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In the Matter of Protest of Scheduled Award of Contract

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


July 29, 2011

IN THE MATTER OF PROTEST OF SCHEDULED AWARD OF CONTRACT T0711/RFP 10-X-20725

On appeal from the Division of Purchase and Property, Department of the Treasury.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 1, 2011

Before Judges Carchman, Graves and Messano.

Appellant, Pearson VUE (Pearson), appeals from the final decision of the Department of the Treasury, Division of Purchase and Property (the Division) upholding the award of State Contract T0711 -- "Testing Services: Long Term Care Facilities & Assisted Living Residences" -- to respondent PSI Services, LLC (PSI). We have considered the arguments raised in light of the record and applicable legal standards. We affirm.

I.

On May 18, 2009, the Division issued RFP 10-X-20725 (the RFP) to solicit bid proposals to engage a contractor to administer a competency evaluation program for the certification of nurse aides, personal care assistants, medication aides and assisted living administrators and to maintain a registry of the certified individuals in the positions listed above, which must include an internet-based system whereby interested parties can verify the status of an individual[']s certification.

Section 3.6.2 of the RFP required that the contractor:

1. Administer the examination in eight (8) test centers throughout the State of New Jersey mutually agreed upon between the Contractor and the Department.

3. Ensure each test center operates Monday through Friday during regular business hours (a minimum of 7 hours per day between 8AM and 6PM) and each test center offers evening testing at least once weekly (until 8PM). In addition, the Contractor shall ensure each site offers testing on at least one weekend (Saturday or Sunday) each month. Hours may be adjusted on the day the center is offering evening testing (for example 12:00PM-8PM).

An addendum to the RFP was issued on July 10, 2009. It reduced the number of necessary testing sites from eight to six, and further provided, "Adjustments to this schedule will be considered with the agreement of both parties." Section 3.6.1 of the RFP required that the contractor:

3. Accept major credit cards, money orders, business checks and process checks by phones for payment of any required fee. The Contractor is not required to accept personal checks. The "check by phone" process is known as direct debit.

Section 3.4.2 stated:

5. Questions in the cognitive test for the assisted living administrator shall be based on a Department approved curriculum implemented by a Department approved training program. The test shall be written for a 6th grade reading comprehension level and the test shall include at least 100 operational items and may include up to ten

(10) pre-test items; a maximum of four (4) hours shall be allocated for candidates to complete the examination.

Section 3.4.1 required the contractor to ensure that:

3. Written tests shall be available as a back-up when CBT [(computer based testing)] is unavailable for an extended period of greater than 48 hours.

4. All examinations are subject to the Department's approval regarding the percentage of used test items; at least twenty percent (20%) of the test items must be new items.

Section 3.4.1 also required that the contractor implement a number of quality control measures, including the following:

1. Provide ongoing test item development activities during the duration of the contract.

2. Continually develop and implement procedures to ensure quality control, confidentiality and security of all test items, examinations, and materials, including electronic software, during all stages of test development, administration, and delivery to and from test sites.

3. Generate, review, and edit test items.

6. Utilize test question writers with expertise in the area of nursing and resident care in long-term care facilities and nursing, resident care, pharmacy issues and facility administration in assisted living facilities.

Section 6.3.1 explained the technical evaluation criteria

employed by the Division, and included the following:

e. The overall ability of the bidder to mobilize, undertake and successfully complete the contract. This judgment will include, but not be limited to, the following factors: the number and qualifications of management, supervisory and other staff proposed by the bidder to complete the contract, the availability and commitment to the contract of the bidder's management, supervisory and other staff proposed and the bidder's contract management plan, including the bidder's contract organizational chart.

PSI submitted its proposal on July 24, and Pearson submitted its proposal on July 28, 2009.

On January 14, 2010, the Division sent letters to both PSI and Pearson seeking clarification of certain portions of their proposals. Specifically, in nearly identical language, both were asked to provide clarification regarding item one, Section 3.6.2 of the RFP by providing a list of testing center locations. The letters also requested clarification as to item three, Section 3.6.2 of the RFP dealing with hours of operation.

