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Certified Constr., Inc. v. Crawford

Intermediate Court of Appeals of Hawai'i

March 21, 2016

NO. CAAP-14-0001160, CERTIFIED CONSTRUCTION, INC., Petitioner-Appellant,
v.
NANCY CRAWFORD, as Director of the Department of Finance, County of Hawaii, Respondent-Appellee, NO. CAAP-14-0001190, In the matter of CERTIFIED CONSTRUCTION, INC., Petitioner-Appellant/Appellee,
v.
NANCY CRAWFORD, as Director of the Department of Finance, County of Hawai'i, Respondent-Appellee/Appellant

          APPEAL FROM THE CIRCUIT COURT OF THE THIRD CIRCUIT. (CIVIL NO. 14-1-0303), (CIVIL NO. 14-1-0200).

         On the briefs: Jeffre W. Juliano, Kristi L. Arakaki, (O'Connor Playdon & Guben LLP), for Petitioner-Appellant/Appellee.

         Jennifer D. K. Ng, Deputy Corporation Counsel, County of Hawai'i, for Respondent-Appellee/Appellant.

         REIFURTH, and GINOZA, JJ. WITH FOLEY, PRESIDING JUDGE, DISSENTING SEPARATELY.

         Lawrence M. Reifurth, J.

          OPINION

         SPINOZA, J.

         In this case, we address consolidated appeals related to a bid protest by Petitioner-Appellant/Appellee Certified Construction, Inc. (CCI) for a County of Hawai'i public works project.

         In appellate case no. CAAP-14-0001160, Respondent-ppellee/Appellant Nancy Crawford, as Director of the Department of Finance, County of Hawaii (County) appeals from a Final Judgment entered by the Circuit Court of the Third Circuit (Circuit Court[1] pursuant to an order entered on June 16, 2014 (6/16/14 Order), which reversed a " Hearings Officer's Findings of Fact, Conclusions of Law and Decision," entered on May 8, 2014 (5/8/14 Hearings Officer Decision). In the 5/8/14 Hearings Officer Decision, the Hearings Officer with the Department of Commerce and Consumer Affairs (DCCA)[2] dismissed this case based on a determination that CCI's protest was untimely and that the Hearings Officer therefore did not have jurisdiction to hear the matter. The Circuit Court reversed, ruling instead that CCI's protest was timely, and therefore the court remanded the case to the Hearings Officer.

         In the County's points of error in CAAP-14-0001190, it contends that the Circuit Court: (1) erroneously ruled that the protest filed by CCI was timely and that the Hearings Officer had jurisdiction to review the protest; and (2) erred in reversing the Hearings Officer's ruling that the bid solicitation documents for the project did not require the listing of a C-44 licensed sheet metal contractor.

         In appellate case no. CRAP-14-0001160, CCI appeals with regard to an order by the Circuit Court filed on September 19, 2014 (9/19/14 Order), which affirmed decisions that had been entered by the Hearings Officer[3] during the remand from the Circuit Court.

         In CCI's points of error for its appeal in CAAP-14-0001160, it contends that the Circuit Court erred in affirming the Hearings Officer because the Hearings Officer incorrectly concluded that: (1) there is no jurisdiction in this matter to consider CBI's claim that the County must defer to the opinion of the Contractors Licensing Board or to consider the Contractors Licensing Board's opinion; (2) CCI cannot utilize the Contractors Licensing Board's opinion to determine an issue related to a gooseneck hood ventilator; (3) the County did not agree to defer to a ruling of the Contractors Licensing Board; and (4) any assertion by CCI that the installation of the ventilators was incidental and supplemental to its roofing work is an admission that installation of the ventilators was not covered by CCI's C-42 license.

         For the reasons discussed below, we conclude that CBI's bid protest was untimely under Hawaii Revised Statutes (HRS) § 103D-701(a) (2012) and therefore the Hearings Officer did not have jurisdiction to hear this matter.

         I. BACKGROUND

         On December 24, 2013, the County, through its Director of the Department of Public Works, published a " Proposal and Specifications for Reroofing for Fire Maintenance Shop & Fire Dispatch/Warehouse Job No. B-4190" (Bid Solicitation). The Bid Solicitation called for " SERLED BIDS for furnishing all tools, equipment, materials and labor necessary for the construction of 'REROOFING FOR FIRE MAINTENRNCE SHOP & FIRE DISPATCH/WAREHOUSE,' Job. No. B-4160, South Hilo, Hawai'i[.]" Sealed bids were to be accepted until February 6, 2014. The Bid Solicitation specifies that " [t]o be eligible to submit a bid, the Bidder must possess a valid State of Hawai'i General Contractor's License 'B'. See Special Notice to Bidders for additional licensing requirements." (Emphasis in original.)

