On appeal from the Division of Purchase and Property, Department of Treasury.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Sabatino, Ashrafi, and Fasciale.
These related appeals, which we consolidate for purposes of this opinion, concern the State's award of a three-year contract for armed and unarmed security guard services. The security guards are to be provided to various State offices, as well as to other agencies and institutions that opt to obtain equivalent services as cooperative purchasing partners with the State under the same contract terms. Among other things, the contract specifications require the provider to compensate the guards at or above the minimum levels established by federal and state prevailing wage laws. After several rounds of public bidding, respondent Division of Purchase and Property ("the Division") of the State's Department of Treasury awarded the contract to respondent Protection Plus Security Corporation ("Protection Plus"), a company that had capably supplied security guard services to certain State agencies in the past.
A competing bidder, appellant Securitas Security Services U.S.A., Inc. ("Securitas"), protested the contract award to Protection Plus, as did another unsuccessful bidder, Security Guard, Inc., d/b/a Tri-County Security, NJ ("Tri-County").*fn1 The Division ultimately rejected the bid protests, reiterating its decision to award the contract to Protection Plus. Securitas appealed, essentially contending that the award must be set aside because Protection Plus bid the contract at too low a price to enable it to fulfill its obligation to pay the guards at the mandated prevailing wages.
On the day after the contract was fully executed in September 2011, the Division amended the contract at Protection Plus's request and awarded the company an increase in the hourly rates paid by the State, effective October 3, 2011. Securitas filed a separate appeal objecting to that price increase. It argued that the increase was a material change in the contract that invalidated the bidding process. Securitas also contended that the applicable statutory language and bidding specifications disallow such a price increase until after the contract has been performed by the vendor for a full year.
For the reasons stated in this opinion, we affirm the Division's award of the contract to Protection Plus but reverse the Division's amendment of the contract that granted Protection Plus a premature price increase.
We summarize the pertinent facts and chronology of events. We do so mindful that there was no adjudicative hearing*fn2 in this accelerated matter. Consequently, the record before us is not comprehensive or entirely clear in certain respects.
The State's Past Procurement of Security Guard Services and the Enactment of the State Building Services Contracts Act
Before the present award, the State procured armed and unarmed security guard services for State buildings through the use of multiple contracts. Those multiple contracts involved separate procurements and different contract numbers for the particular State agencies and departments they covered. Those service contracts were not subject to prevailing wage laws.
In 2006, the Legislature enacted a statute instituting wage and benefit standards for general contractors and subcontractors that supply "building services," such as security guard services, at properties owned or leased by the State. The new law, the State Building Services Contracts Act ("SBSCA"), N.J.S.A. 34:11-56.58 to -56.70, supplemented the New Jersey Prevailing Wage Act ("PWA"), N.J.S.A. 34:11-56.25 to -56.47. The SBSCA specifically extends prevailing wage requirements to State "building services" contracts created or renewed after March 13, 2006.
In particular, the SBSCA requires the contractors and subcontractors that it covers to pay certain prescribed wages and other fringe benefits to their employees working at State-owned or State-leased sites. At a minimum, such vendors must pay their workers at or above the hourly wages determined by the State Commissioner of Labor and Workforce Development ("the Commissioner") to be prevailing for their respective occupations in each county. See N.J.S.A. 34:11-56.60.
The county-specific prevailing wage rates and the associated required benefits (collectively known as the "PWR") promulgated by the Commissioner for New Jersey are based on, and mirror, federal prevailing wage rates and required benefits (collectively known as the "FPWR") by the United States Department of Labor ("USDOL"). The FPWR levels are used in all federal service procurements. They are periodically set by the USDOL under the Service Contract Act of 1965 ("SCA"), 41 U.S.C.A. §§ 351 to 358.*fn3 See N.J.S.A. 34:11-56.59; N.J.A.C. 12:64-1.1 to -4.6 (containing the regulations issued by the Commissioner under the SBSCA).
The public policy underlying the SBSCA is expressed in N.J.S.A. 34:11-56.58:
It is declared to be the public policy of this State to establish prevailing wage levels for the employees of contractors and subcontractors furnishing building services for any property or premises owned or leased by the State in order to safeguard the efficiency and general well-being of those employees and to protect them and their employers from the effects of serious and unfair competition based on low wage levels which are detrimental to efficiency and well-being.