In its original proposal, PSI indicated that it had eight New Jersey test centers, which exceeded the RFP requirements, and listed the addresses of these centers. It also stated: PSI will administer the Department's CNA, PCA, CMA, and ALA written/oral examinations on at least five (5) days every week. Our full-time test center locations can provide accessibility not only during weekdays, during regular business hours, but also weekends and evenings with convenient hours of operation. PSI will review the test center operating hours with the Department, to ensure that the current configuration and hours of operation meets with the Department's approval.

The Division asked PSI to "provide . . . hours for all sites that may be considered to meet the requirements of the RFP." In contrast, Pearson's original proposal provided:

For the pursuant contract term, Pearson VUE proposes a schedule of operation from Tuesday through Saturday . . . offering . . . examination administration five days a week at each of our proposed test centers.

Pearson then outlined suggested testing hours for the various centers, specifically Tuesday through Saturday, with different times each day at different centers. On some days, centers were open as few as four hours. On other days, centers were open for as many as eight and a half hours. The Division's January 14 letter noted, "Your proposal does not meet th[e] requirement [of the RFP]. Please state your firm's plan to meet the requirement."

On January 20, PSI responded to the request for clarification. Regarding test center locations, PSI explained: We are aware of Addendum 4, which lowered the number of computer-based test sites from eight (8) to six (6). Nevertheless, we still proposed eight (8) test centers in New Jersey for this opportunity. The list of PSI's eight centers is still the same as the ones listed in Figure 6 on page 81 of our proposal (Brick, Cherry Hill, Mercerville, Linwood, New Providence, North Brunswick, Paramus, and Parsippany). Our proposal exceeds the RFP requirement. We believe that our eight test centers will provide far better geographic coverage for your candidates than the existing six test centers provided by your current vendor. The PSI test centers in New Jersey have been in place since July 2009, providing test administrations for real estate and insurance candidates.

Regarding test center hours, PSI stated:

PSI currently provides 58 testing sessions weekly across New Jersey (compared to 42 sessions listed in the current candidate handbook). PSI currently operates a testing schedule Monday through Saturday at the various computer-based test sites. We will expand the testing schedule even more and add sessions to accommodate the additional volume of candidates for this program to ensure that each test center operates Monday through Friday during regular business hours (a minimum of 7 hours per day between 8 AM and 6 PM) and that each test center offers evening testing at least once weekly. We currently operate four hours on Saturdays. We will add sessions to accommodate the additional candidates [for] this program. With the proposed schedule, PSI can accommodate over 5,000 candidates monthly. As stated in the RFP, "Adjustments to this schedule will be considered with the agreement of both parties."

On January 25, Pearson responded to the request for clarification. Regarding test center locations, Pearson explained:

Pearson VUE's initial proposal did, in fact, include the required six test sites that would be available to the Department during the new contract period. The specific site locations are provided below, all of which are currently utilized by the State's nurse aide program for testing and recertification services.

Pearson then listed its six test center locations. Regarding the test center hours, Pearson stated:

The test center schedule included in Pearson VUE's proposal represents the current hours of operation and our proposal contemplates maintaining this schedule. . . .

The schedule requested in the RFP Addendum calls for a tripling of seating capacity versus a schedule that fully satisfies the Department's current needs.

Expanding the hours of operation as called for in the addendum would further depress the utilization of the test centers, while significantly increasing the cost of operation. If the Department feels the hours of operation called for in the RFP are absolutely essential for the benefit of the nurse aide program, Pearson VUE would be happy to comply. However, an expanded schedule will necessitate an increase to the written examination fee. We believe the test site schedule outlined in our proposal balances the need for suitable test center availability along with appropriate cost containment, resulting in a reasonable examination fee to the test taker. However, should the Department feel strongly that the expanded schedule is necessary, we would be happy to discuss the specifics.

On March 16, the Division notified Pearson that the contract was awarded to PSI. The Evaluation Committee Report explained that "[u]pon reviewing the response provided by Pearson VUE in conjunction with its bid submission, the Committee determined Pearson VUE to be non-responsive to the RFP requirements" and "[n]o further evaluation of [the] bid was performed."

