Conduent State & Local Solutions, Inc. v. New Hampshire Department of Transportation et al.

Part I, Article 37 of the New Hampshire Constitution states as follows:

In the government of this State, the three essential powers thereof, to wit, the

legislative, executive, and judicial, ought to be kept as separate from, and

independent of, each other, as the nature of a free government will admit, or as is

consistent with that chain of connection that binds the whole fabric of the

constitution in one indissoluble bond of union and amity. The Separation of Powers clause prohibits each branch of government from encroaching on powers and functions of another branch, and is violated when one branch usurps an essential power of another. /n re Judicial Conduct Comm., 145 N.H. 108, 109 (2000). This doctrine does not, however, require “erection of impenetrable barriers between the branches of our government, ” and “thus contemplates some overlapping and duality in the division as a matter of practical and essential expediency.” Hynes v. Hale, 146 N.H. 533, 537 (2001) (citations and quotations omitted). “Unlike most state constitutions the language of the New Hampshire Constitution recognizes that separation of powers in a workable government cannot be absolute.” N.H. Health Care Ass’n v. Governor, 161 N.H. 378, 386 (2011) (citation and quotation omitted). It is well recognized that the power to contract is an executive function, not a legislative one,

Opinion of the Justices, 129 N.H. 714, 717-18 (1987).

A, There Is No Separation Of Powers Violation Where NHDOT Acted Within Its Authority Conferred By The Legislature. ‘

Appellant states that if the BOS contract does not fall within the ambit of RSA 228:4, which requires the contract to be awarded to the “lowest responsible bidder, ” then NHDOT has no authority to procure the contract. First and foremost, the procurement of the BOS contract is

not controlled by RSA 228:4 because that statute applies to contracts that are characteristic of,

and more conducive to, price per unit type of bidding that is common in construction contracts, RSA 228:4 states, “Each state transportation project shall be built under contracts awarded to the lowest responsible bidder through competitive bidding.” The word “Project” is defined as “any construction, reconstruction, alteration or maintenance of any highway, bridge, building, plant, fixture, facility, or other item directly related to transportation.” RSA 228:1, VII. Pursuant to this definition, RSA 228:4 does not apply to the procurement at issue because the statute is for construction and infrastructure and the BOS is a services and software contract.

However, RSA 228:4 is not the sole procurement authority granted to NHDOT. The legislature explicitly granted NHDOT authority to “[a]cquire and install new toll collection equipment.” RSA 237:2, VIIL Additionally, the legislature granted the Commissioner of NHDOT broad authority to operate and maintain the New Hampshire Turnpike System, including the authority to “[e]nter into contractual relations on behalf of the state” and “[d]o and perform all such acts as are necessary for the public good.” RSA 237:5, II(i) and (j). Further, RSA 236:31, IV provides NHDOT authority to implement “a system to detect, record, verify, and administratively enforce violations of this section.” Finally, Appellant’s own pleading admits that the legislature granted NHDOT procurement authority under RSA 237. In its Motion for Partial Summary Judgment and Supporting Memorandum of Law, Appellant states, “A survey of all of NHDOT’s enabling statutes reveals that the legislature has granted competitive procurement authority in several contexts. See... RSA 237:2 (authorizing acquisitions and improvements to the turnpikes system).” AA 74.

RSA chapters 236 & 237 are expansive statutes that grant wide-ranging authority to NHDOT and its commissioner to promote and maintain the Turnpike, including electronic

tolling such as the E-ZPass system. Where the legislature is silent on exactly how these

authorized actions shall be implemented, it must be left to the province of the executive branch to execute the authority granted to it by the legislature. Otherwise, the executive branch would be paralyzed with a panoply of legislatively created authorities and mandates and no means by which to execute them. This is an absurd result that must be rejected by the court. See Weare Land Use Assoc. v. Town of Weare, 153 N.H. 510, 511-12 (2006) (“The legislature will not be presumed to pass an act leading to an absurd result and nullifying, to an appreciable extent, the purpose of the statute.”),

