Protech Solutions, Inc. v. The Delaware Department of Health & Human Services

CourtCourt of Chancery of Delaware
DecidedNovember 30, 2017
DocketCA 2017-0642-TMR
StatusPublished

This text of Protech Solutions, Inc. v. The Delaware Department of Health & Human Services (Protech Solutions, Inc. v. The Delaware Department of Health & Human Services) is published on Counsel Stack Legal Research, covering Court of Chancery of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Protech Solutions, Inc. v. The Delaware Department of Health & Human Services, (Del. Ct. App. 2017).

Opinion

IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE

PROTECH SOLUTIONS, INC., ) ) Petitioner, ) ) v. ) C.A. No. 2017-0642-TMR ) THE DELAWARE DEPARTMENT ) OF HEALTH AND HUMAN ) SERVICES, an agency of the State of ) Delaware, ) ) Respondent, ) ) v. ) ) CONDUENT STATE & LOCAL ) SOLUTIONS, INC., ) ) Nominal Respondent. )

MEMORANDUM OPINION Date Submitted: November 14, 2017 Date Decided: November 30, 2017

David A. Felice, BAILEY & GLASSER LLP, Wilmington, Delaware; Brian A. Glasser, Victor S. Woods, and James L. Kauffman, BAILEY & GLASSER LLP, Washington, District of Columbia; Attorneys for Petitioner.

Lawrence W. Lewis and John H. Taylor III, STATE OF DELAWARE DEPARTMENT OF JUSTICE, Wilmington, Delaware; Attorneys for Respondent Delaware Department of Health and Social Services Steven L. Caponi, K & L GATES LLP, Wilmington, Delaware; Steven G. Schortgen and Jennifer Klein Ayers, K & L GATES LLP, Dallas, Texas; Attorneys for Nominal Respondent Conduent State & Local Solutions, Inc.

MONTGOMERY-REEVES, Vice Chancellor. In March 2017, the State of Delaware Division of Child Support Services (the

“Division” or the “State”) issued a Request for Proposal (“RFP”) for maintenance

and operations (“M&O”) services for the Delaware Child Support System (the

“System”).1 Ultimately, three vendors submitted bids in response to the RFP. Two

of the vendors, Conduent State & Local Solutions, Inc. (“Conduent”) and Protech

Solutions, Inc. (“Protech”), were the current contractor and subcontractor,

respectively, for the System. Protech chose to rely on nonpublic data and stale

information when writing its bid, all of which was in direct conflict with the

information provided to the bidders by the Division. The Division ultimately

rejected Protech’s bid. Protech now comes to the Court asking to be saved from its

own miscalculation because the winning bidder allegedly received nonpublic

information—information that was consistent with the publicly available

information. Specifically, Protech seeks a preliminary injunction to prevent the

Division from awarding the contract to the winning bidder, Conduent, until the Court

can determine whether to permanently enjoin the contract and require a re-bid

process. I deny the Motion for Preliminary Injunction because Protech fails to show

a reasonable probability of success in proving the contract should be permanently

enjoined and rebid.

1 Resp’t’s Ex. A Attach. B, at 4.

1 I. BACKGROUND Conduent had a contract with the Division from May 1, 2010 to September

30, 2017 for the design, development, and implementation of the System (the “Prime

Contract”).2 Protech served as a subcontractor under the Prime Contract until the

final year.3 In late October or early November 2016, the Division began drafting the

RFP and issued it on March 1, 2017.4 The new contract was to begin in August

2017.5

Both Conduent and Protech submitted bids in response to the RFP, as did a

third non-party, Computer Aid, Inc, (“CAI”).6 The Division selected Conduent’s

bid.7 On July 24, 2017, Protech submitted a written bid protest to the Division.8 On

August 4, 2017, Protech and the Division reached a standstill agreement such that

Protech would not file or pursue litigation, and the Division would not award a

2 Resp’t’s Opening Br. 1-2. 3 Id. at 2. 4 Resp’t’s Ex. B 119: 17-20; Resp’t’s Ex. A 1. 5 Id. 6 Pet’r’s App. A735-828. 7 Pet. 2. 8 Resp’t’s Ex. J.

