Davis Wright Tremaine, LLP v. State, Department of Administration, 112812 AKPRO, 3AN-12-04933 CI

Docket Nº:3AN-12-04933 CI
Opinion Judge:Michal Spaan, Superior Court Judge
Party Name:DAVIS WRIGHT TREMAINE, LLP, Appellant, v. STATE OF ALASKA, DEPARTMENT OF ADMINISTRATION Appellee.
Case Date:November 28, 2012
Court:Superior Court of Alaska
 
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DAVIS WRIGHT TREMAINE, LLP, Appellant,

v.

STATE OF ALASKA, DEPARTMENT OF ADMINISTRATION Appellee.

No. 3AN-12-04933 CI

Superior Court of Alaska, Third Judicial District, Anchorage

November 28, 2012

MEMORANDUM DECISION ON APPEAL

Michal Spaan, Superior Court Judge

I. Statement of the Case

The Department of Law ("the Department") and the Alaska Energy Authority issued a Request for Proposals ("RFP") for legal services needed to acquire the necessary Federal Energy Regulation Commission license for construction of the Susitna-Watana Hydroelectric Project.1

The deadline for proposals was 3:00pm on June 17, 2011 at the Juneau Office of the Department of Law, Administrative Services Division.2 Specifically, the RFP read:

It is your responsibility to ensure that the proposal arrives at the address indicated above before the deadline for receipt. Proposals received after 3:00pm on June 17, 2011 will be rejected and returned to the sender.3

Then, on June 14, 2011, the Department notified prospective offerors that the deadline was extended to 3pm Wednesday, June 29, 2011.4

The RFP also contained the following provision:

The State reserves the right to...[r]eject any and all proposals received and to waive deviations from the terms of the FRP if the State determines the deviations are not material.5, 6

The RFP also provided for the protest of any award, in accordance with the State Procurement Code Article 8 "Legal and Contractual Remedies."7

Davis Wright Tremaine, LLP ("DWT"), submitted a proposal to the Department in response to the RFP.8 The USPS attempted delivery of DWT's proposal on Thursday, June 30, 20119 one business day after the deadline and completed actual delivery on Friday, July 1, 2011.10 On July 1, 2011, a procurement officer investigated the facts concerning the two day delay and determined that the proposal should be considered despite the delay.11 The proposal was forwarded on to the evaluation committee, along with a proposal from Van Ness Feldman ("VNF")12 and six other law firms.13

After an evaluation of all the proposals on the merits, the Department decided that DWT's proposal was "the most advantageous."14 The Department issued a Notice of Intent ("NOI") to award the contract to DWT.15 On August 16, 2011, twenty five days after the Department issued the NOI to DWT, Van Ness Feldman ("VNF"), another firm competing for the government contract, filed a protest pursuant to AS 36.30.560 and the RFP.16 VNF protested DWT's contract award on the grounds that DWT's proposal was filed late and the RFP and administrative regulation 2 AAC 12.250 prohibited the Department from considering a late proposal.17

The procurement officer reviewed VNF's protest and the issues challenging DWT's proposal and ultimately granted VNF's protest.18 In light of VNF's protest, the procurement officer determined DWT was improperly awarded the NOI, and on August 18, 2011, the State rescinded DWT's contract award.19 The State re-reviewed and rescored the remaining proposals and issued a new NOI, awarding the contract to VNF on August 29, 2011.20

II. Issues for Consideration

The appellant DWT presented three issues on appeal:

(1)Whether the Department acted unreasonably when it interpreted the RFP and the relevant administrative regulation to prohibit DWT's late proposal;

(2)Whether the Department was reasonable when it considered VNF's protest; and

(3)Whether the Department acted reasonably when it accepted VNF's initial proposal, which lacked a Certificate of Authority.

III. Discussion

A. The Department of Administration Acted Reasonably When It Interpreted the RFP and 2 AAC 12.250 to Prohibit Consideration of a Late Filed Proposal.

The first issue before this Court is whether the Department, through the Commissioner, acted improperly when it failed to consider DWT's proposal. The Department based its decision to prohibit DWT's proposal on a joint reading of the RFP and 2 AAC 12.250, the applicable administrative regulation for late filed proposals. The appellant first challenges the scope and validity of 2 AAC 12.250, and then challenges the Department's interpretation of 2 AAC 12.250 and the RFP together to prohibit a late filed proposal.

