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Certified Construction, Inc. v. Crawford

Supreme Court of Hawaii

September 20, 2016

CERTIFIED CONSTRUCTION, INC., Petitioner/Petitioner-Appellant,
v.
NANCY CRAWFORD, as Director of the Department of Finance, County of Hawaii, Respondent/Respondent-Appellee. In the matter of CERTIFIED CONSTRUCTION, INC., Petitioner/Petitioner-Appellant/Appellee
v.
NANCY CRAWFORD, as Director of the Department of Finance, County of Hawai'i, Respondent/Respondent-Appellee/Appellant.

         CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (CAAP-14-0001160 and CAAP-14-0001190; CIVIL NOS. 14-1-0303 and 14-1-0200)

          Jeffre W. Juliano and Kristi L. Arakaki for petitioner

          Lerisa L. Heroldt and Laureen L. Martin for respondent

          RECKTENWALD, C.J., NAKAYAMA, McKENNA, POLLACK, AND WILSON, JJ.

          OPINION

          POLLACK, J.

         This case arises from the disqualification of Certified Construction, Inc.'s (Certified or CCI) bid proposal on a public works project by the County of Hawai'i (County).[1]After Certified's bid was disqualified, Certified submitted a bid protest to the County. The Office of Administrative Hearings determined that Certified's protest was a challenge to the contents of the bid solicitation rather than to the disqualification of its bid proposal, and thus it concluded that Certified's protest was not timely and dismissed the case. On judicial review, the Circuit Court of the Third Circuit (circuit court) disagreed, finding that the Office of Administrative Hearings had jurisdiction to consider Certified's challenge, and the case was remanded for further proceedings. On remand, the merits of Certified's challenge to its disqualification were reviewed by a second hearings officer who determined that Certified failed to demonstrate entitlement to relief. The decision of the second hearings officer was subsequently affirmed on review by the circuit court. Following the circuit court's second order, Certified appealed to the Intermediate Court of Appeals (ICA) from the circuit court's second order, and the County appealed to the ICA from the circuit court's first order. The ICA determined that Certified's protest was untimely, and thus the ICA concluded the Office of Administrative Hearings was without jurisdiction to consider Certified's protest.

         We conclude that the ICA erred in determining that Certified's bid protest challenged the contents of the County's bid solicitation; instead, Certified's protest challenged the County's disqualification of its bid proposal. Accordingly, we vacate the ICA judgment on appeal and remand the case to the ICA to address the other issues presented by the parties in the consolidated appeal.

         I. BACKGROUND

         On December 24, 2013, the County issued a Proposal and Specifications (Bid Solicitation) for "Reroofing for Fire Maintenance Shop and Fire Dispatch/Warehouse, " Job No. B-4190 (Project). The Bid Solicitation solicited bids for the "new replacement roof, purlins, roof insulation, flashing, ventilators, gutters, downspouts, structural steel, painting and related work."[2] The first page of the Bid Solicitation provides that in order to be eligible to bid, a bidder must possess a General Contractor's License B, and, in boldface, it directs bidders to see the attached special notice to bidders:

To 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.

         The "Special Notice" to bidders first provides a "reminder note, " explaining that work must be performed by appropriately licensed entities and that a general contractor may not act as a specialty contractor in areas in which it has no license. The Special Notice identified specialty contractor classifications C-33, C-44, and C-48 as qualified to perform the work and meeting the minimum licensing requirements. Instructions preceded the listing of the specialty contractors and explained that although the listing provided the minimum requirements and no additional specialty contractor classifications were required, the Bidder may list additional subcontractors at its discretion.[3] Following the listing of the specialty contractors, there were "special instructions to bidders regarding specialty contractor classifications and regarding joint contractors and subcontractors."[4] The Special Notice also stated the manner in which challenges to the Special Notice should be made and indicated that, if no objections were received, bidders would be presumed to be in agreement with the specifications of the Special Notice:

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.

         Thus, objections by bidders to the instructions in the Special Notice were required to be submitted at least ten days prior to bid opening.

         On February 6, 2014, bids were opened and evaluated, and Certified submitted the lowest bid for the Project. By a letter dated February 14, 2014, from the Director of the Department of Public Works, the County notified Certified that its bid was disqualified pursuant to Section 2.2-6 of the General Requirement and Covenants of the Department of Public Works and Hawai'i Administrative Rules (HAR) § 3-122-33(d)(5). The disqualification letter stated that the Project required a C-44 license and that Certified's proposal failed "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."

         Certified filed a protest with the County by a letter dated February 19, 2014. Certified's challenge was made pursuant to Hawai'i Revised Statutes (HRS) § 103D-71, and it protested the County's "disqualification of CCI and rejection of CCI's bid" for the Project. Certified's challenge asserted that the sheet metal work required for the Project could be performed under Certified's C-42 or C-44A licenses. Certified also argued that nothing in the Special Notice strictly required a C-44 license. Instead, Certified argued, the Special Notice stated only that the County believed C-44 contractors were qualified to perform certain work for the Project. Certified noted, "[T]hat the county believes a certain type of construction work can be performed under a particular license in no way means that the same work cannot be performed under another specialty contractor license." The County subsequently upheld the disqualification of Certified's bid as being nonresponsive to the Bid Solicitation because Certified "failed to properly propose the change in specialty licenses in its bid documents."

         Certified filed a request for a hearing with the Office of Administrative Hearings, Department of Commerce and Consumer Affairs (OAH). Certified filed a motion for partial summary judgment, and the County filed a motion for summary judgment contending, among other things, that Certified's bid was nonresponsive. The County also filed a motion to dismiss Certified's request for a hearing, which was granted by the Hearings Officer. In the "Hearings Officer's Findings of Fact, Conclusions of Law and Decision, " the Hearings Officer concluded that "[t]aken as a whole" the Bid Solicitation required a C-44 license" even though the "[t]he Special Notice to Bidders did not specifically say that a C-44 specialty contractor license was required." Accordingly, the Hearings Officer concluded that "it was incumbent upon [Certified] to file a written objection ten calendar days prior to bid opening" in order to challenge the requirement. Because Certified did not file a protest until after the bid opening--when its bid was disqualified--the Hearings Officer concluded that Certified's protest was untimely and the OAH was without jurisdiction to consider the challenge.

         Certified appealed the dismissal of its protest to the circuit court. The circuit court held a hearing on Certified's appeal and issued its June 16, 2014 ruling (first order) .[5] The circuit court found that the Special Notice did not require a C-44 license for completion of the Project. The circuit court also found that Certified's protest of the disqualification of its bid was based in part on its position that it could properly perform the Project using its C-42 and C-44A licenses instead of the C-44 license. Accordingly, the circuit court determined that the Hearings Officer's conclusion that a C-44 specialty contractor license was required by the Solicitation was clearly erroneous and that Certified's bid protest was thus timely submitted. Given that the circuit court concluded ...


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