In the Matter of ACME Bus Corp., Appellant,v.Orange County, et al., Respondents.BriefN.Y.October 20, 2016To BeArgued By: Richard Hamburger Time Requested: 30 Minutes APL-2015-00251 Court of Appeals STATE OF NEW YORK In the Matter of the Application of: ACME BUS CORP., Petitioner-Appellant, For Relief Pursuant to Article 78 of the CPLR, -against- ORANGE COUNTY, ORANGE COUNTY DEPARTMENT OF GENERAL SERVICES, QUALITY BUS SERVICE, LLC, and VW TRANS, LLC, Respondents-Respondents. REPLY BRIEF FOR PETITIONER-APPELLANT Dated Completed: January 21, 2016 HAMBURGER, MAXSON, YAFFE & McNALLY, LLP Attorneys for Petitioner-Appellant ACME BUS CORP. 225 Broadhollow Road, Suite 30IE Melville, New York 11747 Of Counsel: 631.694.2400 RICHARD HAMBURGER, ESQ. DAVID N. YAFFE, ESQ. ANDREW K. MARTINGALE, ESQ. Appellate Division, Second Department Case No. 2013-09516 Orange County Clerk's Index No. 6194-13 DISCLOSURE STATEMENT Pursuant to 22 N.Y.C.R.R. §500.1(f), the undersigned counsel for petitioner-appellant Acme Bus Corp. (a private, non-governmental party) certifies that there are no corporate parents, affiliates and/or subsidiaries of said party, except for the following: ABA Transportation Holding Co. Inc. Baumann & Sons Buses, Inc. Baumann Bus Company, Inc. Brookset Bus Corporation, and Alert Coach Lines, Inc. Dated: Melville, New York January 21,2016 Yours, etc., HAMBURGER, MAXSON, YAFFE & McNALLY, LLP Attorneys for Petitioner-Appellant By: Richard Hamburger 225 Broadhollow Road, Suite 30IE Melville, New York 11747 631.694.2400 TABLE OF CONTENTS Page INTRODUCTION 1 POINT I THE COUNTY CANNOT AWARD A CONTRACT FOR PRESCHOOL HANDICAPPED TRANSPORTATION SERVICES IN CLEAR CONTRAVENTION OF ITS OWN RFP EVALUATION CRITERIA 1 The County's Procurement Policy Requires the County to Make an Award in Accordance with the County's Own RFP Evaluation Criteria. . . B. The RFP Provides That the Award Will Be Based on the County's Evaluation of the Evaluation Criteria as Scored and Weighted by the County's Evaluation Committee, and Requires Proposers to Submit All Information and Documentation Responsive to That Evaluation C. The Requirements of General Municipal Law § 104-b, the County's Procurement Policy and the RFP Specifications Cannot Be Waived 9 D. The County Failed to Follow its Own Evaluation Criteria When it Abandoned the "Percentage to Points Ratio" Formula for Awarding up to 20 Points in the Cost Category 13 Page E. The County Cannot Justify its Arbitrary and Capricious Scoring ofAcme Bus, as Compared to Quality Bus and VW Bus, in at Least Four Performance Categories. The Defenses and Explanations Provided by Quality Bus and VW Trans Are Unsustainable 16 i. Quality Bus 16 ii. VWBus 21 F. The County Always Enjoyed the Right To Reject All Proposals, Revise the Cost Proposal Formula, and Re-issue the RFP 23 G. The Authorities Cited Do Not Support the County's Position That Compliance with its Own Evaluation Criteria Is Optional and May Be Ignored If the County Determines it Is in its "Best Interests" to Do So 24 POINT II THE COUNTY'S INABILITY TO FORECAST FUTURE USAGE IS NO EXCUSE FOR THE RFP FAILING TO CONTAIN A USAGE MATRIX WHICH ADVISED ALL PROPOSERS, IN ADVANCE, HOWTHEIR UNIT COST PROPOSALS WOULD BETALLIED IN ORDERTO CALCULATE THE TOTAL DOLLAR COST OF EACH PROPOSAL 29 n Page POINT III THE COUNTY'S UNLAWFUL ABANDONMENT OF ITS OWN RFP EVALUATION CRITERIA IS NOT EXCUSED BY THE INFORMATION REQUESTED OR GIVEN AT OR AFTER THE PRE- BID CONFERENCE 32 POINT IV EDUCATION LAW § 305(14)(f) AND 8 NYCRR § 156.12(b) GOVERN THE RFP, NOT GENERAL MUNICIPAL LAW § 403-b. THE NINE SPECIFICALLY ENUMERATED PERFORMANCE CATEGORIES REQUIRED BY THIS STATUTE AND REGULATION WERE NOT ALL INCORPORATED AS EVALUATION CRITERIA IN THE RFP 33 POINT V THE PRIOR UNSUCCESSFUL MOTION FOR LEAVE TO APPEAL, MADE TO THE APPELLATE DIVISION, IS IRRELEVANT 37 CONCLUSION 39 in TABLE OF AUTHORITIES Page CASES Acme Bus Corp. v. Bd of Educ. of Roosevelt Union Free Sch. Dist.. 91 N.Y.2d 51, 55, 666 N.Y.S.2d 996, 998 (1997) 11 Am. Totalisator Co. v. N.Y.S. Dep't of Taxation & Fin.. 80 A.D.2d 373, 376, 439 N.Y.S.2d 732, 734 (3d Dept. 1981) 26 Automated Wagering Int'l. Inc.. v. N.Y.S. Dept. of Taxation and Fin.. 195 A.D.2d 169, 607 N.Y.S.2d 446 (3d Dept. 1994) 24-26 Le Cesse Bros. Contracting v. Town Bd of the Town of Williamson. 62 A.D.2d 28, 32, 403 N.Y.S.2d 950, 953 (4th Dept. 1978), affd., 46 N.Y.2d 960, 415 N.Y.S.2d 413 (1979) 26 Matter of Quest Diagnostics. Inc.. v. County of Suffolk. 