Standard of Review

When an administrative agency decision involves the expertise of the agency or where the agency has made a fundamental policy decision, reviewing courts defer to the agency decision if it is supported by a reasonable basis.21 Under the reasonable basis standard of review, courts review an agency decision to "determine whether [it] was arbitrary, unreasonable, or an abuse of discretion."22

When reviewing an administrative regulation itself, where an administrative regulation has been adopted in accordance with the Administrative Procedure Act, courts should review the regulation in the following manner:

First, we will ascertain whether the regulation is consistent with and reasonably necessary to carry out the purposes of the statutory provisions conferring rulemaking authority on the agency. This aspect of review insures that the agency has not exceeded the power delegated by the legislature. Second, we will determine whether the regulation is reasonable and not arbitrary. This latter inquiry is proper in the review of any legislative enactment.23

In the present matter, the Court must review the scope and validity of 2 AAC 12.250 as well as the agency interpretation of 2 AAC 12.250. Since 2 AAC 12.250 is an administrative agency regulation, the Court will first ascertain whether the regulation is consistent with and reasonably necessary to carry out the purposes of the statutory provisions conferring rule making authority on the agency, and then determine whether the regulation is reasonable and not arbitrary.24 The Court also reviews the agency interpretation of 2 AAC 12.250 under a reasonable basis standard of review.25

1. 2 AAC 12.250 Is A Valid Administrative Regulation

It is established law that statutes and agency regulations, once codified, are presumptively valid.26 The Administrative Procedure Act "establishes a rebuttable presumption that the procedural requirements for the promulgation of administrative regulations have been satisfied."27 Under this statutory presumption of validity, agency regulations are presumed compliant with other relevant statutes and it is a challenger's burden to prove otherwise.28

2 AAC 12.250 is the administrative regulation creating a general bar against late filed proposals unless an exception allowing immaterial deviances is "otherwise provided" in an RFP.29 2 AAC 12.250, in pertinent part, reads:

Unless otherwise provided in the request for proposals, a proposal, correction, modification, or withdrawl received after the date and time set for receipt of proposals is late, and may not be accepted unless the delay is due to an error of the contracting agency.30

The State Procurement Code is the collection of Alaska Statutes governing the procedure for government procurement of contracts and services. The procurement code endows agencies with centralized authority over procurement decisions:

Except as otherwise provided, all rights, powers, duties, and authority relating to the procurement...and control over...professional services vested in or exercised by an agency...are transferred to the commission or the chief procurement officer. Authority granted under this subsection shall be exercised in accordance with this chapter.31

The procurement code also governs bids and proposals for public contracts and contains two distinct statutory schemes in the procurement code: article 2, which governs competitive sealed bidding32 and article 3, which governs competitive sealed proposals.33 Article 2 contains a section dedicated to late bids, 34 but article 3 does not contain a corresponding section dedicated to late proposals.35 There is no guidance in article 2, article 3, or any other Alaska Statute regarding the proper response to a late-filed proposal. However, the beginning of the chapter is notated "'for competitive sealed proposals, see 2 AAC 12, art. 4."36

The Court reviews the validity and scope of 2 AAC 12.250 to "ascertain whether the regulation is consistent with and reasonably necessary to carry out the purposes of the statutory provisions conferring rulemaking authority on the agency."37 Then the Court must determine whether the regulation is reasonable and not arbitrary. First, the Court finds that the Alaska Statutes, particularly AS 36.30.005 of the procurement code, confers centralized authority on the Department of Administration. Accordingly, 2 AAC 12.250 must be reviewed in light of this statutory provision.

Article 3 of the procurement code, unlike its sister provision article 2, is silent regarding the procedure for late filed proposals. The Court construes this silence to be compatible with 2 AAC 12, art.4, particularly 2 AAC 12.250. That is, the Court does not interpret the procurement code's silence regarding late filed proposals as an inconsistency with the administrative code. In fact, the Court finds that because the procurement code is silent regarding late filed proposals, 2 AAC 12.250 is necessary to carry out the purpose of AS 36.30.200, et. seq.

Having found 2 AAC 12.250 is consistent with the Alaska Statutes and reasonably necessary to carry out the purpose of this portion of the procurement code, the Court must next review 2 AAC 12.250 to determine whether the regulation itself is reasonable and not arbitrary. This assessment begins with the rebuttable presumption that 2 AAC 12.250 is compliant with AS 36.30.200, et. seq., and shifts the burden on the appellant to prove otherwise.38

The...

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