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In re Protest of Scheduled Award of Term Contract T2813 RFP 12-X-22361 Laboratory Testing Service

Superior Court of New Jersey, Appellate Division

July 10, 2013



Argued June 11, 2013

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

Robert C. Epstein argued the cause for appellant HFL Sport Science, Inc. (Greenberg Traurig, attorneys; Mr. Epstein, on the brief).

Melissa A. Haas, Deputy Attorney General, argued the cause for respondent Division of Purchase and Property (John J. Hoffman, Acting Attorney General, attorney; Beth Leigh Mitchell, Assistant Attorney General, of counsel; Ms. Haas, on the brief).

Before Judges Parrillo and Messano.


Appellant HFL Sport Science, Inc. (HFL), appeals the final agency decision of the Director of the Division of Purchase and Property (DPP) in the Department of the Treasury, rescinding the award of a State contract to perform equine drug testing to HFL, and re-awarding the contract to Truesdail Laboratories, Inc. (Truesdail). For reasons that follow, we affirm.

On November 21, 2011, the DPP issued a Request for Proposal (RFP), soliciting bid proposals from laboratories to provide equine drug testing on racehorses as required by the New Jersey Racing Commission. The RFP sought "to award a contract to that responsible bidder whose bid proposals, conforming to this RFP is most advantageous to the State, price and other factors considered." The contract would have a duration of two years with the option to renew for two additional one-year periods at the State's discretion. Especially pertinent here, section of the RFP required bidders, pursuant to N.J.S.A. 52:25-24.2, to submit an ownership disclosure form (ODF) at the same time, or before, they submitted their bid proposals.

The bid opening was held on December 29, 2011, and the DPP received four proposals, including those from HFL and Truesdail. HFL's ODF included with its bid proposal indicated that there were no individuals, corporations or partnerships having a 10% or greater interest in HFL.[1]

Contrary to this representation, in a narrative section of its technical proposal, HFL stated that it is a wholly-owned subsidiary of another firm, LGC Group, which is in turn owned by a private equity firm, Bridgepoint Capital. Elsewhere in the proposal, an organization chart indicated that HFL is a sister company of HFL Sport Science, Ltd., and that both are owned by LGC Science & Technology, which is itself owned by LGC Group. However, nowhere in its proposal did HFL provide the "names and addresses of all stockholders . . . who own 10% or more of its stock, " as required by N.J.S.A. 52:25-24.2.

On February 23, 2012, DPP issued an award notice, recommending the contract be awarded to HFL as the lowest bidder and having earned the highest total score.[2] On March 8, 2012, Truesdail protested the proposed contract award, alleging, among other things, that the DPP incorrectly calculated the bid prices and that Truesdail was actually the lowest price bidder. Following HFL's opposition, the DPP Director found Truesdail's objections to be without merit.

However, while reviewing the procurement record, the Director noticed that HFL had submitted what appeared to be conflicting ownership disclosure information in its proposal and therefore requested clarification. On May 24, 2012, a representative of HFL responded with an organizational chart that was in some respects different and more detailed than the one included in its proposal. The new chart indicated that HFL is owned by HFL Sport Science, Ltd., which differed from information previously disclosed, and that HFL Sport Science, Ltd. is in turn owned by LGC Ltd. Above LGC, Ltd., however, were seven more tiers of ownership — all omitted from HFL's original submission — ending with LGC Science Group Ltd. at the top. The representative also confirmed that LGC Science Group, Ltd. is owned by Bridgepoint, previously identified in HFL's bid proposal, which she described as a private equity group over which "LGC does not have control." HFL's representative further explained that HFL answered "no" to the question on the ODF concerning whether another entity had a 10% or greater interest in HFL within the past five years because the direct ownership of HFL has never changed since its incorporation and HFL understood the question to only refer to changes in ownership over the preceding five years.

In her October 12, 2012 final agency decision rescinding the notice of intent to award the contract to HFL, and ordering that the contract be awarded to Truesdail, the DPP Director concluded that HFL's failure to provide complete disclosure of all levels of its ownership structure on its ODF at the time its proposal was submitted rendered its proposal incurably nonresponsive to the RFP and ineligible for the contract award. Specifically, the Director found

inconsistent information regarding [HFL's] ownership structure in its proposal. In the required Ownership Disclosure Form included as part of its proposal, [HFL] stated that there was no individual, partnership, corporation or other owner having a 10 percent or greater interest in that entity. However, in a narrative segment of its technical proposal, [HFL] stated that it is a wholly-owned subsidiary of LGC Limited and not a sibling organization of [HFL Sport Science, Ltd.]

The Director acknowledged that HFL responded to the agency's request for clarification, but found the original defect in disclosure to render HFL's proposal incurably nonresponsive:

This information provided by [the HFL representative] clarified certain inconsistencies within [HFL's] proposal and is therefore enlightening and helpful. However, it is clear from the above that [HFL] failed to provide complete disclosure of all levels of its ownership structure on its Ownership Disclosure Form at the time its proposal was submitted, as required by N.J.S.A. 52:25-24.2. This type of proposal defect is generally considered material and is therefore not curable after proposal opening. See George Harms Constr. Co. v. Borough of Lincoln Park, 161 N.J.Super. 367, 375 (Law Div. 1978) .....
Here, [HFL's] proposal reported that it was owned by LGC Science & Technology, which was in turn owned by an LGC Group entity. In contrast, its complete ownership disclosure as provided post-proposal indicated that [HFL] is owned by HFL Sport Science, Ltd., which is owned by a chain of LGC entities, the highest of which is owned by Bridgeport. . . . Further, there was no recent prior disclosure by [HFL] to DPP of its full ownership.

On October 16, 2012, HFL requested a stay from DPP of its decision to award the contract to Truesdail, pending appeal, arguing that the Director misapplied N.J.S.A. 52:25-24.2 in rejecting HFL's bid. The Director denied HFL's request for a stay and the DPP issued a new notice of award on October 17, 2012, awarding the contract to Truesdail.

HFL filed a timely protest of the October 17 notice of award, again arguing that the DPP erred in applying N.J.S.A. 52:25-24.2 to reject its bid, and that the information it provided to the DPP regarding its ownership after bids were opened was a permissible clarification of information in its bid proposal. HFL also argued that Truesdail's proposal should be rejected as nonresponsive, as it did not provide answers to the five questions printed at the top of the ODF.

On December 20, 2012, the DPP Director issued a final agency decision rejecting HFL's protest and upholding the award of the contract to Truesdail. The Director reasoned:

In its letter of protest, HFL lists several places in its narrative proposal that mention its parent and sibling entities, as evidence that HFL made full and accurate disclosure of its ownership, consistent with its later response to the hearing officer's request for clarification. However, the listed statements, for the most part, simply name these entities and suggest that some form of ownership or other relationship exists among them and HFL. These narrative statements do not provide a clear hierarchy of ownership, nor do they provide ownership percentages or addresses for each entity that would allow verification of compliance with the statutory requirement that the names and addresses of all 10 percent or greater owners be disclosed.

The Director reiterated that "HFL's post-bid opening communications cannot . . . serve to cure the discrepancies in its ownership disclosure."

Thereafter, the Director denied HFL's application for a stay pending appeal, as did we.

On appeal, HFL raises the following issues:


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