*** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
Electronically Filed Supreme Court SCWC-XX-XXXXXXX 04-SEP-2024 09:50 AM Dkt. 31 OP
IN THE SUPREME COURT OF THE STATE OF HAWAIʻI
---o0o---
ALPHA, INC., Petitioner and Respondent/Appellant-Appellant,
vs.
BOARD OF WATER SUPPLY, CITY AND COUNTY OF HONOLULU, Respondent and Petitioner/Appellee-Appellee,
and
OFFICE OF ADMINSITRATIVE HEARINGS, DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS, STATE OF HAWAIʻI, Respondent/Appellee-Appellee,
BEYLIK/ENERGETIC A JV, Respondent/Appellee-Intervenor-Appellee.
SCWC-XX-XXXXXXX
CERTIORARI TO THE INTERMEDIATE COURT OF APPEALS (CAAP-XX-XXXXXXX; CASE NO. 1CCV-XX-XXXXXXX)
SEPTEMBER 4, 2024
RECKTENWALD, C.J., McKENNA, EDDINS, GINOZA, AND DEVENS, JJ.,
OPINION OF THE COURT BY EDDINS, J. *** FOR PUBLICATION IN WEST’S HAWAI‘I REPORTS AND PACIFIC REPORTER ***
I.
In this procurement dispute, we examine Hawaiʻi Revised
Statutes §§ 103D-302(b) (2012 & Supp. 2021) and 103D-709(d)
(Supp. 2021), two Hawaiʻi public procurement code laws.
A procuring agency, the Honolulu Board of Water Supply,
(BWS) solicitated bids for a multi-million-dollar well-drilling
project. It disqualified a bidder. Then it awarded the
contract to the project’s only other bidder. The ineligible
bidder challenged the decision administratively and then
judicially. Because the bidder did not have the proper
contractor’s license, and received no waiver, it lost each time.
Along the way, BWS maintained that the administrative
hearings officer and the courts lacked jurisdiction to hear the
procurement protest. The challenge should’ve gone nowhere. We
agree.
A bidder who protests a contract award is entitled to a
hearing “provided that[] . . . [f]or contracts with an estimated
value of $1,000,000 or more, the protest concerns a matter that
is equal to no less than ten per cent of the estimated value of
the contract.” Hawaiʻi Revised Statutes (HRS) § 103D-709(d)(2).
The law’s plain words firmly limit who may initiate a
procurement appeal. In Hawaiʻi’s public procurement code, there
is no prudential consideration - a standing matter possibly
waived - to secure review. Rather, the law’s ten percent
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requirement is jurisdictional. Here, because the bidder could
not satisfy the ten percent limit, no jurisdiction existed to
initiate an administrative review hearing.
II.
In April 2022, the Board of Water Supply posted a
solicitation for the construction of three exploratory wells on
Oʻahu. The work included a line item for tree trimming and
removal.
The solicitation scope of work described BWS’s many
conditions for clearing on-site vegetation. The solicitation
specified that a C-27 license was required for tree trimming and
removal, albeit obliquely. It said, “[p]rior to removal or
trimming of trees by a contractor with a valid C-27/C-27B
license, a bird nest survey will be conducted by a biologist
provided by the BWS.” (Emphasis added.)
The solicitation contained several environmental
conditions, including supervision of tree removal by an arborist
and bird biologist. The solicitation asked contractors to
minimize movement of plant material to mitigate the spread of
invasive plant species. It also required that the contractor
“protect from injury and damage all surrounding trees, plants,
etc., and shall leave all in as good as condition as at
present.”
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In May 2022, Alpha, Inc. bid $5.97 million for the work.
It bested the only other bidder, Beylik/Energetic A JV (Beylik),
by about $7,000. Alpha’s bid included $95,000 for tree trimming
and removal.
