ALPHA PAINTING & CONSTRUCTION COMPANY, INC. v. DELAWARE RIVER PORT AUTHORITY OF THE COMMONWEALTH OF PENNSYLVANIA AND THE STATE OF NEW JERSEY
OPINION. Signed by Judge Noel L. Hillman on 9/23/2016. (tf, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
ALPHA PAINTING & CONSTRUCTION
DELAWARE RIVER PORT AUTHORITY
OF THE COMMONWEALTH OF
PENNSYLVANIA AND THE STATE OF
PETER J. TORCICOLLO
KEVIN W. WEBER
KAITLYN E. STONE
ONE GATEWAY CENTER
NEWARK, NJ 07102-5310
On behalf of Plaintiff
STEWART JOHN GREENLEAF
THOMAS J. ELLIOTT (pro hac vice)
ELLIOTT GREENLEAF PC
UNION MEETING CORPORATE CENTER V
925 HARVEST DRIVE
BLUE BELL, PA 19422
On behalf of Defendant
HILLMAN, District Judge
Presently before the Court is the motion of Plaintiff,
Alpha Painting & Construction Company, Inc., for a preliminary
injunction and judgment in its favor pursuant to Federal Civil
Procedure Rule 65 and Local Civil Rule 65.1, on its claims
relating to its bid on a contract to paint the Commodore Barry
Bridge, which is operated by Defendant, Delaware River Port
For the reasons expressed below, the Court will
grant Judgment in favor of the Plaintiff and direct the
Defendant to award the disputed contract to the Plaintiff. 1
The Commodore Barry Bridge is a five-lane, 14,000 foot span
of the Delaware River between Chester, Pennsylvania and
Bridgeport, New Jersey.
Due to deteriorating lead-based paint
on the bridge, the DRPA instituted a project to remove the
existing paint by sand-blasting the bridge to the bare metal and
applying three coats of a non-lead-based protective coating.
Safety is a major concern of this project.
During the sand-
blasting process, the lead paint must be contained and
remediated through specific methods and equipment so that it
does not harm the workers, the public, or the environment.
addition to the issues that the old lead paint presents, the
On September 19, 2016 this Court entered a temporary
restraining order (Docket No. 33) precluding Defendant from
awarding the disputed contract pending this Court’s decision on
Plaintiff’s application. On September 22, 2016, Defendant filed
an Emergency Motion for the Dissolution of the Temporary
Restraining Order. (Docket No. 34.) A hearing was set for
Monday, September 26, 2016 at 3:00pm. (Docket No. 35.) Because
the Order accompanying this Opinion will dissolve the temporary
restraining order and impose a permanent injunction consistent
with this Opinion, the Defendant’s Emergency Motion is moot and
the hearing is cancelled.
precarious nature of bridge painting requires the application of
strict safety measures to ensure the safety of the painters,
DRPA employees, and the public who travel on and under the
The DRPA has separated the bridge painting project into
Phase I encompasses the New Jersey approach span
of the bridge, Phase II entails painting the Pennsylvania
approach span and the adjacent toll plaza in New Jersey, and
Phase III completes the project by painting the bridge’s main
cantilevered structure in the middle.
Phase I is almost
complete, with Corcon, Inc. (“Corcon”) having performed the work
on that phase.
In May 2016, DRPA issued an Invitation for Bid (“IFB”),
soliciting bids for Contract No. CB-31-2016 to complete Phase
On May 17, 2016, DRPA held a pre-bid conference so that
project bidders could examine the contract documents, become
aware of the scope and requirements of the project, and visit
the site prior to submitting their bids.
Sealed proposals for
the contract were due on June 16, 2016 at DRPA headquarters no
later than 2:30 pm.
Seven bid proposals were submitted.
The bidders, DRPA
employees, and other interested parties gathered in a DRPA
conference room to observe the public opening of the bids and
the announcement of the apparent lowest bidder.
contract administrator opened each sealed bid one-by-one, and
read aloud the total bid price for each bid.
Alpha 2 had the
lowest bid of $17,886,000.00, making it the apparent lowest
Corcon was the apparent second lowest bidder with a bid
of $17,896,200.00 – a $10,200.00 difference between the two
DRPA’s procurement manual requires that the award of
contracts “must be made to the lowest responsible bidder whose
bid meets the requirements and criteria set forth in the
[Invitation for Bids] unless all bids are rejected or the lowest
responsible and responsive bidder is allowed to withdraw his or
(Docket No. 1-1 at 14.)
Six weeks later, on July 28,
2016, after an undocumented process shrouded in mystery and
obscured from public scrutiny, the DRPA notified Alpha by an
undated letter that it had determined that Alpha was “not
Alpha is an industrial painting contractor, and its primary
business is the painting of bridges. Alpha is prequalified to
perform work in more than forty (40) states. In New Jersey and
Pennsylvania, Alpha is prequalified to perform: projects up to a
value of $200 million for the New Jersey Department of
Transportation; projects up to a value of more than $66 million
for the Pennsylvania Department of Transportation; and projects
up to an unlimited value for the New Jersey Turnpike Authority.
The seven bids were: Liberty Maintenance, Inc. $25,465,270.00;
Corcon, Inc. $17,896,200.00; Blastech Enterprises, Inc.
$18,318,125.00; Jupiter PCCC, Inc. $21,395,000.00; Allied
Painting, Inc. $18,364,225.00; Alpha Painting & Construction Co.
$17,886,000.00; M&J Paint Co. $25,417,200.00.
responsible,” and rejected its bid.
Following the rejection of
Alpha’s bid protest, at a public DRPA Board of Commissioners
meeting on August 17, 2016, DRPA’s Board of Commissioners
approved the recommendation of the DRPA’s Operations &
Maintenance Committee and awarded the Phase II painting contract
to Corcon. 4
As with the earlier decision of the Operations &
Maintenance Committee, the full Board’s decision was made
without any public discussion of the reasons for the selection
of Corcon or the rejection of the Alpha bid and protest.
This case primarily, although not exclusively, hinges on
what occurred between June 16, 2016, when Alpha was deemed the
apparent lowest bidder, and July 28, 2016, when the DRPA
rejected Alpha’s bid.
Alpha claims that DRPA’s decision to
reject its bid was arbitrary and an abuse of discretion, and a
result of DRPA’s desire to award the contract to Corcon, which
is the company currently performing the Phase I contract.
contends that it complied with DRPA’s Procurement Manual and it
determined objectively to reject Alpha’s bid and award the
contract to the next lowest bidder.
It also argued initially 5
Alpha filed a bid protest on July 29, 2016, which the DRPA
denied on August 4, 2016. On August 9, 2016, Alpha filed an
appeal of the denial, and on August 12, 2016 its appeal was
denied. At the same time the DRPA denied Alpha’s appeal, DRPA’s
Operations & Maintenance Committee recommended to the DRPA’s
Board of Commissioners to award the contract to Corcon.
Defendant’s post-trial submissions appear to abandon this
that Corcon is actually the lowest bidder after it corrected a
“miscalculation” in the Corcon bid.
At Alpha’s request to consolidate its application for
preliminary injunction with a trial of the action on the merits
pursuant to Fed. R. Civ. P. 65(a), and with no objection from
DRPA, the Court presided over three full days of testimony from
The Court has considered that testimony, the
parties’ closing arguments, and the pre- and post-hearing
submissions in issuing this decision. 6
Subject matter jurisdiction
Plaintiff Alpha Painting & Construction Company, Inc. is a
corporation duly incorporated under the laws of the State of
Maryland, having its principal place of business at 6800 Quad
Avenue, Baltimore, Maryland 21237.
