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Peninsula Correctional Health Care v. Dept. of Corrections (9/13/96), 924 P 2d 425
Notice: This opinion is subject to 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, phone (907) 264-0607, fax (907) 264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
PENINSULA CORRECTIONAL )
HEALTH CARE, ) Supreme Court No. S-6810
) Superior Court No.
v. ) 3KN-93-559 CI
DEPARTMENT OF CORRECTIONS, ) O P I N I O N
Appellee. ) [No. 4403 - September 13, 1996]
Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Kenai,
Jonathan H. Link, Judge.
Appearances: Joe Ray Skrha, Kenai, Walter
Share, Seattle, Washington, for Appellant.
Timothy W. Terrell, Assistant Attorney
General, Anchorage, Bruce M. Botelho, Attorney
General, Juneau, for Appellee.
Before: Compton, Chief Justice, Rabinowitz,
Matthews, Eastaugh and Fabe, Justices.
The decision of the superior court is AFFIRMED for the
reasons expressed in its Memorandum Decision and Judgment, attached
hereto as an Appendix. IN THE SUPERIOR COURT FOR THE STATE OF ALASKA
THIRD JUDICIAL DISTRICT AT KENAI
PENINSULA CORRECTIONAL )
HEALTH CARE, )
vs. ) Case No. 3KN-93-559-CI
DEPARTMENT OF CORRECTIONS, )
MEMORANDUM DECISION AND JUDGMENT
Appellant, Peninsula Correctional Health Care
(hereinafter PCHC) files this administrative appeal challenging the
award of a nursing services contract at Wildwood Correctional
Center and Wildwood Pretrial Facility (hereinafter Wildwood) to a
competing bidder, Intercorp.
After taking a tumultuous course through the bidding,
evaluation, re-evaluation and protest processes, PCHC filed a
protest appeal to the Commissioner of the Department of
Administration (hereinafter DOA), Nancy Usera. (EN1) DOA
Commissioner Usera referred this matter to a hearing officer, Keith
Gilmore. A hearing was conducted January 28, 1992. After
additional briefing Hearing Officer Gilmore issued a recommendation
that the award of the contract to Intercorp be upheld.
Commissioner Usera adopted Hearing Officer Gilmore's recommendation
as her final decision. It is from this decision that PCHC
prosecutes this appeal.
STANDARD OF REVIEW.
Agency determinations of fact are reviewable under the
"substantial evidence"test. Substantial evidence is "such
relevant evidence as a reasonable mind might accept as adequate to
support a conclusion." Keiner v. City of Anchorage, 378 P.2d 406,
411 (Alaska 1963). The court need only determine whether such
evidence exists, and does not choose between competing inferences.
Interior Paint Co. v. Rodgers, 522 P.2d 164, 170 (Alaska 1974).
The court does not evaluate the strength of the evidence, but
merely notes its presence. Matanuska-Susitna Borough v. Hammond,
726 P.2d 166, 179 n.26 (Alaska 1986).
Legal determinations made by agencies are reviewed under
the "reasonable basis"test for questions of law involving agency
expertise, and the "substitution of judgment"standard for review
of legal issues not involving agency expertise. Jaeger v. State,
537 P.2d 1100, 1101 n.23 (Alaska 1975); Kelly v. Zamarello, 486
P.2d 906, 916-17 (Alaska 1971).
WAS INTERCORP'S BID RESPONSIVE?
The bids received were in response to a request for
proposal (hereinafter RFP) issued by the Department of Corrections
(hereinafter DOC). PCHC asserts that Intercorp's bid was non-
responsive to DOC's RFP because it did not attach resumes and
letters of commitment from the actual staff that Intercorp proposed
to service the contract. Hearing Officer Gilmore rejected this
claim finding, inter alia:
the RFP requires that letters of commitment
and resumes for all known contract staff must
be included with the offeror's proposal.
There is no dispute that Intercorp's proposal
contained no letters of commitment. 184.108.40.206
of the RFP requires two things: 1. Letters
of commitment for all known contract staff
must be included with the offeror's proposal.
2. Resumes for all known contract staff must
be included with the offeror's proposal. It
is not a requirement that the RFP have a
letter of commitment under any circumstances.