Problems for Alpha surfaced. Alpha had a C-17 excavating
license, but not a C-27 landscaping license. Also, Alpha did
not name a landscaping subcontractor in its bid. On May 13,
2022, BWS announced it had awarded the contract to Beylik.
On May 17, 2022, BWS sent Alpha a bid rejection letter.
BWS’s reasoning was faulty. The letter incorrectly stated that
bidders did not have to list subcontractors with less than one
percent of the work. It also said the tree trimming and removal
– worth $95,000 – totaled more than one percent of the bid, and
so did not qualify for this purported exception. Thus, Alpha’s
bid was nonresponsive.
The following day, Alpha sent a bid protest letter to BWS.
Alpha argued both that its bid was responsive and that Beylik’s
bid was nonresponsive because Beylik forgot to include a form.
In this letter, Alpha indicated that it would do the tree
removal itself and use a subcontractor for the tree trimming.
The sub’s trimming portion was $6,800, far less than one percent
of the bid amount.
That same day, a BWS employee emailed the Contractors
License Board (CLB), asking whether a C-17 licensee may remove
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trees. A CLB official replied that in one Board member’s non-
binding opinion, a C-17 licensee may generally perform tree
On June 7, 2022, BWS rejected Alpha’s protest. BWS pointed
to HRS § 103D-302(b). That law says construction bids must list
all subcontractors, but that the government entity may waive
this requirement if it’s in the public’s best interest and the
missing sub had less than one percent of the work. Because it
didn’t list its subcontractor, Alpha flunked this requirement,
BWS ruled. Next, BWS reasoned that waiving the condition was
not in the public’s best interest - Alpha’s bid was just 0.13
percent lower than Beylik’s.
BWS also rejected Alpha’s position that its C-17 license
entitled it to remove trees. For the well project, BWS cited a
determination by the CLB that a C-27 contractor was needed to
destroy tree roots without disturbing the surrounding soil in
vegetated areas. The solicitation expressly asked for a C-27
licensee to remove trees. Alpha had no C-27 license. Thus,
Alpha could not remove trees on its well project, BWS decided.
For these two reasons, BWS disqualified Alpha’s proposal.
BWS also rejected Alpha’s challenge to Beylik’s bid. It
said Alpha lacked standing to attack Beylik’s bid, because Alpha
was out, disqualified. On the substance, BWS ruled that
Beylik’s missing form was immaterial.
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In June 2022, per HRS § 103D-709(d), Alpha requested an
administrative hearing review of BWS’s decision. Alpha repeated
the arguments it made to BWS.
BWS moved to dismiss. BWS made the ten percent
jurisdictional argument it raises before this court.
In July 2022, the Office of Administrative Hearings (OAH)
issued its decision. OAH concluded that the ten percent
requirement is not jurisdictional and that it had jurisdiction
to hear Alpha’s appeal.
On the merits, OAH noted that HRS § 103D-302(b) requires
construction bidders to list subcontractors (and that BWS’s
rejection letter got this wrong). OAH also explained that this
solicitation demanded a C-27 contractor for the tree removal
because of the project’s specific ecological needs.
The hearings officer concluded that Alpha could perform
some, but not all, of the project’s tree-related work. The
officer also found that Alpha did not request a waiver of the <1
percent subcontractor listing requirement and BWS, in its
discretion, did not grant a waiver. Thus, Alpha’s bid was
nonresponsive.
Alpha appealed to the circuit court. The parties briefed
the issues, and the court held a hearing.
In September 2022, Circuit Court of the First Circuit Judge
James Ashford affirmed the OAH and BWS decisions. To do tree
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removal on the well project, the solicitation reasonably
required a C-27 license. Alpha didn’t have a C-27, or list a
subcontractor with one. Given the environmental needs of the
project, the court reasoned, BWS could demand a C-27 licensee.
So Alpha’s bid was nonresponsive.
The court rejected Alpha’s argument that BWS was estopped
by statements in its bid rejection letter. Estoppel requires
detrimental reliance. Because Alpha submitted its bid before
the letter, there was no reliance on the letter and no estoppel.