Defendant Delaware River
Port Authority of the Commonwealth of Pennsylvania
and the State of New Jersey (“DRPA”) is a public entity
authorized by Congress and created by an interstate compact
argument. In any event, for the reasons explained infra pp. 2630, that contention is meritless.
As set forth below, the sole relief sought by Plaintiff is a
permanent injunction awarding it the disputed contract. Because
the only relief sought is equitable and neither party has
otherwise sought a right to a jury trial, this Court has acted
as the factfinder. This Opinion and accompanying Order
represents the Court’s findings of fact and conclusions of law.
between the State of New Jersey and the Commonwealth of
Pennsylvania (“DRPA Compact”), enabled by N.J.S.A. 32:3-1 et
seq. and Pa. Cons. Stat. 3503 to 3509, for the purpose of
developing and maintaining bridges and port facilities between
the two states, including the Ben Franklin, Walt Whitman,
Commodore Barry, and Betsy Ross bridges.
DRPA has its principal
place of business at One Port Center, 2 Riverside Drive, Camden,
New Jersey 08121.
This Court has jurisdiction over this action pursuant to 28
U.S.C. § 1332 because the amount in controversy exceeds the sum
of $75,000.00 exclusive of interest and cost, and there exists
complete diversity between the parties to this dispute. 7
Standard for applications pursuant to Fed. R. Civ. P.
65 and L. Civ. R. 65.1
A party seeking a preliminary injunction must show: (1) a
likelihood of success on the merits; (2) that it will suffer
irreparable harm if the injunction is denied; (3) that granting
preliminary relief will not result in even greater harm to the
The Court has previously questioned whether subject matter
jurisdiction may be exercised over DRPA pursuant to 28 U.S.C. §
1331, when no diversity of citizenship exists between the
parties. See Delaware River Port Authority v. Fraternal Order
of Police Penn-Jersey Lodge No. 30, Civil Action 16-1285
(NLH/JS), Docket No. 4. Such issues turn on whether the case
implicates the interstate compact itself, which perforce raises
a federal question, or merely issues of state or common law
which do not raise possible conflicts with or interpretations of
the compact. The Court does not need to address that issue in
this case because jurisdiction under § 1332 is satisfied.
nonmoving party; and (4) that the public interest favors such
Preliminary injunctive relief is an extraordinary
remedy and should be granted only in limited circumstances.
Pharm., Inc. v. Andrx Corp., 369 F.3d 700, 708 (3d Cir. 2004)
Even though it is generally inappropriate for a federal
court at the preliminary-injunction stage to give a final
judgment on the merits, should an expedited decision on the
merits be appropriate, Rule 65(a)(2) of the Federal Rules of
Civil Procedure provides a means of securing one.
permits a court to “order the trial of the action on the merits
to be advanced and consolidated with the hearing of the
Before such an order may issue, however, the
courts have commonly required that the parties should receive
clear and unambiguous notice of the court’s intent to
consolidate the trial and the hearing, either before the hearing
commences or at a time which will still afford the parties a
full opportunity to present their respective cases.
Texas v. Camenisch, 451 U.S. 390, 395 (1981) (citations
This procedure was followed here with the consent of
Standard for reviewing the decision of the DRPA
“[I]t is inherent in a case of this kind that it is likely
that there will be a factual dispute with respect to the
ultimate question of whether a bidder is the lowest qualified
and responsible bidder.”
Allied Painting, Inc. v. Delaware
River Port Auth. of Pennsylvania & New Jersey, 185 F. App'x 150,
151 (3d Cir. 2006).
This is because the “resolution of the
question requires an agency seeking bids to exercise its
judgment in a way that ordinarily it cannot do with mathematical
Accordingly, a decision of the DRPA may be
overturned “only if its decision was the product of ‘an abuse of
discretion or was arbitrary, unreasonable, or irrational.’”
(quoting Princeton Combustion Research Labs. v. McCarthy, 674
F.2d 1016, 1021–22 (3d Cir. 1982)).
The Stated Reasons Why Alpha’s Bid Was
Rejected Are Arbitrary, Capricious and Not Rational
Alpha’s bid was rejected for two reasons: its bid package
was missing OSHA 300 forms, and it did not fulfill a bid
requirement that it have what are called in the insurance
industry as “experience modification factors” (“EMF”) for the
previous three years arising from work in either New Jersey or
(Docket no. 1-2 at 39.)
Putting aside for a moment the implications of DRPA allowing
Corcon, but not Alpha, to supplement the safety metrics
described by the bid requirements, see infra at 23-25, and the
very limited window EMF provides to assess the safety risk a
contractor poses, the EMF requirement is a curious choice with
potentially profound implications for DRPA’s self-professed
desire to choose “safe” contractors for bridge work. The Court
The “Missing” OSHA 300 Forms
Under OSHA's recordkeeping regulations, certain covered
employers are required to prepare and maintain records of
serious occupational injuries and illnesses using the OSHA 300
Log of Work-Related Injuries and Illnesses (OSHA Form 300), the
Summary of Work-Related Injuries and Illnesses (OSHA Form 300A),
and the Injury and Illness Incident Report (OSHA Form 301).
Employers must fill out the Log and the Incident Report only if
a recordable work-related injury or illness has occurred.
Employers must fill out and post the Summary annually in the
heard testimony that EMF factors are calculated by insurance
regulators in only New Jersey and Pennsylvania and that DRPA
will approve a contractor as “safe” even if its workers’
compensation safety record is so poor it must pay a premium as
high as one and one-quarter percent over standard rates. This
means two things. First, under DRPA bid standards a contractor
who has not performed any work in Pennsylvania or New Jersey
over the relevant time period, regardless of its nationwide
safety record, can never satisfy DRPA’s metric of a workers’
compensation track record (even though such records exist
elsewhere in the insurance industry for work in other states,
and testimony establishes are easily found). Second, an
incumbent contractor who has recently received work from DRPA
will automatically meet the bid requirements even if its
workers’ compensation history is considered subpar by the
insurance industry. As the Court observed at the hearing in
this matter, the testimony established that a company can paint
the Golden Gate Bridge for ten years in a row and not hurt so
much as a sea gull and it will lose a DRPA bridge contract to an
incumbent contractor who has to pay a penalty rate for insurance
based on its recent employee injury records in New Jersey or
Pennsylvania. There are several reasons - some honorable, some
not – as to why DRPA might construct its bid requirements to
favor incumbent contractors already doing local work, but a
principled and rational focus on safety is not one of them.
workplace, even if no recordable work-related injuries or
illnesses occurred during the year. 9
Much of the focus of the testimony centered on whether
Alpha provided OSHA 330 forms in its sealed bid package and, if
so, what happened to them.
Alpha’s bid package was prepared by
S. Tom Kousisis, Alpha’s General Project Manager, who testified
that he included the required forms in his sealed bid package.
He testified that he specifically recalls putting the OSHA 300
forms with the other exhibits attached to the Velo-bound bid
book because he had to fold the legal-size paper the forms are
printed on to fit in the standard-size envelope.
uncontroverted that he checked the box on the bid book’s checklist to indicate that the OSHA 300 forms were included with the
Amy Ash, DRPA’s Acting Manager of Contract Administration,
and Adam Jacurak, DRPA’s Senior Engineer, who oversaw the bidopening process, testified that when they flipped through
Alpha’s bid immediately after the bid opening, Jacurak noticed
that the OSHA 300 forms were missing.
Both sides agree that
Testimony at trial established that although OSHA 300 forms
must be tabulated and posted at work places, the forms are not
provided to the government and are not used by the federal
government for the purpose of assessing a company’s safety
record or compliance with OSHA regulations other than the
Alpha did supply a signed letter and print-out from OSHA’s
website regarding its workplace incidents, a set of materials
Jacurak was not sure would meet the requirements of the IFB. 10
Ash testified that no loose papers were left on the floor or
anywhere in the conference room.
