You can
search the entire site.
or go to the recent opinions, or the chronological or subject indices.
Gunderson v. UAF (8/9/96), 922 P 2d 229
<![CDATA[
Notice: This opinion is subject to formal correction before
publication in the Pacific Reporter. Readers are requested to bring
errors to the attention of the Clerk of the Appellate Courts, 303 K
Street, Anchorage, Alaska 99501, telephone (907) 264-0607, fax (907)
264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
TIMOTHY C. GUNDERSON, d/b/a )
ALASKA CONTRACT MOTOR ) Supreme Court No. S-7130
EXPRESS, )
) Superior Court No.
Appellant, ) 4FA-94-84 Civil
)
)
v. ) O P I N I O N
)
UNIVERSITY OF ALASKA, )
FAIRBANKS, ) [No. 4381 - August 9, 1996]
)
Appellee. )
______________________________)
Appeal from the Superior Court of the State of
Alaska, Fourth Judicial District, Fairbanks,
Mark I. Wood, Judge pro tem.
Appearances: Lloyd I. Hoppner, Hoppner &
Paskvan, Fairbanks, for Appellant. James A.
Sarafin, Moran & Sarafin, Anchorage, for
Appellee.
Before: Compton, Chief Justice, Rabinowitz,
Matthews, Eastaugh and Fabe, Justices.
FABE, Justice.
I. INTRODUCTION
This is an appeal from the decision of the superior court
upholding the University of Alaska's award of a coal hauling and
unloading contract to Royal Contractors. We affirm.
II. FACTS AND PROCEEDINGS
The University of Alaska Fairbanks (UAF or the
University) generates its own power and produces heat for the
campus buildings by means of a coal-burning power plant. For many
years the University obtained coal for its power plant through the
Alaska Railroad Corporation (ARRC), which delivered the coal in
rail cars to a siding next to the power plant. This method of
delivery required UAF employees to unload the coal into the
hoppers. In 1992 Timothy C. Gunderson, d/b/a Alaska Contract Motor
Express, (Gunderson) submitted an unsolicited proposal to UAF,
offering to truck coal to UAF and to deliver the coal directly into
the coal hoppers at the UAF power plant.
UAF entered into a sole-source contract with Gunderson in
the fall of 1992. Upon learning of this contract, ARRC filed a
formal written protest with UAF, asserting that the sole-source
contract violated both state and university procurement codes. In
response to the protest, UAF appointed a hearing officer who
determined that the sole-source contract violated competitive
contracting requirements. (EN )
UAF responded to the hearing officer's decision by
issuing Request For Proposal (RFP) number 93P0035TK. A pre-
proposal conference was held between UAF and interested
contractors.
The criteria for evaluation and award of the contract
were set forth in the RFP as follows:
Award will be to the low responsive,
responsible offeror whose offer conforms in
all essential respects to the solicitation
requirements, price and other factors
specifically set forth herein considered.
. . . .
The University may award a contract on the
basis of initial proposals received, without
discussions. Therefore, each initial proposal
should contain the offeror's best terms from a
cost or price and technical standpoint.
Discussions or negotiations may be conducted
with all offerors in the competitive range.
If "Best and Final"offers are requested, they
will be evaluated against the same criteria as
were the initial proposals.
The RFP also requested information describing the
offerors' proposed methodology and a checklist of requirements for
contractors to be considered responsive and responsible, as well as
a detailed pricing schedule and specifications for performance.
Following the pre-proposal conference, UAF issued an amendment to
the RFP clarifying issues raised at the conference.
There were no objections to the RFP, and none of the
contractors, including Gunderson, complained or asserted that UAF
had failed to set forth adequate criteria for the evaluation of the
proposals and determination of the final award.
In response to the RFP, UAF received nine proposals,
including Gunderson's. Royal Contractors (Royal) offered the
lowest price at $7.82 per ton of coal delivered and unloaded.
Alaska Pacific Transport, Inc. offered the second lowest price, at
$8.00 per ton. Haulin Hanna, Inc. proposed a price of $8.12 per
ton, while Gunderson was the fourth lowest proposer at $8.18 per
ton.
As permitted under the competitive proposal method of
contract selection, UAF requested from the qualified offerors
further proposal information and clarification, including price
confirmation. This request did not reveal the prices offered by
other contractors, nor did it disclose any recipient's ranking in
relation to the other proposals received. In response, Royal
offered a price reduction to $7.57 per ton. (EN ) UAF determined that Royal was the low responsive and responsible
proposer, and a Notice of Intent to Award Contract to Royal was
issued. (EN )
Gunderson timely protested the notice of intent.