Pearson filed a bid protest on March 30, requesting that the Director rescind the contract award and permit Pearson to make an oral presentation on the issues. Pearson asserted that:

(1) PSI's bid failed to properly specify hours of operation as required by Part 3 of the RFP Section 3.6.2 and PSI's subsequent clarification violated the RFP and New Jersey law; (2) PSI's bid also failed to respond to three other material RFP Sections; and (3) the technical evaluation criteria sheets used by the Department were procedurally flawed.

PSI filed opposition to Pearson's protest. On July 8, the Division issued its final decision denying Pearson's appeal. In response to Pearson's contention that PSI's proposal was not responsive to the RFP because PSI did not specify proposed operating hours, Guy Bocage, the Acting Director, explained:

I find that nowhere in the RFP are bidders required to state the particular hours of operation that are being proposed. Rather, the RFP specifies that the testing centers must be open a minimum of 35 hours per week during "regular business hours[,]" plus one evening and one weekend day per week. Because the State had already determined the acceptable range of business hours in the RFP, there was no need for the bidders to specify the exact hours of operation. . . .

I find that PSI's response does not constitute a material defect in its proposal. The first sentence is consistent with RFP Subsection 3.6.2, Item 3's requirement for routine operation during business hours five days a week. The second sentence commits PSI to operating on weekends and evenings. The third sentence acknowledges Addendum 4's added text concerning post-award schedule adjustments via bilateral agreement between the contractor and the State. PSI's response, while not detailing the actual days and hours of operation of its testing facilities, does not suggest that PSI would be unwilling or unable to comply with the scope of work requirements set forth in RFP Subsection 3.6.2. Furthermore, PSI's offer to review the operating hours with the State if awarded the contract, is consistent with, and permitted by, the sentence that was added to Item 3 by RFP Addendum #4.

In response to Pearson's argument that PSI's response to the request for clarification was an impermissible correction of its original response, the Acting Director explained:

The clarification is consistent with PSI's initial response to both the intent and the express provisions of that subsection as it set forth in its proposal. PSI's response carefully explained and amplified the information it had provided in its proposal concerning its plans to meet RFP 3.6.2 requirements, but it did not change or correct its initial responsive offer. . . .

I note that Pearson's response, unlike PSI's, proposed fewer operating hours than those prescribed as a minimum in RFP Subsection 3.6.2. . .

I find that the Committee and the Purchase Bureau acted appropriately by deeming Pearson's objection to the RFP's Scope of Work stipulation of 35-hour-per-week operation of each of at least six facilities to be cause to declare its proposal non-responsive and ineligible for consideration of award of the contract. With this contract's firm, fixed pricing structure, Pearson's refusal to provide the required number of hours without additional charge provided Pearson with a pricing advantage by reducing its overhead costs over those of the other bidders, thereby disturbing the equal footing standard of public bidding and creating doubt that the contract would be performed as intended by the State per the text of Item 3 of RFP Subsection 3.6.2. Meadowbrook Carting Co. v. Borough of Island Heights, 138 N.J. 307 (1994)[.]

By contrast, PSI's proposal did not take exception to the number of operating hours desired by the State, and nothing in its proposal suggested that PSI would not perform in accordance with the contract requirements. Thus, I find that Pearson's argument, i.e., that, if its proposal is materially defective, PSI's must be as well, to be without merit.

In response to Pearson's argument that PSI did not expressly state that it would process checks by phone, as required by Item 3 of Section 3.6.1, the Acting Director stated: I discern that PSI has interpreted the terms "check by phone" and "direct debit" to refer to payments made via debit card. My own research of the features and attributes of the "check by phone" and "direct debit" models and those of the "debit card" indicates that, while there are similarities . . . a "debit card" payment is not the same as "direct debit" or "check by phone[.]" However, even though PSI does not specifically refer in its proposal to "check by phone" or "direct debit" payment methods, this omission does not constitute cause to declare its bid non-responsive. As noted above with regard to PSI's not having mentioned specific hours in its bid, the contractor will be required to offer "check by phone" or "direct debit" payments, and PSI did not object to this requirement. Thus, PSI's response is technically responsive.

