BEFORE THE DEPARTMENT OF ADMINISTRTION

STATE OF ALASKA

The Chief Procurement Officer authorized the Information Technology Group [ITG] in the Department of Administration to conduct a limited competition procurement to purchase telecommunications equipment. AS 36.30.305; 2 AAC 12.430. Pursuant to the amended authorization, ITG issued ITB No. 02-042-97. The ITB solicited bids "to supply an indefinite quantity of Northern Telecom PBXs and related hardware and software on an as needed basis", "to maintain and expand the existing State of Alaska Telephone System and to maintain non-network Northern Telecom PBX’s", and for "installation of hardware and software purchased under [the] contract if required by ITG". The winning bidder was also expected to provide "technical sales support…as required."

On August 28, 1998, three bids were submitted and opened. One of the bidders was Williams Communications Solutions, LLC [Williams]. ITG issued a Notice of Intent to award the contract to Williams. Comtec Business Systems, Inc. [Comtec] filed a protest, asserting that Williams was not a responsive or responsible bidder because at the time it submitted a bid, Williams was not (1) a licensed electrical administrator under AS 08.40 or (2) a registered contractor under AS 08.18.

The protest was denied. Comtec appealed. On appeal, Comtec argued for the first time that Williams’ bid was non-responsive because (3) Williams’ name was not on the list of authorized bidders and (4) Williams materially misrepresented its status as an Alaska bidder, because it did not have an Alaska business license when it submitted its bid.

Commissioner Poe appointed a hearing officer. AS 36.30.670. The parties submitted briefs and documentary evidence and the matter was submitted on the record. In addition to the foregoing, I find the following material facts:

The amended authorization for a limited competition procurement authorized ITG to solicit bids from the five known vendors of Northern Telecom (Nortel) equipment in Alaska, including an entity identified as "Witel", which was the same entity identified as "Nortel’s Juneau office" in the initial authorization. That entity was Wiltel Communications LLC, a Delaware limited liability company. [Wiltel] Witel held an Alaska business license effective August 6, 1997, valid through the 1998 calendar year, and was a registered specialty contractor effective August 6, 1997 through August 31, 1999. On January 9, 1998, Wiltel adopted a resolution to change its name to Williams Communications Solutions, LLC. [Williams] The name change was filed with the Delaware secretary of state and it became effective for all purposes in accordance with the resolution on February 1, 1998. Wiltel and Williams are the identical entity, a Delaware LLC; no change in the form, ownership, or management agreement of the LLC, or any other substantive change, was effected as a result of, or in conjunction with, the change of the name of that entity from "Wiltel Communications LLC" to "Williams Communications Solutions, LLC". Williams submitted applications for an Alaska business license under the name "Williams Communications Solutions, LLC" and licenses in that name were issued, effective October 1, 1998. Williams registered as a specialty contractor under the name "Williams Communications Solutions, LLC" effective September 28, 1998.

A. Williams’ Bid was Not Unresponsive for Lack of an Electrical Administrator’s License.

Comtec’s argument that Williams’ bid was non-responsive for lack of an electrical administrator’s license rests on the premise that a person who submits a bid in violation of AS 08.40 must be deemed non-responsive, either because the Procurement Code prohibits bids by an unlicensed person, or because the terms of this particular solicitation required the license at the time the bid was submitted¹.

That premise is incorrect. The Procurement Code does not contain any provision that mandates compliance with AS 08.40 as a condition of submitting a bid or proposal. The Department of Commerce and Economic Development, Division of Occupational Licensing, [DCED] enforces AS 08.40. Even if the submission of a bid in violation of AS 08.40 would subject the bidder to administrative or civil penalties in a proceeding before DCED, it is not a violation of the Procurement Code. See, e.g., Appeal of Corrpro Companies, Inc., Department of Administration No. 98-17 (March 16, 1999).

Nor did this particular solicitation require a license as a condition of submitting a bid. Comtec relies on a term stating:

This language expressly applies to the "performance" of the contract after it has been awarded; it cannot reasonably be read to create an implied condition precedent that bidders must have all required licenses in place at the time they submit a bid².

I conclude that even if AS 08.40 requires that persons must be licensed at the time they submit a bid, the lack of a license at the time a bid was submitted does not mandate a finding of non-responsiveness in this case.

^2. AS 08.40 Does Not Require Bidders to be Licensed.

Assuming that a violation of AS 08.40 would mandate a finding of non-responsiveness, however, Comtec’s argument that AS 08.40 was violated is unpersuasive.

Comtec suggests that even though AS 08.40 does not expressly require that a person obtain a license before submitting a bid to perform work as an electrical administrator, such a requirement should be implied, because AS 08.18.011 provides that "A person may not submit a bid…as a contractor until that person has been issued a certificate of registration by [DCED]", and in Vick v. Board of Electrical Examiners, 626 P.2d 90, 91 (Alaska 1981), the Alaska Supreme Court "equated ‘electrical administrators’ with ‘contractors’…".

