Opinion
No. 1282 C.D. 2011 No.1283 C.D. 2011
01-12-2012
Matthew E. D'Eramo v. Allegheny County, Pennsylvania, and Public Communications Services, Inc. Appeal of: Allegheny County Matthew E. D'Eramo v. Allegheny County, Pennsylvania, and Public Communications Services, Inc. Appeal of: Public Communications Services, Inc.
BEFORE: HONORABLE BONNIE BRIGANCE LEADBETTER, President Judge HONORABLE ROBERT SIMPSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge
This case was assigned to the opinion writer on or before January 6, 2012, when President Judge Leadbetter completed her term as President Judge.
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE SIMPSON
In these consolidated appeals, Allegheny County (County) and Public Communications Services, Inc. (PCS) ask whether the Court of Common Pleas of Allegheny County (trial court) erred in granting a preliminary injunction in favor of Taxpayer Matthew D'Eramo (D'Eramo), who challenged the County's award of a contract for an inmate telephone system for the County Jail and juvenile detention facility (collectively, the Jail) to PCS, who it deemed the successful bidder. The trial court determined that multiple irregularities in the County's evaluation of the proposals it received from potential vendors warranted enjoining the award of the contract to PCS. Additionally, the trial court credited testimony that one of the members of the County's evaluation committee was on a course to steer the contract to a particular vendor. Because reasonable grounds exist to support the trial court's entry of preliminary injunctive relief, we affirm.
The County's appeal was docketed in this Court at No. 1282 C.D. 2011. PCS's appeal was docketed in this Court at No. 1283 C.D. 2011. We consolidated the appeals for disposition.
The County and PCS submitted a joint brief. In their joint brief, the County and PCS assert D'Eramo, by his own admission, was recruited to file this suit by his counsel, who also serves as counsel for Securus Technologies, Inc., the vendor who finished second to PCS in the County's scoring of the award.
I. Background
The trial court provided the following background to this dispute. This case has a history related to a similar proceeding involving Securus Technologies, Inc. (Securus) and the County. That prior matter originated in the trial court in 2006 before the Honorable Judith L.A. Friedman.
In that prior case, after hearings on a taxpayer's motion for preliminary injunction, Judge Friedman found the evaluation committee did not adhere to the provisions of the County's Home Rule Charter, the County Administrative Code, the County Purchasing Manual and the Request for Proposals (RFP) in its evaluation of the proposals submitted. Notably, she found one member of the evaluation committee, then-Lieutenant Thomas Leicht, a Jail employee, engaged in conduct designed to steer the award away from Securus and to another vendor. Thus, Judge Friedman granted a preliminary injunction prohibiting award of the contract.
On consolidated appeals by the County and the vendor who was awarded the contract, this Court affirmed the grant of preliminary prohibitory injunctive relief to the taxpayer. See Lemansky v. Allegheny County et al., No. GD 06-3583 (C.P. Allegheny 2006), aff'd in part, rev'd in part, (Pa. Cmwlth., Nos. 1057, 1078 & 1142 C.D. 2006, filed June 11, 2007) (unreported) (affirming grant of prohibitory preliminary injunction that barred County's award of contract for inmate phone service where record revealed County's evaluation of proposals violated provisions of its Home Rule Charter, Administrative Code, and RFP; reversing grant of mandatory preliminary injunction that awarded contract to Securus).
In the interim, Securus became the County's provider for the Jail's inmate phone services. Securus also previously served as the County's provider for inmate telephone services for several years without any complaint.
With the three-year contract between Securus and the County set to expire, the County issued an RFP seeking to change and upgrade the Jail's phone system. Under the RFP, the successful vendor would install and maintain the system at no cost to the County. In turn, the vendor would pay the County a commission based on the gross revenue generated from the phone system.
Initially, six applicants responded to the RFP. The County appointed the following individuals to serve on a committee to evaluate the proposals: John Deighan, Purchasing Manager of the County Procurement Office; Dennis Madoni, Assistant Purchasing Manager; Alan Opsitnick, Assistant County Solicitor; and, now-Captain Thomas Leicht.
In an effort to avoid the obvious infirmity in an evaluation committee that continued to include Captain Leicht, the County retained a third-party consulting company known as Praeses, LLC, a computer and software evaluation entity. Praeses' representative to the evaluation committee was Ann O'Boyle.
After its evaluation of the proposals, the County awarded the contract to PCS. The facts surrounding the evaluation committee's review process are explored in greater detail below.
D'Eramo subsequently filed a taxpayer suit challenging the County's decision to award the contract to PCS. Shortly thereafter, the County transferred the Jail's phone services from Securus, the incumbent provider and a disappointed bidder, to PCS, the successful bidder.
In December 2010, D'Eramo filed a complaint and motion for preliminary injunction seeking to prevent the County's transition of the Jail's phone service from Securus to PCS. D'Eramo first sought an injunction in advance of a hearing, which was denied. D'Eramo's motion for preliminary injunction was then assigned to the then-sitting motions court judge, who conducted hearings over portions of a six-day period.
Before the trial court, D'Eramo asserted the County should have awarded the contract to Securus rather than PCS. He argued the failure to award the contract to Securus violated the County Administrative Code. Further, D'Eramo maintained the award process was flawed and was based on arbitrary and capricious conduct by the County. D'Eramo asserted the individuals assigned to perform the evaluation and make the award were biased against Securus. Thus, D'Eramo sought an injunction terminating the contract awarded to PCS and directing the issuance of a new RFP. He also requested the trial court restore the status quo so that Securus, the provider of the phone service prior to the award, would be reinstated until a proper award could be made.
After a lengthy set of hearings, the trial court issued a decision in which it determined the County engaged in "many deviations" from the standards set forth in the RFP. Tr. Ct., Slip Op., at 9. The trial court found Captain Leicht manipulated the "testing" component of the evaluation process, and it credited testimony that Captain Leicht "was on a course to steer the award from Securus ...." Id. As such, the trial court granted a preliminary injunction: (1) invalidating the contract between the County and PCS; (2) authorizing Securus to reassume its role as the County's inmate phone service provider; and, (3) requiring the County to commence a new RFP process for the desired inmate telephone system in which all potential vendors could participate. The County and PCS appealed to this Court.
