Bombardier Transportation (Holdings) USA Inc. v. Director, Department of Budget & Fiscal Services

289 P.3d 1049, 128 Haw. 413, 2012 Haw. App. LEXIS 919
CourtHawaii Intermediate Court of Appeals
DecidedOctober 17, 2012
DocketNo. CAAP-11-0000756
StatusPublished
Cited by4 cases

This text of 289 P.3d 1049 (Bombardier Transportation (Holdings) USA Inc. v. Director, Department of Budget & Fiscal Services) is published on Counsel Stack Legal Research, covering Hawaii Intermediate Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Bombardier Transportation (Holdings) USA Inc. v. Director, Department of Budget & Fiscal Services, 289 P.3d 1049, 128 Haw. 413, 2012 Haw. App. LEXIS 919 (hawapp 2012).

Opinion

Opinion of the Court by

FOLEY, J.

In this secondary administrative appeal arising out of a dispute under the State of Hawaii’s (State) Procurement Code, Bombardier Transportation (Holdings) USA Inc. (Bombardier) appeals from the September 23, 2011 Judgment (Judgment) and September 16, 2011 “Order Denying Bombardier Transportation (Holdings) USA, Inc’s Appeal And Affirming The August 5, 2011 Findings Of Fact, Conclusions Of Law, And Decision Of The Department Of Commerce and Consumer Affairs Office of Administrative Hearings,” (Order) both entered in the Circuit Court of the First Circuit1 (circuit court). The circuit court entered judgment in favor of Director, Department of Budget and Fiscal Services, City and County of Honolulu (the City) and Ansaldo Honolulu JV (Ansal-do).

On appeal, Bombardier contends the circuit court erred in affirming the Administrative Hearings Officer’s (hearings officer) determination that:

(1) Bombardier’s protest was untimely;
(2) Bombardier’s proposal was properly rejected as conditional;
(3) Bombardier’s protest arguments would undermine the integrity of the procurement process; and
(4) the City satisfied its duty to conduct meaningful discussions.

I. BACKGROUND

A. RFP, Addenda, Proposal and BAFO Submissions

The following facts are undisputed. On April 9, 2009, the City issued Part 1 of its Request for Proposals (RFP) for the Core Systems Design-Build-Operate-Maintain Contract for the Honolulu High-Capacity Transit Corridor Project. The purpose of RFP Part 1 was to select priority-listed of-ferors deemed qualified to proceed with Part 2, and the City selected three priority-listed offerors: Ansaldo, Bombardier, and Sumito-mo Corporation of America (Sumitomo).

On August 17, 2009, the City issued RFP Part 2, including a provision addressing the City’s liability under the proposed contract. In the following months, the City received several Requests for Information (RFIs) from Bombardier and Sumitomo about this provision, and as a result of these RFIs, the City issued Addendum No. 26 to the RFP on April 14, 2010. Addendum No. 26 deleted the original provision and replaced it with “Special and Management Provisions” (SP) Chapter 2 section 2.13, which read:

(a) The City’s obligations under this Contract shall be limited to the payment for services under this Contract.
(b) The CSC [Core System Contraetorj’s liability to the City for damages arising out of Work performed under the Design-build component of the Contract shall be limited to the total Contract Value of the Design-build component of the Contract, provided that excluded from the limitation of liability will be any liability, including defense costs, for any type of damage or loss to the extent it is covered by proceeds of insurance required under this Contract. Fur[416]*416ther, this limitation of liability shall not apply with regard to fraud, criminal conduct, ... [or] the CSC’s indemnities set forth in this Contract, including but not limited to SP-2.14[.]

On May 6, 2010, Addendum No. 31 formally incorporated this change into RFP 2, with only minor wording differences that are not relevant.

On June 7, 2010, Bombardier submitted its RFP Part 2 Proposal to the City. The proposal contained the following clarification:

2. Clarification: Reference SP 2.13(b)
Bombardier assumes that the City has inadvertently excluded Contractor’s indemnities from the overall cap on liability of total Contract Value set forth in SP 2.13(b). As expressed in the RFP, such exclusion would defeat the purpose of the provision as it would mean effectively that there was no overall cap on liability. Bombardier is basing its proposal on the assumption that the following language in SP 2.13(b) is deleted: “Contractor’s indemnities set forth in the Contract, including but not limited to SP 2.1k ”, and that the balance of the language in SP 13[sie] remains as is.

After submitting the initial proposal, Bombardier participated in discussions with the City. During a September 22, 2010 meeting, Bombardier argued that the City should amend the language of SP-2.13 to eliminate the exception for indemnification liability and instead have a complete cap on potential liability. During a teleconference on October 27, 2010, the City warned Bombardier that a conditional proposal could be deemed non-responsive and unacceptable.

After evaluating the initial proposals, the City issued a call for a best and final offer (BAFO) on November 4, 2010 (BAFO # 1). The City also issued Addendum 41, which replaced SP-2.13(b), making minor wording changes but retaining the language excluding indemnification claims from the liability cap.

On November 15, 2010, Bombardier submitted confidential questions concerning the indemnification terms. Bombardier asked that the SP-2.13(b) language be deleted or revised because the terms were “unprecedented in [Bombardier’s] significant experience of global contracting in the rail industry” and “not reasonable.” The City declined to respond, informing Bombardier that no response to confidential requests for clarifications would be forthcoming.

On December 8, 2010, the City issued Addendum No. 44 to the RFP, addressing questions regarding SP sections 2.13 and 2.14. The questions asked the City to consider changing the language, and the City responded, “[n]o change will be made.”

On January 18, 2011, Bombardier submitted its BAFO # 1. The price proposal portion contained the following language:

2. Clarification: Reference SP-2.13(b)
We note that the City has excluded Contractor’s indemnities from the overall cap on liability of total Contract Value set forth in SP 2.13(b). As expressed in Addendum # 44, Question/Response # 67, such exclusion would serve to defeat the purpose of the provision as it would mean effectively that there was no overall cap on liability. Bombardier is basing its proposal on the assumption that the following language in SP 13(b) is deleted: “Contractor’s indemnities set forth in the Contract, including but not limited to SP 2.14”, and that the balance of the language in SP 13[sie] remains as is.

Before reviewing the price proposal portions of the responses to the call for BAFO # 1, the City decided to call for another BAFO, issuing the second call on February 9, 2011 (BAFO # 2). On February 24, 2011, Bombardier submitted its BAFO #2. The price proposal portion contained the same language as that contained in its BAFO # 1.

On March 14, 2011, the City’s Evaluation Committee recommended the award be made to Ansaldo, and on March 21, 2011, the City advised Bombardier its BAFO #2 was rejected as non-responsive because it was an impermissible conditional proposal that did not conform in all material respects to the RFP. That same day, the City awarded the contract to Ansaldo.

[417]*417B. Protest and Administrative Hearing

Bombardier protested the award to Ansal-do by a letter to the City dated April 11, 2011.

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Cite This Page — Counsel Stack

Bluebook (online)
289 P.3d 1049, 128 Haw. 413, 2012 Haw. App. LEXIS 919, Counsel Stack Legal Research, https://law.counselstack.com/opinion/bombardier-transportation-holdings-usa-inc-v-director-department-of-hawapp-2012.