The circuit court opted not to address BWS’s argument that
the hearings officer lacked jurisdiction to hear Alpha’s appeal.
Alpha appealed to the ICA. It made the same argument there
that it makes now. Alpha could remove the trees itself and was
not required to list a tree trimming subcontractor with less
than one percent of the contract value.
In December 2023, the ICA published an opinion. It
affirmed.
The ICA read HRS § 103D-302 the same way OAH, the circuit
court and BWS did: construction bidders must list all
subcontractors, but the procuring agency may waive this
requirement if it’s in the State’s interest and the subs have
less than one percent of the work. The ICA affirmed OAH’s and
the circuit court’s conclusions that (1) BWS did not waive the
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listing requirement, and (2) BWS was not estopped from enforcing
the requirement.
The ICA addressed the Board of Water Supply’s
jurisdictional challenge. OAH had jurisdiction to hear Alpha’s
appeal. HRS § 103D-709(a) confers jurisdiction on OAH to
“review and determine de novo, any request from any bidder,
offeror, contractor[] . . . aggrieved by a determination of the
chief procurement officer, head of a purchasing agency, or a
designee of either officer.” In the ICA’s view, subsection (a)
establishes OAH’s jurisdiction.
In contrast, the ICA read HRS § 103D-709(d)(2) as a
standing rule. That subsection states that any “bidder,
offeror, contractor, or person that is a party to a protest of a
solicitation . . . may initiate a proceeding under this section;
provided that[]” the ten percent limit is met. Because
subsection (d) concerns a party’s right to bring suit, the ICA
believed it relates to standing.
The ICA drew standing’s meaning from Tax Found. of Hawaiʻi
v. State: “In Hawaiʻi state courts, standing is a prudential
consideration regarding the ‘proper — and properly limited —
role of courts in a democratic society’ and is not an issue of
subject matter jurisdiction.” 144 Hawaiʻi 175, 188, 439 P.3d
127, 140 (2019). The ICA concluded that Alpha satisfied HRS
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§ 103D-709(a)’s jurisdiction requirement, and that BWS did not
challenge Alpha’s standing under HRS § 103D-709(d).
Alpha and BWS filed dueling cert petitions. Both reprised
their positions. Alpha appealed its disqualification. BWS
appealed the ICA’s holding that HRS § 103D-709(d)’s ten percent
threshold concerned standing, not jurisdiction. We accepted
both sides’ certs.
III.
HRS § 103D’s ten percent requirement is jurisdictional and
Alpha did not satisfy the requirement. We therefore conclude
that the Office of Administrative Hearings and our courts lacked
jurisdiction to review BWS’s decision.
To provide guidance, we also address the merits of Alpha’s
appeal. The Board of Water Supply properly disqualified Alpha’s
bid.
A. The ten percent requirement is jurisdictional
We first address the ICA’s holding that HRS § 103D-709(d)’s
ten percent appeal requirement relates to standing, not
jurisdiction.
The ICA erred. HRS § 103D-709(d) is not a prudential
standing requirement that an administrative hearings officer or
court may waive. Rather, the procurement code’s ten percent
limit is the legislature’s jurisdictional command - a fixed and
firm threshold to initiate a protest.
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Statutory interpretation starts with the statute’s words.
Barker v. Young, 153 Hawaiʻi 144, 148, 528 P.3d 217, 221 (2023).
Our main duty is to determine and advance the legislature’s
intent. Id. Ambiguity arises when there is more than one
plausible textual meaning. Id. To clarify ambiguity, we
consider sources outside the text, such as legislative history
or the purpose and spirit of the law. Id. Statutory
construction doctrines may also aid us. Id. at 149, 528 P.3d at
222.
