December 23, 2010
IN RE PROTEST OF B&C TOWING, INC. WITH REGARD TO DENIAL OF PREQUALIFICATION FOR THE PERFORMANCE OF ROUTINE TOWING SERVICES ON THE NEW JERSEY TURNPIKE AND GARDEN STATE PARKWAY.
On appeal from the Final Decision of the New Jersey Turnpike Authority.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted: December 8, 2010
Before Judges Axelrad, R. B. Coleman and Lihotz.
B&C Towing, Inc. ("B&C") appeals from a final determination of the New Jersey Turnpike Authority ("Authority") that B&C did not meet the prequalification requirements relating to on-site secure storage and local road access to the relevant interchange to submit a bid for routine towing and emergency services on the New Jersey Turnpike ("Turnpike"). We affirm.
On July 28, 2008, the Authority issued a Request for Prequalification (RFP) of contractors for routine towing and emergency services on the Turnpike and Garden State Parkway. B&C submitted a timely application to provide towing services at two interchanges on the Turnpike, which was denied on January 30, 2009. B&C protested the denial and requested a hearing. A protest hearing was conducted on April 2, 2009. The hearing officer denied B&C's protest on June l2, 2009. On July 23, 2009, the Authority's Executive Director adopted the hearing officer's decision as the final agency decision. This appeal ensued.
Following the issuance of the RFP, a mandatory pre-application conference was held on August 5, 2008. The return date for completed applications was set for October 29, 2008.
The following prequalification criteria contained in the RFP are relevant to this matter:
For Routine Towing Services on the Turnpike: Applicant's garage facility shall be located within five (5) miles driving distance of the Interchange Toll Plaza specified for the Zone upon which the Applicant intends to bid . . . . Moreover, the location of Applicant's garage facility must allow for unrestricted travel via local roads or routes other than the Turnpike. Applicant must submit detailed driving directions to the Turnpike from Applicant's garage facility . . . .
Contractors will be required to have a garage facility with ample on-site secure storage for at least fifty (50) passenger vehicles, and five (5) tractor-trailers or buses. . . .
B&C submitted timely prequalification applications to provide routine towing and emergency services at Interchanges l5E and l5W of the Turnpike. An unannounced inspection of B&C's facility was performed by Authority employees on November l7, 2008. The inspection revealed that a portion of the fence enclosing B&C's facility had been removed. B&C was informed its application for Interchanges l5E and l5W had been denied because of an "unsecured storage area." The application for l5W was also denied because B&C provided incorrect driving directions to access the interchange. On February 4, 2009, B&C protested the denial of its applications and requested a hearing. In its letter, B&C stated its facility was directly adjacent to the Turnpike and complained that portions of the fence had been removed by Authority representatives to gain access through the B&C facility to perform work on the Turnpike. According to B&C, such conduct had occurred "from time to time over the last l0 years," and most recently approximately six months prior. Thus, B&C urged it was inappropriate for the Authority to deny its application based on the Authority's own conduct in creating the problem. B&C noted the fence posts were still intact and offered to promptly install new fencing.
Alan Young, B&C's owner, testified at the protest hearing. Young contended the City of Newark, which had a similar secure storage area requirement, had hired B&C as an official tower despite the missing portion of the fence and urged the Authority to do likewise. He testified that, despite the gap in the fence, "there's virtually no access from the rear of [B&C's] property" because of a ten-foot wide creek running along the rear of the property outside the fence and a twenty-to thirty-foot wall across the creek that supports an elevated portion of the Turnpike.
Later in the hearing, however, B&C's counsel acknowledged there was access from a road in the back of B&C's property through the fenced area and that an individual would be able to walk through the creek outside the property.
Young also testified that since the late l990's, Authority personnel had utilized B&C's property once or twice a year, with permission, to perform work on a drainage problem on the adjacent property owned by the Authority. This work required the removal of B&C's fence. According to Young, Authority personnel had not repaired the fence since their most recent visit about a year earlier. Young, however, could not provide any specific dates or details, nor could he produce correspondence between the Authority and B&C concerning the access and use of B&C's property. Though he contended the personnel always identified themselves as Authority employees, Young never retained their business cards and never called them to request written representation regarding the kind of work that was taking place. Young also explained he had engaged a contractor to repair the fence but had been hesitant in having the work done because of a concern the Authority would again need access through the fence.
