In re Protest of Contract Award for Project A1150-08
| Decision Date | 02 February 2021 |
| Docket Number | DOCKET NO. A-1193-19T1 |
| Parties | IN RE PROTEST OF CONTRACT AWARD FOR PROJECT A1150-08, N.J. EXECUTIVE STATE HOUSE COMPREHENSIVE RENOVATION AND RESTORATION |
| Court | New Jersey Superior Court — Appellate Division |
Hedinger & Lawless, LLC, attorneys for appellant Hall Construction Co., Inc (Robert T. Lawless, Florham Park, on the briefs).
Gurbir S. Grewal, Attorney General, attorney for respondent New Jersey Division of Property Management and Construction (Melissa H. Raksa, Assistant Attorney General, of counsel; Beth L. Mitchell, Assistant Attorney General and Vivek N. Mehta, Deputy Attorney General, on the brief).
Stevens & Lee, PC, attorneys for respondent Daniel J. Keating Company (Maeve E. Cannon and Patrick D. Kennedy, of counsel and on the brief; Michael A. Cedrone, Lawrenceville, on the brief).
Peckar & Abramson, PC, attorneys for amicus curiae Associated Construction Contractors of New Jersey (Charles F. Kenny, Port Jefferson, on the brief).
Before Judges Sumners, Geiger and Mitterhoff.
The opinion of the court was delivered by
GEIGER, J.A.D.
Hall Construction Co., Inc. (Hall) appeals from the November 15, 2019 final agency decision of the New Jersey Division of Property Management and Construction (DPMC) rejecting Hall's bid protest and awarding the contract for the Comprehensive Renovation and Restoration of the New Jersey Executive State House, DPMC Project No. A1150-08 (the Project), to respondent Daniel J. Keating Company (Keating), the lowest bidder. The appeal presents an issue of first impression—whether a prime contractor bidder is required to name its building control systems subcontractor in its bid. For the following reasons, we dismiss the appeal as moot and also determine that Hall's arguments lack merit.
We discern the following facts from the record. DMPC solicited competitive bids for the comprehensive renovation and restoration of the Executive State House in Trenton. Final specifications for the project were issued on August 20, 2019. Following several rounds of bidder questions, DMPC issued clarifications and amendments to the specifications. DPMC then advertised for sealed bids for the Project. The advertisement stated:
DPMC opened electronic bids for the Project on September 17, 2019. Three bids were received. Keating's bid of $199,498,000 was the lowest. Hall's bid of $205,777,000 was the second lowest. Tutor Perini Building Corp.'s bid of $211,777,000 was the third lowest. Thus, Hall's bid was $6,279,000 higher than Keating's.
Both Keating and Hall used DMPC's bid proposal form (Bid Form). The Bid Form required bidders to identify the names and addresses of each subcontractor who would be performing certain classified trade works on the Project. This included identifying each subcontractor performing "HVACR1 (C032) – Mechanical" and "HVACR (C032) – Duct Work." In addition, each subcontractor listed on the Bid Form was required to be classified by DMPC for their trade at the time of the bid. Thus, subcontractors performing HVACR mechanical and HVACR duct work were required to be classified as HVACR (C032) contractors at the time of the bid. Notably, the Bid Form did not require bidders to identify subcontractors performing "C043 – Control Systems" work.
The day after the bid opening, Hall lodged its initial bid protest, contending that Keating's bid must be rejected and the contract awarded to Hall because: (1) Keating's named HVACR mechanical subcontractor, Devine Brother's, Inc. (Devine), exceeded its DPMC aggregate classification rating; and (2) a notary public with an expired commission notarized Keating's bid bond. Hall sent three subsequent letters to DPMC that provided further information about Devine and reaffirmed its argument that Keating's bid bond was deficient.
DPMC requested Keating provide documentation of Devine's uncompleted work as of the time of the bid opening. Keating contested Hall's protest and provided the requested information, including certifications from Keating's and Devine's respective presidents.
On October 7, 2019, DMPC issued a decision rejecting Hall's claims and declaring DPMC's intent to award the Project to Keating. DMPC found that Devine did not exceed its aggregate classification rating and that Keating's bid bond was not deficient as the notary's public's commission was still valid and in effect when the bid was notarized.
