COMMUNITY ACCESS UNLIMITED INC v. STATE OF NEW JERSEY DEPARTMENT OF TREASURY

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SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

COMMUNITY ACCESS UNLIMITED,

INC.,

Appellant,

v.

STATE OF NEW JERSEY,

DEPARTMENT OF TREASURY,

DIVISION OF PURCHASE AND

PROPERTY,

Respondents.

__________________________________

PCG PUBLIC PARTNERSHIPS, L.L.C.,

Intervenor-Respondent.

___________________________________

November 1, 2016

Argued September 14, 2016 Decided

Before Judges Messano, Espinosa and Suter.

On appeal from the Department of Treasury, Division of Purchase and Property.

Dennis F. Driscoll argued the cause for appellant (Inglesino, Webster, Wyciskala & Taylor, L.L.C., attorneys; Lisa D. Taylor, of counsel and on the briefs; Justin A. Marchetta and Joseph M. Franck, on the briefs).

Roza Dabaghyan, Deputy Attorney General, argued the cause for respondent (Christopher S. Porrino, Attorney General, attorney; Beth Leigh Mitchell, Assistant Attorney General, of counsel; Ms. Dabaghyan, on the briefs).

Brian S. Montag argued the cause for intervenor (K&L Gates, L.L.P., attorneys; Mr. Montag and Dana B. Parker, on the brief).

PER CURIAM

On August 4, 2015, the New Jersey Department of the Treasury, Division of Purchase and Property, Procurement Bureau (Purchasing), issued Request for Proposal 16-X-23964 (the RFP) on behalf of the Department of Human Services (DHS). The RFP solicited proposals for a fiscal intermediary and financial cash and counseling services on behalf of DHS's Divisions of Disability Services (DDS), Aging Services (DOAS), Developmental Disabilities (DDD) and Medical Assistance and Health Services (DMAHS). The RFP was a "re-procurement" of three existing DHS contracts in a single contract. DHS sought to engage one contractor to provide statewide "fiscal management services . . . , administrative services, and financial counseling services . . . for individuals (i.e., participants) who are enrolled in DHS programs that allow these participants to self-direct and manage the services and budget in their plan of care, based on the participant's personal choices."

On September 1, 2015, Purchasing issued Addendum #2, responding in detail to questions it received from prospective bidders prior to the close of a question and answer (Q&A) period. In answering one question regarding extension of the "due date" for submissions, Addendum #2 stated that "the due date for submitting questions ha[d] been extended to September 9, 2015." As we explain in greater detail below, Community Access Unlimited, Inc. (CAU) unsuccessfully attempted to submit additional questions to Purchasing on September 9. On September 11, 2015, Purchasing issued Addendum #4, which corrected the answer previously supplied in Addendum #2, and clarified that the due date for submitting proposals had been extended to September 17, but the Q&A period had expired on August 18, as originally stated, and Purchasing would not answer questions received after August 18.

Both CAU and intervenor Public Partnerships, LLC. (PPL) responded to the RFP, along with three other bidders. CAU currently services two of the above programs, and PPL services the other two.

On September 17, 2015, Purchasing's Proposal Review Unit opened the five proposals, which were then forwarded to the Evaluation Committee (the Committee), comprised of members from DHS and Purchasing. The Committee issued a report ranking PPL's proposal as number one and recommending it be awarded the contract because PPL "exceeded the criteria requirements in its Proposals for each of the three main criteria, namely, personnel, experience of the firm, and ability of the firm to complete the scope of work." The Committee ranked CAU second. On November 23, 2015, Purchasing issued a Notice of Intent (NOI) to award the contract to PPL.

On December 8, 2015, CAU filed a protest outlining PPL's alleged failures to comply with the RFP. A supplemental protest followed two weeks later. In addition to asserting dozens of instances of non-compliance with or deviations from the RFP, CAU contended that PPL engaged in improper ex parte communications with the State regarding how best respond to the RFP. CAU also claimed that it submitted questions to Purchasing in accordance with the RFP addenda, but Purchasing failed to respond. Purchasing issued a final agency decision on May 13, 2016, reaffirming its NOI to PPL and subsequently denied CAU's request for a stay.

