Glasgow, Inc. v. Pennsylvania Department of Transportation

OPINION BY

Judge PELLEGRINI.

Glasgow, Inc. (Glasgow) petitions this Court to review a final determination of the Secretary of Transportation denying Glasgow’s bid protest, challenging the rejection by the Department of Transportation (Department) of Glasgow’s apparent low bid to perform a road reconstruction project in Montgomery County (the Project).

Glasgow submitted a bid to the Department to perform the Project in the amount of $10,335,645.80. The bid was submitted in accordance with the Department’s bid requirements via the Department’s new internet bidding system, known as the Electronics Contract Management System (ECMS). The Department’s bid specification for the Project included a special provision called “Designated Special Provision 7” (DSP7) entitled “Disadvantaged Business Enterprise Requirements.” It provides:

Responsive. When the goal established by the Department is met or exceeded, the apparent low bidder is required to electronically submit evidence of such solicitation and commitments, by accessing the Department’s ECMS web page by selecting and submitting DBE Participation for Federal Projects by 3:00 o’clock p.m. prevailing local time within seven (7) calendar days after the bid opening. When the seventh calendar day after the bid opening falls on a day the PENNDOT offices are closed, submit the DBE Participation for Federal Projects by 3:00 o’clock p.m. prevailing local time on the next business day.

(Reproduced Record at 5b.)

The bid specifications also provided what would occur if the apparent low bidder did not timely submit the Disadvantaged Business Enterprise (DBE) information. In Paragraph IV of DSP7, the Department notified and informed all bidders of the following:

When the above required documentation is not provided by the apparent low bidder within the time specified, the bid will be rejected and the apparent next lowest bid will be notified by telephone to electronically submit evidence of such solicitations and commitments, by accessing the Department’s ECMS web page by selecting DBE Participation for Federal Projects by 3:00 o’clock p.m. prevailing local time within seven (7) calendar days notification.

(Reproduced Record at 5b.) (Emphasis added.)

On July 17, 2003, Glasgow received an email from the Department advising it that it was the apparent low bidder for the Project. The e-mail further advised Glasgow to submit its DBE participation information for the Project by 3:00 p.m. July 24, 2003. This information was to be submitted via the ECMS and placed on the Department’s website.

On July 23, 2003, Glasgow placed all relevant DBE information on the Department’s website; the information indicated that the DBE participation in Glasgow’s bid was 7.1%, exceeding the 7% goal required by the Department for the Project, and the DBE subcontractors named by Glasgow on the website electronically “acknowledged” receipt of their selection via the Department’s website. Glasgow’s estimator, however, neglected to take the next step, which was to press the “submit” button. Taking the failure to hit the “submit” button as a failure to submit the information, the Department rejected Glasgow’s bid because the information had not been “submitted” by the required time. It awarded the contract to the next lowest bidder, whose bid was $432,626 higher than Glasgow’s.¹

Glasgow filed a bid protest with the Department. Without holding a hearing, the Secretary of Transportation (Secretary) denied the protest by letter dated August 18, 2003. The Secretary accepted Glasgow’s contention that its estimator simply forgot to press the submit button. The Secretary, however, noted that the bidding instructions expressly stated that when the required DBE documentation is not provided by the apparent low bidder within the time specified, the bid will be rejected.

The Secretary stated two reasons for the rejection of Glasgow’s contention that the submission requirement should be waived because the DBE information was available on the Department’s website. First, he stated that such information was “not readably [sic] accessible.” (Secretary’s Letter Decision at 2.) Second, he stated that until a contractor submits the required information, it “has a great deal of flexibility regarding the use of particular subcontractors.” Id. The Secretary also noted the Department’s longstanding practice, prior to the implementation of the ECMS, of rejecting bids when a bidder innocently forgets to fax or attach “Attachment A” setting forth the bidder’s information regarding DBE participation. The Secretary determined that a bidder’s failure to hit the submit button is no different than a bidder’s failure, under prior procedure, to timely mail or fax “Attachment A.” This appeal followed.²

Glasgow contends that the Department abused its discretion by failing to waive what Glasgow denominates as insubstantial and immaterial irregularity in the bidding process; i.e., by treating Glasgow’s bid as not “submitted” when it failed to click on the submit button to submit the required information.³

While a governmental body has the discretion to waive non-material bid defects where the non-compliance (1) does not deprive the agency of the assurance that the contract will be entered into and performed and (2) does not confer a competitive advantage on the bidder, Gaeta v. Ridley School District, 567 Pa. 500, 788 A.2d 363 (2002), the failure to submit the information in this case is not a waivable defect. Where specifications set forth in a bidding document are mandatory, they must be strictly followed for the bid to be valid, and a violation of those mandatory bidding instructions constitutes a legally disqualifying error for which a public agent may reject a bid. Kimmel v. Lower Paxton Township, 159 Pa.Cmwlth. 475, 633 A.2d 1271, 1275 (1993). While a bidding entity may waive a bid defect, it may not do so if it involves the waiver of a mandatory requirement that the bid instructions treat as non-waivable. Karp v. Redevelopment Authority of Philadelphia, 129 Pa.Cmwlth. 619, 566 A.2d 649 (1989), petition for allowance of appeal denied, 527 Pa. 619, 590 A.2d 760 (1990). While the Department could have provided otherwise, it removed any discretion it had to waive the time to submit the information when it provided in the bid instructions that the bid would be rejected if the information was not provided within the time specified.

