December 23, 2010
I/M/O PROTEST OF NICK'S TOWING SERVICE, INC., REQUEST FOR PREQUALIFICATION FOR EXTRA HEAVY DUTY TOWING SERVICES, JULY 14, 2009 HEARING
On appeal from the Final Decision of the New Jersey Turnpike Authority.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: December 8, 2010
Before Judges Axelrad, R. B. Coleman and Lihotz.
Nick's Towing Service, Inc. ("Nick's") appeals from a final determination of the New Jersey Turnpike Authority ("Authority") that Nick's did not meet the experience requirements to be pre-qualified to submit a bid for extra heavy duty towing and recovery services on the New Jersey Turnpike and the Garden State Parkway (individually referred to as "Turnpike" or "Parkway" or collectively referred to as "Authority Roadways").*fn1
On October 28, 2008, the Authority issued a Request for Prequalification (RFP) of contractors for extra heavy duty towing and recovery services on the Turnpike and Parkway. Nick's submitted a timely application on December l9, 2008. Nick's application was denied on March 23, 2009. It protested the denial and requested a hearing. A protest hearing was conducted on July l4, 2009. The hearing officer denied Nick's protest on September 9, 2009. On September l4, 2009, the Authority's Executive Director adopted the hearing officer's findings and recommendation as the final agency decision. This appeal ensued.
Following the issuance of the RFP, a mandatory pre-application conference was held on November l4, 2008. As a result, three addenda were issued modifying provisions of the RFP and responding to questions from potential applicants. Nick's submitted a timely prequalification application to provide extra heavy duty towing and recovery services for Zone F on the Turnpike and Zone l5 on the Parkway. The Authority rejected Nick's application based on its failure to meet the prequalification criteria set forth in Section III.A.1 of the RFP ("experience requirement"), which states, as follows:
Applicant must have a minimum of five (5) years of extra heavy duty towing and recovery services experience on the following Interstate highways within New Jersey: I-80, I-280, I-287, I-295, I-l95, I-78, as an approved extra heavy towing and recovery services provider for the New Jersey State Police, and/or five (5) years of such experience on the Authority Roadways as an approved extra heavy duty towing and recovery services provider for the Turnpike Authority.
Addendum No. 2 added the Atlantic City Expressway to the enumerated list of roadways on which an applicant could gain the requisite years of service experience.
At the hearing on July l4, 2009, the Authority presented the testimony of its case manager, Patrick Cicchetti, and its manager of emergency services and operations, John Sutcliffe. Nick's presented the testimony of its owner, Nicholas Testa. Nick's position was that both the prequalification criteria and the denial of its application were arbitrary and capricious. Nick's had explained to the Authority in a November l8, 2008 letter, referenced by the Authority witnesses, that it did not have the requisite experience on the enumerated roadways because it was not located close enough to those roadways to meet the applicable time and distance criteria and there had not been an opportunity to be added to the list of approved towers for the last ten years. Nick's claimed it did, however, have thirty-five years of experience providing extra heavy duty towing services on state highways such as Routes 3 and l7, which it deemed comparable to the enumerated interstate roadways, and to have performed extra heavy duty towing services on Authority Roadways on an emergency basis in connection with its capacity as an approved routine tower.
Cicchetti testified about the importance of the Authority's requirement for extra heavy duty towing experience on the particular, enumerated interstate roadways as opposed to other state and local roadways. He explained that additional expertise was required based on the differences between the Turnpike and other roadways, such as Routes 3 and 46. Cicchetti acknowledged that on one or two occasions the services provided by Nick's had risen to the level of extra heavy duty towing but was of the opinion that Nick's limited exposure did not demonstrate the level of experience necessary to meet the RFP requirements.
Testa took issue with the Authority's position that performing extra heavy duty towing services on the state roads on which he had experience was not comparable to providing the same services on the enumerated or Authority Roadways. He emphasized that Route 3 is a major artery leading into Manhattan and also serves the sports complex at the Meadowlands. He further contended the towers get "the same pressures about lane closure" from the local and county police as from the Authority. Testa also claimed to have provided extra heavy duty towing services on Authority Roadways on more than just a few occasions and, pursuant to the Authority's request, a week after the hearing he supplemented the record with invoices, correspondence, photographs and other documents.
The hearing officer concluded that Nick's application should be denied. He disagreed with Nick's assertion that the extra heavy duty towing experience gained on Routes 3 and l7 was comparable with that gained on the enumerated major roadways or the Authority Roadways, stating that he "must defer to the expertise of the Authority in determining the level of experience required to handle the situations presented on a major roadway like the Turnpike as opposed to performing extra heavy duty towing services on State highways." The hearing officer was also of the opinion that "the Authority has an obligation to operate the Turnpike as it believes is reasonable and necessary to ensure the safe transit of its users. The limited experience of Nick's in performing extra heavy duty towing services on the Turnpike and State highways does not meet the requirements of the RFP." The hearing officer concluded:
As noted in the particular response to a question posed at a mandatory conference on November l4, 2008 and subsequently confirmed in writing, and as demonstrated by the testimony of Mr. Cicchetti, extra heavy duty towing services on the Turnpike are unique based upon the singular circumstances presented by the configuration of the Turnpike and the substantial volume of traffic affected by these incidents. The standard established in the RFP is, therefore, not arbitrary as it has a basis in the distinctive conditions extant on the Authority Roadways.
The hearing officer's decision was adopted as the final agency decision. This appeal ensued.
