January 6, 2011
I/M/O PROTEST OF JOHN'S MAIN AUTO BODY REQUESTS FOR PREQUALIFICATION FOR ROUTINE TOWING SERVICES.
I/M/O PROTEST OF JOHN'S MAIN AUTO BODY REQUEST FOR PREQUALIFICATION FOR EXTRA HEAVY DUTY TOWING SERVICES.
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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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 - Decided:
Before Judges Axelrad, R. B. Coleman and Lihotz.
John's Main Auto Body (John's) appeals from a final determination of the New Jersey Turnpike Authority (Authority) that it did not meet the prequalification requirements to submit bids for routine towing and emergency services and for extra heavy duty towing and recovery services on the New Jersey Turnpike (Turnpike). These appeals were calendared back-to-back and for ease are dealt with in one opinion. We affirm both appeals.
Appeal No. 6118-08T3
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. John's submitted timely applications for two facilities, which were denied on January 30, 2009. On February 4, 2009, John's appealed the prequalification denials as to both its facilities. A protest hearing was conducted on April l, 2009, after which the hearing officer denied John's protest regarding its prequalification applications for both facilities. On June 5, 2009, the Authority's Executive Director adopted the hearing officer's findings and recommendations as the final agency decision.
On July l3, 2009, John's filed a complaint in lieu of prerogative writs in the Superior Court, Law Division, challenging the Authority's denial of its prequalification applications and seeking to temporarily restrain the Authority from proceeding with the procurement process. By written decision and order of August 5, 2009, Judge Maurice J.
Gallipoli, A.J.S.C., transferred this matter to the Appellate Division. By order of October l, 2009, we denied John's emergent application for a stay pending appeal and temporary restraining order.
Following the issuance of the RFP, a mandatory pre-application conference was held on August 5, 2008. As a result, six addenda were issued modifying provisions of the RFP and responding to questions from potential applicants. The return date for completed applications was set for October 29, 2008. John's submitted timely prequalification applications to provide routine towing and emergency services at Interchanges l5E, l5W, and l8W on the Turnpike for each of its facilities in North Bergen -- l4l5 Union Turnpike (Union Turnpike facility) and 4209-430l Dell Avenue (Dell Avenue facility).
The following prequalification criteria contained in the RFP are relevant to this matter:
D. Principal Garage Facility
1. All repairs performed at the request of a patron must be performed by the Contractor at the Garage Facility . . . [which] must be neat, clean, orderly, and well maintained. The Garage Facility must contain at least one (l) major permanent structure, and must contain at least one (l) clean and well-maintained restroom for patrons available 24 hours. There must be clean and comfortable administrative offices and waiting area for patrons with a public and/or private telephone available 24 hours for patrons' use. The restroom must have a working toilet, a sink with hot and cold water and with paper or mechanical means for drying hands. ALL PUBLIC AREAS MUST BE CLEAN, SANITARY AND IN GOOD REPAIR.
2. Applicant represents that the Garage Facility meets all applicable municipal, county and state codes and/or regulations. These include, but are not limited to, a) plumbing, b) electrical, c) fire, d) hazardous waste disposal, e) zoning requirements, f) parking, g) health and h) fire prevention. Applicant must provide a copy of a certificate of occupancy for garage facility.
The RFP also provides, as part of the prequalification process, that each applicant's equipment, facilities and employees are subject to inspection by Authority personnel. It further states that garage inspections will be unannounced and it is the applicant's responsibility to demonstrate to Authority personnel during the inspection that the prequalification application requirements are satisfied. In addition, the RFP requires applicants to submit detailed driving directions to the Turnpike from its garage facility.
John's was notified by letter of January 30, 2009 that its applications for the Union Turnpike facility were denied prequalification because of "(a) no electricity in the trailer (office); (b) no running water; (c) no phone; [and] (d) no working restroom." Prequalification for Interchange l5W was also denied on the ground that John's provided incorrect driving directions from its facility to the interchange. On the same date, John's was notified that its applications for the Dell Avenue facility were also denied prequalification because of "no operating facility; [and] (b) unable to inspect." On February 4, 2009, John's appealed the denials for both facilities.
At the protest hearing on April l, 2009, the Authority presented the testimony of its case manager, Patrick Cicchetti, and its manager of emergency services and operations, John Sutcliffe. John's presented the testimony of its supervisor of daily operations, Robert Heiser. For ease of reference, we will separately detail the testimony pertaining to each facility.