In response to Pearson's claim that PSI's proposal failed to acknowledge that its test will comply with a sixth grade reading level as required by Items 2 and 5 of Subsection 3.4.2, the Acting Director explained,

[T]here is no specific statement within the PSI's response to RFP Subsection 3.4.2 attending to the provision for a sixth grade reading level . . . . [but] it declared that "each item has been reviewed to ensure that its reading level is appropriate." In addition, . . . in discussing the development of examinations, PSI states that its workshops for individuals preparing exam content are trained for "writing realistic and practical items at the appropriate cognitive level." Also . . . the proposal states that "[t]he reading level of examination items is monitored, where appropriate and feasible, so that all items appearing on the examinations are easily within the reading capability of candidates taking the examinations." Thus, PSI does not dispute Pearson's claim that PSI's response to Items 2 and 5 of RFP Subsection 3.4.2 did not expressly commit to development of tests written for a sixth grade reading comprehension level. However, I find that PSI's promise in other sections of its proposal that all tests will be at an appropriate reading level is adequate and does not render the proposal materially deficient. . . . Because PSI did not dispute or contradict that requirement, and because PSI's proposal as a whole demonstrates its understanding that the reading levels of the various exams must be appropriate for the candidates, I find that PSI's proposal is responsive.

In response to Pearson's claim that PSI's response was materially non-responsive because it failed to address Item 4 of Subsection 3.4.1 regarding the requirement that at least twenty percent of test items be new, the Acting Director found that PSI's rebuttal letter effectively refuted the assertions made by Pearson. He also explained that "PSI took no exception to any of the itemized requirements of RFP Subsection 3.4.1 and provided sufficient detail regarding its proposed approaches to the RFP requirements."

Finally, in response to Pearson's assertion that the Committee used an evaluation form that "only paraphrased" the Evaluation Criteria in RFP Subsection 6.3.1, the Acting Director explained:

When queried regarding this point of protest, the Committee members . . . reported that the Purchase Bureau representative who chaired the Committee had provided guidance concerning the specific factors to consider for each of the five evaluation criteria as described in RFP Subsection 6.3.1, that they each thoroughly considered all aspects of each technical evaluation criterion while completing the scoring sheets, and that they therefore consider Pearson's final point of protest to be without merit.

[T]he Committee followed the evaluation protocols set forth in RFP Section 6.0, . . . i.e., the proposals were first reviewed for responsiveness and clarity and then, upon determination of responsiveness and acceptability, the single responsive proposal was evaluated and scored . . . based upon the five criteria set forth in RFP Subsection 6.3.1 . . . . Because the proposals of Pearson and a third bidder had been deemed non-responsive and thus ineligible for award, PSI's proposal was the only one reviewed and scored. The total score earned by PSI's proposal . . . was deemed by the Committee to merit an award of contract. I find no cause to reject the Committee's recommendation.

This appeal followed.

II.

We initially note that Pearson only seeks to set aside the Division's award of the contract to PSI; it does not argue that it should have been awarded the contract, apparently conceding that its own submission was non-responsive. We state some basic principles that inform our consideration of the argument. Pursuant to N.J.S.A. 52:34-6, "[a]ll purchases, contracts or agreements, the cost or contract price whereof is to be paid with or out of State funds shall . . . be made or awarded only after public advertisement for bids . . . ." Once bids are requested and received,

[an] award shall be made with reasonable promptness . . . by written or electronic notice to that responsible bidder whose bid, conforming to the invitation for bids, will be most advantageous to the State, price and other factors considered.

[N.J.S.A. 52:34-12(a)(g).]

