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Nachtigall v. New Jersey Turnpike Authority

June 12, 1997

WALTER NACHTIGALL, PLAINTIFF-APPELLANT,
v.
NEW JERSEY TURNPIKE AUTHORITY, NEW JERSEY HIGHWAY AUTHORITY, SOUTH JERSEY TRANSPORTATION AUTHORITY AND MFS NETWORK TECHNOLOGIES, INC., DEFENDANTS-RESPONDENTS. IN THE MATTER OF THE PROTEST OF LOCKHEED MARTIN IMS. RE: ELECTRONIC TOLL COLLECTION IMPLEMENTATION PROGRAM PROCUREMENT, THE PROTEST OF PROCUREMENT PROCEDURES AND AWARD.



On appeal from the New Jersey Turnpike Authority and The Superior Court of New Jersey, Law Division, Essex County.

Approved for Publication June 12, 1997.

Before Judges Pressler, Kestin and Wecker. The opinion of the court was delivered by Pressler, P.j.a.d.

The opinion of the court was delivered by: Pressler

IN THE MATTER OF THE PROTEST OF LOCKHEED MARTIN IMS

RE: ELECTRONIC TOLL COLLECTION IMPLEMENTATION PROGRAM PROCUREMENT, THE PROTEST OF PROCUREMENT PROCEDURES AND AWARD

The opinion of the court was delivered by

PRESSLER, P.J.A.D.

In the fall of 1995, an ad hoc alliance (the Consortium) was formed by mutual resolutions and a memorandum of understanding adopted and executed by four agencies operating New Jersey's toll roads and interstate toll connections, namely the New Jersey Turnpike Authority (NJTA); the New Jersey Highway Authority (NJHA), operating the Garden State Parkway; the South Jersey Transportation Association (SJTA), operating the Atlantic City Expressway; and the Port Authority of New York and New Jersey (PA). The Delaware Department of Transportation (DDOT) joined the Consortium in the summer of 1996. The single purpose of the Consortium, of which NJTA is the lead agency and which is managed by a representative Executive Council, is to obtain for New Jersey's toll roads, bridges and tunnels, an integrated electronic toll collection (ETC) system, which included the installation of E-ZPass, *fn1 and thereby to achieve the obvious benefits to the environment, the public, and motorists inherent in such a system. Following an extensive bidding and negotiation process spanning many months and involving two bidders, MFS Network Technologies, Inc. (MFS) and Lockheed Martin IMS (Lockheed), the Consortium awarded the contract to MFS. That award was challenged both by Lockheed, who filed a notice of appeal directly with this court, and a taxpayer, Walter Nachtigall, whose action against the Consortium was transferred to this court by the Law Division pursuant to R. 1:13-4. We consolidated and accelerated the two appeals, and we now affirm the contract award to MFS.

As we view the matter, although the appellants raise between them a number of alleged defects in the procurement process, which we will address seriatim hereafter, the fundamental question we must decide is whether that process comported with the applicable public bidding and procurement laws of this State. There is no dispute that a lowest-responsible-bidder standard is statutorily prescribed at least for the three New Jersey agency Consortium members. See N.J.S.A. 27:12B-5.2, 23-6.1, and 25A-8. Nor is there any dispute that the procurement process here employed did not strictly conform to that standard. The Consortium's position is that the undertaking to install, implement, and service this type of ETC system constitutes the provision of a variety of integrated professional services which are exempt under the foregoing statutes from public bidding requirements. The Consortium also contends that the procedures it did employ were not only predicated upon obtaining the most advantageous transaction for the State, but also accomplished that purpose within the framework of the basic procedures, spirit and philosophy of competitive public bidding under N.J.S.A. 52:34-12, which permits the State to award competitively bid contracts, not to the lowest bidder, but to that bidder whose proposal is "most advantageous to the State, price and other factors considered." Those procedures, we note, included the initial issuance of its Request for Information and Request for Qualifications (RFI/RFQ); the issuance of the Request for Proposals (RFP); the issuance of Best and Final Offer (BAFO) Guidelines; the numerous consultations, conferences and clarifications between Consortium personnel and the two bidders; the professional evaluation of the proposals by the Consortium's Multi-Discipline Evaluation Team (MET); and the consideration of Lockheed's two separate protests Having carefully reviewed this voluminous record, which documents every stage of the procurement process in excruciating detail, and having considered the extensive oral arguments of counsel, we are persuaded that the Consortium is correct in both of these contentions.

Explanation of our Conclusion requires a description of what the ETC system essentially is. As we understand it, the system has these basic components. First, of course, is the hardware, signage, traffic reconfiguration, and other implementing procedures and devices that have to be installed at every toll site. That, however, is just the beginning. Second is the heart of the system, namely the customer service center network (CSC) and the necessary communication links between the toll booth and the CSC and between the CSC and users, banks, credit card companies, member agencies, and all the other entities involved in the ultimate collection of tolls and fines from the motorists, and their transmittal to the entity entitled to the receipt thereof. In short, the CSC is intended to operate as an integrated and complex financial entity providing banking, trust, credit, billing, collection, payment, reporting, marketing, and violation detection and fine collection functions both for the Consortium and the ETC users. Obviously a great deal of specially designed computer software is necessary to support the efficient performance of these functions. The third basic component of the system is the communication link itself, virtually all parties involved agreeing that fiber optic cable constitutes the present state of the art in communication access media. And finally, the fourth basic component is the method by which the installation and operation of the system is to be financed.

In the documents constituting the RFI/RFQ, the Consortium announced that it was looking for a combination of the best value and the best system as proposed by the bidder. That is to say, although the Consortium knew and was able to specify much of the detail of a basic ETC system, at least on a preliminary basis, it sought, because of the complexity of the system as a whole and the variety of possible ways of structuring it, the input of the bidders as to the ultimate design, implementation, management and financing of the system. This was made perfectly clear by the cover letter sent to RFI/RFQ responders, which explained, in pertinent part, as follows:

The Consortium is interested in determining to what extent there is interest in providing the services outlined herein, and to provide an opportunity for the vendor community to 'shape the development' of the RFP by capitalizing on their experience and innovation. The Consortium is also interested in determining if there are any special problems, considerations or options that would achieve a more effective implementation of this regional initiative. The Consortium encourages questions or comments from prospective vendors on any issue or concern, as it pertains to this program.

This concept was also expressed by Addendum No. 1 to the RFP providing in pertinent part that:

The process described in the RFP may lead to the evaluation of proposals that differ in ways other than price. The approach taken by each of the Proposers to the various elements of the RFP may differ and the encouragement for innovative and creative approaches to the RFP may lead to substantially different proposals. The negotiated contract process initiated by the Consortium through this RFP anticipates that the bids to be reviewed will be different in many aspects, but the Consortium ...


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