Union Turnpike Facility
Cicchetti testified about the unannounced inspection he and Sutcliffe conducted of this facility on November l7, 2008. According to Cicchetti, Heiser identified a trailer as his office. During the inspection of the trailer, the Authority personnel found there was no running water and no heat. Cicchetti also concluded there was no electricity in the trailer because the lights were not on, the telephone was not working, and a secretary entered and unsuccessfully attempted to plug in a computer. Cicchetti further determined the bathroom was not operational. According to Cicchetti, Heiser did not direct the men to any other facility for the purpose of demonstrating compliance with the RFP. Cicchetti presented photographs of the inside and outside of the trailer.
Cicchetti also testified that John's submitted incorrect driving directions with respect to its application for Interchange l5W. John's application only included directions to access the Turnpike at Interchange l7E.
Heiser testified that he and Sutcliffe went inside an office in the main building and Sutcliffe walked through the main door of the office. According to Heiser, there was "a pay phone, telephones, seats for the patrons to sit on, [and] restrooms," which Sutcliffe apparently "overlooked." He explained that the trailer had recently been installed as a secondary office for overflow business and John's did not have enough time to get it "up and running" in the two months before the inspection. Heiser contended there was electricity in the room in the front part of the trailer, which was "fully operational," but he had not turned the breaker on for the room in the rear of the trailer, which was just used for storage. He also claimed there were restroom facilities inside the trailer although he conceded they were not working at that time. Heiser urged that John's had everything it needed to prequalify under the RFP in both the building and trailer. Heiser presented undated pictures of the trailer and building. He did not offer any explanation for the incorrect directions.
The hearing officer concluded in a written opinion that John's protest should be denied. He noted that the RFP placed the onus on the applicant to demonstrate to the inspectors that its facility was fully compliant. The hearing officer was satisfied Cicchetti's testimony as to the inspection of the trailer established that the facility "did not meet the requirements of a working office and restroom." He found evident that the Authority personnel believed the only office serving as the basis for prequalification was the trailer and it was thus incumbent upon Heiser to point out all the facilities needed for prequalification. The hearing officer ultimately concluded that the "risk of an erroneous assumption falls on [John's] as it was responsible under the RFP to 'show to the Authority personnel that the requirements of this Prequalification Application are satisfied.'" The hearing officer also made a credibility assessment, expressly finding he had "no reason to believe that the Authority personnel omitted testimony about the primary office." In contrast, the hearing officer detailed the reasons he found Heiser's testimony to be "both contradictory and confusing." The hearing officer further found deficient John's application for Interchange 15W for failure to provide driving directions from the facility to that interchange.
Dell Avenue Facility
The same representatives of the Authority and John's testified at this protest hearing, conducted immediately following the prior hearing. Cicchetti testified that he and Sutcliffe made three separate, unsuccessful attempts to inspect the facility - on November 6, 10, and 17, 2008. However, the entrance was enclosed by chained fences and there were no employees in the area to talk to about gaining access. Cicchetti's photographs of the facility were marked into evidence. Sutcliffe explained that in the six years he had been performing prequalification inspections, he had never notified an applicant that he was coming to inspect.
Heiser testified the facility was operational at that time and employees were working inside. According to Heiser, the doors were down because the facility was in a "rather rough area" and there had been security problems. Heiser explained that customers telephone for access to the facility. He acknowledged, however, there was no intercom service at the facility, nor was there a sign anywhere on the outside gate instructing someone to call a number for access to the facility.
Heiser took the position it was incumbent on the inspectors to "pick up a telephone," "bang on the garage door" or go through the side gate entrance. Heiser presented photographs of the facility, demonstrating it was fully operational.
In a written decision, the hearing officer concluded that John's protest with respect to its prequalification applications for this facility should be denied. He noted that while Heiser's pictures showed the facility was operational, nothing addressed why the Authority inspectors could not gain access on three occasions. The hearing officer referenced Cicchetti's pictures, which depicted a "building closed with a metal door that was rolled-down blocking any attempt to gain entry through the front entrance" and the lack of employees present to assist in entry. Additionally, "[b]y  Heiser's own admission, there was no intercom system available to enable a visitor to the premises to notify anyone inside the building of their arrival or a sign with a phone number to call to gain access."
The hearing officer emphasized that John's was aware the RFP provided for an unannounced inspection at any time and thus it was John's responsibility to make sure the facility was open for business and ensure that access was available to the Authority inspectors or, alternatively, to notify the Authority in advance of any inspection to set up a procedure for access.
The hearing officer concluded that John's failure to ensure access to the facility was "inexcusable" and did "not comport with the intent of the RFP in this regard."
The hearing officer's findings and recommendations on both facilities were adopted as the final agency decision. This appeal ensued.
On appeal, John's contends the record from the appeal hearing is scratched, skipped, misses the beat, and warrants this matter being transferred to the trial court. He also challenges the hearing officer's decisions as arbitrary, capricious and unreasonable. Lastly, John's urges us to "curtail the power vested in the Turnpike or risk the bidding process being further corrupted." Based on our review of the record and applicable law, we do not find any of John's arguments persuasive.