The ICA used the plain text to reach its conclusion that
the ten percent requirement is not jurisdictional. HRS § 103D-
709(a) uses the word “jurisdiction.” HRS § 103D-709(d) does
not. Thus, subsection (d) and its ten percent requirement does
not involve jurisdiction. The ICA also flags subsection (d)’s
language that limits the parties who “may initiate a
proceeding.” That sounds like standing, says the ICA.
Here is the text of HRS § 103D-709(a) and (d):
(a) The several hearings officers appointed by the director of the department of commerce and consumer affairs pursuant to section 26-9(f) shall have jurisdiction to review and determine de novo, any request from any bidder, offeror, contractor, or person aggrieved under section 103D-106, or governmental body aggrieved by a determination of the chief procurement officer, head of a purchasing agency, or a designee of either officer under section 103D-310, 103D- 701, or 103D-702.
. . . .
(d) Any bidder, offeror, contractor, or person that is a party to a protest of a solicitation or award of a contract under section 103D-302 or 103D-303 that is decided pursuant
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to section 103D-701 may initiate a proceeding under this section; provided that:
(1) For contracts with an estimated value of less than $1,000,000, the protest concerns a matter that is greater than $10,000; or
(2) For contracts with an estimated value of $1,000,000 or more, the protest concerns a matter that is equal to no less than ten per cent of the estimated value of the contract.
(Emphases added.)
True, because subsection (d) talks about who may initiate a
proceeding, it is phrased like a standing requirement. But that
does not necessarily make it a standing matter.
Tax Foundation stated that standing often depends on
statutes. 144 Hawaiʻi at 188, 439 P.3d at 140. This court has
repeatedly ruled that standing requirements may be “prescribed[]
by legislative declarations of policy.” Id. Thus, “standing
requirements can differ based on legislative enactments.” Id.
This court considers pertinent statutes to determine
standing. Sierra Club v. Dep’t of Transp., 115 Hawaiʻi 299, 319,
167 P.3d 292, 312 (2007). For instance, Tax Foundation held
that the common law “injury in fact” test does not apply to
declaratory judgment plaintiffs under HRS Chapter 632, because
that test conflicts with the legislature’s intent in enacting
Chapter 632. 144 Hawaiʻi at 188-89, 439 P.3d at 140-41.
Here, the ICA used the wording of HRS § 103D-709 to rule
that § 709(d) relates to standing, not jurisdiction. Then it
quoted Tax Foundation: “In Hawaiʻi state courts, standing is a
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prudential consideration regarding the ‘proper — and properly
limited — role of courts in a democratic society’ and is not an
issue of subject matter jurisdiction.” 144 Hawaiʻi at 188, 439
P.3d at 140. Thus, the ICA held that the ten percent
requirement is a prudential standing matter.
We are unpersuaded by this reasoning because it contradicts
HRS § 103D-709(d)’s text and purpose. Construed as a prudential
standing requirement, HRS § 103D-709 becomes fuzzy, losing its
uncomplicated meaning. Reading HRS § 103D-709(d) as a flexible
standing requirement, like the ICA does, creates discord between
the prudential nature of standing in Hawaiʻi courts and
subsection (d)’s straightforward ten percent requirement. The
legislature tightly limits procurement appeals involving
million-dollar contracts. Those disputes must involve “no less
than ten per cent” of the contract’s value.
HRS § 103D-709(d)’s text controls. The ten percent
requirement is firm, not stretchy. Two reasons support our view
that HRS § 103D-709(d)(2) relates to jurisdiction, not standing.
First, the text says so. There is no carve-out for a
hearings officer to waive the ten percent requirement (unlike
HRS § 103D-302(b)’s carve-out for an agency to waive the
subcontractor listing requirement). HRS § 103D-709 does not
provide for any exceptions.
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Further, setting an amount-in-controversy minimum is a
classic tool to define jurisdiction. Hawaiʻi’s district courts
have jurisdiction over civil matters worth less than $40,000.