Alpha did not keep a photocopied version of the entire bid
package it submitted to DRPA. 11
Alpha’s original bid package
provided by DRPA at the hearing before this Court had been
altered by Amy Ash from its original state when it was submitted
by Alpha – the Velo binding had been removed, and the exhibits
had been inserted into the appropriate sections of the bid
No OSHA 300 forms were included.
According to OSHA, “In place of the OSHA forms, employers may
also use equivalent forms (forms that have the same information,
are as readable and understandable, and are completed using the
same instructions as the OSHA forms they replace). Many
employers use an insurance form instead of the Incident Report,
or supplement an insurance form by adding information required
by OSHA.” https://www.osha.gov/recordkeeping2014/records.html.
Indeed, Alpha’s letter stated that Alpha “did not have any
recordable injury or sickness on [its] OSHA logs for the past
three years relative to PA or New Jersey work.” (Def. Ex. 22 at
Attachment K; Tr. 364:16-20.) Defendant has not challenged the
accuracy of Plaintiff’s letter.
Kousisis testified that he retained electronic copies of the
bid package and all the exhibits, but he did not photocopy the
entire bid package prior to submission because the voluminous
bid package was Velo-bound and could not be separated for
The Court must pause to note that the ability of bidders to
submit their bids electronically would eliminate tedious
litigation as to the location and content of paper documents.
Even though the Court finds the evidence in equipoise 13 as
to whether OSHA 300 forms were in fact in Alpha’s bid package,
Ash and Jacurak testified inconsistently as to the manner in
which the bid documents from all the bidders were handled,
conveyed, and stored raising entirely preventable concerns about
chain of custody and the integrity both of the process and the
documents themselves. Plaintiff has made much about their claim
that their bid package included the OSHA 300 forms. Ash and
Jacurak are equally adamant that those forms were not in the
envelope when they opened and examined it. Electronic bid
packages frozen in time and secure in content and accompanied by
a metadata chain of custody would have eliminated all of the
ambiguity and consternation and greatly simplified or even
prevented this case. Such a process could easily password
protected submissions and other encryption and other electronic
means to protect the integrity of the bid process. Indeed, Ash
acknowledged both the availability and wisdom of such
procedures. DRPA awards contracts worth millions of dollar and
does so regularly. It is 2016. Much was made of the gigantic
scissors Ash uses to open the sealed bids during what is a
quaint but antiquated public unsealing. It is time for DRPA to
adopt a more modern process. Cf., The T.J. Hooper, 60 F.2d 737
(2d. Cir 1932)(in defining legal duties even common practices
must give ways to modern advances).
Defendant argues that the circumstances strongly suggest that
Kousisis left the forms out in his rush to meet the June 16th
deadline. This argument is not without evidentiary support.
For example, Alpha’s bid arrived right before the deadline and
Kousisis admitted he was scrambling to complete the package and
travelling to obtain a signature from Alpha’s principal. His
manner of assembling the package was haphazard and inconsistent.
He also operated out of different locations and although he
insisted he could print the OSHA 300 forms from any location,
the Plaintiff’s own exhibits demonstrated his computer held
multiple versions. Moreover, the document he did supply, a
different OSHA report, bore his handwriting and the notation
“Attachment K,” the letter he assigned to the OSHA 300 forms.
It would reasonable to infer that he would have reserve that
notation for the OSHA 300 forms themselves, the required form,
rather than any supplemental materials. As noted, however, for
the reasons set forth in this Opinion, we need not resolve
whether Alpha’s bid contained the disputed but ultimately
the missing forms are essentially a red-herring.
Even if the
bid package did not contain the OSHA 300 forms, their absence,
easily rectified, does not justify or sanctify DRPA’s ultimate
decision to reject Alpha’s bid for this simple reason – they did
not matter to DRPA at all.
The testimony at trial firmly
established that the OSHA 300 forms played no meaningful role –
indeed they seem to have played no role at all – in DRPA’s risk
management and safety review.
DRPA proffered the testimony of Marianne Staszewski, who
holds the title of Director of Risk Management and Safety, to
explain her role in assessing Alpha’s bid both as to the OSHA
forms and the EMF factors.
Her testimony was remarkable both as
to what she said and what she did not say.
impressive title, Ms. Staszewski by her own admission does not
have any real role in assessing a contractor’s safety records.
Nor does it appear that she has any particular expertise, work
history, or academic credentials in assessing issues of
workplace safety of any kind much less on the scale of
construction on a major bridge.
Unlike all the other defense witnesses who reviewed their
resumes and recited their credentials, Staszewski appears to
have joined the DRPA after working in some capacity in the
Her role, as described by her own
testimony, was perfunctory and administrative, and as explained
below, involved at best the application of rudimentary
When asked what role the OSHA forms had in her
“safety” review, she candidly admitted she did not conduct a
safety analysis or analyze the forms at all, and simply
confirmed that OSHA forms were supplied, had numbers on them,
and were signed.
When asked how she would conduct a safety analysis in the
absence of OSHA forms and EMF factors, she was, in the view of
this Court, visibly flummoxed, ultimately concluding that she,
the Director of Director of Risk Management and Safety, would
have to consult others at DRPA outside her department, on what
factors to consider in conducting an analysis of a potential
contractor’s safety record.
In short, fifty percent of the
reason Alpha’s bid was rejected was its failure to provide
something DRPA did not really care about.
It is hard to think
of something more arbitrary or capricious.
Alpha’s Lack of EMF Factors
DRPA’s second stated reason to reject Alpha’s bid based on
the rarely invoked and ultimately wrong conclusion that Alpha
was “non-responsible” (as opposed to non-responsive) was the
lack of reported EMF scores.
EMF scores are derived from the
frequency and severity of workplace accidents that occur at an
employer’s jobs, and are developed using payroll by
classification that are compared to other similar
classifications and size of employers.
An EMF score is a
reflection of workers’ compensation claims arising from a
bidders’ prior jobs.
EMF does not take into account any
workplace incidents that injure non-employees, or do not result
in the filing of workers’ compensation claims.
They also appear
to reflect only work done in Pennsylvania and New Jersey.
Three weeks after the bid openings, on July 7, 2016,
Jacurak prepared his bid review memorandum in accordance with
the Engineering Manual. 14
He acted at the oral direction of Ash
who received her direction orally from the General Counsel’s
Although both had a central role in the administration
of the project, and were proffered by DRPA as key players in the
process, neither had any idea at the time how DRPA intended to
deal with the issues they had themselves identified weeks
In any event, Ash sent the two lowest bids - Alpha’s and
Although described by DRPA as a “bid memorandum,” Jacurak’s
memorandum to Staszewski’s department is really just an email
asking her department to proceed. It was sloppy, perhaps due to
haste. It purported to convey Alpha’s OSHA 300 forms which
Jacurak believed DRPA did not have and asked in essence for an
expedited review because the relevant committee of the DRPA
board was poised to award the bid but cited a date in the past.
Staszewski’s email response stating the obvious (although OSHArelated, the attachment was not an OSHA 300 form) and Jacurak’s
mea culpa reply (in essence “I should have been more careful”)
is a curious, even odd, exchange. A reader is left with the
impression the exchange is a pro forma exercise rather than part
of an objective, collaborative, review process.
