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Diamond Chemical Company, Inc v. Division of Purchase and Property

April 11, 2012

DIAMOND CHEMICAL COMPANY, INC., APPELLANT,
v.
DIVISION OF PURCHASE AND PROPERTY, RESPONDENT.



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

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 12, 2012 --

Before Judges Sabatino, Ashrafi, and Fasciale.

In this procurement case, appellant Diamond Chemical Company, Inc., appeals the rejection of its bids on contracts to supply the State with laundry chemicals. Respondent, the Division of Purchase and Property ("the Division") of the Department of the Treasury, rejected appellant's bids because the bids, as well as a laboratory test of a sample from appellant, reflected that prohibited ingredients were contained in the laundry chemicals. The Division consequently awarded the contracts to other vendors. Appellant filed a protest, which the Division denied.

Appellant contends that the Division's rejection of its bids was arbitrary and capricious. It asserts that the bid deviations were inadvertent clerical errors, noting that it had supplied the State with conforming laundry chemicals for many years under one or more past contracts. Appellant maintains that the Division acted unreasonably in refusing to waive the errors. In addition, appellant contends that one of the other vendors' successful bids was non-responsive.

For the reasons that follow, we affirm the Division's final agency decision.

I.

The facts are substantially undisputed. In January 2011, the Division issued a fifty-four-page Request for Proposal 11-X-21782 ("the RFP") for the statewide supply of laundry chemicals. The RFP specified that bid submissions were due on February 15, 2011. The Division issued the RFP in order to replace the laundry chemicals contracts set to expire on March 31, 2011.*fn1

Appellant was an incumbent vendor under one of those existing contracts.

The RFP consisted of ten price lines corresponding to ten different laundry chemicals. The ten price lines were organized into four groups: group one (dry chemical system); group two (liquid chemical system); group three (packets); and group four (solid encapsulated detergent).

Group one (dry chemical system) consisted of price line 00001, low alkalinity/low temperature powdered laundry detergent. Group two (liquid chemical system) covered price lines 00002 to 00008, entitled: price line 00002: liquid laundry detergent price line 00003: liquid heavy duty alkaline builder price line 00004: detergent/bleach combination liquid laundry detergent price line 00005: concentrated liquid chlorine bleach price line 00006: liquid system combination fabric softener/sour price line 00007: liquid antibacterial softener/sanitizer price line 00008: liquid rust removing sour Group three (packets) referred to price line 00009, pre-measured powdered laundry detergent in water-soluble packets. Group four (solid encapsulated detergent) consisted of price line 00010, also named solid encapsulated detergent. The RFP permitted vendors to bid on one or more of the four groups.

A key aspect of the RFP was to obtain laundry chemicals for the State that were both "[e]nvironmentally [p]referable" and "[b]iodegradable[,]" in order to comply with Executive Order #76 ("EO 76") issued on January 12, 2006. The executive order requires the State to procure and utilize cleaning products that "minimize potential impacts to human health and the environment[.]"

Section 1.2 of the RFP instructed bidders about ingredients that should not be contained in the laundry chemicals. That provision explicitly stated that "[o]ne of the main raw material surfactant types that can be eliminated from laundry chemicals are all Alkyl Phenol Ethoxylates (APE)." According to the RFP, APE is harmful because it "is a suspected hormone disruptor, and has been shown to mimic the hormone estrogen." Additionally, the compound biodegrades to nonylphenols, which can be harmful to salmon and other fish.

Because of these adverse environmental impacts, the RFP noted in Section 1.2 that "purchasing laundry chemicals with no alkyl phenol ethoxylates in them would be in strict compliance with EO 76. In addition[,] the related surfactant forms of all APE[] including Nonyl and Octyl Phenol ethoxylates are also prohibited from all formulations." Furthermore, Section 3.16 of the RFP specified that the "[p]roducts bid are to be free of phosphates."

Apart from these general prohibitions in Sections 1.2 and 3.16, the RFP also specifically cautioned bidders in its descriptions of price lines 00001, 00002, 00007, and 00010 that the surfactants used "shall not be of the Alkyl phenol ethoxylates (APE) or Nonylphenol ethoxylates [type] (NPE)." For reasons that are unclear, this additional warning was not repeated in the descriptions of the other price lines.

The RFP required bidders to submit a material safety data sheet ("MSDS") for each product offered in its bid submission. Each MSDS was required to list "all raw materials which make up greater than 1% of the [product's] formula[.]"

The RFP further authorized the Division's Purchase Bureau to conduct laboratory testing of samples of the bidders' products before the contracts were awarded. According to Section 4.4.3.3, such samples were to "meet the specification requirements set forth in the RFP and must be representative of the product bid." The bidders were required to make their samples available to a quality assurance unit for such testing.

Under Section 6.1 of the RFP, the Director of the Division reserved "the right to waive minor irregularities" in a bid. The Director also was permitted to ...


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