21 Misc.3d 944, 865 N.Y.S.2d 504 (Sup. Ct. Suff. Cnty. 2008) 11 Ouain v. Buzzetta Construction Corp.. 69 N.Y.2d 376, 380 (1987) 39 STATUTES CPLR § 5602 38 CPLR § 5611 38 Education Law § 305(14) 2, 33, 34, 36 Education Law § 305(14)(f) 33, 34, 36, 37, 40 Education Law § 4410 18 Education Law § 4410(8) 33, 34 iv Page Family Court Act § 236 33, 35 Family Court Act § 236(b) 34 Family Court Act § 236(3)(b) 33, 34 General Municipal Law § 103 1, 33 General Municipal Law § 104-b 1,2, 7-9, 11, 12, 26 General Municipal Law § 104-b(1) 10 General Municipal Law § 104-b(5) 28 General Municipal Law § 403-b 33, 40 Public Health Law § 2559-a 18 REGULATIONS 8 NYCRR § 156.12 28, 36 8 NYCRR § 156.12(b) 2, 25, 29, 33, 34, 37, 40 8 NYCRR § 156.12(c) 33, 36 OTHER AUTHORITIES Karger, The Powers of the New York Court of Appeals, § 10:3, p. 330 (rev'd 3rd Ed. 2005) 38 INTRODUCTION This reply brief is submitted on behalf of petitioner-appellant Acme Bus Corp. ("Acme Bus") in response to the three separate answering briefs of respondents-respondents Orange County and Orange County Department of General Services (collectively, the "County"), Quality Bus Service, LLC ("Quality Bus") and VWTrans, LLC ("VW Bus"). POINT I THE COUNTY CANNOT AWARD A CONTRACT FOR PRESCHOOL HANDICAPPED TRANSPORTATION SERVICES IN CLEAR CONTRAVENTION OF ITS OWN RFP EVALUATION CRITERIA. We agree that the transportation of preschool handicapped children is a specialized service which is exempt from competitive bidding under General Municipal Law § 103. This means that the contract may be procured through an RFP under one of two legal statutory regimes: (a)under the authority ofGeneral Municipal Law§ 104-b and the County's procurement policy (as the County contends — see Brief of Respondents-Respondents Orange County and Orange County Department ofSocial Services ["Co. Br."], Point II, pp. 18-21, and Point V, pp. 41-46); or (b)under the authority ofEducation Law§ 305(14) and 8 NYCRR § 156.12(b) (as Acme Bus contends —see Brief of Petitioner-Appellant Acme Bus Corp. ["App. Br."], Point III, pp. 70-77). General Municipal Law § 104-b, the County's procurement policy, Education Law § 305(14), and 8 NYCRR § 156.12(b) all authorize an RFP procurement process. However, under General Municipal Law § 104-b, the County may adopt its own evaluation criteria in the County's procurement policy. In contrast, under Education Law § 305(14) and 8 NYCRR § 156.12(b), the County must use ten specific evaluation criteria, including cost, as designated in the statute and its implementing regulation. In this point, for the sake of argument, we will assume that General Municipal Law§ 104-band the County's procurement policy govern. As we demonstrate, even in such circumstance, the contract awards cannot be sustained because the County violated their requirements. In Point IV, infra, we will demonstrate that, in fact, Education Law § 305(14) and 8 NYCRR § 156.12(b) govern the County's procurement of preschool handicapped transportation services, and the County also did not adhere to their requirements. A. The County's Procurement Policy Requires the County to Make an Award in Accordance with the County's Own RFP Evaluation Criteria. The pertinent section of the County's procurement policy is Part V, entitled, "Procurement of Professional Services" (R. 1868-1870) which applies to contracts for services that require "specialized or technical skills or expertise . . ." (R. 1868). The policy directs that "if the estimated cost of a particular Professional Service contract is $35,000 or more, the Procuring Agency must issue a Request for Proposals (RFP) that, at a minimum, requires submission of pricing and qualifications by potential service providers" (R. 1869) (emphasis added). There are no further directions or guidance in Part V as to how the RFP is to be structured. However, Section E of Part V, not quoted by the County (see Co. Br., p. 5) and entitled, "Award of Professional Services RFP's," states: It is important to keep in mind that the award of a RFP must be made in accordance with the evaluation criteria specified in the RFP. (R. 1870) (emphasis added). Here, the County completely ignores its own procurement policy requirement that awards are to be made "in accordance with the evaluation criteria specified." B. The RFP Provides That the Award Will Be Based on the County's Evaluation of the Evaluation Criteria as Scored and Weighted by the County's Evaluation Committee, and Requires Proposers to Submit All Information and Documentation Responsive to That Evaluation. Under a heading, "Submission of Proposals," all proposers were advised that their proposals "must" follow a format in which they provide, among other things, information in response to the eight performance criteria contained in the RFP (R. 76-77). The RFP then states: "The proposal must address all of the items outlined in this RFP" (R. 77). Under the heading, "Basis of Award," the RFP advises that, "Proposals will be scored and weighted by the evaluation committee as follows" (R. 77) and then proceeds to lay out, over two pages, the nine categories (sealed cost proposal plus eight performance categories) and the maximum number of points that the evaluation committee may award in each category, from a low of 5 points to a high of 20 points (R. 78-79). With respect to each of these nine categories, the RFP specifies that each proposer "must include," "will provide," "must submit," or "shall provide" the requested information and documentation and that "Each member [of the evaluation committee] will evaluate the Offerors' programs [or references] and assign a numeric value that will range from a low of 0 points to a high of [5, 10 or 15 points]." The County points out (Co. Br., p. 24) that the same "Basis of Award" section of the RFP also contains the following language, which is referenced or repeated several times in the RFP: The submission of a proposal implies the Offeror's acceptance ofthe evaluation criteria and the Offeror's acknowledgment that subjective judgments must be made by the Evaluation Committee. Award of any contract shall be made to the responsible Offeror whose proposal is determined to be in the best interests of the County. The County reserves the right to: accept other than the lowest price offer, waive any informality, or reject any or all proposals, with or without advertising for new proposals, if in the best interest of the County. R. 77. Nothing in this provision saves the County from its unlawful conduct: 1. Yes, the Offeror "accepts" the evaluation criteria, but so, too did the County, where nothing in the language of the provision authorized it to ignore or change the evaluation criteria for determining the highest scoring proposer and instead award the contracts based solely on lowest cost (which was only one of nine evaluation criteria). Further, the County mis- scored the proposers in that category by deliberately mis-applying the "percentage to points ratio" formula clearly set forth in the RFP. 2. Yes, there are "subjectivejudgments" that must be made in some cases under certain of the evaluation criteria, but changing the methodology for awarding points in the Cost category does not involve subjective judgment. Nor is subjective judgment involved in accepting unaudited financial statements and management reports where audited statements are required. And subjective judgment cannot insulate from judicial review the clearly arbitrary, capricious and irrational point awards made when comparing Acme Bus to Quality Bus and VW Bus in the Experience, References, Financial Stability and Transition Plan categories. In other words, it may be subjective to award Acme Bus 4 points instead of 5 points in a particular category, but where Quality Bus and VW Bus are awarded the same or a closely similar number of points when the underlying factors to be evaluated clearly warrant a substantially different (and higher) score for Acme Bus, the comparative relationship of the point awards is objectively arbitrary, capricious and irrational. 3. Yes, every General Municipal Law § 104-b RFP award should be made in the "best interests" of the County, but that means an award made in accordance with the evaluation criteria established by the County in the RFP, as this reflects the lawful process adopted by the County to comply with the requirements of General Municipal Law § 104-b, not an ad hoc determination made entirely without the benefit of process, or in adherence to established standards or criteria. 4. Yes, the County reserves the right to accept an offer other than the lowest price offer. That is what the County could have done here, as Acme Bus was the highest scoring proposer but not the lowest cost proposer. 5. Yes, the County can waive any "informality," but General Municipal Law § 104-b, the County's procurement policy, and the evaluation criteria set forth in the RFP would all be meaningless if the concept of informality could be stretched so far as to allow the County to deviate entirely from its evaluation criteria in key substantive categories — Cost, Experience, References, Financial Stability and Transition Plan. These are not mere informalities. 6. Yes, the County can "reject any or all proposals," and that is what the County should have done here if it was unhappy with the results of the RFP after opening and scoring the proposals. The County should have redrafted and reissued a more suitable RFP, according greater point weightings to lowcost and eliminating or relaxing the requirements ofcertain performance categories like Experience, References, Financial Stability and Transition Plan. 8 C. The Requirements of General Municipal Law § 104-b. the County's Procurement Policy and the RFP Specifications Cannot Be Waived. On this appeal, it is fundamentally the County's position that there is no requirement that the County award the challenged contract to the highest scoring proposer: Nowhere in the RFP, GML § 104-b or the Orange County Procurement Policy is it required that the County award the contract to the "highest scoring proposer" as alleged by Acme. Therefore, even a determination by the County to award the contract to an offeror that did not have the highest overall score, but whose proposal was determined to be in the "best interests of the County" would be sustained as having a rational basis in the absence of proof of fraud, collusion, favoritism or some other illegality. Co. Br., p. 36 (emphasis in original); see also Co. Brief, pp. 11, 21, 22, 33. It is the County's position that its determination to award the contracts to Quality Bus and VW Bus, although not the highest scoring proposers in their zones, was "rational" because it saved the County approximately $1.6 million annually (see Co. Brief, pp. 37-38) and the County had the right, in the "best interests" of the County, to waive all of its evaluation criteria, except low cost (see Co. Br., p. 23). 