Corcon’s - to the various departments to review their piece of
the bids. 15
The Office of Business Development and Equal
Opportunity reviewed the MBE/WBE 16 solicitation and commitment
forms, the Office of the Inspector General reviewed the
political contribution disclosure certification forms, the
finance department reviewed the financial documents, and the
risk management department reviewed the OSHA requirements and
the EMF requirements.
It appears that all the departments deemed the bids of
Alpha and Corcon to be satisfactory, except for risk management.
Staszewski testified at length that her risk management
assessment centered almost entirely on a simple calculation of a
bidder’s EMF score.
Staszewski stated that her general practice
was that in order to receive her stamp of approval 17 on a
Ash testified that she had broken the seal on the Alpha bid
and reordered the Alpha documents (but not the Corcon bid)
before sending them for review. She did this because the bid
documents form the basis for the contract after the bid is
awarded. Ash, an experienced contract administrator, familiar
with the bid specifications, and personally knowledgeable about
the contents of both the Corcon and Alpha bids, believed that
Alpha was the likely awardee.
MBE stands for a minority owned business, and WBE stands for a
women owned business. Ownership by these individuals means the
business is at least 51% owned by such individuals or, in the
case of a publicly-owned business, at least 51% of the stock is
owned by one or more such individuals.
Staszewski literally wrote the word “Approved” on the letter
provided by the bidder’s insurance broker and returned it to
bidder’s risk assessment, she added together a bidder’s EMF
score for the previous three years and divided by three in order
to compute a three-year EMF average.
If that average was 1.25
or less, a bidder would pass the DRPA’s risk assessment.
Because Alpha did not do any work in New Jersey or
Pennsylvania on its own in 2015, 2014, and 2013, it did not
qualify for an EMF score.
As stated above, an EMF is a
multiplier applied by workers’ compensation insurers to the
standard premium paid by insureds for workers’ compensation
insurance, relative to the anticipated exposure of risk as
ascertained by accounting for the frequency and severity of
workers’ compensation claims against the insured over the last
three complete reporting years as compared with other similar
The testimony of Alpha’s insurance broker explained that
the reason for a company’s “does not qualify” status can be the
result of it being a new business or that an existing company
did not have any business in that state for that year.
company that does not qualify for EMF is reported as a 1.0,
which means that the company would pay standard market rates for
workers’ compensation insurance.
This is in contrast with a
company that has an EMF score of, for example, .80, which would
mean the company would pay 80 percent of the standard market
rate for workers’ compensation insurance.
Stasweski testified that her risk assessment analysis, and
the requirement that a company have an EMF of 1.25 or less,
shows that the company was not suffering from frequency or
severity of losses, and it therefore would pass her risk
Alpha’s three-year average EMF in New Jersey was
1.00 (1.00 for the year 2013; 1.00 for the year 2014; and 1.00
for the year 2015) and Alpha’s three-year average EMF in
Pennsylvania was 0.935 (0.805 for the year 2013; 1.00 for the
year 2014; and 1.0 for the year 2015).
Even though a 1.0 EMF in
New Jersey and a .935 in Pennsylvania were both below
Staszewski’s 1.25 automatic approval threshold, Staszewski
determined that she could not perform a risk assessment and
safety analysis on Alpha, because Alpha’s safety record was
unknowable due to Alpha’s lack of work in New Jersey and
Pennsylvania for several years. 19
Staszewski stated, however, that a new contractor or joint
DRPA never advised bidders that an EMF of less than 1.25 in
Pennsylvania and New Jersey was required, and the IFB is silent
as to this requirement. Where the figure comes from is, like
most things in this case, a mystery. Staszewski testified that
in her experience it was an industry standard, but when pressed
for a source she could not cite an industry publication,
organization, government agency, private authority, or any other
origin for the standard or how it was derived.
Staszewski did not wish to consider the EMF from Alpha’s joint
venture work in Pennsylvania, which included Alpha’s recent work
on the Ben Franklin Bridge.
venture could be approved through DRPA’s risk management and
safety assessment without having EMFs in Pennsylvania and New
Jersey or only having 1.00 EMFs in those states.
could not explain why a 1.00, or “does not qualify,” EMF score
could be acceptable in one instance, but not in another, such as
in Alpha’s case here.
Additionally, as noted previously,
Staszewski could not describe what other factors or qualities a
bidder would need to possess in order to secure such her
department’s approval. 20
Despite DRPA’s purported concern about a bidder’s safety
record, it does not appear that any other safety data of the
bidders beyond the extent of filed workers’ compensation claims
against those bidders is considered.
As noted above, EMF does
not take into account any incidents that injure non-employees.
For example, Staszewski agreed that if a bridge painter dropped
a beam into a bus or train car as it crossed the bridge, and it
killed all the passengers, as long as none of the bridge
painters were injured and none filed workers’ compensation
claims, such an incident would not be reflected on the company’s
EMF score, and correspondingly not considered in DRPA’s “risk
assessment” of a bidder.
Four of the seven bidders on this contract had a 1.0 EMF score
in New Jersey and Pennsylvania during the relevant time period
and technically “did not qualify” for this contract.
Corcon’s OSHA 300 forms revealed that Corcon had seven
workers’ compensation injuries on the Commodore Barry Bridge
during the Phase I project in 2015.
During the past three
years, Alpha had none or one in all the states it has worked.
Staszewski stated that she did not consider this information in
her risk assessment and safety analysis.
Nothing in the record before the DRPA prior to its final
decision to characterize Alpha as non-responsible justified that
conclusion and nothing before this Court supports it either.
fact all the evidence is to the contrary. 21
For his part, DRPA’s
own chief engineer Michael Venuto testified that he had no
reason to doubt that Alpha was a responsible party, with a good
safety record, and with the requisite credentials and capability
to competently sandblast and paint the Commodore Barry Bridge.
DRPA did not refute the evidence that Alpha is qualified and
capable of performing the work required of the Phase II project.
Alpha’s bid included copies of its QP1 and QP2 certifications
from the Society for Protective Coatings (“SSPC”), which confirm
that Alpha is capable of removing industrial hazardous paint.
Alpha also has extensive experience painting major bridges
throughout the United States, including but not limited to the
Tobin Bridge in Massachusetts; the Huey Long Bridge in
Louisiana; the Chesapeake Bay Bridge in Maryland; and the Amtrak
train station and Benjamin Franklin Bridges in Philadelphia,
Pennsylvania. The value of these projects ranged from
approximately $30 million to $75 million. Alpha has also
previously completed work for DRPA as part of a joint venture
with another bridge painting contractor. Alpha painted the
Philadelphia approach of the Ben Franklin Bridge from 2007 to
This Court cannot conclude that Staszewski’s inability to add
three numbers together and then divide them by three for Alpha
renders all of that meaningless.
DRPA’s analysis of Alpha’s workers’ compensation experience
was just as arbitrary and capricious as their consideration of
Alpha’s lack of OSHA 300 forms.
As we have noted, with the
latter they rejected Alpha’s bid for not including something
DRPA did not consider.
While it is fair to say DRPA considered
EMF factors, as simple as the analysis was, in that former
instance DRPA rejected Alpha’s bid for not providing something
Alpha did not have and could not have because they performed no
work in the narrow circumstances as defined by the bid book.
Whether Alpha was actually safe, or had a good workers’
compensation claim record, was irrelevant to the DRPA.
All of this demonstrates that DRPA’s concerted effort to
deem Alpha non-responsible was simply an effort to squeeze a
square peg in a round hole.
No rational person would consider
They were, however, non-responsive.
Which begs the obvious question.
Why was their bid then, as
DRPA’s Procurement Manual directs, not rejected on that basis
First of all, the time had passed for the DRPA under its
procurement rules to declare Alpha non-responsive. 22
DRPA had ten (10) days from the unsealing of the bids to deem
a bid package “non-responsive” and reject it on that basis.
at first blush suggest DRPA did not view them as such despite
knowing as early as the very day of the bid opening that Alpha
had not met the precise requirements of the bid specifications.