II. Standards for Preliminary Injunction
At the outset, we note, to obtain a preliminary injunction, a petitioner must establish: (1) relief is necessary to prevent immediate and irreparable harm that cannot be adequately compensated by monetary damages; (2) greater injury will occur from refusing to grant the injunction than from granting it; (3) the injunction will restore the parties to their status quo as it existed before the alleged wrongful conduct; (4) the activity it seeks to restrain is actionable, that its right to relief is clear, and that the wrong is manifest, or, in other words, that it is likely to prevail on the merits; (5) the injunction is reasonably suited to abate the offending activity; and, (6) the public interest will not be harmed if the injunction is granted. Brayman Constr. Corp. v. Dep't of Transp., ___ Pa. ___, 13 A.3d 925 (2011); Summit Towne Ctr., Inc. v. Snow Shoe of Rocky Mt., Inc., 573 Pa. 637, 828 A.2d 995 (2003). Appellate courts review a trial court's order refusing or granting a preliminary injunction for an abuse of discretion. Brayman Constr. This standard is applied as follows:
[O]n an appeal from the grant or denial of a preliminary injunction, we do not inquire into the merits of the controversy, but only examine the record to determine if there were any apparently reasonable grounds for the action of the court below. Only if it is plain that no grounds exist to support the decree or that the rule of law relied upon was palpably erroneous or misapplied will we interfere with the decision of the Chancellor.Brayman Constr., ___ Pa. at ___, 13 A.3d 935-36 (emphasis added) (citation omitted). Here, the parties' arguments primarily focus on whether D'Eramo possesses a clear right to relief so as to warrant entry of preliminary prohibitory injunctive relief.
For the first time in their joint reply brief, the County and PCS assert the trial court here granted preliminary mandatory injunctive relief by authorizing Securus to resume its role as the County's inmate phone service provider and by directing the County to reissue the RFP because those portions of the injunction command affirmative acts. By failing to raise this issue in their initial brief, the County and PCS waived it. See Commonwealth v. Colavita, 606 Pa. 1, 993 A.2d 874 (2010) (reply brief is not an appropriate vehicle to raise a new claim); Richardson v. Thomas, 964 A.2d 61 (Pa. Cmwlth. 2009) (an issue raised in a reply brief, but not in the statement of questions involved in the initial brief is waived).
III. Issues
In their joint brief, the County and PCS assert the trial court erred in: (1) improperly relying on the "missing witness rule" to draw a negative inference against the County and to create a clear right to relief for D'Eramo when no such right existed; (2) failing to afford proper deference to the administrative discretion of a local government unit by impermissibly substituting its judgment for that of the County; and, (3) finding D'Eramo satisfied the high evidentiary burden necessary to support the extraordinary remedy of a preliminary injunction.
IV. Discussion/Analysis
A. "Missing Witness" Rule
The County and PCS begin by noting that, in order to grant a preliminary injunction, a trial court must conclude the moving party has a clear right to relief. They contend that, where, as here, the trial court commits an error of law or abuses its discretion in the manner in which it makes the determination regarding a party's right to relief, the grant of a preliminary injunction may be vacated.
The County and PCS then devote a substantial portion of their brief and a portion of their reply brief to their assertions that the trial court erred in applying the "missing witness rule." Their argument is as follows. The trial court both erred as a matter of law and abused its discretion when it drew a negative inference against the County's selection procedure founded on the fact that the County did not call a former County employee, Captain Leicht, as a witness. First, the trial court erred when it relied on "Pa. Rule of Evidence 427" (a rule of evidence that has never been adopted by the Pennsylvania Supreme Court) as a vehicle to support its decision to draw a negative inference against the County. Tr. Ct., Slip Op. at 4.
The trial court then compounded this error by misapplying the common law "missing witness rule." Specifically, an inference based on the "missing witness rule" may only be drawn when, among other things, a witness is under the sole or exclusive control of one party. Here, the trial court used the "missing witness rule" to draw a negative inference against the County's selection procedure based on the fact that a former County employee, Captain Leicht, was not called as a witness by the County. The trial court did so even though it also found that Captain Leicht was not a County employee at the time of hearing. As Pennsylvania courts routinely hold, if a witness is available to all parties through process, a negative inference based on application of the "missing witness rule" cannot be drawn. Since Captain Leicht was not under the sole or exclusive control of the County (or any other party), the negative inference drawn against the County's selection procedure is an error of law.
As was made clear in the trial court's opinion, the negative inference drawn against the County's selection procedure pervaded and informed every aspect of the trial court's decision. The trial court began its analysis with its determination that the failure to have Leicht testify was "critical," and the final sentence of the trial court's 10 page opinion speaks of the "looming influence of Leicht." Tr. Ct., Slip Op., at 10. The trial court's decision to draw a negative inference against the County's selection procedure is the unifying principle of its opinion and order. Because it was an error of law to draw the negative inference ab initio and because it was an abuse of discretion to base the decision to enjoin the award of the contract based on the negative inference drawn, the preliminary injunction must be vacated as D'Eramo did not possess a clear right to relief. We disagree.
The County and PCS are correct that Pennsylvania Rule of Evidence 427, referred to by the trial court, does not exist. Nevertheless, the "missing witness" rule exists within Pennsylvania case law.