Ironically, Appellant’s insistence that NHDOT has no authority to procure the BOS contract would do more to usurp the powers of the legislature by frustrating the broad authority they have to NHDOT to collect the tolls that financially support the major infrastructure of the State. It is evident that the general court provided authority to implement an electronic toll collection system and enter into a regional agreement for collection of the tolls. Appellant acknowledges that this electronic toll collection system requires a back office system of software and support services. AA 17 § 16, Accordingly, if Appellant’s allegation is correct, NHDOT would have no legal means to procure these services and the legislature's will would be blunted by the inability to carry out these valid legislative mandates. Interpreting the statutes to prohibit ' NHDOT from contracting for the essential services that are required to collect the many millions of dollars relied on to maintain the Turnpike System would frustrate the legislature’s intent.

Still more, RSA 21-I:22-a expressly permits State agencies to advertise requests for purchases, request for quotes, or other procurements that provide objective criteria upon which each selection will be reviewed, the weight given to each criteria, and the standards on which an award will be based. RSA 2 1-1:22-a, titled “Request for Purchases and Request for Quotes, ”

states that:

Notwithstanding the provisions of RSA 21-I:18, every request for purchases

(RFP), request for quotes (RFQ) or other procurement which is greater than

$35, 000 that is undertaken by the state or by a state agency as defined in RSA 21-

[:11, H(b), including those agencies referenced in RSA 21-I:18, shall contain

within the body of the document the objective criteria by which each submission

will be reviewed, if there are particular requirements that will receive more

weight in the review of the submission, and the standards upon which any award

will be based.

RSA 21-1:22-b, titled “ Awards, ” further states that:

Notwithstanding the provisions of RSA 21-I:18, awards which are made by the

state or by a state agency as defined in RSA 21-I:11, II(o), including those

agencies referenced in RSA 21-I:18, under this subdivision shall not be made on

criteria that are unknown to the parties submitting bids or proposals. Nothing in

this subdivision shall prevent the state or a state agency as defined in RSA 21-

I:11, H(b), including those agencies referenced in RSA 21-1:18, from making

judgments on the capabilities of vendors to complete the work requested if this

option is clearly stated in the body of the document and if used as the reason for

the award, is so stated.

The legislature granted the above authority to “any board, department, commission, hospital, sanitarium, home, library, school, college, prison, or other institution conducted or operated by or for the state of New Hampshire.” RSA 21-I:11, Il(b). There is no dispute that NHDOT is a department of the State of New Hampshire. See AA 15 2. The superior court has previously noted, in a similar bid protest case, that the above language permits a State agency to use both objective criteria and subjective judgment when making a contract award decision. YTL-NH, Inc. v. NEL State Liquor Comm'n, No. 217-2013-CV-119, 2016 NH. Super. LEXIS 10 *45 (Merrimack Superior Court 2016). This is precisely what NHDOT has done in this procurement.

Appellant’s separation of powers argument is defective on all fronts. RSA chapters 236 & 237 grant broad authority to NHDOT to acquire the tools necessary to implement an electronic tolling system. RSA 21-I:22-a and:22-b permit NHDOT to conduct a qualification based “best

value” procurement. Even assuming, arguendo, that the legislature was silent on the manner in

which NHDOT can procure software and services, this is a traditionally executive function which was performed in furtherance of the broad statutory authority granted to NHDOT to operate the Turnpike System and conduct electronic tolling. As such, this procurement does not usurp power from the legislature but is rather a valid execution of legislative authority. Therefore, NHDOT did not violate the separation of powers doctrine and the trial court’s dismissal of Count IX should be upheld.

B, The New Hampshire Department Of Administrative Services Does Not Possess Sole Authority To Conduct Procurements Of State Contracts.

Appellant argues that NHDOT does not have statutory authority because the New Hampshire Department of Administrative Services (“DAS”) exercises the exclusive power to procure contracts for the State, with limited exceptions not applicable here. Appellant’s argument imposes procurement authority on DAS that simply does not exist. Appellant states that RSA chapter 21-I, the enabling statute for DAS, “recognizes just four categories of procurement authority across the executive branch.” AB 13. However, this expansive assertion of DAS’s authority is incorrect and stems from a narrow reading of RSA chapter 21-1.