The inescapable conclusion is that the reason is more subtle
than that. 23
Section A.10.3 of the IFB specifically required a bidder’s
“Experience Modification Factors for all work completed in the
During cross-examination, DRPA’s chief engineer Michael Venuto
acknowledged that Corcon and certain DRPA employees had worked
on a joint film project concerning the Commodore Barry Bridge
that was actively and currently being promoted for broadcast
either on television or the internet. The line of questioning
appeared to be designed to suggest that the motive for DRPA’s
preferential treatment of Corcon might be the glamour of media
attention in the otherwise staid world of bridge maintenance.
The import of the testimony is merely that – a suggestion.
There is insufficient evidentiary support for a finding that
DRPA employees had a conflict of interest with Corcon and that
this relationship tainted the bid process here. However, while
evidence of an improper motive might explain outwardly arbitrary
action it is not a required element of Plaintiff’s claims here.
What the testimony does show is the importance of transparency
and an objective process. Ambiguity and opaqueness breed
suspicion. Most people recognize that the absence of evidence
is not necessarily evidence of absence. Public entities must
act with integrity of course but it is equally important that
they convey the appearance of integrity as well. The testimony
also highlights the “form over function” nature of the
reluctance to convey to Alpha the perceived deficiencies in its
bid package during the process. Apparently, DRPA engineers can
interact with Corcon employees at high levels concerning a film
project while Corcon’s bid application remains outstanding
before those same DRPA engineers but no one at DRPA may
communicate with Alpha about its bid. Even if the Court adopted
DRPA’s cribbed definition of transparency, that is not
State of New Jersey and the Commonwealth of Pennsylvania,
covering the preceding three (3) reporting years.”
18-1 at 16.)
Corcon provided its EMF for the years 2016, 2015
and 2014, when it was required to provide EMF for the years
2015, 2014, and 2013.
Since the year 2016 was only half over at
the time the bids were unsealed that number was “green” and had
no meaning 24 and the absence of a 2013 figure meant Corcon’s bid
was also non-responsive.
In short, if DRPA had applied its
rules uniformly and rejected Alpha’s bid as non-responsive it
would have been compelled to do the same to Corcon’s.
DRPA appears to have chosen to declare Alpha “non-responsible,”
a rationale that does not withstand even a cursory review much
Alpha Was Treated Differently and
Corcon Was Afforded Preferential Treatment
The arbitrary and capricious risk assessment in this case
is sufficient to warrant the relief sought by Alpha, but there
is more to this story – much more – because not only did it
treat Alpha’s bid in an irrational way, as we find below DRPA
went out of its way to shepherd the Corcon bid through the
Despite Denying Alpha the Same Opportunity,
The DRPA Allowed Corcon to Supplement Its Bid
Stasweski testified an EMF factor is computed only after the
claim experience for a full calendar year.
As we have noted, Corcon’s submitted bid did not meet the
bid specifications in what DRPA itself contends is a material
Contrary to Section A.10.3 of the IFB, Corcon only
provided complete EMF’s for the years 2015 and 2014.
Alpha’s bid, Corcon’s bid as it relates to the safety and risk
assessment metrics was incomplete and therefore non-responsive
to the bid specifications.
Not deterred, Staszewski testified
that she contacted Corcon’s insurance broker, a woman she had
known for many years and was friendly with, in order to obtain
Corcon’s EMF for the proper years.
The broker complied and sent
Staszewski figures for 2013 allowing her to complete her
arithmetic and approve Corcon’s bid. 25
Despite its protestations to the contrary, Alpha was not
afforded the same opportunity to supplement its safety and risk
Staszewski did call Alpha’s broker as well but
The Court notes, as Plaintiff has, that the 2013 numbers were
exactly the same numbers to three decimal points as Corcon’s
numbers for 2014. Based on the Court’s understanding of how EMF
figures are calculated and the nature of the data included in
the calculus (number of man-hours assessed against injuries over
the course of a year at a large company by state) the chances
that a company would have the exact same EMF to three decimal
points in the same state two years in a row seems akin to
winning the lottery. Indeed, the other numbers differ by state
and year consistently. Regardless of what number
Staszewski obtained from her colleague, the issue is not the
number but the decision of DRPA to not only seek it but use it
to award the contract to Corcon in violation of its own
Procurement Manual and the bid specifications.
merely to confirm that it did not have sufficient work in New
Jersey or Pennsylvania in the relevant years to generate an EMF.
Confirming that something does not exist is not the same thing
as allowing someone to provide additional information that does
This is especially glaring in light of Alpha’s repeated
and ignored communications offering to provide any additional
information required to assess its bid.
While it would have
been within DRPA’s right to deny that request, they imposed no
such rule on Corcon, not only allowing them to supplement their
bid but arranging themselves for the key piece of missing
information that allowed for Staszewski’s immediate approval and
ultimately DRPA’s final approval of the Corcon bid.
DRPA Unilaterally Modified Corcon’s Bid In Its Favor
In the next day or two after the June 16, 2016 bid opening,
Jacurak reviewed all of the bids by inputting numbers from the
bids into a spreadsheet.
He determined that three of the
bidders, Liberty Maintenance, Inc., Allied Painting, Inc., and
Corcon, had included a mobilization and clean-up line item that
exceeded 7.5% of the total bid, excluding mobilization and
clean-up and site coordination and conditions in violation of
the bid specifications.
The IFB advised all bidders that the
line item for mobilization and clean-up would be limited to a
maximum of 7.5% of the total bid, excluding the amounts for
mobilization and clean-up and site coordination and conditions.
According to DRPA, the IFB authorizes DRPA to limit the
price bid for mobilization and clean-up to the specific
percentage contained in the IFB (IFB at Q-1), and the IFB
permits DRPA to correctly compute the amount of the total bids
for accurate comparison purposes (IFB at A-3).
Based on this
interpretation of the IFB, Jacurak corrected the total bid
amounts for the Liberty, Corcon and Allied.
When corrected, the
resulting total bids were: Liberty $25,456,415.25; Corcon
$17,830,290.00; Allied $18,326,725.00.
Corcon’s corrected total
bid amount made Corcon the apparent lowest bidder, approximately
$55,710 lower than Alpha’s bid.
The problem with Jacurak’s conclusion that he could change
the bid – if indeed he was the one who made that decision - and
the subsequent recalculation is two-fold, one substantive, the
First, none of the provisions in DRPA’s
Procurement Manual or the IFB allow the DRPA to restate, or in
effect change, the line item for mobilizations and clean-up
The provisions that come closest, Sections A.7.5 and
A.7.6 of the IFB, are not nearly as broad as DRPA contends.
These sections, when fairly read both independently and in
context of the bid package as a whole, clearly address instances
in which the bidder commits a mathematical error of some kind.
An example might be a bidder who promises to provide 10 widgets
at $.10 each but extends the line item out as $1.10 rather than
In such a situation, anyone involved in the process, a
bidder, a contract administrator, or a reviewing court would
understand the bidder intended to quote a price of $1.00 and not
But as Jacurak candidly admitted in his testimony, Corcon’s
lump sum quote for that particular item was not the result of
any discernable mathematical error amenable to a simple
It was not a “miscalculation.”
more that the IFB allowed for that item.
Corcon simply bid
As Jacurak also made
clear, and the clear terms of the IFB dictate, the maximum of
7.5% on mobilization and clean-up costs was just that – a cap or
While the precise numerical cap was defined after a
process of subtraction of figures chosen by the bidder and
simple multiplication, the line item itself was not the sum,
derivative, or product of a rote mathematical process applied to
otherwise given or known numbers.