On October 11, 2019, Hall lodged a second bid protest that raised a new ground for rejection. Hall claimed Keating's bid was deficient because it failed to name the subcontractor it intended to use for the building control systems work, which must be performed by a DPMC classified C043 – Control Systems contractor. Hall contended that N.J.S.A. 52:32-2 requires bidders to identify on their Bid Form the subcontractors performing all possible facets of HVACR work, including subcontractors performing C043 – Control Systems work. Hall asserted that control systems work qualified as HVACR work.
On October 17, 2019, DPMC issued a second decision rejecting Hall's claim that Keating submitted a deficient bid. DPMC found that the Bid Form did not require bidders to identify subcontractors performing C043 – Control Systems work. It noted that C043 – Control Systems work is not included within the "umbrella trades" that classified HVACR contractors may perform. DMPC explained that "[i]t was neither a requirement of the bid nor the intent of DPMC to require bidders to identify a [c]ontrol [s]ystems subcontractor on this project." Hall requested a hearing to present its arguments.
The hearing was held before Hearing Officer Wayne J Martorelli on October 30, 2019. No witnesses testified. Hall and Keating abandoned their respective objections to the form of each other's bid bonds.
In support of its position that control systems fell under HVACR work, Hall argued: (1) Section 230900 of the Project specifications, which detailed the work to be performed by C043 – Control Systems subcontractor, was listed under Division 23 of the specifications, labelled "HVAC"; and (2) the regulations of a different State agency, promulgated under the HVACR contractor licensing statute, defines HVACR work to include "pneumatic air and/or direct digital controls." N.J.A.C. 13:32A-1.2. Keating maintained that Devine had not exceeded its DPMC aggregate classification. It also argued that modern-day control systems work was a distinctly different trade from HVACR work and that it was not required by N.J.S.A. 52:32-2 to identify its building control system subcontractor.
On November 15, 2019, Hearing Officer Martorelli issued written proposed findings and a recommendation to reject Hall's claims that Keating submitted a deficient bid. He found that "Keating's bid proposal identified two HVACR subcontractors: Bonland Industries, Inc. [(Bonland)], to perform the duct work at a price of $5,000,000, and Devine, to perform the mechanical work at a price of $10,000,000."
The hearing officer noted the following undisputed facts: (1) Devine's HVACR mechanical subcontract price and Bonland's HVACR duct work subcontract price did not include installation of the building control systems described under Section 230900 of the specifications; (2) Keating planned to enter into a subcontract with a subcontractor duly classified in the control systems work trade to install the building control systems; and (3) Keating excluded the control systems work from Devine's work scope to keep the value of Devine's current uncompleted work below a $15 million aggregate rating.
The hearing officer noted that Keating estimated the value of the building systems control work at roughly $2.5 million, such that inclusion of this work within Devine's mechanical subcontract would—when combined with its existing backlog of uncompleted work—exceed Devine's aggregate rating. Keating's exclusion of the control systems work from Devine's work scope is referred to "de-scoping," which is "a well-accepted practice in the industry." Hall did not argue that it was per se unlawful for Keating to reduce the scope of Devine's HVACR work.
Instead, Hall argued that Keating's intent to award the building control systems work to an unnamed subcontractor violated N.J.S.A. 52:32-2 because the control systems work fell under HVACR work and needed to be completed by a named HVACR subcontractor pursuant to N.J.S.A. 52:32-2(b)(2). In response, Keating argued that the control systems work was not HVACR work "but rather work belonging to an entirely separate and distinct specialty trade." Keating intended to award the control systems work to a subcontractor classified by DPMC under the control systems trade classification.
The hearing officer explained that DPMC recognizes control systems, which require a different skill set and experience, as a separate and distinct trade apart from HVACR. He noted that Section 230900 of the specifications, which is 111 pages long, "describes a sophisticated, complex, and highly technical computerized and web-based control system, installation of which requires a level of specialized expertise, outside of the origins of the HVAC trade."
To emphasize the complexity of control systems work, the hearing officer also referenced the several qualification requirements for the control systems subcontractor listed in Section 230900. For example, Section 230900 requires the control systems subcontractor to have the sole and primary business of "designing, installing, and maintaining HVAC [c]ontrol Systems." It also requires the control systems subcontractor to be: (1) "a factory authorized [and]...
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