         The " Special Notice to Bidders" (Special Notice to Bidders) was attached to the Bid Solicitation and states in part:

Each of the following specialty contractor classifications listed in the table below have been determined by the County of Hawaii as qualified to perform all of the work on this project based on the project's scope and the County's understanding of the State's licensing requirements and specialty contractor classifications' scopes of work. By way of the minimum licensing requirement stated for this project, no additional specialty contractor classifications are required to perform the work; however, the Bidder may list additional licensed subcontractors at its discretion.

         Immediately below this statement is a table for " Specialty Contractor Classification & Scope of Work" which lists " C-33 Painting and decorating contractor," " C-44 Sheet metal contractor," and " C-48 Structural steel contractor." (Emphasis added.) Below the listing of specialty contractor classifications is a section titled " SPECIAL INSTRUCTIONS TO BIDDERS RESPARDING SPECIALTY CONTRACTOR CLASSIFICATIONS AND REGRADING JOINT CONTRACTORS & SUBCONTRACTORS[,]" (Special Instructions) which provides in pertinent part:

1) Bidder shall be intimately familiar with the scopes of work each specialty contractor classification is licensed to perform under Hawai`i Administrative Rules § 16-77, the scope of work established for this project, and how the specialty contractor classifications' licenses apply in the proper execution and fulfillment of the project's scope of work.
2) In the circumstance where a specialty contractor classification license listed in the above table may be deemed unnecessary by a Bidder due to its intent to employ a plausible alternative means or method, the Bidder shall in its Proposal clearly state such intent and provide a detailed plan that meets with the satisfaction of the Director. The Director reserves the sole discretion and right to determine whether the Bidder's proposed justification for not listing the required license is acceptable.
3) In the circumstance where the Bidder is licensed in one or more specialty contractor classifications required of the project (whether automatically as a general engineering contractor " A", general building contractor " B", or outright) and it intends to perform all or some of the work of those classifications using its own workforce, the Bidder shall, in its Proposal, list itself accordingly and in consideration of the balance of the instructions herein provided.
4) In the circumstance where a specialty contractor classification required in the above table may, in part or in whole (as applicable to the classification's scope of work), be within the licensed scope of work of another listed specialty contractor classification (e.g. overlapping scopes of licenses), the Bidder shall clearly delineate in its Proposal the extent of each subcontractor's responsibility on the project such that the Director can reasonably determine which classification is responsible for the corresponding scopes. Where a listed specialty contractor classification is rendered completely unnecessary due to overlapping scopes of work, the Bidder, in its Proposal, shall clearly state such as the reason for not listing that respective entity in its Proposal.
. . . .
6) The Bidder shall ensure that, in its Proposal, it provides the name of each person or firm to be engaged by the Bidder as a joint contractor, subcontractor, or lower-tier subcontractor in the performance of the contract and the nature and scope of the work to be performed by each in sufficient detail so as the Director can fully comprehend how all aspects of the project are intended to be executed. The Director reserves the right to request supplemental information as necessary for determining Bidder's responsibility and responsiveness.

(Emphasis added.) Immediately after the Special Instructions, the following is stated:

Anyone who disagrees with the determination in the above table shall submit their written objection to the Director identifying the specialty contractor classification(s) in question and the justification(s) for such position at least 10 consecutive calendar days prior to bid opening. If no such written objections are received by the Director prior to such date, it will be presumed that all Bidders and affected parties are in agreement with the listing set forth above. No other specialty license will be required unless noted otherwise in an addendum.

         On January 14, 2014, Addendum No. 1 to the Bid Solicitation was issued which, among other things, updated the Special Notice to Bidders by adding " C-13 Electrical contractor" and " C-19 Asbestos contractor" to the list of specialty contractors in the table.

         CCI submitted its bid to the County on February 5, 2014. On February 14, 2014, the Director of the Department of Public Works, Warren H.W. Lee (Director Lee), sent a written notification to CCI that its bid was disqualified (Disqualification Letter). The Disqualification Letter explained:

This project requires a C-44 - Sheet metal contractor, as noted in the Special Notice to Bidders and the Proposal sections of the bid specifications.
Your Proposal fails to list a C-44 - Sheet metal subcontractor or to describe an alternate means and methods by which the work required of this project covered by this license class would otherwise be legally executed.
In accordance with Hawai'i Administrative Rules § 3-122-21(8) and Hawai'i Revised Statutes Section 103D-302(b), all subcontractors shall be listed in the bid proposal. Failure to list a subcontractor when required renders the bid nonresponsive, as noted in the Listing of Responsible Entities section of the Proposal and in the Special Notice to Bidders.

