Opinion ID: 1124217
Heading Depth: 3
Heading Rank: 1

Heading: Execution of the Ameritech contract

Text: This case provides an example of the difference in available remedies once the contract has been awarded. CARL contended before the Hearings Officer, and maintains on appeal, that Ameritech's proposal should not have been considered because (1) it was not responsive to the RFP, and (2) Ameritech was disqualified from submitting a proposal due to its participation in developing the specifications for the RFP. [17] The Hearings Officer did not address these issues, presumably because of his conclusion that the real focus of this case was the evaluation procedures. CARL urges us to reach these issues on appeal because it contends that, where Ameritech's proposal was nonresponsive or Ameritech was precluded from bidding, this court may disqualify Ameritech's proposal and award the contract to CARL, the only remaining responsive offeror. Had the contract not been executed, the relief CARL seeks would have been available. If the Hearings Officer had agreed with CARL, prior to the award of the contract, he could either have ordered the cancellation of the solicitation and precluded Ameritech from submitting a proposal on any subsequent solicitation based on the same specifications or have revised the solicitation to comply with law by eliminating Ameritech's proposal from consideration, which would have had the same effect. HRS § 103D-706. [18] Because the contract had already been executed, however, even if the Hearings Officer or this court agreed that Ameritech's proposal should not have been considered, the only remedy available is ratification or termination of the contract pursuant to HRS § 103D-707, not the award of the contract to CARL as the only responsive, qualified offeror. Because the award of the contract so severely limits the relief available, HRS § 103D-701(f) provides that, [i]n the event of a timely protest [to the chief procurement officer or the head of a purchasing agency] under subsection (a), no further action shall be taken on the solicitation or the award of the contract until the chief procurement officer, after consultation with the head of the using agency, or the head of the purchasing agency, makes a written determination that the award of the contract without delay is necessary to protect substantial interests of the State. (Emphasis added.) In this case, however, Kane executed the contract with Ameritech on January 25, 1996; there was no substantial interest determination made until March 13, 1996. We hold, therefore, that the award of the contract to Ameritech was in violation of HRS § 103D-701(f). Moreover, the record establishes as a matter of law that Kane's execution of the contract was in bad faith. CARL's timely protest was received on January 3, 1996. Unebasami instructed Kane on January 4 not to award the contract to Ameritech unless he, Unebasami, issued a substantial interest determination, and further instructed Kane to draft a reply for his signature. Kane proceeded to deny the protest directly, without Unebasami's review, on January 9. CARL received the denial on January 12 and timely filed a request for reconsideration on January 22; Kane executed the contract with Ameritech on January 25. The Hearings Officer concluded that, [w]hen Mr. Kane denied [CARL's] protest on January 9, 1996, it was not unreasonable for him to believe that pursuant to section 103D-701(e), his decision was final and conclusive[,] COL 20, and that [i]t was also not unreasonable for Mr. Kane to believe that after his final decision was issued on January 9, 1996, and before any administrative proceeding was commenced under HRS § 103D-709, there was no pending protest under HRS § 103D-701(a) that would require that no action be taken on the award of the Contract. COL 21. COL 20 and 21 are actually findings of fact, and, therefore, reviewed under the clearly erroneous standard. [19] We hold that the finding that Kane acted reasonably is clearly erroneous in view of the reliable, probative, and substantial evidence on the whole record. HRS § 103D-710(e)(5). Notwithstanding HRS § 103D-701(e), which provides in part that [a] decision under subsection (c) shall be final and conclusive[,] the implementing regulations specifically provide for reconsideration of the decision of the chief procurement officer or the head of the purchasing agency and treat the decision after reconsideration as the final decision rendered pursuant to HRS § 103D-701. HAR § 3-126-8 (1995) provides: Request for Reconsideration. (a) Reconsideration of a decision of the chief procurement officer or the head of a purchasing agency may be requested by the protestor, appellant, any interested party who submitted comments during consideration of the protest, or any agency involved in the protest. The request for reconsideration shall contain a detailed statement of the factual and legal grounds upon which reversal or modification is deemed warranted, specifying any errors of law made or information not previously considered. (b) Requests for reconsideration of a decision of the chief procurement officer or the head of a purchasing agency shall be filed not later than ten working days after receipt of such decision. (c) A request for reconsideration shall be acted upon as expeditiously as possible. The chief procurement officer or the head of a purchasing agency may uphold the previous decision or reopen the case as such officer deems appropriate. (d) The decision under subsection (c) shall be final and the protesting bidder or offeror shall be informed: (1) Whether the protest is denied or sustained; and (2) If the protest is denied, the protestor's right to an administrative proceeding pursuant to subchapter 5. (e) The protesting bidder or offeror shall inform the State within five working days after the final decision if an administrative appeal will be filed. An appeal shall be filed within seven calendar days of the determinations under ... this section[.] (Emphasis added.) Even if, as the Hearings Officer implicitly found, Kane was unaware of CARL's January 22 request for reconsideration when he executed the contract on January 25, the period during which such a request could be filed had not yet expired. Pursuant to HAR § 3-126-8(b), CARL had until January 26, 1996, to file its request for reconsideration. Therefore, it was not reasonable for Kane to believe, on January 25, that his denial of the protest was final and conclusive and that there was no pending protest that would require him to suspend any further action. The Hearings Officer implicitly concluded that Kane should not be charged with knowledge of the applicable regulations; his reliance on HRS § 103D-701 was sufficient to make his execution of the Ameritech contract reasonable. We disagree. First, by virtue of his position as the head of a purchasing agency with authority to enter contracts, Kane is certainly chargeable with knowledge of the regulations applicable to public procurement. Second, Kane had actual knowledge of those regulations. His initial denial of CARL's protest cited, as its basis, a regulation in the same subchapter as HAR § 3-126-8. Third, Kane could not rely on the finality of his decision under HRS § 103D-701(e), inasmuch as his denial of the protest was in violation of HRS § 103D-701(c), given his failure to inform CARL of its right to review. The record, therefore, not only belies the findings that Kane's execution of the contract was not unreasonable; it demonstrates bad faith. HAR § 3-126-36(c) (1995) provides in pertinent part that [s]pecific findings of reckless disregard of clearly applicable laws or rules must support a finding of bad faith. [20] Once CARL's timely protest was filed, and during its pendency, Kane was prohibited by the Code and its implementing regulations from executing the contract until the chief procurement officer made a written substantial interest determination. Kane was certainly aware of HRS § 103D-701(f) and was specifically informed by Unebasami that, pursuant to HAR § 3-126-6, the Library was not to award the contract during the pendency of the protest. Kane's disregard of the mandate of clearly applicable law, as well as the specific directions of Unebasami, was, at best, reckless. In his zeal to have the project completed before the end of the legislative session, Kane prematurely awarded the contract in violation of law, effectively restricting CARL's opportunity to participate in a fair solicitation should it prevail on its protest. We therefore hold that Kane's conduct was in bad faith.