Even if the failure to submit the information was a waivable defect, the Department did not abuse its discretion in rejecting Glasgow’s bid, even though the Department had received all the DBE information on its website. The Department found that until Glasgow hit the submit button no information had been provided; there were just “screens” that were filled, and Glasgow did not have a commitment and had no responsibility to commit to the DBE subcontractors it listed until it actually clicked on the submit button. In other words, Glasgow would be able to delete their inclusion absent the formal step of hitting the submit button. We find that where governmental entities are at the beginning stages of implementing electronic bidding, determining the requisites for a proper bid should be left to the discretion of the agency, especially at this early stage.⁴

Moreover, if we were to adopt Glasgow’s position that they are not required to click the submit button, that would make clicking the button superfluous when it is not.⁵ All of us, when using a debit or credit card, are used to “swiping” the card, then receiving a message of “is this amount ok?” and then having to push a button indicating assent. Until we push the button, even though the bank has all the information, it is not ok for the bank to charge the account. Similarly, when one goes on the internet to buy a book or book a trip, one submits all the information to the vendor’s site, and after it has the information and has recapsulized the transaction, the site requires one to click on a submit button. Only when that occurs is the party bound to the terms of the transaction and only then is your credit card charged. What occurred here is no different than what occurs in normal, every day commercial transactions; until the submit button was clicked, Glasgow, as the Department found, was not bound by any of its representations.

Accordingly, because the Department did not abuse its discretion in rejecting Glasgow’s bid, its decision is affirmed.

Judge SMITH-RIBNER and Judge FRIEDMAN dissent.

ORDER

AND NOW, this Jfth day of June, 2004, the order of the Pennsylvania Department of Transportation in the above-captioned matter is hereby affirmed.

1 . The bidding instructions pertaining to the submission of DBE information provide that the low bidder’s failure to "submit” such information by the date and time provided will result in the award of the contract to the next lowest bidder, provided that the next lowest bidder timely submits its DBE information.

2 . This Court's scope of review of an agency decision is limited to determining whether constitutional rights were violated, an error of law was committed, or necessary findings of fact are supported by substantial evidence. Barran v. State Board of Medicine, 670 A.2d 765 (Pa.Cmwlth.), petition for allowance of appeal denied, 544 Pa. 685, 679 A.2d 230 (1996). Further, judicial review of discretionary acts of governmental bodies requires an "affordance of deference” towards such acts. Gaeta v. Ridley School District, 567 Pa. 500, 507, 788 A.2d 363, 366 (2002).

3 . Glasgow also cites Marx v. Lake Lehman School District, 817 A.2d 1242 (Pa.Cmwlth.2003), wherein we determined that a failure to timely deliver a performance bond after the bidding was complete did not violate the spirit of the competitive bidding process and, thus, did not require the rejection of the contract award. Glasgow argues that in the present case, as in Marx, the competitive process had already run its course, and its failure to hit a computer button after the fact is simply an error without any substantial meaning.

4 . We note that Section 502 of the Electronic Transactions Act, Act of December 16, 1999, P.L. 971, as amended, 73 P.S. § 2260.502, gives governmental agencies the power to determine how they are going to receive electronic submissions. Section 502 provides that:

Each governmental agency in this Commonwealth shall determine whether and the .extent to which it will send and accept electronic records and electronic signatures to and from other persons and otherwise create, generate, communicate, store, process, use and rely upon electronic records and electronic signatures.

(b) Specifics.- — -To the extent that a governmental agency uses electronic records and electronic signatures under subsection (a), the governmental agency, giving due consideration to security, may specify all of the following:

(1) The manner and format in which the electronic records must be created, generated, sent, communicated, received and stored and the systems established for those purposes.

(2) If electronic records must be signed by electronic means, the type of electronic signature required, the manner and format in which the electronic signature must be affixed to the electronic record and the identity of or criteria that must be met by any third party used by a person filing a document to facilitate the process.

(3) Control processes and procedures as appropriate to ensure adequate preservation, disposition, integrity, security, confidentiality and auditability of electronic records.

(4)Any other required attributes for electronic records which are specified for corresponding nonelectronic records or reasonably necessary under the circumstances,

(c) Not mandatory. — This chapter does not require a governmental agency to use or permit the use of electronic records or electronic signatures.

5 . Glasgow also argues that the Department erred by making a final determination without first holding a hearing. Glasgow contends that at a hearing, it could introduce computer experts who would testify as to accessibility of the DBE information to the Department ,on its website as of the Department’s deadline. This alleged testimony could refute the Department's conclusion in its determination letter that such information was not readily (or "readably”) accessible. The Department also argues that it did not err by making its determination without a prior hearing. The Department contends that there are no facts in dispute, as both it and Glasgow agree that Glasgow lost the bid because of the latter’s failure, albeit inadvertently, to click on the submit button on the Department's website. Further, the Department cites Section 1711.1 of the Commonwealth Procurement Code, 62 Pa.C.S. § 1711.1, as providing that it may dispose of a bid protest without an evidentiary hearing. Section 1711.1(e) provides that the head' of a purchasing agency may hold a hearing on a bid protest in his or her sole discretion. We agree with the Department that a hearing was not necessary because there is no dispute as to the controlling facts, and a hearing is not required to be held when there are no facts in dispute.