We granted CAU's motion for a stay pending appeal and permitted PPL to intervene over CAU's objection. Also over CAU's objection, we granted Purchasing's request for a limited remand to consider two specific arguments, namely: (1) whether the process was tainted by alleged ex parte communications between PPL and DHS; and (2) whether CAU's supplemental questions were sent and received by Purchasing prior to the bid opening, and if so, why they went unanswered. Purchasing completed the remand in a timely fashion, and, on August 15, 2016, issued its final decision, again reaffirming the NOI to PPL.

Before us, CAU contends that PPL should have been disqualified because its proposal contained material, non-waiveable deviations from the RFP. CAU also alleges that PPL engaged in improper ex parte communications, and CAU was unfairly prejudiced by Purchasing's refusal to answer CAU's questions. Lastly, CAU argues that Purchasing's evaluation of PPL's proposal was marred by favoritism, bad faith, corruption, fraud and a gross abuse of discretion.

We have considered these arguments in light of the record and applicable legal standards. We affirm.

I.

"The public interest underlies the public-bidding process in this State." Barrick v. State, 218 N.J. 247, 258 (2014). Therefore, the bidding statutes "are construed as nearly as possible with sole reference to the public good. Their objects are to guard against favoritism, improvidence, extravagance and corruption; their aim is to secure for the public the benefits of unfettered competition." Ibid. (quoting Keyes Martin & Co. v. Dir., Div. of Purchase & Prop., 99 N.J. 244, 256 (1985)). When the State's procurement of supplies and services require that bids be advertised, any "award shall be made with reasonable promptness . . . by written or electronic notice to that responsible bidder whose bid, conforming to the invitation for bids, will be most advantageous to the State, price and other factors considered . . . ." N.J.S.A. 52:34-12(a)(g) (emphasis added).

The standards governing our review of a challenge to State procurement are clear. "An agency's choice from among responsible bidders under N.J.S.A. 52:34-12(a)(g) is reviewed under the gross abuse of discretion standard." Barrick, supra, 218 N.J. at 258 (citations omitted). However, Purchasing may not make an award to a bidder "whose proposal deviates materially from the RFP's requirements." Id. at 258-59. "[R]equirements that are material to an RFP are non-waivable; the winning bidder's proposal must comply with all material specifications." Id. at 259 (citations omitted). The agency's decision as to whether a requirement is material, or whether a bid conforms to the requirements of an RFP, "will not [be] upset . . . unless the agency's decision is shown to have been 'arbitrary, capricious, or unreasonable, or . . . not supported by substantial credible evidence in the record as a whole.'" Ibid. (second alteration in original) (quoting In re Stallworth, 208 N.J. 182, 194 (2011)).

"[T]he threshold step in the analysis is to determine whether there is a deviation." Id. at 260 (citations omitted). In this regard, we review the correctness of the agency's decision "based on the information available to the Director at the time bids are opened." Id. at 260-61.

If a deviation is found and the Director nonetheless makes an award, then the analysis on appellate review must include two inquiries. First, a reviewing court must assess "whether the effect of a waiver would be to deprive the [public entity] of its assurance that the contract will be entered into, performed and guaranteed according to its specified requirements." Second, the court must determine whether the requirement at issue "is of such a nature that its waiver would adversely affect competitive bidding by placing a bidder in a position of advantage over other bidders or by otherwise undermining the necessary common standard of competition."

[Id. at 261 (citing In re Protest of Award of On-Line Games and Production and Operation Services Contract, Bid No. 95-X-20175, 279 N.J. Super. 566, 594-95 (App. Div. 1995)) (supporting citations omitted).]

With these standards in mind, we review CAU's specific claims.

II.

As noted, CAU asserted in its protests that PPL's bid contained dozens of material deviations from the RFP. CAU's appellate brief lists twelve specific instances, to which we turn our attention.

The RFP required each bidder to complete a "Subcontractor Utilization Plan," (SUP) if it "intend[ed] to subcontract." The name and address of the subcontractor, whether it was a "small business," what types of goods or services it would provide and the estimated value of the subcontract were to be supplied on the SUP. PPL identified one such subcontractor that would provide "[s]taffing" and apparently had been pre-approved as a qualified small business. However, PPL listed in another portion of its proposal the names of six other businesses it intended to use as subcontractors and included the resumes of members of those firms who would perform the work.