HRS § 604-5 (2016). Otherwise, the matter belongs in a Hawaiʻi
circuit court. HRS § 603-21.5 (2016 & Supp. 2017). Similarly,
federal diversity jurisdiction is only available if a party can
make a claim for more than $75,000. 28 U.S. Code § 1332. The
$75,000 minimum is understood as jurisdictional even though it
limits who may bring a diversity suit in federal court.
In Hawaiʻi, standing typically focuses on the party seeking
relief, not on the issues the party wants adjudicated. Citizens
for Prot. of N. Kohala Coastline v. Cnty. of Hawaiʻi, 91 Hawaiʻi
94, 100, 979 P.2d 1120, 1126 (1999). HRS § 103D-709(d) focuses
on both. The section’s first part discusses the party. It says
a “person that is a party to a protest . . . may initiate a
proceeding.” But subsection (d)(2) focuses on the issue. It
requires that “the protest concerns a matter” worth ten percent.
Given the ten percent requirement’s straightforward meaning, we
are unconvinced that the “may initiate a proceeding” language
shifts the requirement from firm jurisdiction to flexible
standing.
Second, over the years, the legislature has frequently
expressed an intent to streamline procurement award appeals. A
hard-and-fast ten percent requirement aligns with that mindset.
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The legislature’s purpose in enacting the ten percent limit
was to constrain the number of procurement appeals, thereby
allowing the government to procure faster and more cheaply.
Other procurement code provisions and legislative history guide
our conclusion.
First, a review of the procurement code reveals that the
legislature structured the procurement appeal process with speed
and finality as the goal. The first two levels of procurement
review delay the government’s ability to complete the purchase.
To start, an unhappy bidder sends a protest to the procuring
agency. HRS § 103D-701(a) (2012 & Supp. 2021). The protest
pauses the purchase. HRS § 103D-701(f). Next, if a party loses
that protest, it may initiate an administrative hearing, subject
to the ten percent requirement. HRS § 103D-709(d). The
administrative proceeding also stays the procurement. HRS
§ 103D-709(h).
When a party loses its OAH case, it may seek review in
circuit court. HRS § 103D-710(a) (2012). A court case doesn’t
stay the procurement. HRS § 103D-710(b). But the procurement
code expedites the circuit court’s review. It mandates that the
circuit court schedule the case as expeditiously as practicable.
HRS § 103D-710(d). It limits the ability to introduce new
evidence outside the administrative record. Id. It directs the
circuit court issue a decision within thirty days, or lose
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jurisdiction. HRS § 103D-710(e). A party that loses at the
circuit court may appeal to the ICA, where “the appeal shall be
given priority.” HRS § 103D-710(f).
Procurement appeals differ from ordinary cases. The
legislature has fast-tracked them. The reason is simple and
practical - the government entity needs to complete its projects
without costly delays. The legislature has often expressed this
goal in its committee reports and statements of purpose.
The legislature first enacted HRS § 103D-709 in 2009 as
part of a broader procurement code revision. The legislature’s
conference committee report identified the main purpose of the
late-aughts update: to “expedite Hawaiʻi’s ability to use and
benefit from federal economic stimulus funds.” Conf. Comm. Rep.
No. 45, in 2009 House Journal, at 1595. The bill, H.B. 1470
(Act 175), made several changes, all prioritizing speed. It
increased the number of contracts that qualify for expedited
small purchase procedures. Conf. Comm. Rep. No. 45, in 2009
House Journal, at 1596. It curtailed the timeline for
administrative and circuit court review. Id. It enacted the
ten percent requirement and required protesting parties to pay
an appeal bond. Id. The procurement appeal provisions were
temporary, set to expire in 2011. Id.
In 2012, the legislature passed H.B. 2265 (Act 173). It
further amended the procurement code. It also made HRS § 103D-
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709(d) permanent. Conf. Comm. Rep. No. 62-12, in 2012 House
Journal, at 1630. The report stated the bill’s purpose: “to
make the purchase of goods, services, and construction more
efficient for state agencies.” The legislature extended the law
beyond the need to quickly use federal stimulus money to help
Hawaiʻi handle a global recession. Evidently, it liked how HRS
§ 103D-709 worked.