If there are no known contract staff committed
to work at these facilities a proposer cannot
be considered non-responsive because they do
not include letters of commitment. The RFP
does not require a letter of commitment from
nurses the offeror intends to hire. The RFP
does not require a letter of commitment from
nurses the offeror knows will work under the
contract. [Emphasis in original.]
The RFP detailed requirements for nursing staff at
Wildwood and what the bid should contain in response to those
requirements. Paragraph 3 of the DOC proposal provides, inter
3.4.1. Content: All proposals must include
the following sections in the order listed
below . . . .
. . .
220.127.116.11.Job Descriptions and Resumes: Letters
of commitment and resumes for all known
contract staff must be included with the
offeror's proposal. Letters of commitment and
resumes from any proposed subcontractors must
also be included. For evaluation purposes,
all resumes and letters of commitment should
. . .
18.104.22.168. Plan for Service Provision: This
portion must include the offeror's plan for
providing services delineated in the Statement
of Work portion of this RFP. Offeror's must
include a proposed staffing schedule which
includes the names and skill level of all
proposed contract staff and any proposed sub-
contractors for each duty position. If any
duty position is not filled at the time of
proposal submission the offeror must include a
plan for obtaining personnel to fill any
vacant positions to include a time-line for
finalization of proposed contract staff.
Intercorp submitted its bid on the contract on June 11,
1991. With respect to nursing staff Intercorp's bid stated:
Health Care Personnel Resumes: All DOC
contract personnel resumes of those who will
be occupying positions at the Wildwood
Correctional Center and the Pretrial Facility
are currently on file with the Department of
It is our intention to give consideration to
those who are presently staffing the facility.
After a short period of evaluation it may be
necessary to replace those who do not meet
company standards with other Intercorp DOC
Similarly, Intercorp's plan for services section of its
3. STAFF REQUIREMENTS:
A. We would consider maintaining the
existing professional staff providing that
they meet our standards.
B. Back-up staff are available to
support all positions under normal relief
Resumes and qualifications of DOC-qualified nurses who work for
Intercorp at other locations were attached.
PCHC asserts that Intercorp's proposal was non-responsive
because Intercorp failed to submit resumes and letters of
commitment from the staff it proposed to use. Worse still,
according to PCHC, Intercorp knew at the time it submitted the bid
that PCHC's current employees would not commit to work for
Intercorp in advance and Intercorp submitted resumes from six
registered nurses on its staff elsewhere in the State who had not
agreed to work at Wildwood.
During the bidding and review process then DOC
Commissioner Lloyd Haymes delegated authority to Statewide Program
Director Richard Benson to act as DOC's procurement officer for the
contract. Procurement Officer Benson addressed PCHC's concerns
when it denied its protest on October 15, 1991.
The Intercorp proposal states (page 6) that it
is their intention to "give consideration to
those who are necessary to replace those who
do not meet company standards with other
Intercorp DOC qualified staff." Again, on
page 13, Intercorp states "we would consider
maintaining the existing professional staff
providing that they meet our standard. Back-
up staff are available to support all
positions under normal relief circumstances."
It does not appear to me that Intercorp mis-
represented their intention to offer positions
to current contract staff nurses, should they
wish to continue providing services to the
Department of Corrections at Wildwood
Correctional Center. It also appears that PEC
[Proposal Evaluation Committee] members were
aware of Intercorp's intention to offer these
contract positions to members of the current
In reality, as you are aware, changes in
Contractors does not always constitute a
complete change in contract staff. Because of
the shortage of qualified medical personnel
within the State, many contract staff members
elect to continue providing services under a
new employer, rather than relinquish a job and
attempt to secure alternative employment. The
Department's position is that this is in the
best interest of the State to allow this
transition because it provides continuity of
services and facilitates the transition of
Contractors. As such, the RFP does not
mandate that all contract nurses must be
specified and that these individuals will be
required to provide services over the life of
the contract. Such requirements would be
unduly restrictive. [Emphasis in original.]