9 This is not, nor should it be, the law. The County 's reliance upon a result oriented "best interests" standard is entirely misplaced. General Municipal Law § 104-b(l) provides that goods and services that are not required to be competitively bid, shall be procured "in a manner so as to assure the prudent and economical use of public moneys in the best interests of the taxpayers . . . , to facilitate the acquisition of goods and services of maximum quality at the lowest possiblecost under the circumstances, and to guard against favoritism, improvidence, extravagance, fraud and corruption" (emphasis added). That section continues: To further these objectives [i.e., lower cost, maximum quality, and avoidance of favoritism, improvidence, extravagance, fraud and corruption], the governing board of every political subdivision and any district therein, by resolution, shall adopt internal policies and procedures governing all procurements of goods and services which are not required to be made pursuant to [] competitive bidding requirements .... (Emphasis added). In otherwords, it is the "internal policies and procedures" that are to be drafted and evaluated under the "best interests" standard. There is no basis to argue that those polices and procedures, once adopted, may be 10 abandoned, ignored or waived in favor of standardless adhoc determinations made by government officials who seek to immunize their conduct from judicial review by wrapping themselves in the language of "best interests." Matter ofQuest Diagnostics. Inc.. v. County ofSuffolk. 21 Misc.3d 944 (Sup. Ct. Suff. Cnty. 2008), quoted by the County (Co. Br. 19), recognizes this distinction and makes this very point: General Municipal Law § 104-b does not mandate the award of contracts to the lowest responsible bidder, and instead, by its very terms, invites localities to formulate their own procedures andpolicies for the awards ofcontracts which are in the "best interests" of the political subdivision. 21 Misc. 3d at 951 (Sup. Ct. Suff. Cnty. 2008) (emphasis added). Again, it is the internal policies and procedures that are to be measured against the "best interests" standard. Accepting the County's argument, that an ad hoc "best interests" determination trumps actual compliance with the internal policies and procedures that the County has adopted would be an open invitation for what General Municipal Law § 104-b, by its very terms, expressly eschews — namely, "favoritism, improvidence, extravagance, fraud and corruption." Cf, Acme Bus Corp. v. 11 Bd. of Educ. of Roosevelt Union Free Sch. Dist.. 91 N.Y.2d 51, 55 (1997) ("Favoritism or irregularity in the bidding process may ostensibly produce monetary savings. However, the use of such means to meet that singular end is still unsustainable because the complete public interest is ultimately promoted by fostering honest competition."). Here, as demonstrated, the County's own procurement policy and the RFP set forth the "best interests" procedure required by General Municipal Law § 104-b and both required that the award be based on the County's adherence to the evaluation criteria set forth in the RFP as scored and weighted by the County's evaluation committee. Notably, this is not a case about how "specific" an RFP needs to be, and whether there was sufficient "particularization" of RFP criteria. (See Co. Br., p. 22). Here, the evaluation criteria were very specific and, as demonstrated in our main brief (App. Br., Point 1(C), pp. 38-59) and hereinafter (pp. 16-22, infra), there is no serious argument to be made that the comparative scores awarded by the County in the Experience, References, Financial Stability and Transition Plan categories were not arbitrary and capricious. 12 D. The County Failed to Follow its Own Evaluation Criteria When it Abandoned the "Percentage to Points Ratio" Formula for Awarding up to 20 Points in the Cost Category. Here, there is no dispute that the RFP established a "percentage to points ratio" formula for awarding up to 20 points in the Cost Category. Applying that formula, as that formula wasdefined and illustrated in the RFP, required that Acme receive at least 15 points (see App. Br., pp. 28-37), and not the eight points it was awarded based on an entirely different formula, namely, awarding "the offeror with the lowest price ... 