HRS § 103D-709 has remained untouched since 2012. Twice,
the legislature has amended other parts of Chapter 103D. In
2019, it added a filing fee to help recoup administrative
hearing costs. The legislature found that, “procurement bid
challenges often result in project delays, funding lapses, and
project cost increases.” 2019 Haw. Sess. Laws Act 73, § 1 at
312.
In 2021, the legislature revised the procurement code
again. It enacted a deadline for agencies to resolve
construction and airport contract protests and increased the
protest bond for procurement appeals. 2021 Haw. Sess. Laws Act
224, §§ 2, 3 at 813-14. The legislature found, “the procurement
protest review process can be lengthy, causing project delays,
thereby increasing project costs that are borne by taxpayers.”
Id. at § 1 at 813.
Taken together, these findings and enactments show a clear
concern with speed, delay, finality, and cost. The ten percent
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limit is itself evidence of this concern. On its face, the
limit’s purpose is to reduce appeals. The monetary qualifier
serves as a jurisdictional limit. Like monetary amounts tend to
do.
Our holding squares with how the Office of Administrative
Hearings was deciding procurement appeals until Alpha’s appeal.
Before then, OAH had repeatedly ruled (a) that the ten percent
limit is jurisdictional and (b) a sub-ten-percent matter that
disqualifies a bidder does not satisfy the limit by putting 100
percent of the amount in controversy. See, e.g., MEI Corp. v.
Dep’t of Budget and Fiscal Servs., City & Cnty. of Honolulu,
Case No. PDH-2019-004 (Haw. Off. Admin. Hearings Sept. 27, 2019)
(Hearings Officer’s Findings of Fact, Conclusions of Law, and
Final Order), at 7-8. As far as we can tell, the Hearings
Officer in this case decided for the first time that the ten
percent requirement concerns standing, not jurisdiction.
Last, we address the ICA’s holding that the Board of Water
Supply contested jurisdiction, but failed to challenge Alpha’s
standing. This ruling is technically accurate, but misses the
point. BWS never attacked Alpha’s standing because it argued
that the ten percent requirement is jurisdictional. The whole
time, BWS argued that HRS § 103D-709(d)(2) foreclosed Alpha’s
case. We decline to conclude that BWS waived its argument.
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B. Alpha did not satisfy the ten percent requirement
Standing or jurisdiction? Never mind, says Alpha. It
satisfied the ten percent requirement either way.
Alpha argues its protest concerns the responsiveness of its
whole bid and its attack against Beylik’s entire bid. If Alpha
won its protest, it would receive the contract. After all, it
bid the lowest. Or, failing that, if Alpha’s protest
successfully disqualified Beylik, there would be no responsive
bidders, and BWS would presumably have to resolicit the
contract. Thus, Alpha insists that its protest concerns a
matter worth 100 percent of the contract value, and therefore it
satisfied the jurisdictional limit.
BWS views things differently. Alpha’s protest concerns
either its failure to list the subcontractor – $6,800 to trim
trees, or 0.11 percent of the contract – or its failure to
secure a C-27 licensee for all tree trimming and removal –
$95,000 or 1.59 percent of the contract. Either way, Alpha is
well below ten percent.
HRS § 103D-709(d)(2) requires that a protest “concerns a
matter” worth at least ten percent of the contract’s value. Is
the relevant “matter” the small tree trimming and removal line
item that got Alpha into trouble? Or is it 100 percent, because
Alpha got disqualified?
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In this respect, HRS § 103D-709(d)(2)’s ten percent
requirement is ambiguous. Evidently, the legislature did not
consider how the ten percent limit would apply in a situation
where a less-than-ten-percent issue resulted in a disqualified
bidder.