It was a number chosen by the
bidder who at the same time had the incentive to keep it as low
as possible to lower the overall bid.
Stated differently, so long as the cap was not exceeded a
bidder could choose any number it wanted for the line item – so
long as it did not exceed the cap.
Choosing a number in excess
of the cap does not subject the line item to recalculation
according to the whim of DRPA. 26
and therefore unacceptable. 27
It makes the bid non-responsive
But as other aspects of this
Opinion should make clear, for reasons unknown, DRPA was not
inclined to reject Corcon’s bid.
The second, and glaring, problem with the recalculation of
Corcon’s bid is the gross time delay in implementing it and the
fact that it occurred after DRPA had already decided to reject
By Friday, June 17th, by Ash’s recollection or
certainly no later than Tuesday, June 21, 2016, if Jacurak’s
conflicting testimony is believed, Ash, Jacurak, and DRPA’s
legal counsel knew, despite whatever problems there might be
with Alpha’s bid package, that Corcon – and not Alpha - would be
the lowest bidder if DRPA’s unilateral recalculation of Corcon’s
mobilization and clean-up costs was allowable.
Instead of immediately alerting Liberty, Allied, and Corcon
and the rest of the bidders of DRPA’s recalculation of these
three bids, and the effect it would have on the lowest bidder
determination, DRPA waited until August 9, 2016 to send a letter
to these three bidders, copied to the other bidders, confirming
To be clear, under DRPA procurement rules the bidder may not
modify its bid once opened. And it should be obvious that to
allow DRPA unbridled discretion to change a line item it deemed
too high (or too low) would render the bid process as a whole a
DRPA Procurement Manual 5.d.
that they would accept and be bound by the mobilization and
clean-up costs as calculated by the DRPA. 28
This was almost two
weeks after DRPA rejected Alpha’s bid for being “not
responsible” on July 29, 2016, and almost two months after the
bids were opened.
If DRPA was permitted to recalculate a bidder’s
mobilization and clean-up costs, and Corcon’s bid was otherwise
in compliance with the IFB, why would DRPA have not simply
informed all the bidders that Corcon was actually the lowest
bidder in mid-June or at least re-set the numbers for everyone
to see in the context of the on-going bid review?
DRPA, as a public entity, have an obligation to hold the true
lowest bidder to its price?
The answer is obvious.
At best, the unexplained delay
highlights the bid review process as the black box it
represents, obscure and unexplained, and lacking any indicia of
transparency or the hallmarks of a deliberative process.
worst, the delay simply puts the lie to the notion that DRPA
believed it had the legal authority to recalculate the bid and
Several witnesses testified that they understood that they
were precluded from ex parte contacts with the potential
contractors during the bidding process and described this a
tenet of transparency. In general, this is understandable and a
commendable practice. However, the use of this procedure late
in the process confirms that DRPA could indeed remain
“transparent” and simultaneously communicate with bidders when
issues arose and fairness dictated it.
exposes the August 9th letter writing exercise as a post-hoc
rationalization designed to create the illusion rather than the
substance of a proper bid review.
Despite a Claim of Transparency, the DRPA’s
Deliberate Process is Opaque and Unreviewable
In addition to DRPA’s superficial safety and risk
assessment and the favored treatment it afforded Corcon, an
evaluation of every other aspect of the bid review and award
process supports the conclusion that DRPA acted in an arbitrary
and capricious manner.
While we hold that none of these things
standing alone would be sufficient to warrant the relief Alpha
seeks, they are nonetheless significant evidence of DRPA’s
apparent intent to conceal rather than disclose the reasons for
Such reticence, otherwise unjustified, makes it
more likely than not that the stated reasons for a decision are
not the real ones, a particularly egregious form of
On or around July 8, 2016, Staszewski stamped “approved” as
to Corcon’s risk assessment and rejected Alpha’s.
By her own
testimony, however, Staszewski was not the decision-maker who
deemed Alpha to be “not responsible.”
Almost three weeks passed
until July 28, 2016, when Ash, six weeks after the bids were
opened, emailed an undated 29 rejection letter to Alpha revealing
Ash explained that the letter was undated because she was in a
for the first time that DRPA considered them “not responsible”
because of their failure to provide suitable OSHA and EMF
A reader of the letter would be forgiven for
concluding that Ash had made the decision to reject Alpha.
reader would be wrong.
Ash was merely a scribe who testified
adamantly that she was not the decision-maker who deemed Alpha
As we have noted, the same is true for
Jacurak and Venuto as well.
If neither the chief or senior engineer, nor the acting
manager of contract administration, nor the director of risk
management and safety made the decision that Alpha was “not
responsible,” who did?
That question was posed to each of these
DRPA employees, and none could provide the answer.
testimony depicts the decision-maker as the apparition of the
Wizard of Oz before the curtain is thrown open.
Only here, the
curtain remains closed tight.
One evident reason for this iron curtain is the invocation
of attorney-client privilege at every turn when these DRPA
employees were questioned about any decision-making.
appears to be a result of counsel being intimately involved from
the beginning and throughout the bid review process even before
the prospect of a bid challenge and litigation.
rush to leave DRPA’s offices because of heightened security
associated with a Democratic National Convention event.
The attorney-client privilege is deeply embedded in our
jurisprudence, and the privilege recognizes that sound legal
advice or advocacy serves public ends and rests on the need to
“encourage full and frank communication between attorneys and
Upjohn Co. v. United States, 449 U.S. 383, 389
Preserving the sanctity of confidentiality of a
client’s disclosures to his attorney promotes an open atmosphere
of trust, and where the privilege is applicable, it must be
given as broad a scope as its rationale requires.
There are few privileges more sacrosanct or more worthy of our
respect in a land governed by law.
This privilege extends fully to corporations and public
entities such as the DRPA that receive legal advice.
See In re
Grand Jury Subpoenas Duces Tecum Served by Sussex County, 574
A.2d 449, 455 (N.J. Super. Ct. App. Div. 1989) (finding that the
attorney-client privilege is fully applicable to communications
between a public body and an attorney retained to represent it).
But, as the Supreme Court has recognized, “‘the
administration of the privilege in the case of corporations
presents . . . special problems.
Communications which relate to
business rather than legal matters do not fall within the
protection of the privilege.’”
Louisiana Mun. Police Employees
Ret. Sys. v. Sealed Air Corp., 253 F.R.D. 300, 305–06 (D.N.J.
2008) (quoting Commodity Futures Trading Comm'n v. Weintraub,
471 U.S. 343, 348 (1985)).
Thus, the general rule is “while
legal advice given to a client by an attorney is protected by
the privilege, business advice generally is not.”
In order to prevent corporate attorneys from abusing
the privilege, the person claiming the privilege should
demonstrate that the communication would not have been made but
for the client’s need for legal advice or services.
(quotations and citations omitted).
Nor can a lawyer assume the
role of executive decision-making and by virtue of his or her
status as a lawyer deem all his or her communications
Because of the procedural posture of these proceedings, the
scope of DRPA’s invocation of the attorney-client privilege was
not assessed to determine what communications between DRPA staff
and in-house counsel were related to legal issues or business
Instead, the DRPA blanketed all of its deliberations –
from the initial bid review by internal DRPA staff through the
“public” consideration by the Operations Committee and Board of
Commissioners – under the cloak of attorney-client privilege.