20 points and then [deducting] 2 points ... from the next highest proposal for every 4% over the lowest cost proposal" (Co. Br., p. 32). In its brief, the County cites to page 79 of the Record and disingenuously states, "The RFP did not set forth a specific ratio, but explained — asan example, or illustration only — that a deduction of 2 points might be applied for every 10% increase over the low bidder's price" (Co. Br., p. 7) (emphasis in original). In fact, reference to page 79 of the Record shows that the County's brief substituted the word "might" for the word "will" and 13 added the phrase "or illustration only." The RFP language, which governs, states: The Offeror submitting the lowest cost proposal will be awarded 20 points. Awarding of points to the remaining Offerors will be based on a percentage to points ratio; example: if the total cost between the lowest Offeror and the next lowest Offeror is 10% then Offeror twowill have 2 points deducted from the maximum score of 20. (R. 79) (emphasis added). Again, there is no ambiguity in this language (see App. Br., pp. 33- 37). Notably, the County erroneously claims that four separate evaluators evaluated the cost proposals (see Co. Br., pp. 9, 33) when, in fact, only one evaluator, Tara Zanni, scored the proposers in the Cost Category, with the three other evaluators simply adopting Ms. Zanni's point awards (R. 1792, 1916, 1929, 1785-1791). The County also erroneously claims that it used Acme Bus's lower cost aggregate pricing — i.e., for all three zones of the entire program — in determining the cost differential that resulted in an award of eight points to Acme Bus in the Cost Category (see Co. Br., p. 10). Although this contention 14 is supported by theJuly 23, 2013 e-mail ofTara Zanni that the County's brief references (R. 1792), it is clearly not supported by the affidavit submitted by Tara Zanni, dated July 31, 2013, in opposition to the petition, which shows that the 27% price differential calculated by the County is based on Acme Bus's higher zone-by-zone pricing of$686,363 (R. 1921). In fact, when Tara Zanni used Acme Bus's lower aggregate pricing of $638,926.75, the cost differential was only 22% (R. 907). As we stated in our main brief: In any event, accepting the analysis and position taken by the County in its later papers (which used the higher $686,363 zone-by-zone Acme Bus cost proposal), and applying the "percentage to points ratio" formula set forth in the RFP, the 27 % differential should have only resulted in a 5.4 point reduction for Acme Bus in the Cost Category for all three zones (27% of 20 points = 5.4 points) — for a total score.of 14.6 out of 20 points (20 points - 5.4 points = 14.6 points). Instead, Acme Bus was awarded only 8 points for all three zones, an underscoring of 6.6 points (or 7 points if rounded upwards). (Acme Br.,p. 31). Nowhere does the County contest this analysis, nor does the County contest Acme Bus's demonstration (at pages 32-33 of its main brief) 15 that the correction ofthe underscoring alone would have substantially altered the position of all three proposers and left Acme Bus the highest scoring proposer in Zone 3 and very close to the highest scoring proposer in Zones 1 and 2. If the Cost Category underscoring is corrected, and Acme Bus is given the additional 6, 6.6 or 7 points that it is due, Acme Buswould have handily prevailed over VW Bus in Zone 3 (89.5, 89.1 or 88.5 to 85 points) and, would have come very close to reaching the higher scores of Quality Bus in Zones 1 and 2 (89.5, 89.1 or 88.5 to 90.5 points). (App. Br., pp. 32-33). E. The County Cannot Justify its Arbitrary and Capricious Scoring of Acme Bus, as Compared to Quality Bus and VW Bus, in at Least Four Performance Categories. The Defenses and Explanations Provided by Quality Bus and VW Trans Are Unsustainable. i. Quality Bus. With regard to the performance categories (which aggregated a total of 80 points), the County puts up no factual defense whatsoever to its totally arbitrary and capricious scoring, simply deriding Acme Bus's well- 16 documented position as a "belief that it "should have been awarded more points" (Co. Br, pp. 38, 41). The strength of that position — no mere "belief — is made very clear when it is compared to the feeble contentions advanced by Quality Bus to defend the rationality of its scores compared to those received by Acme Bus. Thus, in the "Experience" Category, Acme Busdemonstrated that scoring Acme Bus only one point higher than Quality Bus (9.25 vs. 8.25) was arbitrary and capricious where Acme Bus had decades of experience transporting preschool children with disabilities, including 20 years experience transporting 280 children for SuffolkCounty, 20 years experience transporting 650 children for Nassau County and five years experience transporting 640 children for Orange County (App. Br., pp. 40, 42). In its respondent's brief, Quality Bus details no prior experience and simply refers the Court to the Record at 1095-1098 (Brief for Respondent-Respondent Quality Bus Service, Inc. ["Qual. Br."], p. 13). However, those page references show that the only experience Quality Bus has with preschool handicapped transportation — which is what the RFP asked about — was for New York School for the