Court Opinion

ID: 4429824
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:30:57.477881+00
Date Added: 2024-06-11T14:23:17.445387
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                           APPROVAL OF THE APPELLATE DIVISION
    This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
 internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

                                                     SUPERIOR COURT OF NEW JERSEY
                                                     APPELLATE DIVISION
                                                     DOCKET NO. A-5379-16T3

IN RE BID SOLICITATION
#16-X-23961, LAUNDRY CHEMICALS
STATEWIDE.
_____________________________

                Argued October 23, 2018 - Decided December 14, 2018

                Before Judges Hoffman and Firko.

                On appeal from the New Jersey Department of the
                Treasury, Division of Purchase and Property, RFP No.
                16-X-23961.

                Joshua S. Bratspies argued the cause for appellant
                Diamond Chemical Co., Inc. (Sherman Wells Sylvester
                & Stamelman LLP, attorneys; Joshua S. Bratspies, of
                counsel and on the briefs; Matthew F. Chakmakian, on
                the briefs).

                Rebecca Pluckhorn, Deputy Attorney General, argued
                the cause for respondent Department of Treasury,
                Division of Purchase and Property (Gurbir S. Grewal,
                Attorney General, attorney; Beth Leigh Mitchell,
                Assistant Attorney General, of counsel; Diana
                Reynolds, Deputy Attorney General, on the brief).

PER CURIAM
      In this procurement case, appellant Diamond Chemical Company, Inc.,

(Diamond Chemical) seeks reversal of a decision by respondent, the Division of

Purchase and Property (Division), to cancel a request for proposal (RFP) for

bids on contracts to supply the State with laundry chemicals. The cancellation

occurred after the Division and its Procurement Bureau (Bureau) concluded that

the list of approved product brands did not correspond to RFP specifications,

and none of the products proposed by any of the five bidders could meet certain

requirements. The cancellation letter further indicated the Division's intent to

revise its RFP specifications and to issue a new solicitation.

      Diamond Chemical contends the Division violated its own procedural

regulations, and such action was per se arbitrary and capricious. Specifically,

Diamond Chemical asserts the Division issued a "final agency decision"

awarding it all of the subject contracts, and the Division could not reconsider

this determination under N.J.A.C. 17:12-3.3. We disagree. For the reasons that

follow, we affirm the Division's decision to cancel the RFP.

      The essential facts are undisputed. In May 2015, the Division issued a

fifty-one-page RFP 16-X-23961 for the statewide supply of laundry chemicals.

The RFP specified the bid submissions were due on July 1, 2015. The Division

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issued the RFP in order to replace the laundry chemicals contracts set to expire

on July 31, 2015.

      The RFP consisted of twelve price lines corresponding to twelve different

laundry chemicals. The twelve price lines were organized into three groups:

group one (dry chemical system); group two (liquid chemical system); and group

three (solid encapsulated detergent).

      Group one (dry chemical system) consisted of price line 00001, low

alkalinity/low temperature powdered laundry detergent. Group two (liquid

chemical system) covered price lines 00002 to 000011, entitled:

            price line 00002: liquid laundry detergent

            price line 00003: liquid heavy duty alkaline builder

            price line 00004: detergent/bleach combination liquid
                              laundry detergent

            price line 00005: concentrated liquid chlorine bleach

            price line 00006: liquid system combination fabric
                              softener/sour

            price line 00007: liquid antibacterial softener/sanitizer

            price line 00008: liquid rust removing sour

            price line 00009: regular liquid fabric softener

            price line 00010: liquid solvent detergent

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            price line 00011: liquid hydrogen peroxide bleach

Group three (solid encapsulated detergent) referred to price line 00012, also

named solid encapsulated detergent. The RFP permitted vendors to bid on one

or more of the three groups.

      A key aspect of the RFP was to obtain laundry chemicals for the State that

were both "[e]nvironmentally [p]referable" and "[b]iodegradable[,]" in order to

comply with Executive Order #76 issued on January 12, 2006. The executive

order requires the State to procure and utilize cleaning products that "minimize

potential impacts to human health and the environment . . . ."

      Diamond Chemical timely submitted its bid in response to the RFP for all

twelve price lines on July 1, 2015. Also on July 1, the Division's Proposal

Review Unit opened the five proposals timely received, and on September 23,

2015, the Division issued its first notice of intent (NOI-1) to award all three

groups to Diamond Chemical.            Thereafter, two competitor bidders,

SupplyWorks, also known as Interline Brands, Inc. (SupplyWorks) and

ACCSES NJ/CNA Services (ACCSES), submitted protests of the Division's

notice of intent to award price lines three, four, and seven to Diamond Chemical.