Within the statute's definitional section, N.J.S.A. 34:11-56.59, "building services" are described to include, among other things, the "securing, patrolling, or other work in connection with the care, securing, or maintenance of an existing building[.]" (Emphasis added). That definition thus embraces the security guard services involved in this appeal. In addition, the definitional section denotes the "'prevailing wage for building services'" as "the wage and benefit rates designated by the [C]commissioner based on the determinations made by the General Services Administration pursuant to the federal 'Service Contract Act of 1965' (41 U.S.C. §351 et seq.), for the appropriate localities and classifications of building service employees." Ibid.
N.J.S.A. 34:11-56.60 specifically mandates that vendors of such building services to the State must pay their employees the minimum prevailing wages and benefits.
Every contract to furnish building services for any property or premises owned or leased by the State shall contain a provision stating the prevailing wage for building services rates that are applicable to the workers employed in the performance of the contract and shall contain a stipulation that those workers shall be paid not less than the indicated prevailing wage for building services rates. The contract shall provide for annual adjustments of the prevailing wage for building services during the term of the contract, and shall provide that if it is found that any worker employed by the contractor or any subcontractor covered by the contract, has been paid less than the required prevailing wage, the State Treasurer may terminate the contractor or subcontractor's right to proceed with the work, and the contractor and his sureties shall be liable to the State for any excess costs occasioned by the termination. [N.J.S.A. 34:11-56.60.]
The RFP and the Related Bidding Documents
The State's then-existing contracts for armed and unarmed security guard services, which were awarded before the adoption of the SBSCA, were scheduled to expire on or about June 5, 2010.*fn4
The Division decided to reprocure those services by transitioning all of the work into the same procurement and contract award process, which would now be subject to the SBSCA. Accordingly, on March 18, 2010, the Division issued a Request for Proposal, RFP #11-X-21295 ("the RFP"), for the statewide procurement of armed and unarmed security guard services. The award based upon the RFP submissions would become Contract T0900-A79768.
More specifically, the RFP solicited proposals for a three-year contract "to provide armed and unarmed security guards services to various State agencies and locations" throughout the State. Its stated intent was "to award contract(s) to those responsible bidder(s) whose bid proposals, conforming to th[e] RFP are most advantageous to the State, price and other factors considered." See also N.J.S.A. 52:34-12 (reciting the same criteria).
The RFP explicitly advised bidders that the procurement was subject to the prevailing wage laws. The discrete price amounts within each bid, the RFP explained, were to be based "on the county in which the service is being provided." The RFP divided the State into three geographical regions for contracting purposes: Northern, Southern, and Central. The bidders did not have to bid on all three geographic regions, but the regions they chose to compete for had to be bid in their entirety.
The RFP permitted the State to award the contract to multiple bidders or to one bidder, whichever was in the State's best interest, price and qualifications considered. See N.J.S.A. 52:34-12.1 (authorizing awards to multiple bidders). The security guard services and the corresponding prices of the successful bidder or bidders had to be accessible to all State agencies using those services ("the State using agencies"), as well as to all State "cooperative purchasing partners[.]" The cooperative purchasing partners would each have the option of procuring security guards for their own facilities under the terms of the State contract, but they would not be required to do so.*fn5
Under the RFP, any bidder awarded the contract must be "capable of providing security guard services to all counties listed within the awarded region[,]" and must furnish those guards "with uniforms and necessary equipment, including two-way radios as required by State Using Agencies." RFP, Section 3.9. The RFP also required that all bidders had to "be able to provide full time guards and part time guards to meet the present needs of the State for this contract and complete for all locations." RFP, Section 3.14.
The RFP noted that "[t]he specific number of guards" actually needed by any contracting agent, including "their principal posts and hours of duty[,]" would "be agreed upon in writing between the parties." Ibid. "As changes occur[,]" each site manager had to approve "a revised written agreement[.]" Ibid. In this respect, the RFP cautioned:
[i]t must be understood that the contract resulting from this RFP is for security guard services on an as needed basis for the present and future locations in the three regions; and that the locations served and the number of hours of security guard service will increase and decrease based on the State Using Agency's needs. [Ibid. (emphasis added).]
The RFP required that security guards be paid by the vendor at an "hourly rate of pay." RFP, Section 3.5. In particular, the RFP required bidders to propose all-inclusive hourly rates as listed on the price sheets of this RFP. Failure to propose hourly rates for each type of security guard specified will warrant the bid be deemed non-responsive. Separate hourly rates are specified: one for guards equipped with two-way radios, the other for guards not equipped with two-way radios.