Patrick Cicchetti, the Authority's case manager, testified that he asked the appropriate individuals at the Authority whether anyone from the Authority entered B&C's property within the past year and was informed that none had. He also testified that he had contacted Thomas Giaimo, the Authority's general supervisor in charge of maintenance operations, about whether Authority personnel had accessed B&C's property in the past year to perform work in that area. Giaimo replied in an e-mail in the negative, and expressed a belief that B&C had been deceived by a property owner who had informed the Authority he planned to correct a drainage problem in his yard after unsuccessfully requesting the Authority to do so.
Cicchetti did not have any personal knowledge of anyone conducting work at the site that would have required taking down B&C's fence.
Cicchetti also testified as to the directions provided by B&C from its facility to Interchange l5W, noting they accessed the Turnpike at Interchange l4 in order to get to l5W, failing to comply with the RFP requirement that only local roads be used. B&C's counsel responded that his client did not understand he could not use the Turnpike to get from one interchange to the other and requested the opportunity to submit an amended set of directions using local roads.
The hearing officer concluded that B&C's protest should be denied in a written decision of June 12, 2009. He concluded that the missing portion of the fence surrounding B&C's facility rendered it noncompliant with the secure storage requirement, finding "[i]t is clear that it is possible to gain access to the B&C property, notwithstanding the existence of the creek and wall, and, therefore, it is not secure as required by the RFP."
He also found that Young's testimony regarding the Authority's use of B&C's property lacked credibility, noting Young was unable to recall any specific dates work was performed, never retained a business card or any other means of identifying the Authority personnel who purportedly entered upon his property, failed to produce any written correspondence regarding the purported access work or addressing issues such as liability, and made no effort to bring the situation to the attention of the Authority or demand it repair the fence. The hearing officer viewed Young's testimony in context with that of Cicchetti and the e-mail from Giaimo that the Authority had not done any work out on B&C's property.
The hearing officer also expressly found unpersuasive Young's explanation that he did not have the fence repaired himself out of concern that the Authority would ask him to remove it again, noting that B&C would be well within its rights to simply refuse. Based on his credibility assessment and review of the evidence, the hearing officer concluded that the "totality of the circumstances does not justify B&C's failure to properly prepare the property for inspection in light of its application for prequalification and the requirement in the RFP for a secure storage facility."
As to the issue regarding the driving directions to Interchange l5W, the hearing officer found that although B&C's facility was within five miles of Interchange l5W, the submitted directions relied on access at Interchange l4, which was noncompliant with the RFP requirement that the directions use only local roads to reach the interchange. The hearing officer's decision was adopted as the final agency decision. This appeal ensued.
On appeal, B&C challenges the factual finding of the Authority that its facility was unsecured, contending the creek and high wall*fn1 on the adjoining property rendered the facility secure. B&C also argues the Authority should be equitably estopped from denying its application based on the gap in the fence caused by Authority personnel. B&C challenges the Authority's rejection of its application for Interchange l5W as arbitrary in light of the undisputed fact its facility is within five miles of the interchange. Lastly, for the first time on appeal, B&C asserted a due process violation based on the hearing officer's consideration of hearsay evidence as a basis to reject live testimony. Based on our review of the record and applicable law, we do not find any of B&C's arguments persuasive.
We consider B&C's challenges in the context of well-settled law. Appellate review of an agency's decision relating to bidding specifications is limited. See George Harms Constr. Co. v. N.J. Tpk. Auth., l37 N.J. 8, 27 (l994) (holding the judicial role in reviewing administrative action is restricted to four inquiries: (1) "whether the agency's decision offends the State or Federal Constitution; (2) whether the agency's action violates express or implied legislative policies; (3) whether the record contains substantial evidence to support the findings on which the agency based its action; and (4) whether in applying the legislative policies to the facts, the agency clearly erred in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors"). See also Sevell's Auto Body, Inc. v. N.J. Highway Auth., 306 N.J. Super. 357, 364 (App. Div. 1997), certif. denied, 153 N.J. 51 (1998). Prequalification requirements and bidding specifications are the type of matters within the Authority's area of technical expertise and are thus entitled to deference. See In re Distrib. of Liquid Assets upon Dissolution of Reg'l High Sch. Dist. No. l, 168 N.J. 1, l0 (2001).
State agency's "decisions as to responsibility of the bidder and bid conformity are to be tested by the ordinary standards governing administrative action[.]" In re Protest of Award of On-Line Games Prod. and Operation Servs. Contract, Bid No. 95-X-20175, 279 N.J. Super. 566, 593 (App. Div. l995). "The standard of review on the matter of whether a bid on a local public contract conforms to specifications (which is a component of the ultimate issue of who is the lowest responsible bidder) is whether the decision was arbitrary, unreasonable or capricious." Id. at 590. We will not interfere with the exercise of an agency's discretion in awarding a contract or rejecting a bidder "in the absence of bad faith, corruption, fraud or gross abuse of discretion." Commercial Cleaning Corp. v. Sullivan, 47 N.J. 539, 549 (l966).
