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Unibridge Systems, Inc. v. Patterson

Court of Appeals of Oklahoma, Division II

May 5, 2017

UNIBRIDGE SYSTEMS, INC., an Oklahoma Corporation, Plaintiff/Appellant,
v.
MIKE PATTERSON, Director of the Oklahoma Department of Transportation; STATE OF OKLAHOMA, ex rel. OKLAHOMA DEPARTMENT OF TRANSPORTATION, Defendants/Appellees.

          Mandate Issued: 06/06/2017

         APPEAL FROM THE DISTRICT COURT OF WOODWARD COUNTY, OKLAHOMA HONORABLE DON A. WORK, TRIAL JUDGE

          Katresa J. Riffel, J. Piper Bowers, RIFFEL LAW FIRM, PLLC, Enid, Oklahoma, for Plaintiff/Appellant

          Norman Hill, GENERAL COUNSEL, OKLAHOMA DEPARTMENT OF TRANSPORTATION, David Allen Miley, ASSISTANT GENERAL COUNSEL, Oklahoma City, Oklahoma, for Defendants/Appellees

          JERRY L. GOODMAN, JUDGE

         ¶1 Unibridge Systems, Inc. (Unibridge) appeals a November 13, 2015, trial court order which affirmed the decision of the Oklahoma Department of Transportation (ODOT) denying Unibridge's protest of a bid awarded to Cardinal Scale Manufacturing (Cardinal). Based upon our review of the facts and applicable law, we affirm.

         FACTS AND PROCEDURAL BACKGROUND

         ¶2 ODOT issued Solicitation #3450004339 and a Request for Proposal (RFP) for the demolition and replacement of a scale and pit for the El Reno Eastbound Truck Scale House on June 5, 2014. The Scope of Work required, inter alia, that the scale contain hydraulic compression stainless steel load cells, which shall meet applicable maintenance tolerance as specified in the National Institute of Standards and Technology (NIST) Handbook 44. The Scope of Work further required the scale system and components to be listed on National Type Evaluation Program (NTEP) Certificates of Conformance.

         ¶3 Two bids were submitted. On July 7, 2014, Cardinal submitted a bid of $299, 950.00. On July 18, 2014, Unibridge submitted a bid of $262, 846.00. Unibridge's bid was subsequently deemed nonresponsive because: 1) it did not bid a hydraulic compression type scale but rather had bid an electronic analog type load cell system; and 2) Unibridge's system was to be constructed of a non-specified type of alloy steel rather than stainless steel. On July 28, 2014, ODOT awarded the contract to Cardinal after determining it had the most responsive bid meeting the requirements of the Solicitation.

         ¶4 On July 30, 2014, Unibridge filed a Protest of Award with the ODOT Purchasing Office. On August 8, 2014, ODOT's Purchasing Manager denied Unibridge's Protest. On August 21, 2014, Unibridge appealed to the Office of Management and Enterprise Services pursuant to the Oklahoma Administrative Code (OAC) 260-115-3-19, which was subsequently transferred to ODOT for consideration. [1] Unibridge asserted, inter alia, that the Solicitation should have been let pursuant to the Oklahoma Public Competitive Bidding Act of 1974 (PCBA), 61 O.S.2011, § 101 et seq., rather than the Oklahoma Central Purchasing Act (CPA), 74 O.S.2011, § 85.1 et seq. The Administrative Law Judge (ALJ), in a Fourth Prehearing Conference Order issued on November 5, 2014, determined that jurisdiction for the proceeding existed under the CPA, and the rules promulgated thereto, OAC 260:115-3-19. The ALJ further established the issues to be addressed: 1) whether the Solicitation is for goods and services, governed by the CPA; 2) whether ODOT improperly bid out the acquisition under the CPA; 3) did ODOT violate the required competitive bidding process in the Solicitation; and 4) the Solicitation requires compliance with Handbook 44. "If the accepted bid... failed to meet [those] requirements, did ODOT violate the provisions of the [CPA] and rules promulgated thereto in awarding the bid to the successful bidder."

         ¶5 After a hearing on January 26, 2016, the ALJ issued findings of fact and conclusions of law on March 11, 2015. The ALJ recommended Unibridge's appeal be denied, finding, inter alia, that the Solicitation was properly let under the CPA as the contract involved an acquisition of various equipment and services relating to a new truck scale in El Reno, Oklahoma, which meets the definition for "acquisition" under the CPA. See 74 O.S.2011 and Supp. 2013, § 85.2 (1). In addition, ALJ found the Scope of Work required, inter alia, that the scale contain hydraulic compression and stainless steel load cells. However, Unibridge did not bid a hydraulic load cell system or stainless steel materials and was therefore properly eliminated as a nonresponsive bid. Cardinal, on the other hand, was determined to have bid a hydraulic load cell system that included stainless steel materials. Thus, its bid was determined to be the most responsive bid.