John's first argument is somewhat incomprehensible to us as we were provided with a transcript, not a tape, of the protest hearings and John's does not challenge any portion of the transcript as inaccurate or incomplete.
John's is asserting a due process challenge based on the informality of the protest hearings. Such argument 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 Corp. v. Sullivan, 47 N.J. 539, 550 (l966). 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 of 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 Constr. Co. v. N.J. Tpk. Auth., l37 N.J. 8, 19 (l994) (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.) ("[R]ules against the admission of hearsay evidence are considerably more relaxed in administrative proceedings than in court."), certif. denied, l74 N.J. 38 (2002).
John's was afforded a fair opportunity to present its protest to the Authority's denial of its prequalification applications. After receiving a written statement of reasons for the denial, John's 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) and (c), 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.
We consider John's argument asserting arbitrariness by the hearing officer in his decision in the context of well-settled law. Appellate review of an agency's decision relating to bidding specifications is limited. See George Harms, supra, l37 N.J. at 27 (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, l0-11 (2001).
State agencies' "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, supra, 47 N.J. at 549.
As to the Union Turnpike facility, the RFP clearly sets forth the requirements that an applicant's facility must have a functioning bathroom, a comfortable waiting room, and a working telephone. The RFP also unambiguously states that the applicant has the responsibility to demonstrate to Authority personnel that the facility is compliant with the RFP at the time of inspection. The hearing officer made express credibility assessments in favor of the Authority representatives and against John's representative, which were reasonably based on the testimony presented at the protest hearing. Furthermore, John's did not dispute that the driving instructions to Interchange 15W were flawed.
As to the Dell Avenue facility, Cicchetti presented ample evidence that the facility appeared closed and was inaccessible to him and Sutcliffe on the three occasions they attempted to conduct their inspection, including four photographs showing the facility gated and chained. The transcript also demonstrates there was no genuine dispute that the facility appeared closed and there was no way to gain entry aside from calling the office. Knowing an unannounced inspection was provided for in the RFP, John's should have notified the Authority of the security problem and made alternate arrangements for the inspectors to have access to its facility. There is nothing arbitrary, capricious or unreasonable about the hearing officer's conclusion that the burden of ensuring ready access to the facility for inspection was on the applicant and that John's failure to ensure access on three occasions warranted denying prequalification under the RFP.
John's also suggests the hearing officer, as a paid employee of the Authority, was biased. This challenge is completely baseless. Under N.J.A.C. 19:9-2.12, the Executive Director of the Authority, or a designee, is empowered to conduct a hearing. The standard for recusal of an agency official is actual bias, and the "probability of actual bias is grounds for disqualification when the decision maker has a pecuniary interest in the outcome of the matter or has been the target of personal criticism from one seeking relief." In re Carberry, 114 N.J. 574, 586 (1989). John's neither demonstrated any actual bias nor such probability.
John's last argument, which includes a diatribe against the Authority, with references to "The Sopranos" and the novel Soprano State, is not worthy of further discussion. R. 2:11-3(e)(1)(E).
Appeal No. 0922-09T2
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 Garden State Parkway. John's submitted a timely application on January 14, 2009. John's application was denied by letter of March 23, 2009. By letter of March 30, 2009, John's protested its disqualification and appealed the decision. A protest hearing was conducted on July 16, 2009. The hearing officer denied John's protest on September 2, 2009. On September 14, 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 14, 2008. As a result, three addenda were issued modifying provisions of the RFP and responding to questions from potential applicants. John's, located at 1445 Union Turnpike, North Bergen, submitted a timely prequalification application to provide extra heavy duty towing and recovery services for Zone F of the New Jersey Turnpike. By letter of March 23, 2009, the Authority rejected John's application for prequalification because John's was "not an approved service provider for the N.J. State Police as per Section III, paragraph A.1 of the Pre-qualification Application." This provision states:
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.
The second addendum 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 protest hearing on July 16, 2009, the Authority presented the testimony of its case manager, Patrick Cicchetti, and its manager of emergency services and operations, John Sutcliffe. John's presented the testimony of its in-house counsel, John Appello, and its daily operations supervisor, Robert Heiser. Although recognizing that John's had routine towing experience for the Authority, Cicchetti testified that John's had failed to meet the experience requirements of the RFP because it did not demonstrate it had sufficient experience as an extra heavy tower for the New Jersey State Police on the enumerated highways or on the Authority Roadways. Cicchetti noted that John's effectively conceded this deficiency in a November 16, 2008 letter to the Authority's director of purchasing, stating: "What we do not have is the required experience on state roadways (I-80, I-280, I-287, I-78) [n]ot because we are not qualified but because we chose to service only the roadways in our immediate area (US Highway 1 and 9, NJ routes 495 and 3 as well as numerous county roadways) as to not over extend ourselves."