Deaf (R. 1095). Yet nowhere 17 in its proposal did Quality Bus indicate how many preschool handicapped children it had transported for this school or for how long. Notably, the vague special education transportation services that Quality Bus claims to have provided for the PortJervis School District at the preschool level (R. 1095) are a fiction because preschool handicapped services, including transportation, must be provided by the municipality in which the children reside, not by school districts, pursuant to New York State law (R. 2148). See Educ. Law § 4410; Public Health Law § 2559-a. Similarly, in the "References" Category, Acme Bus demonstrated that scoring Acme Bus one quarter of a point lower than Quality Bus (9.25 vs. 9.5) was arbitrary and capricious where Acme Bus submitted 37 letters of reference from clients to which Acme had actually provided preschool handicapped transportation services, including major clients like Eastern Suffolk BOCES, Westchester County, Nassau County, Orange County and Suffolk County (App. Br., pp. 44-45). In its respondent's brief, Quality Bus states only that it "has provided references required by the RFP" which "all attest that Quality has provided superior service" (Qual Br., p. 14). 18 Yet Quality Bus does not deny that it only submitted six letters of reference and only one of them isfrom a client for whom Quality Bus actually transported preschool handicapped children —again, The New YorkSchool for the Deaf, without any indication as to how many preschool handicapped children Quality Bus actually transported for this client or for how long (see App. Br., p. 45, R. 1095, 2147, 1102-1106, 1108). In addition, in the "Financial Stability" Category, Acme Bus demonstrated that scoring Acme Bus the same as Quality Bus (4.75) was arbitrary and capricious whereonly Acme Bus provided the required audited statements, with Quality Bus providing only reviewed statements (App. Br. 40). The RFP stated: The Offeror must include the latest 3 years of audited financials to demonstrate the company's financial strength. (R. 79) (emphasis added). Quality Bus is entirely silent about its failure to submit the required audited statements (see Qual Br.,pp. 15-16). Acme Bus also demonstrated that byall objectivemeasurements — EBITDA, working capital, cash and credit — Acme Bus was significantly bigger and financially stronger 19 than Quality Bus, with average equity of over $12 million and revenues exceeding $70 million (App. Br., pp. 48-50). In response, Quality Bus noted its credit line of $2 million (compared to $7 million for Acme Bus [R. 650- 651]) and claimed, without reference to any page of the record, that it had "proofof financing for 3.5 million dollar acquisition costs" (Qual. Br., p. 15). Quality Bus defended the rationality of scoring it on par with Acme Bus in the Financial Stability Category (despite the failure to submit audited financial statements) on the untenable basis that since it was so much smaller than Acme Bus, there was no need to demonstrate equal financial strength: "ACME is a larger entity that requires greater working capital, a higher line of credit and larger revenue because the company issubstantially larger. When financial stability is assessed in relation to company size, Quality possess financial stability equal to or greater than that of ACME" (Qual. Br., p. 15). Of course, this statement by Quality Bus makes no sense. According to the County RFP, "financialstability" means "financial strength," (R. 75)and is, consequently, a measurement ofwhether the company has the financial resources to perform the contract, and concomitantly, if the 20 company fails to adequately perform, the financial resources to be accountable to the County for that failure. A much smaller company (like Quality Bus), with fewer assets, less credit, less working capital, less revenue, etc., is not, by this yardstick, financially stronger than a much larger company (like Acme Bus). Finally, in the "Transition" Category, Acme Bus demonstrated that scoring Quality Bus only .5 points lower than Acme (18.75 vs. 19.25) (R. 2127) wasarbitrary and capricious where Acme Bus was actually providing the identical transportation services (under the immediately prior contract) in all three zones to the County's satisfaction (R. 18, 2156) and was "the only proposer that could, therefore, seamlessly transition to perform the contracts without any disruption" (App. Br., p. 51). In its respondent's brief, Quality Bus ignores this logic and merely cites to its own allegedly "detailed transition plan" (Qual. Br., p. 16). ii. VWBus. VW Bus makes no attempt to defend the palpably arbitrary and capricious scores awarded to this clearly unqualified company in the 21 Experience, References, Safety/Training and GPS/Video Categories (see App. Br., pp. 55-58). Instead VW Bus defends the County's contract award for Zone 3 on the ground that VW Bus "as a newly formed company ... should [] be deemed to have the experience of its