Gunderson's protest was denied, and he appealed to the University's
chief procurement officer. The chief procurement officer concluded
that Gunderson had failed to demonstrate any factual or legal
errors that would substantiate his appeal.
Gunderson appealed this administrative decision to the
superior court. The superior court upheld the chief procurement
officer's determinations and the denial of Gunderson's protest. In
reaching this conclusion, the court found that (1) UAF did not
violate the state procurement code or its own procurement
regulations and procedures by using the RFP procedure to award the
coal hauling and unloading contract at issue; (2) UAF's RFP
included sufficient evaluation factors to satisfy the requirements
of state law and UAF's own regulations; (3) Gunderson had standing
to challenge the responsiveness of Royal's proposal as it relates
to the question of UAF's implied duty to consider, fairly and
honestly, all of the proposals; and (4) Royal's proposal was
responsive as it did not contain any variance that would give it a
substantial advantage over any of the other contractors.
This appeal followed.
III. DISCUSSION
Gunderson asserts that UAF disregarded the rules and
regulations governing the award of public contracts. He raises the
following issues on appeal: (1) the RFP issued by UAF did not
contain any evaluation factors, in violation of AS 36.30.210(b) and
UAF Procurement Regulations and Procedures P-3-064; (2) the
proposal of Royal, the successful bidder, was not responsive to the
terms and specifications of the RFP; and (3) Royal amended its
proposal after the due date in violation of AS 36.30.240 and UAF
Procurement Regulations and Procedures P-3-081 by further reducing
its price.
A. Standard of Review
In an appeal from a judgment of the superior court acting
as an intermediate court of appeal, we independently review the
agency decision. Cook Inlet Pipe Line Co. v. Alaska Pub. Utils.
Comm'n, 836 P.2d 343, 348 (Alaska 1992).
When an appeal of an agency decision involves a question
of statutory interpretation, this court applies one of two
standards. "The 'rational basis' test is used when the issue
involves agency expertise or the determination of fundamental
policies within the agency's statutory function." Public
Employees' Local 71 v. State, 775 P.2d 1062, 1063 (Alaska 1989).
This standard is generally applied in two circumstances:
First, . . . where the agency is making law by
creating standards to be used in evaluating
the case before it and future cases. Second,
. . . when a case requires resolution of
policy questions which lie within the agency's
area of expertise and are inseparable from the
facts underlying the agency's decision.
Tesoro Alaska Petroleum Co. v. Kenai Pipe Line Co., 746 P.2d 896,
903 (Alaska 1987) (quoting Earth Resources Co. v. State, Dep't of
Revenue, 665 P.2d 960, 964 (Alaska 1983)). However, when the
statutory interpretation does not involve agency expertise, or the
agency's specialized knowledge and experience would not be
particularly probative, this court independently reviews the
decision and substitutes its own judgment. Public Employees' Local
71, 775 P.2d at 1063.
The superior court found that the applicability of UAF's
procurement regulations and procedures to the award of a coal
hauling and unloading contract was a question of statutory
interpretation not involving agency expertise, since the
regulations and procedures were developed in accordance with the
requirements of the State Procurement Code in AS 36.30.005 - .995.
The superior court then substituted its judgment in the resolution
of the issues presented.
UAF asserts that the superior court erred in substituting
its judgment for the conclusions of the chief procurement officer
and maintains that the officer's determinations should be upheld if
they meet the "reasonable basis"test. Chris Berg, Inc. v. State,
Dep't of Transp. & Pub. Facilities, 680 P.2d 93, 94 (Alaska 1984)
("The determination by a public agency of the responsiveness of a
bid is within the agency's discretion, subject, on judicial review,
to an ascertainment that there was a reasonable basis for the
agency's action.").
We conclude that the appropriate standard for reviewing
the decision of the University's chief procurement officer is the
reasonable basis standard rather than the substitution of judgment
standard employed by the superior court. Under this standard, we
seek to "determine whether the agency's decision is supported by
the facts and has a reasonable basis in law, even if we may not
agree with the agency's ultimate determination." Tesoro Alaska
Petroleum, 746 P.2d at 903.