Cicchetti explained that experience in performing routine towing services for the Authority would not qualify a tower to provide extra heavy duty towing services. According to Cicchetti, the alternative requirement of five years experience on the roadways designated in the RFP was based on the Authority's determination that the experience on those roadways would be compatible with the type of work needed on the Turnpike. Conversely, towing experience gained on other roadways was not comparable to the type of experience necessary for services to be performed on the enumerated roadways pursuant to contracts awarded by the State Police. In response to John's complaint about its inability to be included on the State Police towing rotation list, Cicchetti testified that the Authority has no involvement with or responsibility for the State Police's process for awarding towing contracts.
Appello asked a series of questions regarding the RFP and was advised to put his questions in writing, which he did in a letter dated July 16, 2009. He asked why Route 495 was not a road suitable for prequalification, why the current RFP was different than the prior one and included as a requirement experience on certain roadways, and what person or entity was responsible for making the additional requirement of experience on designated roadways a part of the RFP. A prompt response was sent by the Authority's attorney, explaining that the requirements are part of an ongoing, evolving process in which Authority personnel from various departments provide input, including the issue of experience on interstate highways. A detailed explanation was provided as to why the Authority determined the conditions on Route 495 did not simulate those existing on Authority roadways. Furthermore, in accessing the effectiveness of its towing program, the Authority determined a greater degree of experience was required for extra heavy duty towers.
Heiser testified that John's was on a waiting list for inclusion on the State Police's towing list and had never been explicitly rejected by the State Police for lack of experience. He further claimed John's had been informed the State Police would not put it or any additional towers on its list at the present time, a position which he contended was unlawful. Heiser additionally argued that it was illegal and exclusionary for the Authority to condition prequalification on a bidder's inclusion on the State Police's towing list. Heiser provided the hearing officer with some booklets detailing John's extra heavy duty towing service experience.
In a written decision, the hearing officer concluded that John's application should be denied. He found the Authority was in the best position to determine what qualifications were necessary to provide heavy duty towing services on the Turnpike and, therefore, deferred to the expertise of the agency in establishing the requirements. He also determined that the actions of the State Police were not properly before him, and found Cicchetti's statement credible that the Authority had no involvement in the State Police's contract procurement process. The hearing officer also found convincing Cicchetti's testimony that towing experience on State highways and local roads was not compatible with the experience needed for towing on the Turnpike. He then concluded that the "requirement that applicants for extra heavy duty towing services must demonstrate experience gained through contracts either awarded by the State Police on interstate highways in New Jersey or by the Authority on the Authority Roadways is not unreasonable in light of the Authority's singular expertise in the administration of the Authority Roadways." The hearing officer's findings and recommendation were adopted as the final agency decision.
On appeal, John's challenges the hearing officer's decision as arbitrary, unreasonable and capricious. He also urges us to "curtail the power vested in the Turnpike or risk the bidding process being further corrupted." As in the prior appeal, based on our review of the record and applicable law, we do not find either of John's arguments persuasive.
Earlier in this opinion we cited the well-established law regarding our review of administrative decisions, particularly our deference to them and limited standard of review. Within this context, we are satisfied 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 alternative route in the event of a major traffic backup caused by a jackknifed tractor trailer or accident involving a large vehicle. As such, the Authority properly concluded it was more likely ability to deal with such situations would be possessed by those applicants who have provided services under conditions comparable to what they will face on the Turnpike, i.e., an approved extra heavy duty towing and recovering services provider on the enumerated roadways for the State Police.
John's post-hearing argument pertaining to the hiring of an individual who purportedly had experience on Authority roadways is not appropriately before us and thus will not be addressed in this opinion. See Nieder v. Royal Indemnity Ins. Co., 62 N.J. 229, 234 (1973).
To the extent John's is challenging the experience requirements as ambiguous, that argument must also fall. A mandatory pre-application conference was conducted prior to the date for submitting completed applications. The fact John's failed to seek a clarification of the RFP at the mandatory pre-application conference whereby written questions thereafter, raising it only after a denial of its application, undermines the validity of this argument.
Unsuccessful applicants such as John's "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").
In its last argument, John's contends the Authority improperly exercised "unfettered discretion" in evaluating bidder qualifications and awarding contracts. It continues with a diatribe not relevant to the issues on appeal. We have already concluded that deference to the Authority's determination of appropriate prequalification specifications is warranted as a result of its expertise regarding extra heavy duty towing services on the Turnpike. Additionally, 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 (1999). Accordingly, we discern no basis upon which to second-guess the Authority's denial of John's prequalification for extra heavy duty towing services on the Turnpike.
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