members and principals" (Brieffor Respondent-Respondent VWTrans, LLC Inc. ["VWBus. Br."], p. 1). But the County's own RFP evaluation criteria is to the contrary, requiring that the "person, firm or corporation" submitting the proposal have at least five years of experience and three years of BusNet ratings (R. 30, 54, 117). The Countyviolated thisevaluationcriterion when it accepted the experience, references, and BusNet ratings not from VW Bus, but from two entirely different entities—Visconti Bus Service, LLC, and WestPoint Tours, Inc. (see App. Br., pp. 52-54). The Supreme Court permitted this violation on the false, albeit irrelevant, premise that VW Bus was the parent of these two companies (R. 5), which it was not (R. 2090-2091, 2102, 2158). In any event, parent or not, the courts below had no legal basis for condoning the County's abandonment of the RFP's minimum experience requirement and the RFP's 22 evaluation criteria related to experience, references and BusNet ratings ofthe company actually submitting the proposal. F. The County Always Enjoyed the Right To Reject All Proposals. Revise the Cost Proposal Formula, and Re-issue the RFP. The County repeatedly argues that it saved $1.6 million annually by ignoring and deviating from its own RFP evaluation criteria, and that this is sufficiently rational to sustain the award of the contracts to respondents Quality Bus and VW Bus as being in the County's "best interests." (see App. Br., pp 11,37,50). We respect the County's concern for the public fisc, but if the County wanted to award these contracts to the lowest cost proposers it could have: (a) allocated more than 20 points to the cost category; and/or (b) employed some formula other than the "percentage to points ratio formula" which would have deducted a greater number ofpoints from higher cost proposers. The County could have taken either of these approaches in drafting the initial RFP evaluation criteria or, upon opening the RFP 23 submissions and realizing that the award of the contract to the successful highest scoring proposer, pursuant to its own evaluation criteria, meant it would expend $1.6 million more than if awards were made to the unsuccessful lower cost proposers, the County could have withdrawn the RFP and started over, issuing a revised RFP that, in the County's perceived "best interests," gave greater weight to lowest cost. Indeed, the County recognizes this, quoting from that portion of the RFP that expressly reserved the County's right to "reject any or all proposals, with or without advertising for new proposals, if in the best interest of the County" (Co. Br., p. 24; R. 79). G. The Authorities Cited Do Not Support the County's Position That Compliance with its Own Evaluation Criteria Is Optional and May Be Ignored If the County Determines it Is in its "Best Interests" to Do So. The County cites Automated Wagering Int'l. Inc.. v. N.Y.S. Dept. of Taxation and Fin.. 195 A.D.2d 169 (3d Dept. 1994), for the proposition that, "[e]ven a determination by the County to award the contract to an offeror that did not have the highest overall score, but whose proposal was determined to be in the 'best interests of the County' would be sustained as 24 having a rational basis in the absence of proof of fraud, collusion or some other illegality" (Co. Br., p. 36). That decision, however, stands for no such proposition, as the evaluation criteria there expressly included a "price-value" analysis that required the Lottery Evaluation Committee to determine "whether the added value provided by a technically superior proposal was worth the additional cost." 195 A.D.2d at 170-171. Here, in contrast, the "technical" requirements (i.e., eight performance criteria), were allocated precisely 80 points in total, and the cost criterion was allocated precisely 20 points, with the winner of the RFP being the proposer with the highest number of points when the points awarded in all nine categories were tallied. The additional cases cited by the County stand for general propositions that Acme Bus does not quarrel with and do not diminish the force ofAcme Bus's position before this Court. The County admits that the challenged contract awards should be vacated if the award determinations were "taken without sound basis in reason" or "without regard to facts." (See Co. Br., p. 15). Here, the abandonment and deviation from the County's own evaluation criteria is 25 arbitrary and capricious, and violates General Municipal Law § 104-b, as that section incorporates the County's procurement policy. Manipulating the points awarded in the cost category and in the eight performance categories in order to reach proposers whowouldannually save the County $1.6 million reflects impropriety, favoritism and unfair dealing. The County's own cases recognize that municipalities must not deviate from their RFP evaluation criteria. See Automated Wagering Int'l. Inc.. 195A.D.2d at 173. ([W]e find the Committee's procedures to have been in keeping with the methodology set forth in the RFP "); Am. Totalisator Co. v. N.Y.S. Dep't of Taxation & Fin.. 80 A.D.2d 373, 376 (3d Dept. 1981) ("The charge that awarding backup sitepoints to break the tie in the technical portion of the contract constituted a deviation from the terms of the RFP is not borne out by the record"). Wealso agree with the general rule that a municipality maywaive as "mere irregularities" those specificationswhose waiver would not confer a competitive advantage. See generally, Le Cesse Bros. Contracting v. Town Bd. of the Town of Williamson. 