Okada Trucking Co. v. Board of Water Supply

Decision Date29 August 2002
Docket NumberNo. 22956.,22956.
PartiesOKADA TRUCKING CO., LTD., Petitioner-Appellee-Petitioner-Respondent, v. BOARD OF WATER SUPPLY, City and County of Honolulu, Respondent-Appellee-Respondent-Respondent, and Inter Island Environmental Services, Inc., Intervenor-Respondent-Appellant-Respondent-Petitioner.
CourtHawaii Supreme Court

Darryl H.W. Johnston, David F.E. Banks, and Marc E. Rousseau (Cades, Schutte, Fleming & Wright), Honolulu, for the intervenor-respondent-appellant-respondent-petitioner Inter Island Environmental Services, Inc., on the application for a writ of certiorari and on the supplemental brief.

Kelvin H. Kaneshiro and Dennis E.W. O'Connor, Honolulu, for the petitioner-appellee-petitioner-respondent Okada Trucking Co., Ltd., in response to the supplemental brief.

MOON, C.J., LEVINSON, NAKAYAMA, RAMIL, and ACOBA, JJ.

Opinion of the Court by LEVINSON, J.

We granted the application for a writ of certiorari filed by the intervenor-respondent-appellant-respondent-petitioner Inter Island Environmental Services, Inc. (now known as Inter Island Construction, Inc.) [hereinafter, "Inter Island"] in order to review the order of the Intermediate Court of Appeals (ICA) dismissing Inter Island's appeal in Okada Trucking Co., Inc. v. Board of Water Supply, No. 22956 (Haw. Ct. App.2002) [hereinafter, the "ICA's order"]. The ICA's order dismissed Inter Island's appeal as moot on the basis that "Okada Trucking ha[d] already completed performance of its contract with [the Board of Water Supply (BWS)] to construct and install the Kaluanui Booster Station, Phase II and that the remedies sought by Inter Island when it sought judicial relief [could] no longer be provided." ICA's order at 1. As discussed more fully infra in section III, we hold that Inter Island's appeal falls within an exception to the mootness doctrine, because it involves a matter of public concern and is capable of repetition yet evading review. Accordingly, we vacate the ICA's order and remand this matter to the ICA for consideration of the points of error raised by Inter Island in its appeal from the hearings officer's decision, as instructed in our prior decision in this matter, Okada Trucking Co., Ltd. v. Board of Water Supply, 97 Hawai`i 450, 40 P.3d 73 (2002) [hereinafter, "Okada I"].

I. BACKGROUND

The present matter involves a dispute over the interpretation of the Hawai`i Public Procurement Code, Hawai`i Revised Statutes (HRS) ch. 103D (1993 & Supp.2001),1 and its application to the award of a procurement contract by the BWS.2 In May 1999, the BWS issued an invitation for bids (IFB) for a project involving the construction of the Kaluanui Booster Station, Phase II [hereinafter, "the project"]. The project involved some work that required a plumber who held a C-37 specialty contracting license. The IFB expressly provided, pursuant to HRS § 103D-302(b) (Supp.2001),3 that any general contractor who bid for the project was required to disclose the names of, as well as the nature and scope of work to be undertaken by, any joint contractor or subcontractor, but that, "where the value of the work to be performed by the joint contractor or subcontractor is equal to or less than one percent of the total bid amount, the listing of the joint contractor or subcontractor may be waived if it is in the best interest of [the] BWS."

The BWS opened bids for the project on June 10, 1999 and determined that Inter Island had submitted the lowest bid, but that it had not disclosed, inter alia, the name of and the nature and scope of any work to be performed by a C-37 licensed plumbing subcontractor.4 The BWS contacted Inter Island regarding its omission and Inter Island explained that it "did not list subcontractors for the plumbing and installation of the pumps as their quotes were considerably below 1%[,] or $13,500.[00,]" of its bid. In support of its contention, Inter Island produced an estimate that it had received from a subcontractor to perform the work that required the use of a C-37 licensed plumber, which was, in fact, less than one percent of Inter Island's bid. The subcontractor's estimate bore the date of June 22, 1999, which was twelve days after the "bid-opening" date of June 10, 1999. The BWS notified Inter Island on July 28, 1999 that it had been awarded the contract for the project.