B&C first attacks the secure storage qualification requirement as ambiguous. The fact Young failed to seek a clarification of exactly how the Authority planned to interpret this provision at the mandatory pre-application conference or by written question thereafter, raising it only after denial of its application, undermines the validity of this argument. Unsuccessful applicants such as B&C "who bid on a contract without first objecting to the specifications lack standing to 'challenge the award of the contract to a rival bidder or to attack allegedly illegal specifications.'" Entech Corp. v. City of Newark, 351 N.J. Super. 440, 459 (Law Div. 2002) (quoting Waszen v. Atlantic City, l N.J. 272, 276 (l949)) (holding that "one cannot endeavor to take advantage of a contract to be awarded under illegal specifications and then, when unsuccessful, seek to have the contract set aside").
Nonetheless, this argument fails on its merits. The language of the provision "should not and cannot be analyzed in a vacuum [but] [r]ather, it should be considered within its particular context, both textual and factual." Sevell's Auto Body, supra, 306 N.J. Super. at 366. It is clear from the context that this requirement is aimed at preventing a trespasser from gaining access to the tower's facility and committing vandalism or theft of a vehicle or its contents while it is in storage. As such, it bears a rational relationship to the nature of the services to be bid and thus is not arbitrary.
Although the physical barriers of the creek and adjoining wall may be a deterrent to some trespassers, there is ample basis in the record for the hearing officer's finding that access to B&C's property could be gained via the strip of land extending along the adjoining properties and through the hole in the fence. Accordingly, the facility is not secure.
We are also satisfied the record justifies deference to the hearing officer's credibility assessment and rejection of the factual basis for B&C's claim of estoppel by the Authority based on its representatives' purported removal of portions of the fence. The hearing officer set forth in detail the basis for his findings, including Young's generalized allegations, vague testimony, lack of any documentary evidence, and failure to report the damage to the Authority at any time and demand the fence be repaired. The hearing officer also had ample basis not to credit Young's excuse for failing to have the fence repaired as, even accepting Young's claim as to the Authority's past conduct, he easily could have refused to grant agency personnel further access through his fence.
Even assuming the break in the fence was caused by Authority conduct, however, B&C cannot establish the elements of equitable estoppel. "The essential principle of the policy of estoppel . . . is that one may, by voluntary conduct, be precluded from taking a course of action that would work injustice and wrong to one who with good reason and in good faith has relied upon such conduct." Middletown Twp. Policemen's Benevolent Ass'n Local No. l24 v. Twp. of Middletown, 162 N.J. 361, 367 (2000) (internal citation and quotation marks omitted). The doctrine "is rarely invoked against a governmental entity, particularly when estoppel would 'interfere with essential governmental functions.'" O'Malley v. Dep't of Energy, 109 N.J. 309, 316 (l987) (internal citation omitted) (quoting Voyt v. Borough of Belmar, 14 N.J. 195, 205 (1954)).
B&C does not explain how any act or omission by the Authority induced reasonable reliance on its part. The record is devoid of evidence that anyone associated with the Authority ever led Young to believe that the Authority's access through B&C's property excused it from the secure storage requirement or that B&C could comply with this qualification requirement notwithstanding the missing portion of the fence. Indeed, at the time the Authority purportedly accessed B&C's property, ten to twelve months before the protest hearing, the RFP had not yet been issued.
We turn now to B&C's challenge to the Authority's rejection of its application for Interchange l5W. Although one of the stated reasons for the Authority's denial of that application was "incorrect driving directions given to access l5W (they were for l5E)," it is clear from the protest hearing that the additional deficiency in B&C's application for Interchange l5W was its failure to provide directions reaching that interchange using only local roads. The requirement that B&C's garage had to be within five miles driving distance of the relevant interchange is only one of the mandates of the RFP. The other is that "the location of Applicant's garage facility must allow for unrestricted travel via local roads or routes other than the Turnpike. Applicant must submit detailed driving directions to the Turnpike from Applicant's garage facility."
The directions B&C provided reached Interchange l5W by first accessing the Turnpike at either Interchange l4 or l5E.*fn2
During the protest hearing, B&C's attorney stated his client did not understand he could not use the Turnpike to get from one interchange to the other and asked the hearing officer if he could submit a new set of directions. The record, however, does not reflect that compliant directions were provided to the hearing officer, presumably because Interchange l5W could not be reached from B&C's facility without either using the Turnpike itself or traveling further than five miles.