But AS 08.18 and AS 08.40 are significantly different in their purposes and in the requirements they impose in order to achieve those purposes. AS 08.18, which requires contractor registration prior to bid submission, is intended primarily to provide financial safeguards by imposing bonding and insurance requirements, while AS 08.40 is intended primarily to ensure the public safety. Compare, Vick, supra, and Allison v. State, 583 P.2d 813, 815-16 (Alaska 1978), with Industrial Power & Lighting Co. v. Western Modular Company, 623 P.2d 291, 293-94 (Alaska 1981) and Balboa Insurance Co. v. Senco Alaska, Inc. 567 P.2d 295, 296 (Alaska 1977). In light of the distinct purposes served by these provisions, it would be inappropriate to imply the requirement of AS 08.18.011 into AS 08.40. AS 08.18 and AS 08.40 expressly and clearly distinguish an "electrical administrator" from an "electrical contractor". See, AS 08.18.026, AS 08.40.130. Vick does not support the argument that electrical administrators are "equivalent" to electrical contractors for all purposes and that a requirement of licensing at the time of bid should be implied in AS 08.40³. I conclude that for purposes of the Procurement Code, AS 08.40 should not be read to contain an implied requirement that persons responding to a solicitation to work as an electrical administrator must be licensed at the time they submit a bid, offer or proposal.

B. Williams’ Bid was Not Unresponsive for Lack of Registration Under AS 08.18.

AS 08.18.011 states that "A person may not submit a bid…as a contractor until that person has been issued a certificate of registration by [DCED]." Williams did not hold a certificate of registration issued in its name at the time it submitted its bid. 1. AS 36.30 Did Not Mandate Registration Under AS 08.18.

Comtec’s argument on this issue, like its argument regarding licensing under AS 08.40, is premised on the assumption that registration as a contractor at the time of the bid was required either by AS 36.30, or by the terms of this particular ITB. That assumption is, again, incorrect.

AS 36.30.110(b) and AS 36.30.210(b) require that bidders on "construction contracts" must be registered under AS 08.18 at the time they submit a bid. "Construction", for purposes of the Procurement Code, is defined as "the process of building, altering, repairing, maintaining, improving, or demolishing a public…structure or building, or other public improvement of any kind to real property." AS 36.30.990(6). The procurement of contracts for construction is under the authority of the Department of Transportation and Public Facilities. AS 36.30.005(b). This was not a construction contract within the meaning of AS 36.30; it was a contract for the purchase, installation, and maintenance of telecommunications hardware and software. The Procurement Code does not contain a provision that required bidders on this contract to be registered under AS 08.18⁴. Nor, as pointed out above, did the ITB contain such a requirement.

Assuming, however, that either the Procurement Code or the terms of this solicitation had required compliance with AS 08.18 as a condition to submission of a bid, Comtec’s contention that Williams’ bid was in violation of AS 08.18.011 is unpersuasive.

AS 08.18.011 applies to "contractors". AS 08.18.171(4) defines a "contractor", in language substantially similar to AS 36.30.990(6), as "a person who…submits a bid for a project to construct, alter, repair, move or demolish a building, highway, road, railroad, or any type of fixed structure." The RFP in this case may have included some work that would have to be performed by a registered contractor or by a licensed electrical administrator, but that work was incidental to the primary purpose of the contract. The "project" described in the contract was not a construction project, it was a telecommunications software and hardware purchase, installation, and maintenance project. I conclude that for purposes of the Procurement Code, Williams did not submit a bid "as a contractor" within the meaning of AS 08.18.171(4), even if some of the work within the scope of the contract required use of a registered contractor or a licensed electrical administrator. Cf., Olsen & Sons Logging, Ltd. v. Owens, 607 P.2d 949, 951 (Alaska 1980) (contractor registration unnecessary for road construction when "the basic contract was for the sale of timber…[and] the road construction was incidental to the logging contract.").

Even if AS 08.18.011 did apply, Williams was in substantial compliance with the registration requirement. In Jones v. Short, 696 P.2d 665, 667 n. 10 (Alaska 1985), the court applied the doctrine of substantial compliance to AS 08.18, stating: "substantial compliance involves conduct which falls short of strict compliance with the statutory registration requirements, but which affords the public the same protection that strict compliance would offer." Although in the past the doctrine has been discussed and applied in the context of AS 08.18.151, I conclude that it has equal application in the context of AS 36.30, and that substantial compliance with AS 08.18.011 is sufficient to satisfy the requirements of AS 36.30.

In this case, it is clear that the entity that submitted a bid was registered, but under a former name rather than its name at the time of the bid⁵. There is no evidence to suggest that Witel’s bond and insurance were not fully available to Williams at the time it submitted its bid, not notwithstanding the name change. I conclude that for purposes of AS 36.30, Williams was in substantial compliance with the requirement of AS 08.18.011 at the time it submitted its bid. See, 12 AAC 21.040(d) (contractor "shall continue to do business under the name which is registered until a certificate of registration issued under the new name is received from the department.")⁶.