With regard to the parameters of the missing witness rule, our Supreme Court explained:
Generally, if a litigant fails to call a witness who presumably would support his allegation, the opposing party is entitled to have the jury instructed that it may infer that the witness, if called, would testify adversely to the party who failed to call him. But this rule is inapplicable if such witness is equally available to both sides of the litigation. In other words, the inference is permitted only where the uncalled witness is peculiarly within the reach and knowledge of only one of the parties.Bentivoglio v. Ralston, 447 Pa. 24, 29, 288 A.2d 745, 748 (1972) (citations omitted); see also Wood v. Workers' Comp. Appeal Bd. (Country Care Private Nursing), 915 A.2d 181, 187 (Pa. Cmwlth. 2007) (internal quotations omitted) ("[T]he missing witness rule, permitting adverse inference, is applicable only where the uncalled witness is peculiarly within the reach and knowledge of only one of the parties.")
The Pennsylvania Superior Court holds use of the missing witness instruction may also be precluded where: (1) the witness is so hostile or prejudiced against the party expected to call him that there is a small possibility of obtaining unbiased truth; and (2) there is a satisfactory explanation for failure to call the witness; or, the testimony of the adverse witness is not within the scope of the natural interest of the party failing to produce him. See Commonwealth v. Evans, 664 A.2d 570 (Pa. Super. 1995).
As is evident from the above authority, the missing witness rule is not applicable where the witness is equally available to both parties. Here, the trial court recognized Captain Leicht was no longer employed by the County. Tr. Ct., Slip Op. at 4. Thus, Captain Leicht was not peculiarly within the reach of the County. D'Eramo does not dispute this point.
Contrary to the argument of the County and PCS, a careful reading of the trial court's opinion does not convince us that the trial court did, in fact, invoke the missing witness rule here. Rather, before setting forth the rule, the trial court stated: "Both Lei[c]ht and the Warden [of the Allegheny County Jail] are no longer employed by the County but no explanation was offered as to why they did not appear. Under similar circumstances a governing principle of evidence [provides that] ... [i]f a party fails to call a witness or offer evidence within his or her control, the fact finder may be permitted to draw an adverse inference." Tr. Ct., Slip Op. at 4 (emphasis added) (citation and quotations omitted). Thus, rather than clearly invoking the missing witness rule, it appears the trial court merely analogized use of the rule to the circumstances presented here. Id.
Further, the trial court stated that, during oral argument, the County's solicitor provided the following explanation for the County's failure to call Captain Leicht as a witness: "[I]f we call Leicht in our case, what we will hear from the other side are allegations that the witness has lied before under oath from a witness stand. So what benefit do the Defendants get from that type of testimony?" Reproduced Record (R.R.) at 657a. The trial court deemed this an unsatisfactory explanation. Tr. Ct., Slip Op., at 5. However, rather than clearly drawing an adverse inference, the trial court explained that Captain Leicht's failure to testify undercut the County's attack on the credibility of Jail employee William Mistick, who testified Leicht specifically told him the contract would be steered to a friend of the warden. Id.
In short, it is not clear the trial court actually invoked the missing witness rule. Instead, it appears the trial court used the discussion of the rule to better explain its decision to credit Mistick's testimony where neither Leicht nor the warden offered testimony to refute Mistick's accusation. Id.
More importantly, the trial court, sitting as fact finder without a jury, was empowered to resolve conflicts in the evidence, assess the credibility of witnesses and draw reasonable inferences from the evidence. See, e.g., Commonwealth v. TAP Pharm. Prods. Inc. (Johnson & Johnson), ___ A.3d ___ (Pa. Cmwlth., No. 212 M.D. 2004, filed August 31, 2011). The fact that the trial court heard this matter without a jury is significant given that all the cases cited by the County and PCS concern the propriety of an adverse inference instruction given to a jury. Even if the trial court here improperly invoked the missing witness rule, it possessed exclusive authority to weigh the evidence and make credibility determinations, including crediting Mistick's testimony as to the allegation of corruption in the absence of conflicting testimony by Leicht or the warden.
See Bennett v. Sakel, 555 Pa. 560, 725 A.2d 1195 (1999); Commonwealth v. Manigault, 501 Pa. 506, 462 A.2d 239 (1983); Commonwealth v. Moore, 453 Pa. 302, 309 A.2d 569 (1973); Bentivoglio v. Ralston, 477 Pa. 24, 288 A.2d 745 (1972); O'Rourke by O'Rourke v. Rao, 602 A.2d 362 (Pa. Super. 1992).
In particular, Mistick, who was involved in the video visitation system component of the RFP (explained more fully below), provided the following testimony regarding his conversation with Leicht and the decision to remove this component from the RFP (with emphasis added):
Q ... Mr. Mistick, you had testified that you had communications with Captain Leicht related to the inmate telephone contract?
A Yes.
Q And that those conversations -- did any of those conversations that you had with Captain Leicht, did those involve -- did he tell you anything about the process for awarding the contract?
A Yes. He for a long time talked about, yeah, it's going well. We're getting everything we need, da-da-da-da-da, like
everything is on track to get the video visits. And then said we're not getting the video visits.R.R. at 435a. The trial court provided a detailed explanation for its decision to credit this testimony. Tr. Ct., Slip Op., at 5, 9. In a footnote to their initial brief, and again in their reply brief, the County and PCS assert this testimony is inadmissible hearsay. The County and PCS also maintain it is not admissible as an admission by party opponent because Leicht was not clothed with authority to make admissions on behalf of the County.
Q And did he tell you why?
A He said I got to make sure that the warden's friend gets this contract.
The admissibility of evidence rests largely within a trial court's discretion. In re Penn-Delco Sch. Dist., 903 A.2d 600 (Pa. Cmwlth. 2006). Thus, an appellate court will only interfere with the trial court's admission of evidence upon a clear showing of an abuse of discretion. Id.