         ¶6 The Executive Director of ODOT entered a Final Agency Order on March 23, 2015, adopting the ALJ's proposed order and affirming the denial of Unibridge's bid protest. Unibridge appealed to the District Court of Woodward County on April 22, 2015, pursuant to 75 O.S.2011, § 318. The court ultimately affirmed the Final Agency Order by order entered on November 13, 2015. Unibridge appeals.

         STANDARD OF REVIEW

         ¶7 The standard of review for appeals from an administrative agency is found at 75 O.S.2011, § 322. "An agency's order will be affirmed if the record contains substantial evidence in support of the facts upon which the decision is based and the order is otherwise free of error." Agrawal v. Okla. Dept of Labor, 2015 OK 67, ¶ 5, 364 P.3d 618, 620 (citing Scott v. Okla. Secondary Sch. Activities Ass.'n, 2013 OK 84, 313 P.3d 891). "The order is subject to reversal, however, if the appealing party's substantial rights were prejudiced because the agency's findings, inferences, conclusions or decisions were entered in excess of its statutory authority or jurisdiction, or were arbitrary, capricious, or clearly erroneous in view of the reliable, material, probative and substantial competent evidence." Id. An appellate court may not substitute its judgment for that of the agency on its factual determinations. Agrawal, 2015 OK 67, at ¶ 5, 364 P.3d at 20 (citing Oklahoma Dep't of Pub. Safety v. McCrady, 2007 OK 39, ¶ 10, 176 P.3d 1194, 1200-01); 75 O.S.2011, § 322.

         ANALYSIS

         ¶8 For its first assertion of error on appeal, Unibridge contends the trial court erred in affirming the agency's determination that the Solicitation was a contract for goods and services that was properly let under the CPA. Unibridge asserts the Solicitation should have been let under the PCBA, 61 O.S.2011, § 101 et seq., which applies to contracts which involve construction. Unibridge notes the Solicitation requests the design and fabrication of a three-platform truck scale, demolition of the old scale pit, construction of a new scale pit, foundation, and approach slab. Thus, it is a public construction contract enhancing the utility and value of public property. At a minimum, Unibridge asserts the contract was a mixed contract, partially construction and partially goods and services, with construction at its core, citing Gilbert Cent. Corp. v. State of Oklahoma, 1986 OK 6, ¶ 35, 716 P.2d 654, 663. Thus, it should have been let under the PCBA.

         ¶9 ODOT disagrees, asserting the Solicitation was properly let pursuant to the CPA to acquire a new truck scale to replace the broken scale at the El Reno Truck Scale House. ODOT contends, much like the purchase and installation of a water heater, the acquisition of the scale was a transaction for the sale of goods and that the installation services were merely incidental to producing the piece of equipment. Thus, the Solicitation was properly let under the CPA.

         ¶10 In the present case, the parties clearly disagree as to which Act governs. The Oklahoma legislature adopted the CPA to govern the expenditures of governmental agencies in acquiring goods or services. Indiana Nat'l Bank v. State of Oklahoma ex rel., Dept. of Human Serv.'s, 1993 OK 101, ¶ 12, 857 P.2d 53, 60. The Act applies to all "acquisitions" by state agencies, which term is defined broadly to include "items, products, materials, supplies, services, and equipment a state agency acquires by purchase, lease-purchase, lease with option to purchase, or rental...." 74 O.S.2011 and Supp. 2013, § 85.2 (1).

         ¶11 The PCBA, on the other hand, applies to "public construction contracts, " which are defined as:

[]any contract, exceeding Fifty Thousand Dollars ($50, 000.00) in amount, awarded by any public agency for the purpose of making any public improvements or constructing any public building or making repairs to or performing maintenance on the same....

61 O.S.2011 and Supp. 2013, § 102 (6). "Public improvement" is defined as:

[]any beneficial or valuable change or addition, betterment, enhancement or amelioration of or upon any real property, or interest therein, belonging to a public agency, intended to enhance its value, beauty or utility or to adapt it to new or further purposes. The term does not include the direct purchase of materials, equipment or supplies by a public agency, or any personal property, including property as defined in paragraphs 1 and 4 of subsection B of Section 430.1 of Title 62 of the Oklahoma Statutes;

Id. at § 102(7). The term construction means "to put together the materials and constituent parts used therein in their proper place and order." Carpet City, Inc. v. Stillwater Mun. Hosp. Auth., 1975 OK 75, ¶ 18, 536 P.2d 335, 338. All public construction contracts are to be awarded to the lowest responsible bidder by free and open competitive bidding after ...


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