This interpretation is consistent with the language found
in 22.214.171.124 of the RFP requiring the offeror to include a plan for
obtaining personnel to fill vacant positions and supply a time-
Section 126.96.36.199 of the RFP requires letter of commitment
and resumes for "all known contract staff." DOC and DOA have
interpreted this provision to include individuals a bidder already
has a contract with, not people they intend to contract with in the
future. The chairman of the Proposal Evaluation Committee, Mike
Taylor, testified that the RFP had been deliberately worded in this
fashion so that existing staff at correctional facilities could
transition from one contractor to another if desired. Clearly it
would be unreasonable, as PCHC seems to suggest, to require that a
prospective contractor obtain letters of commitment from workers,
who at the time, are performing the same service for a competitive
Under these circumstances Commissioner Usera's decision
that Intercorp's bid was responsive had a reasonable basis in fact
WAS INTERCORP'S BID BASED ON MISREPRESENTATION AND/OR FRAUD?
Alternatively, PCHC argues that Intercorp's contract
award must be overturned since Intercorp's proposal for Wildwood
was based on misrepresentation, material admissions and fraud.
Specifically, PCHC claims that Intercorp submitted resumes of staff
members, without authority, even though these staff members were
never contacted nor ever agreed to work at Wildwood; and falsely
represented that PCHC's Wildwood staff would work for Intercorp,
even though it knew they had already refused to do so.
These claims must be resolved on the basis of information
available at the time the bid was awarded.
Intercorp submitted resumes of six employees as possible
back-up personnel. They did so without contacting these employees
to specifically ascertain their willingness to work the Wildwood
contract. Using a contract doctrine analogy, these employees were
"samples"of "goods to conform to a sample product." Intercorp
made no affirmative representation that these six individuals would
actually become employees. Rather, Intercorp's affirmative
representation was that it would staff Wildwood with individuals
having like or similar qualifications.
The DOA and the DOC maintain that this contract was
awarded on the basis that Intercorp's primary contract staff was to
be compiled from its corporate inventory. These individuals might,
or might not, be part of the present Wildwood staff. This is how
DOA characterizes its consideration of the proposal and, given the
clear requirements of the RFP, to do otherwise would have been
arbitrary. There is substantial evidence to support this
interpretation and a reasonable basis in the law to reach a
conclusion that, under the circumstances, Intercorp's proposal did
not amount to misrepresentation or fraud.
Similarly, there is substantial evidence to support DOC's
and DOA's position that the inclusion of these six resumes did not
induce the State to enter into this contract.
PCHC characterizes the evidence as establishing that
their Wildwood staff refused to work for Intercorp prior to these
bids being submitted. Thus, according to PCHC, Intercorp's bid
could not be responsive to the "timeline"requirement of the RFP.
DOC and DOA interpret the same evidence to mean only that PCHC's
existing staff declined to sign letters of commitment indicating
they would work for Intercorp prior to the bid opening. If the
incumbent staff decline to work for Intercorp, others were
available from Intercorp's corporate inventory or other sources to
satisfy the "timeline"requirements of the RFP.
There is substantial evidence to support the DOA's and
the DOC's interpretation and a corresponding lack of evidence to
support PCHC's interpretation.
Legally there is no duty for a bidder for a public
contract to get letters of commitment from proposed staff members
who are working for a competitor. This approach would be
completely unrealistic and undermine the entire competitive bidding
process. Likewise, if a proposed bidder contacts existing workers
of his competitor, that bidder is under no duty to disclose the
fact that the competitor's workers will not sign a letter of
commitment in the bid process. It is simply irrelevant. What is
relevant to the bid process is whether or not the bids received are
responsive. This court has previously affirmed the decision of the
DOA finding that Intercorp's bid was responsive.
Finally, there is no evidence that Intercorp could not
provide nursing staff comparable to the resumes submitted in
response to the RFP. Intercorp's plan to staff Wildwood relied on
its ability to transfer or hire a qualified professional staff. It
represented to the DOA and the DOC that it had the resources to do
that, and the DOA and the DOC found this representation to be
reasonable. There is no relevant evidence to the contrary.
For the foregoing reasons the decision of the Department
of Administration is AFFIRMED in its entirety.
DATED at Kenai, Alaska, November 26th, 1994.
JONATHAN H. LINK
Superior Court Judge
1. The Department of Administration was not named as a party in
this administrative appeal. However, both parties have conducted
themselves as if the Department of Administration was, in fact, a
party. This appeal cannot be decided without the inclusion of the
Department of Administration as a party since it is that
Department's decision that is being appealed. Under the
circumstances, and because briefing is complete, the court elects
to treat the Department of Administration as a party to this