Pursuant to Rule 803 of the Pennsylvania Rules of Evidence, certain statements are not excluded by the hearsay rule, even though the declarant is available as a witness, such as an admission by a party opponent. See Pa. R.E. 803(25). Rule 803(25)(D) allows a statement offered against a party if it is a statement by the party's agent or servant concerning a matter within the scope of the agency or employment, made during the existence of the relationship. Pa. R.E. 803(25)(D). Thus, a statement made by a party's agent or servant is admissible if the following three elements are established:
(1) the declarant was an agent or employee of the party opponent; (2) the declarant made the statement while employed by the principal; and (3) the statement concerned a matter within the scope of the agency or employment.Biddle v. Dep't of Transp., 817 A.2d 1213, 1215 (Pa. Cmwlth. 2003) (quoting Sehl v. Vista Linen Rental Serv., Inc., 763 A.2d 858, 862 (Pa. Super. 2000)). "It is the proponent of the statement who bears the burden of establishing the declarant's scope of employment." Id. at 1216 (quoting Sehl, 763 A.2d at 863).
Here, the County and PCS do not dispute that Captain Leicht: (1) was (formerly) a County employee; (2) made the statement while employed by the County, and; (3) the statement concerned a matter within the scope of his employment as an employee of the County Jail and a member of the County's RFP evaluation committee.
Further, the cases cited in a footnote by the County and PCS for the proposition that D'Eramo had to prove Captain Leicht was authorized to speak on behalf of the County in order for the statement to be admissible, pre-date the 1998 promulgation of Pa. R.E. 803(25)(D). As authors Leonard Packel and Anne Bowen Poulin explain in their treatise Pennsylvania Evidence:
See Duquesne Light Co. v. Woodland Hills Sch. Dist., 700 A.2d 1038 (Pa. Cmwlth. 1997); Northern Health Facilities v. Unemployment Comp. Bd. of Review, 663 A.2d 276 (Pa. Cmwlth. 1995); Ligon v. Middletown Area Sch. Dist, 584 A.2d 376 (Pa. Cmwlth. 1990); Brady v. Unemployment Comp. Bd. of Review, 539 A.2d 936 (Pa. Cmwlth. 1988); Durkin v. Equine Clinics, Inc., 546 A.2d 665 (Pa. Super. 1988).
Pa. R.E. 803(25)(D) is a substantial change in Pennsylvania law. Under prior Pennsylvania law the party
offering a person's statement as the admission of another party had to establish the speaker's authorization to speak on behalf of the other party. Under Pa. R.E. 803(25)(D), the party offering the statement need only prove that the speaker was an agent or servant of the party against whom it is offered, that the statement concerned a matter within the scope of the speaker's agency or employment, and that the statement was made while the speaker was still an agent or servant of the party against whom the statement is offered. The party offering the statement need not prove that the speaker was authorized to speak on behalf of the party against whom the statement is offered. However, if the party offering the statement fails to establish that it concerns a matter within the scope of the declarant's employment, the statement should be excluded.Leonard Packel & Anne Bowen Poulin, PENNSYLVANIA EVIDENCE, §803-25(D)-1 at 910 (3rd ed. 2007) (footnotes omitted) (emphasis added). Here, the County and PCS do not contest the fact that the statement made by Leicht concerned a matter within the scope of his employment.
For these reasons, the trial court did not abuse its discretion in admitting the challenged testimony as an admission by party opponent. Additionally, the trial court's skeptical view toward an evaluation committee that included Captain Leicht, who was part of a prior evaluation committee that the trial court in Lemansky determined did not act fairly and impartially, was certainly understandable.
B. Independent Reasonable Grounds for Grant of Preliminary Injunction
In any event, even if the trial court improperly invoked the missing witness rule, the trial court possessed independent reasonable grounds to issue the preliminary injunction prohibiting award of the contract to PCS based on its findings of irregularities in the evaluation of the bids. We may affirm a trial court's order based on a different rationale if the basis for our decision is clear on the record. Guy M. Cooper, Inc. v. E. Penn Sch. Dist., 903 A.2d 608 (Pa. Cmwlth. 2006).
In the latter portion of their initial brief and in their reply brief, the County and PCS take issue with the trial court's determinations concerning the purported irregularities in the evaluation process. After reviewing most of the purported irregularities, the County and PCS contend that no violations of the RFP occurred, and, to the extent the trial court concluded otherwise, its conclusions were based on a misapprehension of the record. To place these arguments within the proper context, we address them in our analysis below, where appropriate.
1. Competitive Bidding Principles
"The requirement in competitive bidding that there be fair and just competition and an absence of favoritism is violated whenever the bidders are treated otherwise than by a common standard." Gaeta v. Ridley Sch. Dist., 567 Pa. 500, 507, 788 A.2d 363, 367 n.8 (citation omitted). "[F]airness lies at the heart of the bidding process, and all bidders must be ... given the same fair opportunity to bid in free competition with each other." Carbo v. Redstone Twp., 960 A.2d 889, 902 (Pa. Cmwlth. 2008). As such, the award of a public contract may be enjoined when irregularities in the bidding process are shown. Am. Totalisator Co., Inc. v. Seligman, 489 Pa. 568, 414 A.2d 1037 (1980); Shaeffer v. City of Lancaster, 754 A.2d 719 (Pa. Cmwlth. 2000); Stapleton v. Berks Cnty., 593 A.2d 1323 (Pa. Cmwlth. 1991).
Where a municipality "fail[s] to abide by the terms of its own request for proposal, it lack[s] ... any discretion to award the ... contract ... thus warranting judicial intervention." Am. Totalisator, 489 Pa. at 576, 414 A.2d at 1041. Thus, this Court explains:
It is well-settled that the specifications set forth in a bidding document are mandatory and must be strictly followed for the bid to be valid. Furthermore, an award of a contract in a competitive bidding process must be overturned if the mandatory requirements in the bid instructions are not strictly followed.Smith v. Borough of E. Stroudsburg, 694 A.2d 19, 23 (Pa. Cmwlth. 1997) (citations omitted).
Additionally, in American Totalisator, our Supreme Court rejected the argument that a complaining party must prove bad faith, fraud or capricious action on the part of the contracting agency in order to justify judicial intervention. Rather, the Court held a contracting agency's failure to abide by the terms of its RFP and its violations of elementary principles of competitive bidding were sufficient to justify judicial intervention. Id.