This is an overbroad use of the privilege and a perfect recipe
To be clear, the Court does not suggest that DRPA was
required to waive any valid privilege to make out its defense,
and as the specter of litigation arose from the decision to
reject Alpha’s bid the scope of those communications privileged
But DRPA cannot have it both ways.
cannot delegate executive functions to lawyers, have those
lawyers dictate the actions of non-lawyers 30 who communicate with
the public, 31 cloak the entire process in the privilege and then
assert in the same breath that the process is transparent.
DRPA has chosen through their own procedures to leave a
void where disclosure of a rational, fair and deliberate process
A “non-lawyer’s statements do not automatically become
privileged simply because, at some point, that person interacted
with or learned from an attorney.” HPD Labs., Inc. v. Clorox
Co., 202 F.R.D. 410, 417 (D.N.J. 2001) (citation omitted). “To
hold otherwise would give in-house counsel a strategic incentive
to impart basic legal knowledge to corporate employees and then,
during litigation, claim that statements made by those employees
in the regular course of business are protected because they
build on or derive from counsel's teachings in some manner.
Such a construction would subject the privilege to abuse and,
hence, must be avoided.” Id. (citation omitted).
The privilege “protects only those disclosures - necessary to
obtain informed legal advice - which might not have been made
absent the privilege.” Westinghouse Elec. Corp. v. Republic of
the Philippines, 951 F.2d 1414, 1424 (3d Cir. 1991) (citation
omitted). The attorney-client privilege is waived when
privileged information is disclosed to a person outside of the
attorney-client relationship. Westinghouse Elec. Corp., 951
F.2d at 1424. The act of disclosing privileged information to a
third-party indicates that the client did not intend to keep the
communication secret. In re Teleglobe Communications Corp., 493
F.3d 345, 361 (3rd Cir. 2007). Specifically applicable to the
case here, “a communication between an attorney and client will
not be privileged if the communication was made with the
understanding that it would be imparted to third parties.”
Robertson v. Cent. Jersey Bank & Trust Co., 834 F. Supp. 705,
708 (D.N.J. 1993) (citations omitted).
A contrary rule would allow the mere presence and
involvement of a lawyer to shield public agencies from
No public agency should be allowed to involve
in-house counsel in every business decision in order to shield
its operations from the public under the guise of attorneyclient privilege. 32
That is not the law or their public duty.
Further evidencing DRPA’s lack of transparency is DRPA’s
refusal to communicate with Alpha when it inquired on the status
of the contract.
On July 7, 2016, Kousisis had not yet heard
from DRPA regarding the Contract, and telephoned Vijay Pandya,
Pandya did not answer, and Kousisis followed
up on this same date with an e-mail to Pandya, Ash, and Jacurak.
In order to “prevent corporate attorneys from abusing the
privilege by using it as a shield to thwart discovery, the
claimant must demonstrate that the communication would not have
been made but for the client’s need for legal advice or
services.” Leonen v. Johns-Manville, 135 F.R.D. 94, 99 (D.N.J.
1990) (citation and quotation omitted). Moreover, an attorney
acting as a business executive, rather than “peculiarly within
the province of an attorney at law,” cannot assert the attorneyclient privilege. Id. (citing Metalsalts Corp. v. Weiss, 184
A.2d 435, 440 (N.J. Super. Ct. Ch. Div. 1962) (finding that inhouse counsel “undertook to serve as an investigator and not as
a lawyer,” and that the “service rendered could have been
rendered by any corporate agent who was not a lawyer,” thus
barring the application of the attorney-client privilege)); see
also Rowe v. E.I. duPont de Nemours & Co., 2008 WL 4514092, at
*8 (D.N.J. Sept. 30, 2008) (citation omitted) (explaining that
“modern corporate counsel have become involved in all facets of
the enterprises for which they work,” and that “in-house legal
counsel participates in and renders decisions about business,
technical, scientific, public relations, and advertising issues,
as well as purely legal issues”).
Kousisis’ email stated: “I am just reaching out to you to verify
that nothing else is needed from Alpha for the above subject
project [(i.e., Contract No. CB-31-2016)], prior to the Board
meeting of July 20, 2016.” (Pl. Ex. 7; Tr. 52:1-3.)
receipts for the e-mail confirm that Ms. Ash and Mr. Pandya
received and read the e-mail on July 7, 2016.
Yet, no one from
DRPA responded to Mr. Kousisis’ e-mail, and no one from DRPA
informed Kousisis about any issue with Alpha’s OSHA 300 forms or
any other perceived problems with Alpha’s bid.
Even though Jacurak, Ash, and Staszewski testified that
they were precluded from communicating directly with bidders,
none of these DRPA employees could point to a DRPA rule that
disallows such contact, or directs that DRPA staff completely
ignore an apparent lowest bidder’s inquiries into the status of
the contract award process.
As we have noted, when they wanted
to do so, DRPA had a procedure to communicate to bidders that
was transparent and procedurally fair to all.
And they used it
in this very matter in their effort to lower Corcon’s bid.
as Staszewski’s testimony demonstrates, did DRPA have any
difficulty making ex parte contact with a bidder’s agents.
Also troubling about DRPA’s contract award process is the
fact that there was no public discussion or public deliberation
of what transpired with the review of Alpha’s and Corcon’s bids.
There also was no public discussion or deliberation of the
determination that Corcon should be awarded the contract.
of the discussions and deliberations were conducted in
“executive sessions” that excluded public access.
Only the 30-
second vote to approve the Operations Committee’s recommendation
to award the contract to Corcon was made public.
DRPA’s procurement manual provides that “in order to be
considered a responsible bidder . . . the bidder/offerer must
possess the capability to fully perform the contract
requirements in all respects and the integrity and the
reliability to assure good faith performance.”
(Def. Ex. 3 at
Ch. 6.; Tr. 436:14-18.)
Even after three days of testimony and substantial briefing
and argument, the Court is still left to guess who made the
decision to deem Alpha incapable of fully performing “the
contract requirements in all respects and the integrity and the
reliability to assure good faith performance.”
Even if the
decision to find Alpha “not responsible” was proper under DRPA
guidelines, the fact that no one outside of DRPA knows the who,
what, where, when, how of that decision is more evidence the
decision was arbitrary and an abuse of discretion. 33
Our conclusion in this respect is buttressed by the Open Public
Meetings Act (N.J.S.A. 10:4-7). More specifically, N.J.S.A.
10:4-12b(7) states that “[a] public body may exclude the public
from that portion of a meeting involving ... [a]ny matters
falling within the attorney-client privilege, to the extent that
confidentiality is required in order for the attorney to
What Is the Appropriate Remedy?
The foregoing findings fully support a determination that
DRPA’s actions relating to the procurement and award of Contract
CB-31-2016 were an abuse of discretion, arbitrary, and
Allied Painting, Inc. v. Delaware River Port
Auth. of Pennsylvania & New Jersey, 185 F. App'x 150, 151 (3d
Cir. 2006) (citing Princeton Combustion Research Labs., Inc. v.
McCarthy, 674 F.2d 1016, 1021–22 (3d Cir. 1982)).
reached that conclusion, the Court must determine the remedy for
DRPA’s arbitrary actions.
Even though courts have recognized the necessity of
exercising restraint in interfering with procurement decisions,
when a court has found that an agency’s decision lacks any
reasonable basis, the court must exercise its discretion by
balancing three factors: (1) the practical considerations of
efficient procurement of supplies for continuing government
operations; (3) the public interest in avoiding excessive costs;
exercise his ethical duties as a lawyer.” Thus, our Legislature
has expressly recognized that public scrutiny of matters
traditionally falling within the purview of the attorney-client
privilege is often inimical to the public interest,
notwithstanding that a governmental entity is the client. See
Pillsbury v. Freeholders Cty. of Monmouth, 133 N.J. Super. 526,
535, 337 A.2d 632 (Law Div. 1975), aff'd 140 N.J. Super. 410,
356 A.2d 424 (App. Div.1976); see also Biunno, New Jersey Rules
of Evidence, Comment 2 to Evid. R. 26 (1989).
and (3) the bidder’s entitlement to fair treatment through
adherence to statutes and regulations.