B. The Request for Proposals
Gunderson claims that UAF violated the Alaska procurement
code and its own regulations by failing to disclose relevant
evaluation criteria in the RFP as required by state law (EN ) and UAF procurement regulations. Specifically, Gunderson claims
that the RFP failed to list the factors that were going to be
considered by the procurement officer in evaluating the proposals
and omitted information about the relative importance of price and
other evaluation factors.
AS 36.30.200, which sets forth the competitive sealed
proposal method for awarding an "agency contract,"does not apply
to the University because AS 36.30.990(1) specifically exempts the
University from the definition of "agency"under the state
procurement code. (EN ) Furthermore, under AS 36.30.005(c), "all rights, powers, duties
and authority relating to the procurement of supplies, services,
professional services, and construction"are delegated to the
University's Board of Regents. However, this provision also states
that "[t]o the maximum extent possible, authority granted under
this subsection shall be exercised in accordance with this
chapter." Additionally, the Board of Regents is directed to "adopt
regulations . . . that are substantially equivalent to the
regulations adopted by the commissioner of administration." AS
36.30.005(c).
The requirements governing the issuance of an RFP are
contained in the University's Procurement Regulations and
Procedures (PR&P). PR&P 3-064(2) requires an RFP to include (1)
the purchase description; (2) the evaluation criteria; (3) the
delivery or performance schedule; and (4) the inspection and
acceptance requirements that are not included in the purchase
description. We conclude that in addition to a purchase
description, the RFP contained all of the requirements, including
a statement of the criteria for evaluation and award.
RFP No. 93P0035TK provides in part:
The University of Alaska Fairbanks is
soliciting offers for the hauling and off
loading of coal for the UAF Power Plant.
Transportation services are to be provided
from mine mouth, Healy, Alaska to the UAF
Power Plant. Coal shall be off loaded into
the coal receiving facility located below the
railroad tracks at the UAF Power Plant
facility. The successful offeror shall
provide all labor, equipment and supplies
necessary to execute the terms and conditions
contained in this RFP.
The University requires from 110 to 220 tons
of coal per day depending on load and weather
conditions. Hauling and off loading services
shall be performed in support of continuous
operation of the Power Plant. The contract
shall commence upon award and shall continue
until June 30, 1994, with one (1) year renewal
options for up to seven (7) additional years,
ending not later than June 30, 2001.
We hold that the foregoing satisfies the requirement of
a "purchase description"for purposes of P-3-064(2) as well as
explicitly describing the "delivery or performance schedule." The
RFP also contains evaluation criteria, including price,
responsiveness and responsibility:
Subject to provisions of section 11,
Instructions to Offerors, and the terms and
conditions contained herein, an award will be
to a single offeror. Award will be to the low
responsive, responsible offeror whose offer
conforms in all essential respects to the
solicitation requirements, price and other
factors specifically set forth herein
considered.
. . . .
The University may award a contract on the
basis of initial proposals received, without
discussions. Therefore, each initial proposal
should contain the offeror's best terms from a
cost or price and technical standpoint.
Discussions or negotiations may be conducted
with all offerors in the competitive range.
If "Best and Final"offers are requested, they
will be evaluated against the same criteria as
were the initial proposals.
Even if the evaluation criteria listed in the RFP were
deficient in some unexplained respect, Gunderson has "failed to
demonstrate that such error prejudiced [his] proposal in comparison
to others, since each proposal received identical treatment." King
v. Alaska State Hous. Auth., 512 P.2d 887, 894 (Alaska 1973)
(holding agency's failure to assign specific grade to earthquake
risk did not deprive evaluation of proposals of reasonable basis);
see also Fairbanks N. Star Borough Sch. Dist. v. Bowers Office
Prods., Inc., 851 P.2d 56, 59 n.3 (Alaska 1993) (finding
consideration of factors only implicitly included in RFP
justified). (EN )
A review of the record confirms the University's
assertion that the RFP contained the evaluation factors required by
P-3-064. We therefore affirm the superior court's decision holding
that UAF's RFP included sufficient evaluation factors to satisfy
the requirements of state law and UAF's own regulations.
C. Royal's Proposal
1. Responsiveness to Terms and Specifications
Gunderson contends that Royal's proposal was not
responsive to the terms and specifications of the RFP. Gunderson
complains that Royal's successful bid proposed the use of "end-dump
containers"while the RFP in Specification No. 2, Scope of Services
stated:
The coal must be delivered in bottom dump
containers to enable dumping through a grill
. . . and into a grizzly located below the
railroad tracks. Services shall be performed
in strict accordance with these
specifications, and all terms and conditions
of the contract.