Further, in Lasday v. Allegheny County, 499 Pa. 434, 453 A.2d 949 (1982), our Supreme Court applied the holding in American Totalisator to a case involving an Allegheny County RFP for a revenue-producing contract, like the RFP here. In so doing, the Supreme Court extended the American Totalisator holding, concluding it is also proper for courts to issue injunctions where the public contracting procedure was not conducted "in accordance with basic standards of fairness, an obligation that could not be validly disclaimed, as was attempted here, by a reservation of the right [in the RFP] to reject any and all proposals and to negotiate privately with an individual concessionaire." Lasday, 499 Pa. at 443, 453 A.2d at 954.
2. Irregularities in RFP Evaluation Process
a. RFP Evaluation Criteria
In its opinion, the trial court stated the County deviated from the provisions of the RFP by changing the criteria to be utilized in evaluating the bids in the "Best and Final Offer" (BAFO) round of the scoring process. Specifically, the trial court explained:
The selection process involved an initial evaluation of all 6 applicants who received varying scores. The standards on which they were to be evaluated and the percentage weight to be given were:
| 1. Financial, Accounting and Billing Compliance | - 15% |
| 2. Equipment and Security Features | - 20% |
| 3. Service | - 15% |
| 4. Local, Regional, State & Client Considerations | - 15% |
| 5. Financial Offering | - 25% |
| 6. Other | - 10% |
The Evaluation Committee assigned numeric scores for each applicant.
The Committee then went to a second round called [the BAFO] Round and eliminated 2 of the Applicants, ICS and DSI. The remaining applicants were Embarq with a score of 25; Global Technology - 62; PCS - 62 and Securus - 65.
But now the standards to be used in the BAFO round were changed by Ann O'Boyle which were not set forth in the RFP. Now, the committee decided to consider the 4 Finalists to be equal in many of the categories and devised a new evaluation grid consisting of 3 categories:
| 1. Compliance with noted exceptions | - 25% |
| 2. Updated Financial Proposal | - 45% |
| 3. Onsite System Demonstration | - 30% |
Specifically, the RFP requires the County to evaluate each proposal submitted based on several factors, including but not limited to: (1) financial, accounting and billing compliance; (2) equipment and security features; (3) service; (4) local, regional, state and client considerations; and, (5) financial offering. R.R. at 728a-29a. After enumerating these criteria, the RFP states: "Allegheny County shall award [the contract] upon determining the optimal proposal considering all above stated criteria." R.R. at 729a (emphasis in original).
Additionally, the County Purchasing Manual states: "No other factors, other than those set forth in the RFP, shall be used in the evaluation." County Purchasing Manual, §2.10.2; Supplemental Reproduced Record (S.R.R.) at 96b (emphasis added). Further, the County Administrative Code requires the County Purchasing Officer to award a revenue contract, such as the inmate phone service contract, in accordance with the "approved procedure and criteria" developed by the contacting agency within the County. County Administrative Code, §5-909.02; S.R.R. at 97b.
Here, the record here reveals the County did not award the contract to PCS based on all of the mandatory award criteria. Instead, the County used the mandatory criteria to narrow the field from six vendors to four. R.R. at 66a. The County then (1) wiped the scores clean; (2) conducted a second round of scoring for the remaining four vendors based solely on "compliance with noted exceptions," "updated financial proposals," and "onsite system demonstration/system capabilities"; and (3) awarded the contract based on the vendors' performances in these categories using a different scoring system than in round one. R.R. at 66a-68a.
Additionally, the weight assigned to each category in the second round differed between rounds one and two. This is evidenced by a comparison of the score sheet in round one and the score sheet in round two. Compare R.R. at 707a with R.R. at 708a. Further, Ann O'Boyle from the County's independent consultant, Praeses, confirmed the "service" and "local, regional, state and client considerations" categories were not included in the scoring for round two. R.R. at 530a.
The decision not to use the "service" or "local, regional, state and client considerations" categories impacted the outcome of the award. To that end, on cross-examination County Purchasing Manager Dieghan testified that if the evaluation committee used all of the mandatory award criteria in round two, it would have resulted in a tie between PCS, GTL and Securus. R.R. at 586a-88a, 595a. In their initial brief, the County and PCS provide no basis upon which to overturn the trial court's decision on this point. Further, as set forth below, the trial court's supported determinations reveal the evaluation committee manipulated the scoring of the "onsite system demonstration/system capabilities" category.
In their reply brief, the County and PCS argue that the RFP did not mandate any scoring for round two. Instead, they contend, under the RFP, the County could have simply entered into negotiations with the remaining vendors after round one, and, therefore, the County was not required to score the proposals at all in round two.
Contrary to these assertions, however, the County did not enter into negotiations with the remaining vendors after round one. The County and PCS basically concede as much in an earlier section of their reply brief. See Joint Reply Br. of Appellants at 6, n.3. Further, under our Supreme Court's decision in Lasday, even if the County reserved the right to conduct private negotiations in the RFP, "once the County voluntarily undertook to follow a particular procedure, the County was obligated to adhere to that procedure throughout the procurement process." Id. at 443, 453 A.2d at 954 (citing Am. Totalisator). Thus, we reject the arguments of the County and PCS on this point.
In short, the County's deviation from the RFP's mandatory award criteria, which violates provisions of the County Administrative Code and the County Purchasing Manual, provides reasonable grounds for the trial court's entry of preliminary prohibitory injunctive relief. See Am. Totalisator; Smith.
While this irregularity provides reasonable grounds for the trial court's grant of a preliminary injunction, in the interest of completeness we address some of the other irregularities discussed by the trial court and the parties below.
b. Scoring of "Onsite System Demonstration/System Capabilities" Category
In its analysis, the trial court focused on its determination that "the real manipulation of the procedure" was Captain Leicht's leading role in the decision to award 30 points to PCS and 20 points to Securus in the "onsite system demonstration/system capabilities" category. Tr. Ct., Slip Op., at 9-10. The trial court explained, at length (with emphasis added):
As part of the evaluation process, and after the [a]pplicants had been winnowed down to four, a demonstration or "test" of each system was imposed. To that end, Securus offered its test site and gave the necessary entry codes to the [c]ommittee.
