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Bombardier Transportation (Holdings) Usa Inc v. Director

October 17, 2012

BOMBARDIER TRANSPORTATION (HOLDINGS) USA INC., PLAINTIFF-APPELLANT,
v.
DIRECTOR, DEPARTMENT OF BUDGET AND FISCAL SERVICES, CITY AND COUNTY OF HONOLULU; ANSALDO HONOLULU JV; DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS, STATE OF HAWAII, DEFENDANTS-APPELLEES, AND JOHN DOES 1-10, JANE DOES 1-10, DOE GOVERNMENTAL UNITS 1-10, AND DOE ENTITIES 1-10,
DEFENDANTS



APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT (CIVIL NO. 11-1-1778)

The opinion of the court was delivered by: Foley, J.

FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER

FOLEY, PRESIDING JUDGE, FUJISE AND GINOZA, JJ.

OPINION OF THE COURT BY FOLEY, J.

In this secondary administrative appeal arising out of a dispute under the State of Hawaii's (State) Procurement Code,

FOR PUBLICATION IN WEST'S HAWAII REPORTS AND PACIFIC REPORTER

Bombardier Transportation (Holdings) USA Inc. (Bombardier) appeals from the September 23, 2011 Judgment (Judgment) and September 16, 2011 "Order Denying Bombardier Transportation (Holdings) USA, Inc's Appeal And Affirming The August 5, 2011 Findings Of Fact, Conclusions Of Law, And Decision Of The Department Of Commerce and Consumer Affairs Office of Administrative Hearings," (Order) both entered in the Circuit

Court of the First Circuit *fn1 (circuit court). The circuit court

entered judgment in favor of Director, Department of Budget and Fiscal Services, City and County of Honolulu (the City) and Ansaldo Honolulu JV (Ansaldo).

On appeal, Bombardier contends the circuit court erred in affirming the Administrative Hearings Officer's (hearings officer) determination that:

(1) Bombardier's protest was untimely;

(2) Bombardier's proposal was properly rejected as conditional;

(3) Bombardier's protest arguments would undermine the integrity of the procurement process; and

(4) the City satisfied its duty to conduct meaningful discussions.

I. BACKGROUND

A. RFP, Addenda, Proposal and BAFO Submissions

The following facts are undisputed. On April 9, 2009, the City issued Part 1 of its Request for Proposals (RFP) for the Core Systems Design-Build-Operate-Maintain Contract for the Honolulu High-Capacity Transit Corridor Project. The purpose of RFP Part 1 was to select priority-listed offerors deemed qualified to proceed with Part 2, and the City selected three priority-listed offerors: Ansaldo, Bombardier, and Sumitomo Corporation of America (Sumitomo).

On August 17, 2009, the City issued RFP Part 2,

including a provision addressing the City's liability under the proposed contract. In the following months, the City received several Requests for Information (RFIs) from Bombardier and Sumitomo about this provision, and as a result of these RFIs, the City issued Addendum No. 26 to the RFP on April 14, 2010. Addendum No. 26 deleted the original provision and replaced it with "Special and Management Provisions" (SP) Chapter 2 section 2.13, which read:

(a) The City's obligations under this Contract shall be limited to the payment for services under this Contract.

(b) The CSC [Core System Contractor]'s liability to the City for damages arising out of Work performed under the Design-build component of the Contract shall be limited to the total Contract Value of the Design-build component of the Contract, provided that excluded from the limitation of liability will be any liability, including defense costs, for any type of damage or loss to the extent it is covered by proceeds of insurance required under this Contract. Further, this limitation of liability shall not apply with regard to fraud, criminal conduct, . . . [or] the CSC's indemnities set forth in this Contract, including but not limited to SP-2.14[.]

On May 6, 2010, Addendum No. 31 formally incorporated this change into RFP 2, with only minor wording differences that are not relevant.

On June 7, 2010, Bombardier submitted its RFP Part 2 Proposal to the City. The proposal contained the following clarification:

2. Clarification: Reference SP 2.13(b)

Bombardier assumes that the City has inadvertently excluded Contractor's indemnities from the overall cap on liability of total Contract Value set forth in SP 2.13(b). As expressed in the RFP, such exclusion would defeat the purpose of the provision as it would mean effectively that there was no overall cap on liability. Bombardier is basing its proposal on the assumption that the following language in SP 2.13(b) is deleted: "Contractor's indemnities set forth in ...


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