In her final decision, the Director of Purchasing (Director) concluded that PPL supplied the necessary information regarding all potential subcontractors, and those subcontractors not listed on the SUP were "performing ancillary work" not contained within the RFP's scope of work. The Director concluded that although there was a deviation from the RFP to the extent all subcontractors were not listed on the SUP, "the deviation [was] not material."

Before us, CAU contends that the deviation was material, because it directly affected Purchasing's ability to assess PPL's contribution to small-business set-aside goals. Further, CAU argues that whether a bidder subcontracted work could impact its overall profit, and hence, the amount bid. Although contrary to the Director's decision, Purchasing argues that, although some of the subcontractors not listed on the SUP will perform services contemplated within the RFP's scope of work, PPL supplied essentially all the information required on the form and gained no competitive advantage.

Since Purchasing concedes there was a deviation from the RFP because all subcontractors were not listed on the SUP, we need to address whether this deviation deprived the State "of its assurance that the contract will be entered into, performed and guaranteed according to its specified requirements." Barrick, supra, 218 N.J. at 261. In this regard, the uniform Standard Terms and Conditions of State contracts, which were incorporated by reference into the RFP, only specifically prohibited engaging a subcontractor "other than as identified in the . . . proposal" without the written consent of the Director. The RFP anticipated the substitution or addition of subcontractors with Purchasing's approval, and required "detailed resumes" of the subcontractor's staff even after the award was made.

The Committee's report indicated it had thoroughly reviewed the "resumes" contained in the proposal, as well as the staffing model that included the subcontractors not listed on the SUP, and concluded PPL had the "capacity to complete" the work. We conclude that the significant amount of information actually supplied by PPL regarding these other subcontractors did not impair Purchasing from being able to assess PPL's ability to perform the contract if awarded to the company.

We also conclude that PPL's partial completion of the SUP did not place it "in a position of advantage over other bidders or . . . otherwise undermin[e] the necessary common standard of competition." Ibid. PPL included the name of one subcontractor, a qualified small business, on the SUP. It has since argued that it believed only subcontractors for which it was seeking small business set-aside credit needed to be listed on the SUP.

We need not decide whether this was a reasonable assumption on PPL's part in light of the express terms of the RFP, because Purchasing was fully able to assess the bid as providing only a 5% set-aside for small businesses. Moreover, the Committee's report makes clear that PPL did not, in fact, submit the lowest-priced bid. However, pursuant to N.J.S.A. 52:34-12(a)(g), price is only one factor in the Director's discretionary decision-making calculus. See, e.g., In re On-Line Games, supra, 279 N.J. Super. at 590-91 (noting that, in contrast to purchases made with State funds, contracts bid by local public entities "must be awarded to" the "lowest responsible bidder").

CAU also argues that PPL's proposal materially deviated from the RFP because it failed to submit proof of having established a $3 million line of credit at the time it submitted the proposal. However, the Director noted that the RFP required only that "the contractor shall establish a $3 million line of credit" and provide Purchasing with proof "before the contract's effective date." (Emphasis added). In its proposal, PPL committed to establishing the necessary line of credit if it was awarded the contract. We agree with the Director's decision that, in this regard, PPL's proposal did not deviate from the requirements of the RFP.

CAU asserts PPL's proposal materially deviated from the RFP because the company: refused to meet the mandatory start date of January 1, 2016; refused to commit to maintaining New Jersey offices and indicated its managing staff would be housed in Boston; failed to affirmatively commit to "live" personnel answering phone calls 95% of the time; intended to use multiple Federal Employer Identification Numbers; failed to agree to conduct individual "meets-and-greets" with program participants; refused to act as the account holder for all funds; reserved its right to further negotiate the cash flow requirements contained in the RFP; proposed to "pend" payments to workers if budgetary limits were exceeded; failed to specifically agree to provide home visits to veterans and state how it would implement those visits; and refused to use DDD's data entry system for more than six months. To the extent these were asserted in the protests CAU filed, the Director concluded none were deviations from the RFP. We agree.