Testimony was offered that said codes appeared to be incorrect and some slight delay was caused in attempting to use the Securus test site. Rather than using the Securus test site, or getting appropriate codes, O'Boyle and Lei[c]ht took it upon themselves to access a working site of Securus at a Florida prison and run the test devised by Lei[c]ht -- the retrieval of 68,000 telephone calls for surveillance of who the jail inmates were calling. O'Boyle was able to accomplish this because that Florida jail was also a client of hers and she had the Securus Codes for that site. The testimony was that Securus failed the test because the inquiry "timed- out" on the internet before all information could be received.
The defense has emphasized that this "test" proved the Securus product to be inferior and thus there is no basis to grant
relief. Their rubric was that "it didn't work." What strikes me as unusual is that O'Boyle and Lei[c]ht, without notice to Securus, took it upon themselves to access a working installation of Securus at the Florida prison. She then ran the inquiry that Lei[c]ht directed and the "timing out" occurred. It does not appear that the "timing out" occurred each time but that one of the three efforts was successful. In this respect, James LeBoeuf of Securus opined that O'Boyle had the requisite skill and knowledge of the Securus System to input such information as to cause it to fail.
In contrast, O'Boyle and Lei[c]ht did a test of the PCS System at a New Mexico prison, which had been advised to expect the test and which test was successful.
Based on the foregoing[,] the [e]valuation [c]ommittee, led by Lei[c]ht, awarded the contract to PCS. While the Defendants, and in particular Purchasing Agent John Deighan attempted to suggest that the award was by consensus and that Lei[c]ht did not have a dominant role in the evaluation, I am not persuaded. I place more weight on the deposition testimony of Attorney Allan Opsitnick who said that Lei[c]ht led the evaluation discussion and the others just followed along (N.T. Feb. 22 - P. 137; Feb. 23 - P. 45-47).
In view of Lei[c]ht's role in both the testing and the evaluation, I am not inclined to view Mistick as a raving lunatic and believe there to be merit in what he says about Lei[c]ht, who both orchestrated the test and led the evaluation. O'Boyle lent her expertise to the equation by facilitating the test outside the parameters established and without notice to Securus. Finally, it was never explained why this type of test was necessary or typical of what the system would be used for. Indeed, LeBoeuf testified that a review of 68,000 phone calls would be a herculean task. He suggested that the typical phone call lasts 10 minutes. Times 68,000 that equals 680,000 minutes or 11,333 hours or 1416 workdays. Even 5 minute phone calls will equal 708 work days. If each call is to be analyzed, the time necessary escalates geometrically. When reduced to these
practical numbers, it does appear to be a conscious effort to make the system fail. ...Tr. Ct., Slip. Op., at 5-7, 9-10. The record supports the trial court's determinations. R.R. at 159a, 217a-20a, 234a-35a, 264a-65a, 271a-72a, 273a-81a, 384a-86a, 397a-98a, 510a-13a. While the County and PCS advance several arguments in opposition to the trial court's findings and determinations in this regard, the trial court was empowered to resolve conflicts in the evidence and to determine the credibility of witnesses. TAP Pharm. Prods. We cannot alter these factual determinations. Id. Further, the trial court's findings that disparate treatment occurred during the testing portion of the evaluation process also provide reasonable grounds for its entry of an injunction. Am. Totalisator.
[T]he Defendant County engaged in many deviations from [the] standards [of the RFP,] the most egregious of which was the imposition of a 'test' at the instance [sic] of Captain Lei[c]ht developed to make the system fail while performing an unreasonable and useless search. I have credited jail employee Mistick in his testimony that Lei[c]ht was on a course to steer the award from Securus and the facts support that conclusion. In addition, I am satisfied that Lei[c]ht led the decision to award 30 points to PCS and only 20 to Securus.
Nevertheless, the County and PCS assert the trial court erred in relying on Securus' representative James LeBeouf's testimony that "O'Boyle possessed the requisite skill and knowledge of the Securus System to input such information as to cause it to fail." Tr. Ct., Slip Op. at 6. They contend LeBeouf was not qualified as an expert, and, therefore, he was not permitted to offer opinion testimony.
Our review of the record reveals the testimony that supports the trial court's finding was elicited during the County's re-cross-examination of LeBeouf. See R.R. at 397a-98a. The County did not raise an objection to LeBeouf's testimony that O'Boyle possessed the requisite skill and knowledge to cause the Securus system to fail at the time that testimony was offered. Thus, this issue is waived. See, e.g., B.C. v. Penn Manor Sch. Dist., 906 A.2d 642 (Pa. Cmwlth. 2006) (to preserve an issue for review, a litigant must make a timely objection at the hearing before the lower tribunal).
In any event, no abuse of discretion is evident in the trial court's admission of this testimony. To that end, the Third Circuit explains:
Under [Federal Rule of Evidence 701 (which is substantively identical to Pennsylvania Rule of Evidence 701)], lay opinion is admissible so long as it is (a) rationally based on the perception of the witness, and (b) helpful to a clear understanding of the witness's testimony or the determination of a fact in issue. A witness testifying about business operations may testify about inferences that he could draw from his perception of a business's records, or facts or data perceived by him in his corporate capacity. Lay opinion testimony may be based on the witness's own perceptions and knowledge and participation in the day-to-day affairs of [the] business.United States v. Polishan, 336 F.3d 234 (3d Cir. 2003) (citations and quotations omitted) (emphasis added).