Hourly rates proposed must be all-inclusive hourly rates. They must contain all direct and indirect costs including, but not limited to: overhead, wages, fee or profit, clerical support, travel expenses, safety equipment, materials, supplies, managerial support and all documents, forms, and reproductions thereof. Hourly rates shall also include portal to portal expenses.
Time spent in traveling to and from the work site or employee's normal work station shall not be billed to the State. Hourly rates for guards equipped with two-way radio shall also include [the] cost of being equipped with two-way radio. [RFP, Section 3.14 (emphasis added).]
Consistent with this overall arrangement, the RFP contained price sheets with individual price lines and wage rates for each county. The price lines were segregated between armed and unarmed security guard services. There were a total of 126 price lines on the bidding forms, divided into six categories. Bidders were required to submit an all-inclusive hourly rate in all categories per county in the regions they were bidding on. See RFP, Section 6.4.2. The RFP declared that "[f]or evaluation purposes, bidders will be ranked according to the total bid price located on the [p]rice [s]heet accompanying this RFP." Ibid. (emphasis added).
The two specific FPWR job categories covered by the RFP were Guard I (unarmed) and Guard II (armed). In addition to their distinctive armed status, Guard II officers generally have greater responsibilities than Guard I officers. Among other things, Guard II officers have greater authority and discretion in responding to security incidents and emergencies. They are also to receive specialized training in techniques and methods of protecting controlled areas.
Each bidder was required under the RFP to include, among other mandatory items listed in Section 3.14, several assurances of its capacity to fulfill the terms of the contract. First, descriptions of "its approach and plans for accomplishing the work outlined in the Scope of Work," including "its understanding of the requirements of this RFP and its ability to successfully complete the contract." RFP, Section 4.4.3 (emphasis added). Second, descriptions of "its overall technical approach and plans to meet the requirements of the RFP in a narrative format" in order to "convince the State that the bidder's detailed plans and approach proposed to complete the Scope of Work are realistic, attainable and appropriate and that the bidder's bid proposal will lead to successful contract completion." RFP, Section 126.96.36.199 (emphasis added).*fn6
Two sections of the RFP, Sections 5.18 and 5.19, addressed future changes in the law and in prevailing wage levels. Section 5.18 dealt with "unforeseen" changes, affording the contractor an opportunity to seek a price adjustment from the Division on that basis.
Whenever an unforeseen change in applicable law or regulation affects the services that are the subject of this contract, the contractor shall advise the State Contract Manager and the Director in writing and include in such written transmittal any estimated increase or decrease in the cost of its performance of the services as a result of such change in law or regulation. The Director and the contractor shall negotiate an equitable adjustment, if any, to the contract price. [RFP, Section 5.18 (emphasis added).]
Section 5.19, meanwhile, allowed the contractor to apply for prospective adjustments in the contract price "on the anniversary of the effective date of the contract," solely to take into account increases in the prevailing wage that occurred "during the prior year." Specifically, [i]f the Prevailing Wage Act (N.J.S.A. 34:11-56 et seq.) is applicable to the contract, the contractor may apply to the Director, on the anniversary of the effective date of the contract, for a contract price increase. The contract price increase will be available only for an increase in the prevailing wages of trades and occupations covered under this contract during the prior year. The contractor must substantiate with documentation the need for the increase and submit it to the Director for review and determination of the amount, if any, of the requested increase, which shall be available for the upcoming contract year. No retroactive increases will be approved by the Director.
[RFP, Section 5.19 (emphasis added).]
The RFP explained that the bid proposals would be evaluated by the Division using general evaluation criteria categories, such as technical evaluation factors and the price schedules. Those general criteria could be used by the Division "to develop more detailed evaluation criteria[.]" RFP, Section 6.4. The stated criteria included, among other things, the bidder's "documented experience" with similar past contracts, see RFP, Section 6.4.1(c) and (d), and its "overall ability . . . [to] successfully complete the contract," RFP, Section 6.4.1(e).
The RFP set forth several procedures to govern the procurement process. In particular, after the submission of the bidders' proposals, the Division may request clarifications concerning one or more of the proposals. The Division may also request oral presentations by one or more of the bidders at its discretion.
A request for clarification may be made in order to resolve minor ambiguities, irregularities, informalities or clerical errors. Clarifications cannot correct any deficiencies or material omissions or revise or modify a proposal, except to the extent that ...