To clear up this ambiguity, we use statutory interpretation
doctrines. When a law’s meaning is unclear, this court
considers the “reason and spirit of the law, and the cause which
induced the legislature to enact it.” HRS § 1-15 (2009). This
court may also consider other statutes in pari materia, a
doctrine that construes ambiguous laws on the same subject
matter together. State v. Obrero, 151 Hawaiʻi 472, 479, 517 P.3d
755, 762 (2022). We do so because “[w]hat is clear in one
statute may be called in aid to explain what is doubtful in
another.” HRS § 1-16 (2009).
Here, Alpha argues the legislature cannot have intended to
permit an agency to disqualify a bidder based on a minor flaw
without giving the bidder a forum to appeal that putatively
unlawful disqualification. We disagree. Given the
legislature’s oft-expressed dismay about delays caused by
procurement appeals, we believe limiting small-scale appeals is
exactly what the legislature intended.
Alpha claims an incongruity between the one percent waiver
rule and ten percent appeal requirement. Alpha’s argument boils
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down to “how come 1 percent is important for listing a
subcontractor, yet 9.9 percent isn’t important for appealing?”
The answer is the same as the answer to the ten percent
jurisdictional question – the legislature has expressed a low
tolerance for procurement appeals.
In many ways – protest bonds, expedited timelines for
reviews, and the ten percent requirement – the legislature shows
that it does not view procurement disputes as ordinary civil
litigation. The legislature seeks to balance the virtues of
procurement appeals – rule of law, protecting the public from
costly mistakes - against the costs, delay and inefficiency in
government purchasing.
Per HRS § 103D-709(d)’s text, purpose, and legislative
history, a disqualified bidder cannot sidestep the ten percent
requirement. We hold that a sub-ten-percent matter that
disqualifies a bidder does not satisfy the jurisdictional limit
by placing 100 percent of the contract amount in controversy.
Our decision does not displace existing OAH administrative
caselaw holding that bidders may aggregate smaller claims to
meet the ten percent threshold. See Nan, Inc. v. Honolulu Auth.
For Rapid Transp., Case No. PDH-2015-004 (Off. Admin. Hearings
May 28, 2015) (Hearings Officer’s Findings of Fact, Conclusions
of Law, and Decision), at 16-18.
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Next, we briefly address Alpha’s proposed distinction
between offensive and defensive procurement appeals. That
difference lacks a basis in HRS § 103D-709’s language,
legislative history, or purpose. It does not alter our reading
of the statute’s language and meaning.
Last, we note that no party briefed the issue of whether
judicial review under HRS § 632-1 (2016) may be available per
Alakaʻi Na Keiki, Inc. v. Matayoshi, 127 Hawaiʻi 263, 277 P.3d
988 (2012).
C. BWS properly disqualified Alpha’s bid
Because we rule that OAH and our courts lacked
jurisdiction, we need not resolve the merits of Alpha’s bid
protest. Due to procurement’s public importance and the
infrequency of procurement cases in Hawaiʻi’s appellate courts,
we exercise our supervisory power under HRS § 602-4 (2016) to
provide guidance to lower courts. See also, e.g., State v.
David, 141 Hawaiʻi 315, 327, 409 P.3d 719, 731 (2017) (providing
guidance).
Alpha divides the solicitation into two categories of work:
tree removal and tree trimming. Alpha argues that its C-17
license entitled it to perform tree removal. And, it says, the
principles of estoppel or waiver force BWS to forgive its
failure to list its <1 percent C-27 subcontractor.
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Alpha is wrong on both fronts. BWS may require a C-27
license for tree removal. And BWS had no obligation to waive
Alpha’s failure to list a subcontractor.
In Alpha’s view, the Contractors License Board defines the
scope of a C-17 license as a matter of law. A CLB member (in a
non-binding email advisory) informed BWS that Alpha’s C-17
excavation license covered tree removal. So Alpha may use its
C-17 license to remove trees. BWS violated licensure law,
Alpha’s argument goes, by asking for a more specialized C-27
landscaping license.