"Any or all bids may be rejected when the . . . Director of the Division . . . determines that it is in the public interest so to do." N.J.S.A. 52:34-12(a). The statute contemplates that the lowest bidder may not be awarded the contract. Keyes Martin & Co. v. Dir., Div. Of Purchase & Prop., 99 N.J. 244, 252-53 (1985); Blondell Vending v. State, 169 N.J. Super. 1, 11 (App. Div.), certif. denied, 81 N.J. 333 (1979). Instead, "the courts of this state have consistently accorded the Director considerable deference and great latitude in awarding public contracts." Keyes Martin, supra, 99 N.J. at 252. The scope of our review of the Director's discretionary decision making is limited. Id. at 253. "[T]he courts should not and cannot substitute their discretion for that of the Director." Commercial Cleaning Corp. v. Sullivan, 47 N.J. 539, 549 (1966). "[I]n the absence of bad faith, corruption, fraud or gross abuse of discretion," we will not interfere with the Director's decision. Ibid. However, this highly deferential standard of review applies only to the Director's "ultimate business decision . . . as between responsible bidders whose bids conform to the invitation." State v. Ernst & Young, L.L.P., 386 N.J. Super. 600, 619 (App. Div. 2006) (emphasis added) (quotations omitted).

"[D]ecisions as to responsibility of the bidder and bid conformity are to be tested by the ordinary standards governing administrative action[.]" In re Protest of the Award of On-Line Games Prod. & Operation Servs. Contract, 279 N.J. Super. 566, 593 (App. Div. 1995).

[T]he judicial role 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.

[Ibid. (citations and quotations omitted).]

"The preliminary inquiry is whether the bid deviates from the RFP. If there is no deviation, the bid must be deemed conforming. If there is a deviation, a decision must be made as to whether it is material and can be waived." Id. at 594. As to such decisions, our review is limited to determining whether the Director's decision was "arbitrary or unreasonable." DGR Co. v. State, 361 N.J. Super. 467, 474 (App. Div. 2003) (citing On Line-Games, supra, 279 N.J. Super. at 593).

(a) The RFP required the successful bidder to "[e]nsure each test center operate[d] Monday through Friday during regular business hours (a minimum of 7 hours per day between 8 AM and 6 PM) and each test center offers evening testing at least once weekly (until 8 PM)." It also required the contractor ensure that each site offer testing on at least one weekend each month. In its bid, PSI explained that it would "administer the . . . examinations on at least five (5) days every week" and could "provide accessibility not only during weekdays, during regular business hours, but also weekends and evenings with convenient hours of operation." Further, PSI offered to "review the test center operating hours with the [Division] to ensure that the current configuration and hours of operation [met] with the [Division]'s approval."

Pearson argues that the language of the RFP required bidders to specify hours of operation. Because PSI did not so specify, its bid was non-responsive and the Division's subsequent letter seeking clarification "violated the RFP and New Jersey law." PSI and the Division contend that there was no deviation between the proposal and requirements of the RFP. We agree.

As the Acting Director noted, "nowhere in the RFP [we]re bidders required to state the particular hours of operation that [we]re being proposed." He further determined, that "[b]ecause the State had already determined the acceptable range of business hours in the RFP, there was no need for the bidders to specify the exact hours of operation." The Acting Director did not mistakenly exercise his discretion in this regard. We need not consider the necessity or prudence of the Division's January 14, 2010, letter seeking clarification from PSI and Pearson. Because there was no deviation from the RFP, PSI's response to that letter was not, as Pearson claims, an attempt to "fix" a materially deficient bid.

(b) Next, Pearson argues that PSI failed to comply with three other provisions of the RFP. Specifically, section 3.6.1 required the contractor "[a]ccept major credit cards, money orders, business checks and process checks by phones for payment of any required fee. . . . The 'check by phone' process is known as direct debit." PSI's bid stated it "w[ould] collect payment in the form of major credit and debit cards, money orders, cashier's checks, and company checks," but failed to expressly state it would accept "direct debit," a process that is concededly different from the use of a debit card. The Acting Director concluded the omission in PSI's bid of any reference to "'check by phone' or 'direct debit' payment methods . . . d[id] not constitute cause to declare its bid non- responsive," particularly since PSI "did not object to this requirement."

Pearson contends this omission makes PSI's bid non- responsive. The Division maintains that PSI addressed the RFP's requirements in an acceptable fashion because it "did not state that it would not comply with the RFP once informed of these differences." Further, the Division argues that any deviation was not material, and, therefore, not a basis to invalidate PSI's bid.