      The Division agreed with the protests by SupplyWorks and ACCSES after

it investigated and determined that Diamond Chemical was ineligible to receive

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the contract award for all ten of Group Two's price lines. Accordingly, the

Division rescinded NOI-1, and on December 14, 2015, it issued a second NOI

(NOI-2) indicating an intent to award a contract to ACCSES for Group Two.

Diamond Chemical then submitted a protest of the Division's NOI-2, arguing its

decision was erroneous. On August 25, 2016, the Director of the Division issued

a "final agency decision with respect to the protest submitted by" Diamond

Chemical, and agreed with Diamond Chemical's arguments.           The Director

ordered "the Bureau to rescind [NOI-2 and] to reinstate the original September

23, 2015 NOI [(NOI-1)], awarding all price line[] items to" Diamond Chemical.

This led to the Bureau's September 1, 2016 issuance of NOI-3, which indicated

"an intent to award the contract to Diamond [Chemical] for all Groups." As with

NOI-1 and NOI-2, NOI-3 provided a due date for the competitor bidders to

submit a protest "in accordance with the Division's administrative reg ulations,

N.J.A.C. 17:12-3.3."

      ACCSES and SupplyWorks then submitted a protest in response to NOI-

3.   On July 10, 2017, the Division wrote to all bidders announcing the

cancellation of the entire RFP. The next day, the Division's Acting Director

issued his "final agency decision with respect to this matter." The decision

provided:

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            In connection with its review of this protest [by
            ACCSES] and a protest submitted by [SupplyWorks],
            the Hearing Unit requested that the Bureau undertake a
            thorough review of the RFP specifications, the
            approved brands listed on the price sheet, and the
            proposals submitted. Based upon this review, the
            Bureau concluded that the list of approved brands did
            not correspond to the RFP specifications. In addition,
            a review of the specifications revealed that certain
            requirements could not be met by any of the products
            proposed by any of the five bidders. Accordingly, on
            July 10, 2017, the Bureau issued a letter to all bidders
            advising it had cancelled the subject procurement and
            rescinded the intended contract award. The letter
            further advised that it was the Bureau's intent to revise
            the specifications and issue a new solicitation.

Because the Division rescinded NOI-3 and cancelled the procurement, the

Acting Director found that the protesting bidders' "points are moot and need n ot

be addressed at this time."

      Diamond Chemical then filed the present appeal. In addition, Diamond

Chemical requested the Division to stay its decision. The Division denied the

request, and Diamond Chemical did not seek emergent review from this court.

      All of Diamond Chemical's arguments on appeal turn on the procedural

question of whether the Division was permitted under N.J.A.C. 17:12-3.3 to

accept, review, and determine more protest submissions from competitor bidders

after the Director issued the August 25, 2016 decision in response to Diamond

Chemical's protest submission regarding NOI-2.           Specifically, Diamond

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Chemical argues that under N.J.A.C. 7:12-3.3(d)(2), "a decision on a protest

'shall be a final agency decision,'" meaning that "pursuant to N.J.A.C. 17:12 -

3.1(b), [the decision] is 'appealable [only to] the Appellate Division.'" Diamond

Chemical therefore contends the Division lacked jurisdiction to reconsider or

disturb its August 25, 2016 "final agency decision." We disagree.

      When reviewing a final agency decision, we are "in no way bound by the

agency's interpretation of a statute or its determination of a strictly legal issue."

U.S. Bank, N.A. v. Hough, 210 N.J. 187, 200 (2012) (quoting Univ. Cottage v.

N.J. Dep't of Envtl. Prot., 191 N.J. 38, 48 (2007)). "However, we defer to an

agency's interpretation of . . . [a] regulation, within the sphere of [its] authority,

unless the interpretation is 'plainly unreasonable.'" Ibid. (alterations in original)

(quoting In re Election Law Enforcement Comm'n Advisory Op. No. 01-2008,

201 N.J. 254, 262 (2010)). This is because "a state agency brings experience

and specialized knowledge to its task of administering and regulating a

legislative enactment within its field of expertise." Ibid. (quoting In re Election,

201 N.J. at 262).

      "In the absence of some legislative restriction, administrative agencies

have the inherent power to reopen or to modify and to rehear orders that have

been entered." Burlington Cty. Evergreen Park Mental Hosp. v. Cooper, 56 N.J.

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579, 600 (1970). An "agency is free to alter any prior decision if it concludes

that to do so is in the public interest." St. Joseph's Hosp. & Med. Ctr. v. Finley,

153 N.J. Super. 214, 223 (App. Div. 1977).

      In its July 11, 2017 final agency decision to cancel the procurement, the

Division indicated that after further internal review, "the Bureau concluded that

the list of approved brands did not correspond to the RFP specifications," and

that "certain [RFP] requirements could not be met by any of the products

proposed by any of the five bidders." Considering the fact that the Division

realized it was unable to attain the products that it actually sought, it was clearly

in the public interest for the Division to effectively reject all bids and cancel the

procurement. See In re Jasper Seating Co., Inc., 406 N.J. Super. 213, 222 (App.