2 contract while the parties continued discussions between their lawyers.9 On August

11, 2017, after consideration of Protech’s bid protest, the Division issued Protech a

written denial.10 On September 5, 2017, Protech filed its Verified Petition to

Protest/Enjoin a State Contract Award (the “Petition”). On November 14, 2017, the

Court heard oral arguments on the Motion for a Preliminary Injunction.

II. ANALYSIS

A. Standard of Review “[A] motion for preliminary injunctive relief requires [this Court] to take a

step that, procedurally speaking, is extraordinary: to make a ‘preliminary’

determination of the merits of a cause before there can be a final adjudication of

[petitioner’s] claims.”11 “To obtain a preliminary injunction, the [petitioner] must

demonstrate: (1) a reasonable probability of success on the merits; (2) that they will

suffer irreparable injury without an injunction; and (3) that their harm without an

injunction outweighs the harm to the defendants that will result from the

injunction.”12 “A party showing a ‘reasonable probability’ of success must

9 Resp’t’s Opening Br. 4. 10 Id. 11 In re the New Maurice J. Moyer Acad., Inc., 108 A.3d 294, 311 (Del. Ch. 2015). 12 C & J Energy Servs., Inc. v. City of Miami Gen. Empls.’ & Sanitation Empls.’ Ret. Tr., 107 A.3d 1049, 1066 (Del. 2014).

3 demonstrate that it ‘will prove that it is more likely than not entitled to relief.’”13

The preliminary injunction “burden is not a light one,” and such an “extraordinary

remedy. . . will never be granted unless earned.”14

Here, in order to prevail, Protech must demonstrate that it is more likely than

not that the Division violated the express requirements of the procurement statute,

employed a process that was arbitrary or capricious, or acted in bad faith.15

This Court will not normally or lightly decline to defer to a . . . decision made by [an agency]. Given the broad discretion conferred upon the agency . . . and the highly deferential nature of the applicable judicial review standard, only in extraordinary cases would this Court be justified in setting aside such a decision.16

“Simple disagreement with the agency’s evaluations or conclusions is . . . not enough

to support allegations of bias.”17 “Neither [are] [b]ald allegations of bias; inferences,

suspicion and innuendo; nor the possibility and appearance of impropriety, without

13 Id. at 1067. 14 Wayne Cty. Empls.’ Ret. Sys. v. Corti, 954 A.2d 319, 329 (Del. Ch. 2008). 15 Doctors Pathology Servs. P.A. v. State Div. of Pub. Health, Dept. of Health & Soc. Servs., 2009 WL 4043299, at *4-5 (Del. Ch. Nov. 20, 2009). 16 Id. at *5 (alterations in original) (quoting Harmony Constr., Inc. v. State Dept. of Transp., 668 A.2d 746, 752 (Del. Ch. 1995)). 17 Id. at *8.

4 ‘hard facts’ implying actual misconduct, . . . sufficient to fulfill the clear and

convincing proof required to show bias on the part of the government.”18

B. Protech Has Not Demonstrated a Reasonable Probability of Success on the Merits Protech advances four main arguments related to alleged deficiencies or

biases in the procurement process, which it contends are sufficient to require a do-

over of the entire bidding process. First, Protech asserts the RFP was not

“sufficiently definite to permit free, open, and competitive bidding on a common

basis.”19 Second, Protech contends the Division provided Conduent with inside

information about “personnel resources.”20 Third, Protech argues the Division

utilized a “deficient and otherwise arbitrary” process by not disclosing the use of a

technology scoring committee in the RFP.21 Fourth and finally, Protech avers that

Conduent’s proposal “failed to meet the material requirements of the RFP and should

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