In determining the propriety of an agency's determination of bid conformity, "[t]he preliminary inquiry is whether the bid deviates from the RFP . . . [and] [i]f there is a deviation, a decision must be made as to whether it is material and can be waived. On-Line Games, supra, 279 N.J. Super. at 594. If a deviation is material and non-waivable, the inquiry is whether:
[t]he effect of a waiver would be to deprive [the agency] of its assurance that the contract will be entered into, performed and guaranteed according to its specified requirements, and second, whether it 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 594-95 (internal citations and quotation marks omitted).]
If the deviation is material and "thus non-waivable, the inquiry is over because the bid is non-conforming and a non-conforming bid is no bid at all." Id. at 595.
The prequalification requirement that a tower be able to reach the relevant interchange driving less than five miles from its facility and using only local roads is material and non-waivable. The RFP makes clear the ability of a tower to respond to a service call as quickly as possible is an integral requirement of the towing contract. Section II Towing Requirements expressly provides that "[c]ontractors must respond immediately to a call for service on the Roadways and arrive at the site of the disabled vehicle within twenty-five (25) minutes of the initial call while adhering to all traffic laws." The requirement that a tower be able to reach the relevant interchanges using only local roads clearly anticipates that the situation prompting the call for services may also back up traffic on the Turnpike itself, requiring the tower to reach the disabled vehicle through an alternate route.
A waiver of the local road requirement would place B&C in a position of advantage over other bidders as it would unfairly permit it to submit bids for a greater number of interchanges than other local towers who comply with the RFP. Accordingly, the Authority was justified in rejecting B&C's application for Interchange l5W on this basis.
B&C's due process challenge is procedurally waived as it was not raised before the hearing officer. Nonetheless, it fails on the merits.
A trial-type hearing is not required to address an unsuccessful bidder's protest of an administrative decision. See Commercial Cleaning, supra, 47 N.J. at 550. Rather, "an informal hearing or conference should be granted" if a dissatisfied applicant requests one. Ibid. We have recognized that "a plenary quasi-judicial hearing need not be afforded provided there is a fair opportunity, consistent with the desideratum of a fair and expeditious conclusion to the procurement process, for the protesting bidder to present the facts and law supporting the protest." Nachtigall v. N.J. Tpk. Auth., 302 N.J. Super. l23, 143 (App. Div.), certif. denied, l5l N.J. 77 (l997). See also George Harms, supra, 137 N.J. at l9 (stating that due process is satisfied as long as "the parties had adequate notice, a chance to know opposing evidence, and the opportunity to present evidence and argument in response . . . ."); Hartz Mountain Indus., Inc. v. N.J. Sports & Exposition Auth., 369 N.J. Super. l75, 188 (App. Div.) (holding that a bid protest hearing need not adhere to procedural rules and safeguards of the Administrative Procedures Act), certif. denied, 182 N.J. 147 (2004); Carteret Bd. of Educ. v. Radwan, 347 N.J. Super. 45l, 455 (App. Div.) (holding that the "rules against the admission of hearsay evidence are considerably more relaxed in administrative proceedings than in court"), certif. denied, l74 N.J. 38 (2002).
B&C was afforded a fair opportunity to present its protest to the Authority's denial of its prequalification application. After receiving a written statement of reasons for the denial, B&C was provided the opportunity to appear with counsel and present testimonial and documentary evidence in support of its position. Pursuant to N.J.A.C. l9:9-2.12(b), the hearing officer issued a detailed written decision and the Authority's Executive Director, retaining ultimate authority, adopted the recommendation as a final agency decision.
B&C's reliance on Carteret Board of Education is misplaced as that case supports the conduct of the hearing officer in the present case. In that case we rejected an employee's claim of a due process violation, finding no unfair prejudice in his inability to cross-examine an individual whose affidavit was offered at the hearing by his employer to contradict his testimony. Id. at 455. We noted that other evidence supported the administrative law judge's decision. Ibid.
Similarly, the hearing officer in this case took note of the e-mail correspondence from Giaimo, the Authority's general supervisor in charge of maintenance operations, but made his decision on the estoppel issue based on the totality of the evidence. As previously discussed, the hearing officer made detailed findings as to the reasons he did not credit Young's claim of removal of the B&C fence by Authority personnel based on Young's own testimony. The hearing officer found Young's explanation for not reinstalling the fence to be similarly unpersuasive.
As the hearing officer complied with all procedural requirements and his findings "could reasonably have been reached on sufficient credible evidence present in the record," In re Taylor, 158 N.J. 644, 658 (l999), we discern no basis upon which to second-guess the Authority's denial of B&C's prequalification application for routine towing services on the Turnpike.