Research Labs, 674 F.2d 1016 at 1021–22 (citing Sea-Land Serv.,
Inc. v. Brown, 600 F.2d 429, 434 (3d Cir. 1979)) (explaining
that “a district court's discretion as to whether or not to
grant a preliminary injunction cannot be predicated upon just
any violation of applicable statutes or regulation; only if the
violation, if committed, renders the agency decision irrational
may the district court go on to consider whether a balancing of
the three Sea-Land factors justifies the grant of a preliminary
injunction with all the attendant disruption of orderly
DRPA’s determination to award Corcon the contract was
irrational because it arbitrarily deemed Alpha to be a nonresponsible bidder by violating its own procurement rules to
recraft Corcon’s bid into the lowest responsive and responsible
At 2:30 pm on June 16, 2016, Alpha was the lowest
responsive, responsible bidder for Contract CB-31-2016, and
Corcon was not.
DRPA’s arbitrary and capricious actions over
the next two months flipped that result without any meaningful
justification or rational process.
An aggrieved bidder such as Alpha cannot obtain money
damages as a result of DRPA’s conduct.
M. A. Stephen Const. Co.
v. Borough of Rumson, 288 A.2d 873, 874 (N.J. Super. Ct. Law.
Div. 1972), aff'd sub nom., M. A. Stephen Const. Co. v. Borough
of Rumson, 308 A.2d 380 (N.J. Super. App. Div. 1973) (quoting
Commercial Cleaning Corp. v. Sullivan, 222 A.2d 4, 7 (N.J.
1966)) (other citations omitted) (“The general rule is that an
improper award of a public contract to one other than the low
bidder does not entitle the low bidder to a recovery of damages
from the public body.”).
Accordingly, an injunction is
appropriate where there exists a threat of irreparable harm such
that legal remedies are rendered inadequate.
Davila, 125 F.3d 148, 164 (3d Cir. 1997).
Irreparable harm would result if DRPA is not enjoined from
proceeding on the contract with Corcon.
As the New Jersey
Supreme Court observed forty years ago:
Bidding statutes are for the benefit of the taxpayers and
are construed as nearly as possible with sole reference to
the public good. Their objects are to guard against
favoritism, improvidence, extravagance and corruption;
their aim is to secure for the public the benefits of
unfettered competition. To achieve these purposes all
bidding practices which are capable of being used to
further corrupt ends or which are likely to affect
adversely the bidding process are prohibited, and all
awards made or contracts entered into where any such
practice may have played a part, will be set aside.
Terminal Const. Corp. v. Atl. Cty. Sewerage Auth., 341 A.2d 327,
330 (N.J. 1975); see also Cubic W. Data, Inc. v. New Jersey Tpk.
Auth., 468 F. Supp. 59, 69 (D.N.J. 1978) (“The general citizenry
is also entitled to a guarantee that public contracts are being
awarded on the basis of full compliance with the bidding
With these observations in mind, there is no need to start
the bidding process over, as such a remedy would be adverse to
the public good, and unfair to Alpha.
See In re Jasper Seating
Co., Inc., 967 A.2d 350, 358 (N.J. Super. Ct. App. Div. 2009)
(quoting Marvec Const. Corp. v. Twp. of Belleville, 603 A.2d
184, 189 (N.J. Super. Ct. Law. Div. 1992)) (noting that
“‘rebidding a contract is fraught with certain dangers,’” such
as higher contract prices, discouraged low bidders that drop
out, and rebidding until the “favorite son” candidate is awarded
Alpha is fully capable and qualified to perform
the work required under the contract, and it is ready to
The Court will, and must, flip the award
back to its original and proper result.
“Only by granting the
injunctive relief sought by plaintiff can this court ensure that
the door remains tightly closed to the evils which are to be
Disposmatic Corp. v. Mayor & Council of Town of
Kearny, 393 A.2d 610, 613 (N.J. Super. Ch. Div. 1978).
Consequently, judgment must be entered in Alpha’s favor on
its claim that DRPA was arbitrary and capricious in awarding
Contract CB-31-2016 to Corcon. 34
DRPA is enjoined from
The Court will not opine as to whether DRPA violated Alpha’s
due process rights, New Jersey’s Open Public Meetings Act,
N.J.S.A. 10:4-6 to -21, or Pennsylvania’s Sunshine Act, 65 Pa.
Cons. Stat. 701 to 716. Instead, the facts that Alpha presented
proceeding on the contract with Corcon, and DRPA is directed to
award the contract to Alpha, which is the lowest responsive and
responsible bidder in accordance with DRPA’s procurement rules.
DRPA’s chief engineer, senior engineer, the acting manager
of contract administration, and the director of risk management
and safety all testified that the transparency of DRPA’s bidding
processes is DRPA’s paramount concern.
proclamations, the evidence has revealed that DRPA’s bid review
process only presents an illusion, and not the reality, of
What occurred between June 16, 2016, when Alpha
was declared the apparent lowest bidder, and July 28, 2016, when
Alpha’s bid was rejected, in particular demonstrates the
complete lack of transparency as to how DRPA actually awards
The only thing clear about DRPA’s process is that it
is deeply and dramatically flawed, Kafkaesque, and in need of
substantial reform. 35
This state of affairs is not without consequence.
next several years, the DRPA will oversee more than $700 million
to prove such violations support the Court’s conclusion that
DRPA acted arbitrarily and capriciously.
DRPA has adopted a Resolution declaring “the right of the
public to be present at all meetings of the Authority Board and
to witness the deliberation, policy formulation and decisionmaking of the Authority.” (Pl. Ex. 26 (emphasis added).)
in public contracts, most of which involve the four major
crossings of the Delaware River in the Philadelphia region and a
major rail line.
The manner in which those contracts are
awarded and administered is, and ought to be, a matter of
important public interest.
Indeed, as we and other courts have
noted, such a vital interest correctly informs this Court’s
judgment on the propriety of an injunction on this record and
what that record has revealed about the contracting practices of
Nonetheless, this Court recognizes the unusual nature of
the remedy provided to Alpha in this matter.
This Court should
not be in the business of awarding bridge painting contracts or
substituting its judgment for an agency charged with that
But it is equally true that this
Court should not stand idly by when a public agency, borne of
Congress and financed by two states and the traveling public,
acts in violation of its own rules, applies those same rules
differently to different entities, creates a façade of
rationality and transparency, and fails to provide this Court
with any meaningful record to review its decision.
record, an obligation of deference should not become an
abdication of responsibility.
As we have noted, after three days of trial and dozens of
exhibits this Court still has no idea who made the decision to
award the contract to Corcon or by what deliberate process that
decision was made. There are no emails, no minutes of
discussions or debate, no memoranda among decision-makers, no
witnesses to take responsibility.
Instead, there is six weeks
of silence, a carefully orchestrated but ultimately hollow
administrative denial, and another three weeks of pro forma
Equally important, the stated reasons have
fallen away as apparent subterfuge.
The bidders, both winners
and losers, and the public, deserve better from their appointed
The Court will enter a permanent injunction awarding
Contract No. CB-31-2016 (Phase II) to Alpha.
The Court will
enter the appropriate Order and will direct Alpha to submit a
form of judgment within three (3) days.
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
Dated: September 23, 2016
At Camden, New Jersey
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