On appeal from final decision of Director, Division of Building and Construction, Department of the Treasury.
Seidman, Antell and Lane.
Triangle PWC, Inc. (Triangle) appeals from a determination by the Director of the Division of Building and Construction (DBC) in the Department of the Treasury on April 17, 1980 that:
1. THE STATE WILL NOT APPROVE THE USE OF HIGH POWER TRIANGLE CABLE ON ANY DBC PROJECTS UNTIL AFTER JANUARY 1, 1981, UNLESS
2. TRIANGLE PWC PROVIDES THE STATE WITH A LIST OF ALL PURCHASORS [ sic ] OF HIGH POWER CABLE FROM MAY 1972 (THE INCEPTION OF THE GREYSTONE CONTRACT) TO DATE. THE STATE WILL CONDUCT A RANDOM AUDIT OF THE BUYERS TO VERIFY THE PERFORMANCE OF THESE CABLES. IF THERE HAS BEEN NO PATTERN OF FAILURES, THE DISQUALIFICATION OF SAID CABLES WILL BE LIFTED. IF THERE IS A PATTERN OF FAILURES, DISQUALIFICATION WILL REMAIN IN EFFECT UNTIL JANUARY 1, 1981.
We stayed the determination pending the appeal, "subject to the proviso that any part of the term of the disqualification will be served should the court affirm the decision under appeal." We now reverse and remand the matter to the Director for reconsideration and the issuance of a new final decision.
On March 24, 1977 the Director notified Triangle in writing that DBC was considering debarring it, i.e. , excluding it from contracting, for a period of five years because of alleged violations of N.J.A.C. 17:13-8.2(9), (10) and (12). The violations were stated to be:
A hearing was held before a hearing officer appointed by the Director. The hearing officer thereafter issued a lengthy report in which, on the basis of his findings of fact and conclusions of law, he recommended that DBC's case against respondent "should be dismissed with prejudice because of a failure to make out a prima facie case of clear and convincing evidence of manufacturing defects attributable to Respondent." On DBC's claim of newly discovered "concrete" evidence supporting its allegation that Triangle cable was defective, further hearings took place before the same hearing officer. He submitted a supplemental report in which he again concluded that DBC failed to present clear and convincing evidence to substantiate its charges.
The Director declined to accept and adopt the findings and conclusions of the hearing officer. Instead, he issued a letter opinion containing the determination that is the subject matter of this appeal.
In our view, the Director did not approach the problem properly. It is evident that he was heavily influenced by his belief that Triangle should have assumed its "responsibilities" to pay both material and labor costs associated with replacing the cable. He spoke of the cable's failure being "a disaster for the
State of New Jersey." He pointed out that Triangle had agreed under its warranties to replace only the material and had refused to bear the costs of the labor necessary to extract the damaged cable and install replacement cable. He said that "[i]t was on this point that the State moved to suspend Triangle PCW on [ sic ] supplying material on future State jobs," taking the position that "it was entitled to an unlimited warranty on the cable installed at Greystone, not a limited one." To hold the inadequacy of the warranty against Triangle, as the Director appears to have done, was wrong. If the State desired a better warranty, it could have made appropriate provision for it in the contract documents. Moreover, the sufficiency of the Triangle warranty was irrelevant to the debarment issue here involved. It was not among the causes for debarment enumerated in N.J.A.C. 17:13-8.2.
The Director noted that the parties agreed at the hearing that the failure might be attributed to one of three factors: improper installation or mechanical damage, defective manufacture or impressed voltage (overloading), especially lightning strikes. He said that it was "quickly conceded" that the failure was not caused by improper installation. He acknowledged and apparently did not contest the hearing officer's inability to find "clear and convincing" evidence in support of the State's contention that the cable was defective. But he added that "[n]either can I find 'clear and convincing' evidence on the part of Triangle that failure was due to lightning or that some other external effect overloaded the system." In this regard the Director fell into error, for under the ...