RSA 21-I:1 sets out the general functions of DAS. To be sure, DAS is responsible for “administrative and financial functions” that help maintain “the effective and efficient management of all state programs and operations.” RSA 21-I:1, I. Included in the list of general functions is procurement, along with accounting, graphic services, general support services, and other general administrative needs of the departments of the State. Jd. The statute then goes on to establish certain units within DAS to help it perform its statutory functions. Appellant rhaintains that two of these units—the division of procurement and support services (RSA 21-I:11) and the division of public works design and construction (RSA 21-1:78, :80, &:81)—combine with

NHDOT’s purported construction authority under RSA 21-1:78 and agencies exempt from the provisions of RSA chapter 21-I (RSA 21-I:18) to become the sum of the total procurement authority over all contracts in the State. AB 16.

First and foremost, this assertion is unfounded. There is nothing in RSA chapter 21-I that even hints that the legislature intended to give DAS exclusive procurement powers over state contracts. “When a statute’s language is plain and unambiguous, [the Court]... will not consider what the legislature might have said or add language that the legislature did not see fit to include.” Cloutier v. City of Berlin, 154.N.H. at 17. In fact, reviewing the statute as a whole, it is clear that the legislature intended to grant authority to DAS to procure contracts for services such as janitorial, furniture, and other functions that pertain to all departments of the State, This facilitates a better functioning administration of the services offered to the executive branch. RSA chapter 21-l is a grant of authority to DAS, much like other enabling statutes, and does not preclude other Departments from procuring contracts related to their department.

Appellant’s support for the “comprehensive” DAS procurement scheme that prohibits all other state procurements is unconvincing and depends on the interpretation of four distinct legislative grants of power. First, DAS’s division of procurement and support services is responsible for “purchasing all materials, equipment, supplies, and services for all departments and agencies of the state... except as otherwise provided by law.” RSA 21-1:11, I(a)(1) (emphasis added). As stated above, RSA chapter 237 grants authority to NHDOT to procure the BOS contract. Still more, the procurement referenced in the DAS statute does not contemplate a contract like the BOS. In fact, the definitions related to the division of procurement and support services state:

(a) “Supplies” shall mean all materials, equipment, printing, furniture,

furnishings, and books, of every name and nature, including computer hardware, software, related licenses, media, and documentation, and support

and maintenance services, excluding any systems that collect or store data

off-site. [...]

(f) “Services” shall mean services provided for general agency use including, but not restricted to, the following: credit card agreements, elevator maintenance, hazardous waste testing and removal, janitorial services, laboratory services, rubbish removal, recycled materials pickup, security services, snow removal, soil testing, transportation, office machine maintenance, vehicle repair, vehicle rental and leasing, and warehousing. “Services” shall not mean services provided solely to one agency.

RSA 21-1:11, (a) & (f) (emphasis added). Because the BOS is a system that collects and stores data off-site (see JA14), and the services in the RFP were solely provided to NHDOT, the BOS contract would not fall under the procurement authority of the division of procurement and support services.

The BOS contract also would not fall under any of the other three “mutually exclusive categories” for DAS procurement. The division of public works contracts for the construction and maintenance of buildings, fixtures, and facilities, and as such, would not procure a services and software contract. RSA 21-I:78-81. Appellant alleges that NHDOT’s authority to procure under RSA chapter 21-I lies within RSA 21-I:78, IX. However, this is a definition that delineates the construction work that is controlled by the division of public works versus that performed by NHDOT, and would not include the BOS contract. Finally, the section that lists certain agencies exempt from the provisions of RSA chapter 21-I contain no agency that would procure the BOS contract. RSA 21-[:18. Thus, in Appellant’s “DAS as the sole procurer” scheme, the BOS contract would not be procurable by any state department, let alone DAS. Certainly a legislature

that provides for a turnpike tolling method intends to authorize some department to procure the

contract for the services and software to implement that system.

Yet, the list of exempt agencies is logical when viewed with the lens that DAS’s intended procurement power is for administrative supplies and services. It is sensible that the university system of New Hampshire is exempted from buying all their paper and books through DAS and allowed to use their own vendor. However, in Appellant’s scheme, the university system can procure anything it wants because it is exempt from RSA 21-1. Simply put, Appellant’s view of the DAS procurement power is too expansive, and the trial court’s reading of the statutes was correct.

