Supplemental Conditions

Federal Judge Rips Shady Procurement Practices at DRPA

Posted in Public Bidding

In an opinion overturning a $17,000,000 bridge painting contract for the Commodore Barry Bridge, a United States Federal Judge called the procurement practices of the Delaware River Port Authority “a black box . . . obscure and unexplained, and lacking any indicia of transparency or the hallmarks of a deliberative process.”

The case involved lead paint remediation and repainting of the Pennsylvania span of the Commodore Barry.  Seven contractors submitted bids.  Alpha Painting was the apparent low bidder.  Corcon was the second low bidder. Corcon was also the contractor that was perform the painting work on the New Jersey span of the bridge.  Like most agencies engaged in public bidding, the DRPA requires contracts to be awarded to the lowest responsible and responsive bidder.

Six weeks after the bids were opened and read aloud, “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 responsible,’ and rejected its bid.”  After unsuccessfully protesting the decision with the DRPA internally, Alpha filed a bid protest complaint seeking injunctive relief against the DRPA.

After a three day trial, Judge Noel Hillman of the United States District Court for New Jersey, entered an order and opinion granting Alpha the injunction it requested and ordering the DRPA to award the contract to it rather than Corcon.  Judge Hillman’s opinion provides a scathing review of the DRPA’s procurement practices.  Ultimately, Judge Hillman ruled that the DRPA acting arbitrarily, capriciously, and without reason. The opinion describes a culture at the DRPA that is designed to steer contracts to favored contractors rather than to award contracts to the lowest responsible bidder.

The DRPA gave two reasons for ultimately determining – six weeks after opening its bid – that Alpha was not a responsible contractor.  First, the DRPA said that Alpha had not included certain OSHA 300 forms with its bid. Second, the DRPA claimed that Alpha’s “experience modification factor” (EMF) was too low.

As to the OSHA 300 forms, the Court noted a factual dispute as to whether the forms were included with the bid or not.  Alpha claimed they were included and the DRPA claimed they were not. Notwithstanding this, the Court concluded that whether the forms were missing or not was a red-herring as the DRPA admitted it did not rely on the forms at all in evaluating a contractor’s safety record.  Instead the DRPA admitted it simply looked to see if the forms were completed and signed.

As to the EMF score, the Court explained that an appropriate score could only be achieved by contractors that had successfully completed projects in New Jersey and Pennsylvania.  As the Court observed, “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.”  Alpha, a Maryland contractor, had not completed enough projects in Pennsylvania and New Jersey to be eligible for an EMF score.  However, the DRPA’s chief engineer testified that there was no reason to doubt that Alpha was a responsible party with a good safety record. This led the court to conclude that the DRPA’s decision to declare Alpha non-responsible based on a EMF score irrational and incapable of “withstand[ing] even a cursory review much less scrutiny.”

However, the Court did not end by simply debunking the DRPA’s stated reason for rejecting Alpha.  Instead, the Court noted that the DRPA “recalculated” the bids so that Corcon, not Alpha, was the lowest bidder.  While this would appear objectionable on its face, for good measure, the Court found that the DRPA’s policies did not permit this practice.  Furthermore, the Court found that the DRPA permitted Corcon to supplement its bid with missing information after the bids were opened.  In fact, the DRPA went so far as to call Corcon’s insurance broker directly and ask that he supply certain forms that Corcon had omitted from its bid.

Based on these circumstances, the Court awarded Alpha the relief it requested and ordered the DRPA to award the bridge painting contract to it.