On August 4, 1999, Okada Trucking, which had submitted the second lowest bid for the project, filed a protest of the BWS's award of the contract with the BWS's chief procurement officer (CPO), pursuant to HRS § 103D-701, see supra note 1. Okada argued that the contract for the project should not have been awarded to Inter Island because, inter alia, Inter Island had not disclosed the name of or the nature and scope of work to be performed by the C-37 licensed subcontractor it intended to use, in contravention of HRS § 103D-302(b), see supra note 3, and it was not in the BWS's best interest to waive the statutory requirement. The CPO denied Okada Trucking's protest, reasoning that it was within the BWS's discretion to waive the disclosure requirement in the event that, as Inter Island had verified, the work to be performed by the unnamed subcontractor was less than one percent of Inter Island's bid.

On September 10, 1999, Okada requested administrative review of the BWS's denial of its protest, pursuant to HRS § 103D-709, see supra note 1. By stipulation, Inter Island was allowed to intervene in the administrative proceedings. The hearings officer determined that, while Inter Island was obligated to identify all the subcontractors that it would engage in order to complete the project, the BWS could waive "the non-responsive aspects of [Inter Island's] bid, pursuant to HRS § 103D-302(b), see supra note 3, and Hawai`i Administrative Rules (HAR) § 3-122-21(a)(8) (1997),5 if it determined that "acceptance [of the bid] would be in [its] best interest[.]" Nevertheless, the hearings officer concluded that the IFB's requirement that each prospective bidder "must be capable of performing the work for which the bids [were] being" invited "subsume[d a requirement that] the bidder, at the time of bid submission and no later than bid opening date, was ready and able to perform the work required on the construction project if awarded the contract." Thus, because Inter Island failed to have a duly licensed plumbing subcontractor "lined up" and "contractually bound to perform" its delegated responsibilities at the time of bid-opening, the hearings officer found that Inter Island "was not a responsible bidder." While the hearings officer acknowledged that the BWS could waive the requirement that a bidder list each of its subcontractors and the nature and scope of their work, if the value of the unlisted subcontractor's work was less than one percent of the total project contract amount, he ruled that the BWS could not waive the requirement that a bidder have all of its subcontractors "lined-up" and "contractually bound to perform" its delegated responsibilities prior to bid-opening. Therefore, the hearings officer believed that the BWS had violated "provisions of the Procurement Code" by allowing Inter Island "to rectify its failure by obtaining a plumbing subcontractor after bid opening." (Emphasis in original.) Consequently, the hearings officer concluded that it was not in the BWS's or the public's best interests to have waived the disclosure requirement. Accordingly, the hearings officer terminated the contract between the BWS and Inter Island and awarded Inter Island compensation for any actual expenses it had reasonably incurred under the contract. Subsequently, the BWS awarded the contract for the project to Okada.

On November 18, 1999, Inter Island appealed to this court for judicial review of the hearings officer's decision, pursuant to HRS § 103D-710, see supra note 1. Inter Island challenged the hearings officer's determinations that it had submitted a non-responsive bid, that it was not a responsible bidder, and that it was not in the BWS's best interest to waive the disclosure requirement with regard to Inter Island's failure to identify a duly licensed plumbing subcontractor. More specifically, Inter Island contended that the hearings officer erred in determining that "it was unlawful under the Procurement Code for ... the BWS to determine that it was in its best interest to waive the subcontractor listing requirement and allow Inter Island to obtain a written commitment from a plumbing subcontractor after bid opening." We assigned the matter to the ICA pursuant to HRS § 602-5(8) (1993) and Hawaii Rules of Appellate Procedure (HRAP) Rule 31(a) (2000).

The ICA, however, did not address Inter Island's points of error on appeal. Rather, the ICA held, sua sponte, that the hearings officer erred in determining that the project required Inter Island to subcontract, inter alia, any plumbing specialty work involved in the project. Okada Trucking Co., Ltd. v. Board of Water Supply, 97 Hawai`i 544, 562, 40 P.3d 946, 964 (App.2001). The ICA further held that Inter Island "was authorized to undertake the [p]roject with its own staff,[] provided, of course that where certain work required performance by individuals with particular licenses, Inter Island utilized employees who were appropriately licensed to perform such work." Id. at 564, 40 P.3d at 966. Accordingly, the ICA vacated the hearings officer's decision. Id. at 568, 40 P.3d at 970. The ICA did not terminate Okada's contract with the BWS, however, based on the parties' representations that Okada had been performing on the contract for several months. Id. at 567-68, 40 P.3d at 969-70. The ICA held that it would not be in either the BWS's or the public's best interest to terminate the contract at this stage. Id.

On May 18, 2001, Okada applied to this court for a writ of certiorari to review the ICA's opinion. In its application, Okada argued that the ICA erred in its conclusions (1) that...

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