C. Other Issues are Untimely.

In this case, the issues raised in the initial protest were whether Williams was required to be registered as a contractor and licensed as an electrical administrator at the time it submitted its bid. On appeal, Comtec for the first time asserted that Williams’ bid should have been rejected because it was not on the list of authorized bidders, and because it allegedly misrepresented its status as an Alaska bidder. Because these issues were raised in an untimely manner, and there is no appearance of impropriety⁷, they will not be considered further⁸. AS 36.30.565(a); -.590.

DATED this 16^th day of April, 1999.

______________________________

Andrew M. Hemenway, Hearing Officer

² Comtec also points to the bidder's certification that "the bidder is complying with... the laws of Alaska...". This provision appears to refer to compliance with AS 36.30 and other statutes specifically applicable to the state procurements, rather than to compliance with state law generally. In any event under this provision the rejection of bids is discretionary, not mandatory: "If a bidder fails to comply..., the State may reject the bid..." (emphasis added). ITG did not abuse its discretion in this case.
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³ In Vick, a person challenged the Board of Electrical Examiners' refusal to institute license revocation proceedings against an electrical administrator licensed under AS 08.40. The case had nothing to do with AS 08.18 and made no reference to any of its provisions. The opinion states: "An electrical administrator, i.e., a contractor, ...". This language was not germane to any issue in the case.
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⁴ For this reason, it is unnecessary to determine whether a person who responds to a limited competition procurement is a "bidder" for purposes of AS 36.30.110(b). See note 7, infra. Regardless of the answer to that question, a bid, offer or proposal submitted in response to a limited competition procurement may be a "bid" within the meaning of AS 08.18. See, e.g., State v. ZIA, Inc., 556 P.2d 1257, 1261 n. 12 (Alaska 1976).
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⁵ Comtec argues that the responsiveness of Williams' bid must be determined solely on the basis of the information submitted in the bid document. See, e.g., Mechanical Resources, Inc., No. B-241403 (Comp. Gen., January 30, 1991) (6 Comp. Gen. 105,109). However, not all information that is required to be submitted with a bid involves responsiveness. Some information, though material, relates to the bidder's ability to perform, that is, to responsibility, and evidence may submitted as to responsibility after bids are due. See, e.g., Carpenter's Pole & Piling, No. B-280267 (Comp. Gen., July 17, 1998); 2 AAC 12.500. Also, evidence regarding the identity of the bidder may be submitted after the due date. See, e.g., Sunrise International Group, No. B-266357 (Comp. Gen., February 12, 1996). A leading treatise states:

Shnitzer, Government Contract Bidding at 261 (2d ed. 1982) (emphasis in original). I conclude that the evidence submitted by Williams may be considered.
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⁶ Comtec argues that because registration as an electrical contractor under AS 08.18 requires that the registrant be or employ a licensed electrical administrator, the requirement of registration under AS 08.18 at the time a bid is submitted is tantamount to a requirement that the bidder be or employ a licensed electrical administrator. This argument does not preclude application of the doctrine of substantial compliance to AS 08.18.011, although it does suggest that the statutory exemptions to AS 08.40 should be read narrowly. See, Allison v. State, 583 P.2d 813, 817 (Alaska 1978).
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⁷ Clearly, Williams was within the intended scope of the authorization, even though it was not identified in the authorization under that name. In addition, AS 36.30.305 expressly provides that the provisions of the Procurement Code governing competitive sealed bidding do not apply in a limited competition procurement. AS 36.30.110(b) and -.170 may reasonably be read as applying only to the competitive sealed bidding process, and as inapplicable to any limited competition procurement. Cf., AS 36.30.250(e). Incorporation of AS 36.30 by the terms of this ITB plainly included AS 36.30.305, and thus included any inherent limitations on the applicability of AS 36.30.110(b) and AS 36.30.170.
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⁸ These issues should be considered, Comtec argues, because a "procedural objection should not be allowed to extinguish Comtec's substantive right to a fair and equitable bidding process including its protest and appeal." It relies on McBirney & Associates v. State, 753 P.2d 1132, 1137 (Alaska 1988). McBirney, however, was not an appeal from a protest filed under AS 36.30.565; it was a case in which a party to a state contract sued to enforce the contract after it was voided by the state. The case does not hold that an untimely protest must be accepted if the impropriety alleged is sufficiently serious.

Even if McBirney were read to require acceptance of an untimely protest alleging conduct that subverts or circumvents the Procurement Code, cf. AS 36.30.565(b), the issues raised do not rise to that level. There is no suggestion in this case of any impropriety other than technical defects arising out of a name change. It is wholly unwarranted to compare this to the substantive defects observed in McBirney.
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