We agree that to the extent PSI's failure to explicitly state it would accept payments by "direct debit" made the bid non-conforming, the deviation was so immaterial that the Acting Director correctly concluded it was not cause to invalidate PSI's bid.

[T]here are certain requirements often incorporated in bidding specifications which by their nature may be relinquished without there being any possible frustration of the policies underlying competitive bidding. In sharp contrast, advertised conditions whose waiver is capable of becoming a vehicle for corruption or favoritism, or capable of encouraging improvidence or extravagance, or likely to affect the amount of any bid or to influence any potential bidder to refrain from bidding, or which are capable of affecting the ability of the contracting unit to make bid comparisons, are the kind of conditions [which] may not under any circumstances be waived.

[On-Line Games, supra, 279 N.J. Super. at 594 (alterations in original) (quoting Terminal Constr. Corp. v. Atl. Cnty. Sewerage Auth., 67 N.J. 403, 412 (1975)).]

It is readily apparent that PSI's failure to include "direct debit" as an approved payment method, particularly where there was no express rejection of the process, did not render its proposal materially deficient.

Section 3.4.2 of the RFP required that tests be written for a sixth grade reading level. Pearson next argues that PSI's response was "devoid of any mention that its tests w[ould] comply with a sixth-grade reading level." The Acting Director, however, determined that "PSI's promise in other sections of its proposal that all tests will be at an appropriate reading level is adequate and does not render the proposal materially deficient." The Division asserts that although PSI did not specifically mention the sixth grade reading level in its bid, it clearly agreed to review its tests to ensure their reading level was appropriate.

Pearson also argues that PSI failed to comply with Section 3.4.1 of the RFP that required "[w]ritten tests . . . be available . . . when CBT is unavailable for an extended period of greater than 48 hours," and "at least twenty percent (20%) of the test items must be new items." This Section also requires that the contractor perform a number of quality control measures.

PSI's response clearly indicated it would comply with the requirement that all tests be administered at an appropriate reading level. Although PSI's agreement to "paper and pencil testing" was not in response to Section 3.4.2, it is obvious that PSI's bid met the requirement. In another section of its proposal, PSI stated:

In case of a disaster at one of PSI's testing centers, PSI is committed to having a permanent replacement site operational in less than 60 days. In the interim period, PSI also maintains replacement systems ready for implementation on site at our corporate location and can have a temporary site up and running within two business days for computer-based examination administration. Additionally, PSI can offer any scheduled candidates the ability to reschedule at other locations within the state. PSI can also implement temporary paper-and-pencil administrations should that be required.

PSI's commitment surpassed the RFP's requirements in that it offered to direct test-takers to other centers or operate a temporary site. Pearson's other contentions, i.e., that PSI failed to explicitly mention the "twenty percent" requirement, or denote its quality control mechanisms, are similarly without sufficient merit to warrant any further discussion in this opinion. R. 2:11-3(e)(1)(E). (c) Section 6.3.1 of the RFP provided five technical evaluation criteria. The actual evaluation sheets used in scoring the bids listed the fifth criteria simply as "[t]he overall ability of the bidder, to begin and successfully complete the project within the proposed schedule," the first sentence of the RFP's scoring criteria section. Pearson argues that the score evaluation sheets demonstrate that the "fifth criteria was not reviewed in full." PSI argues that the "Point Score Evaluation Sheets used by the Evaluation Committee, which summarized one of the evaluation criteria set forth in the RFP, did not undermine the principles of public bidding."

The Acting Director explained that "Committee members" were fully briefed by "the Purchase Bureau representative who chaired the Committee . . . [as to] the specific factors to consider for each of the five evaluation criteria as described in RFP Subsection 6.3.1." The Acting Director found "that . . . each thoroughly considered all aspects of each technical evaluation criterion while completing the scoring sheets." There is no evidence to the contrary. Indeed, the committee report itself indicates that other aspects of the evaluation criteria were considered. The argument lacks sufficient merit to warrant any further discussion in this opinion. R. 2:11-3(e)(1)(E). Affirmed.

20110729

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