Gunderson argues that the competition for the contract was not
equal among the various trucking companies, since the rest of the
bidders complied with the specifications in the RFP and submitted
their bids based upon the use of bottom-dump containers.
UAF concedes that the type of truck proposed by Royal, a
self-unloading trailer that emptied through the rear by means of a
conveyor belt, was not the type of trailer initially contemplated
by the University. However, UAF points out that "the reason for
the bottom-dump trailer specification was that clearance in the
University's facility did not allow raising a conventional end-dump
trailer for unloading purposes."
It is well settled that a public entity "is required to
reject bids which vary materially from the specifications set forth
in the published request for proposal." McBirney & Assocs. v.
State, 753 P.2d 1132, 1136 (Alaska 1988). We have previously held
that "[a] variance is considered material if it gives one bidder 'a
substantial advantage over other bidders and thereby restricts or
stifles competition.'" Id. (quoting Chris Berg, Inc., 680 P.2d. at
94).
In this case, the purpose of the bottom-dump
specification in the RFP was to allow adequate clearance for
dumping at UAF's facility. In denying Gunderson's protest, the
chief procurement officer concluded that the proposal by Royal
contained only a "minor variation on the theme established by the
RFP - that is that coal may be delivered to the UAF Power Plant by
means other than rail car." He based this conclusion on his
finding that "the size and capacity of the grizzly located in the
coal handling facility does not restrict end dumping as proposed by
Royal. . . . For purposes of this RFP they have proposed a method
of delivery and off loading that appears viable and they will be
held to the requirements for performance."
We conclude that Gunderson has failed to show that
Royal's proposed equipment was a material deviation from the RFP
requirements. There was thus a reasonable basis for the
University's action in accepting Royal's proposal under the RFP.
Furthermore, there is no evidence in the record to suggest that
such equipment gave Royal a substantial advantage over other
bidders. In fact, the chief procurement officer's decision did not
represent UAF's final action on this issue. Prior to awarding the
contract to Royal, the University obtained confirmation that Royal
was "not making any exceptions to the specifications, including
scope of services, paragraph 2." The contract was then awarded to
Royal "in strict accordance with the terms and conditions"of the
RFP. Accordingly, Royal is using bottom-dump equipment in
compliance with the RFP requirements, and any error by the chief
procurement officer is harmless.
2. Reduction of Proposed Price
After evaluating the proposals received, UAF sent a form
letter to those offerors "within the competitive range for further
consideration." This June 24, 1993 letter requested a confirmation
of the price schedule from the original proposal and further
informed these offerors that
[a]s soon as the evaluation is completed you
will be advised of the results. In addition,
you are notified that additional clarification
or information and a best and final offer may
be requested at a later date.
(Emphasis added.)
Upon receipt of this letter, Royal amended its proposal
by further reducing the price on its price schedule, without
awaiting a request by UAF for a best and final offer. Gunderson
argues that the University did not provide any of the other
offerors an opportunity to make a best and final offer at a later
date. Gunderson also contends that Royal's price reduction
violated University PR&P 3-081. (EN )
As UAF points out, changes in price after the proposal
deadline are expressly permitted under the University's competitive
sealed proposals procedure. P-3-061(a) provides:
The competitive sealed proposals method
differs from competitive sealed bidding in two
important ways. First, it permits discussions
with competing offerors and changes in their
proposals including price; and second, it
allows comparative subjective evaluations to
be made when determining acceptable proposals
for negotiation and award of the contract.
The ability of offerors to make price adjustments is further
recognized under P-3-061(b): "Under competitive sealed proposals,
revisions in a proposal, including prices, may be made after
proposals are opened." Furthermore, Royal's submission was not an
untimely modification to the RFP but instead was a response to a
letter requesting verification of its proposal.
There is no support for Gunderson's assertion that he was
not given the same opportunity to adjust his price as was given to
the other proposers. (EN ) The University representative at the pre-proposal conference
informed all of the potential proposers that the University had the
right to obtain clarifications and enter into negotiations with the
proposers after the proposal deadline. Gunderson was further
advised in a letter that the alternative procedure of requesting
best and final offers was optional.