         On February 19, 2014, CCI submitted a letter to the County protesting its disqualification and the rejection of its bid on the project (Protest Letter). CCI noted that its protest was being made pursuant to HERS § 103D-701. CCI's Protest Letter addressed two issues: first, CCI's contention that the sheet metal work could be performed by CCI under its C-42 (roofing) and C-44A (gutters) licenses; and second, CCI's position that the use of a sheet metal contractor with a C-44 license was not required by the bid documents.

         On March 11, 2014, CCI wrote a letter to the Contractors Licensing Board requesting " a determination from the [Contractors Licensing] Board that the . . . project work may be performed under a C-42 and C-44A license and that a C-44 Sheet Metal License is not required."

         On March 21, 2014, Director Lee informed CCI that he was upholding the disqualification of CCI's bid as being nonresponsive and denying CCI's bid protest. This letter noted in part that CCI did not list any entity for, among others, the C-44 specialty license, and that it was required to do so or provide " a plausible alternative means/methods to accomplish the work." This letter further stated that:

CCI attempts to cure its bid defect by arguing that a C-42 and C-44(a) license is sufficient to perform the work requested by the County. The first time that this alternative was proposed was after bid opening and after CCI's bid was disqualified, as opposed to including the information within its bid documents. Because CCI failed to properly propose the change in specialty licenses in its bid documents, it is therefore non-responsive.

         On March 28, 2014, CCI submitted a Request For Hearing to the DCCA's Office of Administrative Hearings (OAH), challenging the County's determination that CCI's bid was nonresponsive. CCI's Request For Hearing asserts that CCI's bid was " responsive and conformed in all material respects" with the Bid Solicitation.

         On April 8, 2014, the Contractors Licensing Board responded to CCI, addressing CCI's " inquiry regarding whether the reroofing for fire maintenance shop & fire dispatch/warehouse project work may be performed under a C-42 Roofing or C-44a Gutters contractor and that a C-44 Sheet metal contractor license is not required." Based on the information provided to the Contractors Licensing Board, the letter sets out various, and alternative, contractor licenses believed to be needed for different parts of the project. The letter further states, however, that " the above interpretation is for informational and explanatory purposes only. It is not an official opinion or decision, and thus is not binding on the [Contractors Licensing] Board."

         On April 17, 2014, a hearing was held before the Hearings Officer on CBI's protest, and subsequently, the 5/8/14 Hearings Officer Decision was issued. After quoting HRS § 103D-701(a), the Hearings Officer made the following relevant conclusions:

The Special Notice to Bidders did not specifically say that a C-44 specialty contractor license was required for the Project . . . . However, the Special Notice to Bidders identified the C-44 specialty contractor license as one of the " minimum licensing requirement stated for the project, and no additional specialty contractor classifications are required to perform the work" and provided that it would be presumed that " all Bidders and affected parties are in agreement with the listing set forth above" if written objections were not filed with the [County] ten consecutive days prior to the bid opening. Additionally, in allowing for the bidder to identify an alternate means or method to perform the work for a specialty classification license listed in the table, [the County] " reserved the sole discretion and right to determine whether the Bidder's proposed justification for not listing the required license is acceptable." Taken as a whole, the Hearings Officer finds that the Proposal required a C-44 specialty contractor license for the Project. Accordingly, . . if [CCI] disagreed with [the County's] assessment that a C-44 specialty contractor license was required and believed that the work could be done with its C-42 and C-44 specialty contractor licenses in lieu of the required C-44 license, it was incumbent upon them to file a written objection ten calendar days prior to bid opening or at the latest, by February 5, 2014, the day before bid opening. Since [CCI] did not protest until February 19, 2014, the Hearings Officer concludes that [CCI's] protest was untimely and DCCA does not have jurisdiction to hear this matter.
The Hearings Officer would note that [CCI's] failure to object to listing a C-44 specialty contractor prior to bid opening might not have led to its bid being disqualified if it had not ignored the Proposal's instructions to state its intent to use an alternate method to do the work required by the C-44 specialty contractor license and provide a detailed plan so that [the County] could determine whether " the Bidder's proposed justification for not listing the required license is acceptable."