As Appellant states itself: “New Hampshire law does not prescribe a single method of procurement across state government. Rather, the legislature has chosen to give agencies different types of procurement authority on a case-by-case basis.” AA 72-73. Appellant states in its brief that the legislature has considered and rejected best value procurement authority on multiple occasions. However, Appellant also admits that legislation exists that gives agencies authority to use a best value approach to procurement, citing RSA 21-1:22, V (authorizing contract negotiations with the “highest qualified firm” when seeking architectural, engineering, or surveying services) and RSA 126-A:5, XIX(a) (authorizing the commissioner of health and human services to procure a managed care model for administering the state Medicaid program that offers the “best value, quality assurance, and efficiency”). AA 72-73.

Appellant argues that because a 2010 procurement bill that advocated for a best value procurement across all government entities “failed as inexpedient to legislate, ” NHDOT’s use of best value procurement in a services contract is against legislative intent. AB 4-5. Still more, Appellant mentions a past legislative committee that failed and a current legislative committee

that examined state contract procurement methods and potential uniformity across the state, AB

5-6. This continuous review of procurement methods supports the notion that there is not one scheme for procurement, and the legislature is still examining the issue. There exists no

legislative intent to disavow the best value procurement method.

Il. THE DECLARATORY JUDGMENT ACTION ASSERTED BY APPELLANT

An action for declaratory judgment in New Hampshire may only be brought in cases where no other adequate remedy exists to address the violation complained of by the plaintiff. Morin v, Berkshire Mut. Ins, Co., 126 N.H. 485, 486 (1985). In this case, Appellant’s declaratory judgment allegations are merely a rebranding of its equitable and promissory estoppel claims against the State. This is not a case where the plaintiff seeks to invalidate a statute or regulation and can only reach those remedies through a declaratory ruling. Rather, this is a dispute over a commercial transaction between the State and a corporate entity. Disputes such as this are more than adequately addressed through the remedy of monetary damages, if appropriate. “[D]amages ordinarily should be limited to the expenses incurred by the low bidder in its fruitless participation in the competitive bidding process, i.e., its bid preparation costs.” Marbucco Corp. v. City of Manchester, 137 N.H. 629, 634 (1993). This is the sole remedy that New Hampshire courts have provided to disappointed bidders. As an adequate remedy exists, Appellant’s declaratory judgment claims were properly dismissed.

Even assuming that Appellant has a right to a declaration as to the State’s conduct in this matter, it may not seek equitable relief on these claims. Appellant seeks to void the State’s contract with Cubic, AA 38 § 151. New Hampshire courts have never allowed such an extraordinary remedy to a disappointed bidder and have identified monetary damages as the sole remedy available in these cases. See Marbucco Corp., 137 N.H. at 634. In general, claims

seeking equitable relief against the State are barred by the doctrine of soverei gn immunity. See Lorenz v. NH. Admin. Office of the Courts, 152 N.H. 632, 634-35 (2005) (sovereign immunity barred action for declaratory judgment seeking equitable relief), Sovereign protection against equitable claims exists to safeguard the orderly administration of government and to ensure that government operations do not come to a grinding halt. State agencies like NHDOT are “cloaked with the State’s sovereign immunity.” Chase Home for Children v. N.H. Div. for Children Youth & Families, 162 N.H. 720, 730 (2011). The request to void a contract after more than two years of design and development activities implicates all of the concerns ameliorated by the doctrine of sovereign immunity. The trial court properly declined to allow Appellant to move forward on its equitable claims based on these concerns and the availability of monetary damages. The same

consideration should be given to claims for equitable relief couched in declaratory judgment.

For the foregoing reasons, the State respectfully requests that this Honorable Court affirm the judgment below.

The State requests a 15-minute oral argument and expects that Jessica A, King will

present the argument,

Thereby certify that two copies of the foregoing were mailed this day, postage prepaid, to

AZZ,

all counsel of record.