On appeal, Nick's challenges as arbitrary and capricious the RFP requirement that the services must be provided for the New Jersey State Police on one of the enumerated interstate highways, asserting it bears no rational relationship to the nature of the services required by the Authority. According to Nick's, the interstate restriction: (1) impedes competitive bidding by arbitrarily and unreasonably eliminating qualified bidders; (2) is not related to the services for which the Authority mandated prequalification; and (3) arbitrarily fails to include all of New Jersey's interstate highways and irrationally includes a roadway, the Atlantic City Expressway, which is not an interstate highway. Secondly, Nick's argues it has provided, and continues to provide, the services sought by the Authority for the Authority itself, making the denial of its prequalification application unreasonable, arbitrary and capricious. Lastly, Nick's argues the hearing officer's decision, upon which the Authority's decision was based, is unintelligible, without rational basis, misquotes requirements and improperly fails to acknowledge evidence submitted. Based on our review of the record and applicable law, we do not find any of Nick's arguments persuasive.
Nick's primarily asserts there is no meaningful distinction between the extra heavy duty towing services performed on the enumerated highways and Authority Roadways and those same services performed on other major state and local roadways. Accordingly, Nick's contends the prequalification requirement in the RFP that the necessary experience be obtained on the specific roadways selected by the Authority is arbitrary and capricious. Nick's has identified several roadways it contends possess characteristics that are similar to those an extra heavy duty tower would confront in performing services on the Authority Roadways, most notably Route 3. However, merely because the equipment used, the tasks performed, and the insurance requirements may be similar on the state and local highways upon which Nick's has performed services, does not mean the experience gained on those roadways is identical to that gained on the enumerated interstate highways, the Atlantic City Expressway, and the Authority Roadways.
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 Co., Inc. v. N.J. Highway Auth., 306 N.J. Super. 357, 364 (App. Div. l997), certif. denied, l53 N.J. 5l (l998). The decision that only applicants who have gained the requisite experience on roadways that most closely replicate the conditions on the Authority Roadways is one that is within the Authority's area of technical expertise and is entitled to deference. See In re Distrib. of Liquid Assets upon Dissolution of Reg'l High Sch. Dist. No. l, 168 N.J. 1, l0-11 (2001).
The 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).
The Authority determined, within its discretion, that the Turnpike presents a unique situation for extra heavy duty towers. The Turnpike is a high-speed, high-volume roadway, which creates significant safety and other obstacles for the tower as well as the disabled trucker. Furthermore, many of the exits are several miles apart, leaving drivers unable to exit the roadway in search of an alternate route in the event of a major traffic backup caused by a jack-knifed tractor-trailer or accident involving a large vehicle. As such, the introductory provision of the RFP emphasized that the applicant must be able to "provide service under critical time restraints and work under severe pressure in an effort to return the Roadways to normal operating conditions." The Authority properly concluded it was more likely this ability would be possessed by those applicants who have provided services under conditions comparable to what they will face on the Turnpike.
That is not to say Nick's would be unable to provide effective service given the opportunity. Indeed, the Authority acknowledged at the protest hearing that Nick's providing of routine towing services was excellent. The key determination in this appeal, however, based on our limited standard of review, is whether the requirement that the applicant gain its experience performing extra heavy duty towing and recovery services on particular roadways is arbitrary and capricious. We are not convinced Nick's satisfied that burden.
We also do not find compelling Nick's challenge to the enumerated roadways as arbitrary based on the Authority's exclusion of other interstate roads such as I-76 and I-676*fn2 and the inclusion of the Atlantic City Expressway, an intrastate roadway. The enumerated roadways were not chosen simply because they are interstate roads; as previously stated, they were chosen because the Authority determined they most closely replicate the conditions a successful bidder will confront in providing extra heavy duty towing services on the Turnpike. The Expressway was added to the list by addendum as a road deemed comparable by the Authority to the Turnpike and Parkway in response to input from towers at the pre-application conference. Including an intrastate road suggested by the potential bidders demonstrates flexibility, not arbitrariness, by the Authority. The choice does not undermine the Authority's determination not to include other suggested roadways that it determined did not share the unique characteristics of the Authority Roadways.
Nick's also challenges the experience qualifications as too restrictive and thus contrary to the principle that fostering competition among a large number of bidders results in a "greater  likelihood that the public entity will receive the lowest possible contract price from responsible bidders." See Tormee Constr. v. Mercer Cnty. Improvement Auth., 143 N.J. l43, 148 (l995). Although that principle may be true in certain circumstances, it does not render arbitrary and capricious the Authority's determination that the extra heavy duty towing and recovery services to be performed on the Turnpike require a specific kind and level of experience. In reviewing challenges to bidding procedures, our courts have noted that "it is better to leave the door tightly closed than to permit it to be ajar, thus necessitating forevermore in such cases speculation as to whether or not it was purposely left that way." Sevell's Auto Body, supra, 306 N.J. Super. at 364 (quoting Hillside Twp. v. Sternin, 25 N.J. 317, 326 (l957)) (internal quotation marks omitted).
The only argument that gave us pause is Nick's contention that, although it was not approved by the Authority as an extra heavy duty tower, it performed those services on an emergency basis on the Turnpike as ancillary to the services it performed as an approved routine tower, thus effectively satisfying the alternate requirement. Nick's correctly notes that the hearing officer's decision does not expressly address the post-hearing supplemental materials provided by Nick's at the Authority's request. Nick's "de-facto" challenge, however, does not merit a remand because even if we consider all nine instances documented by Nick's as satisfying the extra heavy duty towing and recovery experience requirement, the documentation only spans four years (2005 to 2008), not the five years mandated by the RFP.*fn3
Lastly, Nick's references to the minor errors in the hearing officer's decision do not undermine the soundness of the determination and the Authority's denial of its protest. We are satisfied the hearing officer's findings "could reasonably have been reached on sufficient credible evidence present in the record." In re Taylor, 158 N.J. 644, 658 (l999).