(Brackets omitted.) The Hearings Officer thus dismissed the case on jurisdictional grounds.

         On May 16, 2014, CCI filed its notice of appeal to the Circuit, Court from the 5/8/14 Hearings Officer Decision. On June 16, 2014, the Circuit Court issued its order granting CCI's application for judicial review and ruling that CCI's bid protest was timely. The Circuit Court thus reversed the 5/8/14 Hearings Officer Decision and remanded the matter to the Hearings Officer for further proceedings. The 6/16/14 Order states in pertinent part:

FINDINGS OF FACT

. . . .
2. The Proposal and Specifications for the Project (the " Solicitations" ), including the Special Notice to Bidders and the Listing of Responsible Entities, did not require the use or listing of a contractor, joint contractor, or subcontractor having a C-44 specialty contractor classification (the " C-44 License" );
3. The Solicitation permitted the use of a contractor, joint contractor, or subcontractor having a specialty contractor classification other than the C-44 License to perform work included within the C-44 License's scope of work subject to review and approval by the Director of the Department of Public Works; and
4. Petitioner-Appellant's protest of the disqualification of its bid by the Department of Public Works was based in part on the argument that it could properly perform certain Project work itself using its license having specialty contractor classifications C-42 (the " C-42 License" ) and C-44A (the " C-44 License" ), and did not attack the contents of the Solicitation.

CONCLUSIONS OF LAW

1. The Hearings Officer's finding that the Proposal or Solicitation required a C-44 specialty contractor license for the Project, is clearly erroneous;
2. The Hearings Officer erred in concluding that Petitioner-Appellant's protest of the disqualification of its bid was required to be submitted ten calendar days prior to bid opening or no later than February 5, 20l4;
3. Petitioner-Appellant's protest of the disqualification of its bid was timely submitted on February 19, 20l4; and
4. As a timely protest, the Hearings Officer and the Department of Commerce and Consumer Affairs of the State of Hawaii has jurisdiction to review Petitioner-Appellant's protest of the disqualification of its bid.

         Based on the foregoing Findings of Fact and Conclusions of Law, the Court hereby grants Petitioner-Appellant's Application for Judicial Review of the Hearing Officer's Findings of Fact, Conclusions of Law and Decision and Exhibit " A", Filed May 8, 20l4 in PDH-2014-0C6, filed herein on May 16, 20l4, and hereby orders, adjudges and decrees that:

1. The Hearings Officer's Findings of Fact, Conclusions of Law and Decision and Exhibit " A", filed May 8, 2014 in PDH-20l4-006, is reversed; and
2. The matter is remanded to the Hearings Officer for further proceedings consistent with this opinion.

         The Circuit Court subsequently entered Final Judgment based on the 6/16/14 Order.

         On July 14, 2014, the Hearings Officer issued an " Order on Motions Pending After Remand" (Order on Remand). The Order on Remand decided issues that had not been addressed by the 5/8/14 Hearings Officer Decision. The Hearings Officer then held a hearing on July 17, 2014 on two issues:

1. Did the County agree to defer to a ruling by the Contractors Licensing Board concerning the use of a C-42 specialty license, and/or whether a C-44 specialty license was necessary, on the project in question?

2. Are the gooseneck hood ventilators shown in the project drawings non-motorized prefabricated roof vents?

         On July 30, 2014, the Hearings Officer issued " Hearings Officer Findings of Fact, Conclusions of Law, and Decision" (7/30/14 Hearings Officer Decision). On August 11, 2014, CCI filed its notice of appeal to the Circuit Court from the Order on Remand and the 7/30/14 Hearings Officer Decision. On September 19, 2014, the Circuit Court issued an Order Denying CBI's Notice of Appeal/Application. The Circuit Court subsequently entered Final Judgment based on the 9/19/14 Order.

         The County timely appealed to this court from the Final Judgment entered pursuant to the 6/16/14 Order. CCI timely appealed to this court from the Final Judgment entered pursuant to the 9/19/14 Order.

         On October 15, 2015, this court consolidated CAAP-14-000l160 and CAAP-14-000l190.

         II. STANDARD OF REVIEW

         We decide this case based on jurisdictional grounds. " The existence of jurisdiction is a question of law that is reviewed de novo under the right/wrong standard." Carl Corp. v. State, Dep't of Educ., 93 Hawaii 155, 171, 997 P.2d 567, 583 (2000).

         III. DISCUSSION

         Based on our review of the record in this case, we hold that CCI's bid protest was untimely and, for the reasons set forth below, the Hearings Officer properly dismissed the case because the ...


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