The chief procurement officer found that the University
did not accept a "late modification"but had merely allowed a
change in price expressly permitted by P-3-061(b). The chief
procurement officer's decision did not constitute an abuse of
discretion, and the decision has a reasonable basis in the law. (EN
)
IV. CONCLUSION
"The determination by a public agency of the
responsiveness of a bid is within the agency's discretion, subject,
on judicial review, to an ascertainment that there was a reasonable
basis for the agency's action." Chris Berg, Inc., 680 P.2d at 94.
In this case, the chief procurement officer did not abuse his
discretion in awarding the coal hauling contract to Royal. We hold
that there is a reasonable basis for the award to Royal and AFFIRM
the decision of the superior court upholding the award of the
contract to Royal.
ENDNOTES:
1. Gunderson filed suit in response to the hearing officer's
finding. The superior court dismissed Gunderson's claims against
ARRC, ruling that ARRC was immune from suit under the Noerr-
Pennington doctrine. This court concluded that the superior court
properly granted summary judgment in favor of ARRC. Gunderson v.
University of Alaska, Fairbanks, 902 P.2d 323 (Alaska 1995).
2. Alaska Pacific Transport, Inc. and Gunderson did not change
their prices in response to the request for clarification and price
confirmation; however, Haulin Hanna, Inc. increased its price to
$13.82 per ton, changing Gunderson's ranking to the third most
favorable proposal.
3. The contract was formally awarded to Royal on September 23,
1993.
4. Gunderson refers to AS 36.30.210(b) which provides:
A request for proposals must contain that
information necessary for an offeror to submit
a proposal or contain references to any
information that cannot reasonably be included
with the request. The request must provide a
description of the factors that will be
considered by the procurement officer when
evaluating the proposals received, including
the relative importance of price and other
evaluation factors.
5. AS 36.30.990(1) states that "'agency' . . . does not include
(i) the University of Alaska."
6. Gunderson also acquiesced to the RFP process and did not
object until after he learned that the contract would go to another
bidder. The University's RFP clearly stated in Section 7(a):
Offerors must read the RFP thoroughly. Any
ambiguity, conflict, discrepancy, omission or
other errors in this RFP should be reported in
writing to the University of Alaska address
for inquiries shown on the face of the RFP
prior to the Pre-proposal Conference and in
any case must be reported prior to the
proposal submittal deadline.
Therefore, UAF has a strong argument that Gunderson has waived his
objections.
This argument finds support in the federal government contract
bidding process. Protests against the language and specifications
of an Invitation for Bids (IFB) must be received by the Comptroller
General (Comp. Gen.) prior to bid opening.
The Comp. Gen. will not consider a protest
against an alleged deficiency in the IFB if
the protester goes along with the procurement
without objection until it appears that the
award may go to another bidder. If the bidder
has not protested before then, he is deemed to
have acquiesced in the terms of the IFB.
Paul A. Shnitzer, Government Contract Bidding 573 (2d ed. 1982).
Because we find that the RFP was not deficient, we need not decide
whether Gunderson waived his objection by failing to object prior
to the award of the contract.
7. P-3-081 states:
Unless otherwise provided in the request for
proposals, any proposal, withdrawal, or
modification received after the established
due date at the place and closing time
designated for receipt of proposals is late
and may only be considered if its lateness is
due solely to mishandling by the university.
8. In response to the University's request for clarification,
Gunderson indicated that he was proposing to use his own new type
of specially designed equipment; two other bidders adjusted their
prices.
9. In its decision the superior court addressed the issue of
whether Gunderson had standing to protest the responsiveness of
Royal's proposal. The court determined that Gunderson had a
sufficient personal stake in the outcome to have standing to
protest the responsiveness of Royal's proposal. In holding that
Gunderson had standing, the superior court stated:
Acknowledging the Alaska Supreme Court's
stated liberal construction of standing in
administrative appeals, and the fact that the
responsiveness issue is only part of
Gunderson's argument, this court finds that
Gunderson has standing to challenge the
responsiveness of Royal's proposal as it
relates to the question of UAF's implied duty
to fairly and honestly consider all of the
proposals.
UAF renews its argument before this court that Gunderson lacks
standing to protest the responsiveness of Royal's proposal. It
argues that Gunderson does not have a sufficient personal stake in
the outcome of the controversy since he did not present the second
lowest price proposal. Although a judgment of the superior court
may be affirmed on different grounds than those advanced by the
trial court, we need not reach the issue of standing given our
conclusion that the chief procurement officer did not abuse his
discretion in the contract award.
]]>