Here, LeBeouf testified he worked in the inmate telephone service business for over 20 years, he possessed technical knowledge in this area, and he gave presentations in the technical aspects of this field. R.R. at 259a, 277a. He also testified he had several certifications in telecommunications. R.R. at 373a. Further, LeBeouf's testimony regarding O'Boyle's testing of Securus' system was based on his knowledge of the day-to-day operations of the inmate phone system, and was helpful in deciding a fact in issue, whether O'Boyle ran a test on Securus' system that would cause it to fail, in order to manipulate the evaluation and scoring of Securus' technology. Additionally, LeBeouf's qualifications would qualify him as an expert. See Miller v. Brass Rail Tavern, Inc., 541 Pa. 474, 664 A.2d 525 (1995) (the standard for qualification of an expert witness is a liberal one; a witness may be qualified to render an expert opinion based on training and experience). Thus, even if the qualification objection was properly preserved, no abuse of discretion is apparent in the trial court's admission of this testimony.
Finally, although the County and PCS maintain the RFP specifically contemplated live testing at the facilities of other vendors such as Securus, a review of the RFP provisions cited by the County and PCS do not bear out these assertions. See R.R. 729a ("Evaluation ad Selection" Section, Subsection F) (relating to trade secrets), R.R. 730a ("Competitive Negotiations of Proposals" Section at Subsection B) (relating to potential for negotiations with vendors). Additionally, while the County and PCS suggest that Securus gave its permission for its live Florida site to be accessed for testing, LeBeouf explained that he only gave Captain Leicht permission to test Securus' demonstration site. R.R. 264a-67a, 274a, 276a, R.R. at 316a-19a.
c. Video Visitation System
The parties also address the trial court's reference to the fact that the County deleted the video visitation system component to the RFP, which PCS did not include in its proposal, while Securus did. See Tr. Ct., Slip Op. at 10. The parties differ on whether the RFP required potential vendors to include a video visitation system component in their proposals.
However, our review of the RFP supports D'Eramo's argument that the RFP required vendors to include a video visitation system component. Specifically, the RFP states (with emphasis added):
B. Video Visitation
R.R. at 732a. Additionally, the RFP included a requirement that the selected vendor "shall furnish, install and maintain" video visitation equipment. R.R. at 752a.Vendor shall install and maintain video visitation equipment, hardware, software and network components at the ... Jail to allow the inmates to participate in onsite and offsite video visits with the general public (including privileged visits with attorneys) in a secured environment as well as to allow [the] County to control, monitor, record, retrieve and export the video visitation systems.
Securus submitted a video visitation system component in its proposal, R.R. at 926a, while PCS did not. R.R. at 518a-19a; S.R.R. at 105b-116b. Instead, PCS offered the County a $1 million technology grant. Id. After the potential vendors submitted their proposals, the evaluation committee eliminated the video visitation system requirement from consideration. R.R. at 519a.
As explained above, Mistick testified that Captain Leicht told him the video visitation system was eliminated because he had to "make sure that the warden's friend gets this contract." R.R. at 435a. The trial court credited this testimony. Tr. Ct., Slip Op. at 9. Thus, the trial court made a supported finding that the decision to eliminate the video visitation system was the product of impropriety. This determination provides an additional reasonable ground for the grant of preliminary injunctive relief. Am. Totalisator.
The trial court also briefly referenced the fact that PCS included a "commission switching" option in its financial proposal to the County, which was not an option proposed by any other potential vendor. The trial court determined the "shifting standards" of what would be accepted from one vendor, but not offered to the other, like the commission switching option, was another factor in its decision to grant injunctive relief. Tr. Ct., Slip Op. at 10. The County and PCS take issue with this statement by the trial court.
Because PCS's inclusion of a commission switching option does not clearly violate the terms of the RFP, it is less clear that this issue, by itself, would warrant judicial intervention. However, as is apparent from the above discussion, the trial court did not base its decision solely on this purported irregularity. Instead, this was one factor the trial court pointed to in support of its grant of the preliminary injunction. See Tr. Ct., Slip Op. at 10. Thus, even if this Court concluded the commission switching issue, by itself, did not warrant equitable relief, based on the above discussion, the trial court still had reasonable grounds to grant the preliminary injunction.
C. Administrative Discretion in Awarding the Contract
The County and PCS next assert Pennsylvania appellate courts caution trial courts that they are not permitted to substitute their discretion for that of a contracting governmental entity. Their argument is as follows. The trial court plainly and unmistakably erred as a matter of law or abused its discretion when it substituted its discretion for that of the County. The language of the trial court's opinion unequivocally reveals occasions where the trial court determined it would have acted differently than the County—a conclusion that represents both an error of law and an abuse of discretion.
The County and PCS further maintain the trial court erred when it ignored evidence that the County's evaluation of the vendors' submittals was improper. In pursuit of its conclusion that the County's evaluation process was improper, the trial court used the adverse inference discussed above to either: substitute for a lack of actual record evidence; or, ignore undisputed record evidence. Again, we reject the arguments of the County and PCS on this point.
First, as explained above, the trial court's determinations that improprieties occurred in the evaluation of the proposals here are supported by the record. In making these determinations, the trial court did not substitute its judgment for that of the County; rather, the trial court analyzed the evidence presented, made factual findings and credibility determinations, and determined several improprieties occurred. Further, contrary to the assertions of the County and PCS, our Supreme Court holds that where a municipality fails to abide by the terms of its RFP or violates basic competitive bidding principles, it lacks any discretion to award a contract, thus warranting judicial intervention. Am. Totalistaor. Here, the trial court determined the County engaged in several improprieties, including deviations from the RFP. Under these circumstances, judicial intervention was appropriate. Id.