In each instance cited, CAU seizes upon specific language in PPL's proposal and, without regard to context, argues that PPL was unwilling or unable to perform the contract in accordance with DHS's instructions. We have carefully reviewed these individual claims and conclude that the Director's decision was not arbitrary, capricious or unreasonable.

III.

A.

In its protests, CAU asserted that PPL had failed to specifically state how it would meet certain requirements of the RFP. In its administrative reply to the Director, PPL noted that it "did not, and was not required to, reiterate each requirement due to space limitations and based on guidance from the DHS." (Emphasis added). The RFP specifically prohibited all bidders from contacting DHS. CAU served a reply averring that PPL had admitted having ex parte communications with DHS in violation of the RFP. The Director did not address the issue in her decision.

In seeking a remand, Purchasing conceded that "[if] it [was] true that a bidder had improper ex parte communication with DHS during the procurement, the Director would be faced with a decision of whether to disqualify that bidder or to cancel all bids and reissue the RFP." As noted, over CAU's objection, we granted Purchasing's motion and remanded to the Director to address this assertion.

Purchasing contacted each voting member and the technical advisors on the Committee, as well as the State contracts managers for the current contracts. All advised Purchasing that he/she had no communications with PPL regarding this solicitation. Furthermore, David Horvath, PPL's manager who was primarily responsible for its response to the solicitation, certified that no ex parte communications took place between PPL and DHS. The Director concluded that there were no ex parte communications, and "[w]ith regard to PPL's specific statement which also refer[red] to space limitations, . . . the statement was made in the context of the RFP's instructions."

CAU contends that Purchasing's investigation was perfunctory and the conclusion relied heavily on Horvath's self-serving statement. We disagree. There is nothing in the record to support the conclusion that PPL, which was servicing two DHS programs prior to this solicitation, engaged in ex parte communications regarding the RFP. The Director's decision in this regard was "supported by sufficient credible evidence in the record as a whole." R. 2:11-3(e)(1)(D).

B.

Purchasing's answer to a question in Addendum #2 ostensibly extended the Q&A period until September 9, 2015. CAU attempted to upload some questions onto Purchasing's website on September 9, but was unsuccessful, and emailed the eSupport team that the site was not working properly. On September 10, Purchasing responded that CAU could submit its questions by email, which CAU did later that day. The Division never answered the questions.

On remand, Purchasing's Hearing Unit reviewed the emails that CAU submitted in its appellate appendix. It determined that because of a formatting problem, the content of the emails could not be viewed nor could it be determined that they related to the RFP. Therefore, the emails were not forwarded to Purchasing for review prior to the opening date for proposals. The Director concluded that the supplemental questions "would not have resulted in a revision to the RFP. Therefore, th[e] question[s] did not impact the procurement process; and this procurement was conducted in conformance with the applicable laws and regulations." CAU contends that it suffered prejudice as a result of Purchasing's failure to answer these supplemental questions.

The record is quite clear. CAU submitted questions and received answers during the Q&A period. In the context of answering questions posed by all prospective bidders, Purchasing erroneously indicated it was extending the Q&A period. CAU attempted to pose additional questions that, because of a computer glitch, went unanswered. One day after being advised of the problem, Purchasing clarified that the Q&A had not been extended.

We are hard-pressed to see how these circumstances prejudiced CAU vis-a-vis any other bidder. Once again, the Director's conclusions are "supported by sufficient credible evidence in the record as a whole." R 2:11-3(e)(1)(D). We conclude CAU failed to assert any demonstrable prejudice, and the Director's decision must be affirmed.

IV.

Lastly, CAU argues that the Committee's review and Purchasing's decision were flawed by "favoritism, bad faith, corruption, fraud and gross abuse of discretion." Specifically, it contends that PPL's proposal was given positive consideration, even though it failed to meet the RFP's requirements. It argues that both PPL and CAU stated in their proposals that certain key personnel would be identified and hired after conducting a search, yet, PPL was not penalized for this uncertainty and CAU was. CAU also contends that the committee itself lacked the "relevant experience necessary to evaluate the project." N.J.S.A. 52:34-10.3(c).

These arguments lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.


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