Okada Trucking Co. v. Board of Water Supply
| Decision Date | 28 January 2002 |
| Docket Number | No. 22956.,22956. |
| Citation | 40 P.3d 73,97 Haw. 450 |
| Parties | OKADA TRUCKING CO., LTD., Petitioner-Appellee-Petitioner, v. BOARD OF WATER SUPPLY, City and County of Honolulu, Respondent-Appellee-Respondent, and Inter Island Environmental Services, Inc., Intervenor-Respondent-Appellant-Respondent. |
| Court | Hawaii Supreme Court |
James E.T. Koshiba and Neal K. Aoki, Honolulu, (of Koshiba Agena & Kubota) for the petitioner-appellee-petitioner Okada Trucking Co., Ltd., on the application for a writ of certiorari.
We granted the application for a writ of certiorari filed by the petitioner-appellee-petitioner Okada Trucking Co., Ltd., [hereinafter, "Okada Trucking"], to review the published decision of the Intermediate Court of Appeals (ICA) in Okada Trucking Co., Ltd. v. Board of Water Supply, 97 Hawai`i 544, 40 P.3d 946 (Haw.App.2001) [hereinafter, the "ICA's opinion"].1 In its opinion, the ICA held that the administrative hearings officer, who reviewed the decision of the respondent-appellee-respondent City and County of Honolulu Board of Water Supply [hereinafter, "the BWS"] to award a construction contract to the intervenor-respondent-appellant-respondent Inter Island Environmental Systems, Inc., [hereinafter, "Inter Island"], erroneously determined that Inter Island was not a "responsible" bidder and had submitted a "non-responsive" bid in connection with an invitation for bids that the BWS had issued, pursuant to the Hawai`i Public Procurement Code, HRS ch. 103D (1993 & Supp.2000), in order to procure a contractor to construct a booster station.2 ICA's opinion at 546, 40 P.3d at 948. According to the ICA, the hearings officer erroneously found that the project for which the BWS had invited bids required the use of a plumbing subcontractor who held a "C-37" specialty contracting license. Id. at 547, 40 P.3d at 949. Insofar as the project, in the ICA's view, did not entail work that would require the particular skills of a plumbing subcontractor who held a C-37 specialty license, the ICA held that Inter Island—which had neither named a C-37 licensed plumbing subcontractor in its bid nor described the nature and scope of the work that such a subcontractor would perform—had submitted the lowest responsive and responsible bid. Id. at 547, 40 P.3d at 949. Consequently, the ICA further held that the hearings officer had erroneously determined that the BWS should not have awarded the contract for the project to Inter Island. Id. On the basis of its analysis, the ICA "vacated" the hearing officer's findings of fact, conclusions of law, and order, but denied Inter Island the relief it had sought—i.e., reinstatement of the BWS's award of the project contract to it—because the ICA believed that to do so would be in neither the BWS's nor the public's best interests. Id. at 567-68, 40 P.3d at 969-70.
For the reasons set forth below, we vacate the ICA's opinion 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.
During the administrative proceedings, no party disputed, and the hearings officer expressly found, that the project involved some work that would have to be performed by a plumbing subcontractor who held a C-37 specialty contracting license.3
As to those subcontractors whom the bidding contractor intended to engage in order to complete the project, the IFB expressly provided, in language similar to that contained in HRS § 103D-302(b) (Supp.2000)4 and Hawai`i Administrative Rules (HAR) § 3-122-21(a)(8) (1997),5 that the contractor was required to disclose the name of, as well as the nature and scope of work to be undertaken by, the subcontractor:
each bid for public works construction contracts shall include the name of each person or firm to be engaged by the bidder as a joint contractor or subcontractor in the performance of the public works construction contract. The bid shall also indicate the nature and scope of work to be performed by such joint contractors or subcontractors. All bids which do not comply with this requirement may be rejected.
Nevertheless, the IFB—again reflecting the provisions of the Procurement Code and the administrative rules implementing its provisions, see supra notes 4 and 5—further provided 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 BWS."
To assist the bidding contractor, the IFB included a form for the bidding contractor to complete as relevant, which enumerated each type of specialized work with respect to which a subcontractor could hold a classification "C" specialty contractor's license. Other than providing that the bidding contractor must hold a classification "A" general engineering contractor's license and that the project involved specialty work in the areas of pavement restoration (which would have had to be performed by an asphalt and paving contractor holding a C-3 specialty contractor's license) and water chlorination (which would have had to be performed by a water chlorination contractor holding a C-37d specialty contractor's license), the IFB did not expressly identify what other specialty work the project involved.
After the BWS opened the sealed bids and determined that Inter Island had submitted the lowest bid, it contacted Inter Island in connection with its failure to disclose the name of and the nature and scope of work to be performed by a C-37 licensed plumbing subcontractor, as well as several other speciality subcontractors that the project would require.6 In response, Inter Island asserted 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. Inter Island believed that the disclosure requirement did "not require[it] to list subcontractors [whose estimates of the cost of the work they would perform on the project were] under 1%." To verify its assertion that the work to be performed by each of the undisclosed subcontractors amounted to less than one percent of its bid, Inter Island transmitted to the BWS several estimates that it had received from the undisclosed subcontractors, each of which in fact fell below one percent of the bid that Inter Island had submitted to the BWS. However, the estimate that Inter Island obtained from a plumbing subcontractor to "[i]nstall [b]uilding [p]ump [p]iping in accordance with plans & specifications," bore the a date of June 22, 1999, which was twelve days after the "bid-opening" date of June 10, 1999.7 Thereafter, on July 28, 1999, the BWS awarded the project contract to Inter Island.
Pursuant to HRS § 103D-701, see supra note 2, on August 4, 1999, Okada Trucking, which had submitted the second lowest bid on the project, filed a protest of the BWS's award of the project contract to Inter Island with the BWS's chief procurement officer. Okada Trucking asserted that the contract "should not have been awarded to [Inter Island] because it [had] not demonstrated that it is qualified and/or capable of completing the contract." More specifically, Okada Trucking contended that: (1) "approximately" fifteen percent of the work required by the project involved "certain specialty work, such as plumbing," which could only be performed by a C-37 licensed subcontractor; however, (2) in contravention of HRS § 103D-302(b) (1993), see supra note 4, 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; and, thus, (3) the project contract should not have been awarded to Inter Island. Moreover, Okada Trucking contended that, in any event, even if the plumbing work required by the project amounted to less than one percent of Inter Island's bid, it was not in the BWS's best interest to waive the requirement that Inter Island disclose the subcontractors it intended to use to complete the project. The BWS denied Okada Trucking's protest, inter alia, because it was within the BWS's discretion to waive the disclosure requirement in the event, as Inter Island had verified, the work to be performed by a subcontractor was less than one percent of Inter Island's bid.8
Subsequently, pursuant to HRS §...
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