Additionally, although the County and PCS cite Blumenschein v. Housing Authority of Pittsburgh, 379 Pa. 566, 109 A.2d 331 (1954), for the proposition that a party must prove bad faith in order to overcome the deference afforded to a local government unit in the exercise of its administrative discretion, our Supreme Court rejected that notion in American Totalisator. Specifically, the Court stated:
[Appellant] argues that the chancellor erred in intervening in the procurement process, citing [Blumenschein], as authority for his proposition. Therein we stated:
"By a host of authorities in our own and other jurisdictions it has been established as an elementary principle of law that courts will not review the actions of governmental bodies or administrative tribunals involving acts of discretion, in the absence of bad faith, fraud, capricious action or abuse of power: they will not inquire into the wisdom of such actions or into the details of the manner adopted to carry them into execution. It is true that the mere possession of discretionary power by an administrative body does not make it wholly immune from judicial review, but the scope of that review is limited to the determination of whether there has been a manifest and flagrant abuse of discretion or a purely arbitrary execution of the agency's duties or functions. That a court might have a different opinion or judgment in regard to the action of the agency is not a sufficient ground for interference; judicial discretion may not be substituted for administrative discretion." Id. at 572-73, 109 A.2d 334-35 ....
As the chancellor made no findings concerning bad faith, fraud or capricious action, [the appellant] believes that the instant judicial intervention was improper. We do not agree.
As Blumenschein points out, principles of municipal law forbid the substitution of judicial discretion for administrative discretion. We believe, however, that the governmental agencies in this case simply had no discretion to award the contract ... on the original bids submitted. Our belief is based on two reasons. ... As the Commonwealth failed to abide by the terms of its own request for proposal, it lacked, in our view, any discretion to award the instant contract ... thus warranting judicial intervention.
We acknowledge that the chancellor made no findings of bad faith, fraud or capricious action. Nevertheless, the
chancellor did find that elementary principles of competitive bidding had been violated ... The evil of the instant procedure is readily apparent. When competitive bidding is used and the procedures followed emasculate the benefits of such bidding, we believe judicial intervention is proper.Am. Totalisator, 489 Pa. at 575-76, 414 A.2d at 1040-41 (emphasis added). Based on the above-quoted authority, the County and PCS's reliance on Blumenschein is misplaced.
D. Public Interest
As a final issue, the County and PCS contend the determination of whether the public interest would be served by the entry or denial of a preliminary injunction is a threshold determination. They maintain the trial court erred when it failed to find the public interest would have been best served by retaining PCS as the Jail's phone vendor. They argue the record reveals PCS's proposal returned more revenue to the County than Securus.
In addition, the County and PCS maintain the trial court erred when it barred post-award evidence offered by PCS that showed the public interest would be served by denying the preliminary injunction based on the increased revenue the County was realizing over its prior projections. On the other hand, they argue, the trial court permitted D'Eramo's counsel to enter post-award evidence. As such, they contend the trial court's actions in permitting post-award evidence from one party, but not others, is both an error of law and an abuse of discretion.
We reject the argument that the trial court erred in failing to find that the public interest would be served by retaining PCS as the Jail's phone vendor. In Pennsylvania Public Utility Commission v. Israel, 356 Pa. 400, 52 A.2d 317 (1947), our Supreme Court stated: "The argument that a violation of law can be a benefit to the public is without merit. When the Legislature declares certain conduct to be unlawful it is tantamount in law to calling it injurious to the public." Id. at 426, 52 A.2d at 321. While the County and PCS assert that Israel does not apply in the competitive bidding context, this Court previously cited Israel in the context of an action for injunctive relief based on a municipal entity's award of a public contract, which deviated from competitive bidding requirements. See Shaeffer.
Here, the trial court determined the County violated basic principles of competitive bidding as well as the terms of its own RFP. In the face of such violations, the trial court did not err in failing to find that it was in the public interest to retain PCS as the Jail's phone vendor. See Shaeffer, 754 A.2d at 723 ("[The appellant] next argues that the trial court erred in concluding that he failed to show irreparable harm. [The appellant] cites [Conduit and Foundation Corp. v. City of Philadelphia, 401 A.2d 376 (Pa. Cmwlth. 1979)] for the proposition that the violation of competitive bidding requirements constitutes irreparable harm justifying the issuance of an injunction. The Court agrees. Statutory violations are sufficiently injurious to constitute irreparable harm, [Israel], and a preliminary injunction may be upheld based upon the violation of competitive bidding requirements. Conduit; Karp [v. Redevelopment Auth. of City of Phila., 566 A.2d 649 (Pa. Cmwlth. 1989).] ")
We also reject the contention of the County and PCS that the trial court improperly precluded their attempt to present certain "post-award" evidence showing the increased revenue to the County in an effort to support their assertions that the award of the contract was in the public interest. The County and PCS argue, while the trial court barred their attempts to present such evidence, it permitted D'Eramo to do so. This argument fails for two reasons.
First, this argument relates to the ability of the County and PCS to show the award to PCS was in the public interest. As set forth above, where, as here, principles of competitive bidding as well as the RFP were violated, the trial court did not err in failing to find that the award to PCS was not in the public interest.
In addition, our review of the record reveals the trial court permitted D'Eramo's counsel to elicit testimony from Ann O'Boyle concerning the "post-award" time period over PCS's objection on the basis that the testimony related to the credibility of this witness. R.R. at 522a. Clearly, evidence which is inadmissible for one purpose may be admissible for another. Dep't of Gen Servs. v. U.S. Mineral Prods. Co., 927 A.2d 717 (Pa. Cmwlth. 2007), aff'd, 598 Pa. 331, 956 A.2d 967 (2008). Thus, even if the trial court determined that evidence relating to the period after the award was irrelevant, it could admit such evidence for impeachment purposes.
For all the foregoing reasons, we affirm.
For the first time in their joint reply brief, the County and PCS maintain that the record reveals Securus admitted that it attempted to deceive the County. By failing to raise this issue in their initial brief, the County and PCS waived it. See Colavita; Richardson. Further, the trial court made no findings on this issue, and the County and PCS do not point out where in the voluminous record they raised the issue before the trial court. --------
/s/_________
ROBERT SIMPSON, Judge Judge Leavitt did not participate in the decision in this case. ORDER
AND NOW, this 12th day of January, 2012, the order of the Court of Common Pleas of Allegheny County is AFFIRMED.
/s/_________
ROBERT SIMPSON, Judge