Not so. In effect, Alpha asks us to hold as a matter of
law that government agencies must always accept the minimum
competence for each job. It also asks us to hold that a
project’s specific needs are inconsequential; the general
licensing laws always control. Alpha misses the point of
contractor licensing laws. They protect the public from shoddy
workmanship. See HRS § 444-4(2) (2013) (the purpose of
contractor licensing laws is “protection of the general
public”). Licensing doesn’t exist to force the government to
hire less qualified contractors.
Here, this project’s specific ecological needs called for a
C-27 contractor. The solicitation included several
environmental protection specs: supervision of tree trimming by
an arborist and ornithologist, protecting surrounding
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vegetation, and leaving the site in as good a condition as the
contractor found it. The solicitation asked for a C-27 tree
removal and tree trimming license. Alpha was not entitled to
fulfill the work with its C-17 excavation license.
When it procures, a government entity participates in the
private market. Like any private actor, if BWS wants a C-27
certified landscaper to do certain tasks, it may ask for one.
BWS did not usurp the CLB’s authority when it specified license
requirements for its project. BWS may enforce its solicitation
terms.
Next, BWS had discretion to disqualify Alpha. Even if
Alpha could do the tree removal, it failed to name a tree
trimming subcontractor. HRS § 103D-302(b) is clear:
If the invitation for bids is for construction, it shall specify that all bids include the name of each person or firm to be engaged by the bidder as a joint contractor or subcontractor in the performance of the contract and the nature and scope of the work to be performed by each. Construction bids that do not comply with this requirement may be accepted if acceptance is in the best interest of the State and the value of the work to be performed by the joint contractor or subcontractor is equal to or less than one per cent of the total bid amount.
On a construction project, listing all subcontractors is
mandatory. Id. BWS had the option to waive the condition if
the work was “equal to or less than one per cent of the total
bid amount.” Id. But BWS chose not to. It found that excusing
Alpha’s mistake was not in the county’s best interest. For good
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reason. Alpha lacked the proper license and its bid barely beat
Beylik’s. BWS could disqualify Alpha.
Waiver and estoppel do not change this calculus. As the
circuit court and ICA rightly noted, the bid rejection letter
cannot estop BWS. Alpha didn’t rely on the letter’s inaccurate
statement. Alpha submitted a defective bid first, then BWS made
the statement. Because there was no reliance, there can be no
estoppel. Furuya v. Ass’n of Apartment Owners of Pac. Monarch,
Inc., 137 Hawaiʻi 371, 387, 375 P.3d 150, 166 (2016) (“The
essence of promissory estoppel is detrimental reliance on a
promise.”) (cleaned up).
There was also no waiver. Waiver requires the knowing
relinquishment of a right. Coon v. City & Cnty. of Honolulu, 98
Hawaiʻi 233, 261, 47 P.3d 348, 376 (2002). BWS’s misstatement
was not a knowing waiver.
IV.
We reverse the ICA’s holding that the ten percent
requirement relates to standing, not jurisdiction. We hold that
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HRS § 103D-709(d) is jurisdictional and that Alpha could not
satisfy the ten percent requirement.
Jeffrey M. Osterkamp /s/ Mark E. Recktenwald (Kirk M. Neste on the briefs) /s/ Sabrina S. McKenna for petitioner and respondent Alpha Inc. /s/ Todd W. Eddins /s/ Lisa M. Ginoza Joseph A. Stewart (Stephen G.K. Kaneshiro, Aaron /s/ Vladimir P. Devens R. Mun, Moana A. Yost, and Jeff A. Lau on the briefs) for respondent and petitioner Board of Water Supply, City and County of Honolulu
Lyle S. Hosoda and Spencer J. Lau (Kourtney H. Wong on the briefs) for respondent Beylik/Energetic A JV