Div. 2009) ("Any or all bids may be rejected when the State Treasurer or the

Director of the Division of Purchase and Property determines that it is in the

public interest to do so." (quoting N.J.S.A. 52:34-12(a))). The final issue before

us, therefore, is whether the Division was procedurally permitted to conduct

further internal review and modify the August 25, 2016 written decision.

      Diamond Chemical primarily contends that because the August 25, 2016

decision stated it was a "final agency decision" by the Division in accordance

with the regulations, all further review and adjudications should have been

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conducted by this court. We find Diamond Chemical's argument unpersuasive,

as it is inconsistent with the language of applicable regulations and case law.

      N.J.A.C. 17:12-3.3(a)(2) provides:

             (a) A bidder . . . may submit a written protest to the
             Director concerning the following:

             ....

             2.    Notice of award of contract(s) or of intent to
             award contract(s) pertaining to the subject
             procurement.

N.J.A.C. 17:12-3.3(d)(2) provides the procedural regulations as to how the

Division responds to protests that the Director accepts to review – it states, in

pertinent part:

             The Director . . . may perform a review of the written
             record or conduct an in-person presentation directly . .
             . . [T]he Director shall make a final written decision on
             the matter. In the case of a review or in-person
             presentation being handled by a designee from within
             the Division, the determination shall be issued by the
             Director, or the Director's designee, and such
             determination shall be a final agency decision pursuant
             to N.J.A.C. 17:12-3.1(b).

Lastly, N.J.A.C. 17:12-3.1(b) states, "Final agency determinations by the

Director on matters of protest are appealable to the Appellate Division."

      On August 25, 2016, the Director responded to Diamond Chemical's

protest to NOI-2, stating that its written decision was his "final agency decision

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with respect to the protest submitted by Diamond [Chemical]." This narrow

language demonstrated the Division's willingness to continue reviewing the

procurement internally, and further corresponded with N.J.A.C. 17:12-3.3(d)(2),

which states that in response to a timely protest, "the Director shall make a final

decision on the matter." Moreover, after the August 25 decision, the Division

issued NOI-3, which explicitly permitted competitor bidders to again proffer

written protests under N.J.A.C. 17:12-3.3(a)(2). Diamond Chemical does not

argue, nor do the regulations prohibit, the Division from issuing an NOI after a

final agency decision. The Division thus did not act on the basis of a "plainly

unreasonable" interpretation of the regulations.

      We implicitly recognized the ability of an agency to continue internal

review of a "final agency determination" in In re Jasper Seating Co., Inc., 406

N.J. Super. 213 (App. Div. 2009), another case involving the Division. There,

the Division issued an NOI and Jasper Seating Company (Jasper), an

unsuccessful bidder, protested. Id. at 219. Subsequently, "the Division issued

a [f]inal [a]gency [d]etermination formalizing its rejection of [Jasper]'s bids . . .

." Ibid.

      Instead of filing an appeal to this court, however, "[a]n email exchange

took place between [Jasper]'s [c]ontract [a]dministrator and the Acting Director

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. . . whereby the Acting Director reiterated the reasons for the" final agency

determination. Id. at 220. Shortly thereafter, Jasper "filed a further protest in

another effort to reverse" the final agency determination. Ibid. Three months

later, the "Acting Director responded in writing . . . and concluded that Jasper

had not presented any facts, information or arguments sufficient to cause the

Acting Director to set aside her [f]inal [a]gency [d]etermination. Nevertheless,

the Acting Director elaborated on her prior determination" by addressing and

rejecting arguments raised in the latter protest which sought to have the Division

waive "minor elements of non-compliance with bid specifications," based on a

provision of the RFP. Ibid. Yet another month later, Jasper, "through a different

law firm, filed another request for reconsideration and a reversal of the Agency's

decision . . . . [T]he Acting Director again responded in writing, reiterating that

she found no basis to alter or vacate the [f]inal [a]gency [d]etermination . . . ."

Id. at 221. Finally, in the same writing, the Acting Director "reminded Jasper

that the recourse available to a bidder disagreeing with a [f]inal [a]gency

[d]etermination is with the Appellate Division." Ibid.

      Since this court did not take issue with the procedural history of the case,

we implicitly recognized that while final agency determinations are

"appealable," the Division may continue to respond to bidders' challenges and

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otherwise conduct internal review if it so chooses. We therefore reject Diamond

Chemical's argument that the Division lacked jurisdiction to reconsider or

disturb its August 25, 2016 final agency decision.

      Affirmed.

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