62 A.D.2d 28, 32 (4th Dept. 1978), affd., 26 46 N.Y.2d 960 (1979). But there was no waiver here, and the competitive advantage is obvious. Rather than "waiving" a specification, the County replaced the formula (i.e., evaluation criterion) set forth in the RFP for determining the dollar amount of each cost proposal with another formula (i.e., a different evaluation criterion) that delivered the result it wanted — a point spread in the Cost Category more than twice as large (from 5.4 points to 12 points) between Acme Bus and its competitors. Similarly, the County did not "waive" the specifications for Experience, References, Financial Stability or Transition set forth in these performance categories. Rather, the County simply ignored its own evaluation criteria for these categories and awarded points, arbitrarily and capriciously, to further distance Acme Bus from its competitors in the rankings. Moreover, even if the County's actions were characterized as a series of "waivers," it is clear that each such waiver would be unlawful as conferring a competitive advantage upon Quality Bus and VW Bus. For example, by providing Quality Bus and VW Bus with the surprise advantage 27 of according additional weight to lower cost, Acme Bus was denied the opportunity to submit a lower cost proposal. And by effectively discounting the importance ofexperience and references in the transportation ofpreschool handicapped children, and the value of audited statements demonstrating superior financial strength, the County gave an unfair advantage to marginal contractors who could offer lower costs based on the savings obtained from non-compliant operational activities. Finally, because the abandonment of the percentage to points ratio formula was admittedly deliberate (see R. 1923-1924), as was the arbitrary and capricious scoring in certain Cost Categories, the County cannot rely upon General Municipal Law § 104-b(5) as excusing an "unintentional failure to comply" with the County's own evaluation criteria (see Co. Br., p. 23). 28 POINT II THE COUNTY'S INABILITY TO FORECAST FUTURE USAGE IS NO EXCUSE FOR THE RFP FAILING TO CONTAIN A USAGE MATRIX WHICH ADVISED ALL PROPOSERS. IN ADVANCE. HOW THEIR UNIT COST PROPOSALS WOULD BE TALLIED IN ORDER TO CALCULATE THE TOTAT DOT J ARCOST OF EACH PROPOSAL. Aswe explained, each proposer submitted a price for a particular category of vehicle (non-wheelchair bus, wheelchair bus, and Suburban or equivalent), operating for a certain number of hours (one hour to eight hours), with or without a driver assistant, also called a matron (see App. Br., pp. 64, 66-67; R. 92-100)). A usage "matrix" reflects the specific number of vehicles of different types, operating for different hours, with or without a driver assistant, that would be used to calculate the dollar amount of each contractor's cost proposals. The County attempts to obfuscate the issue before the Court (see Co. Br., pp. 35-36). Obviously, the County cannot know what the usage matrix will actually be when performance under the contract begins, but this 29 inability to "see the future" is beside the point. It is the position ofAcme Bus, based on cases arising in the competitive bidding context and on good practical common sense (see App. Br., p. 65), that the County must nonetheless identify a usage matrix, in advance, and include it in the RFP so that the scoring process is not manipulated. Here, it is undisputed that the County used as its scoring matrix the actual usage for February 2012 (see R. 1920-1921). It was perfectly logical and lawful for the County to do so, and to use this matrix to calculate the cost of each proposal, but it was unlawful not to disclose in advance to proposers, in the RFP, that this is what the County would be doing (see App. Br., pp. 64- 66). Supreme Court stated (R. 5) and the County here argues (Co. Br., p. 35), that Acme was not prejudiced by the failure to disclose, in advance, that the February usage matrix would be used to calculate the dollar amount of each cost proposal because Acme, as prior transportation contractor, was familiar with its actual vehicle deployment during its performance ofthe prior contract. 30 With all due respect, the County is looking at this backwards. There can be no advantage for the prior contractor if the RFP does not announce, in advance, what the usage matrix will be. Without that advance knowledge, it is anyone's guess what combination of route packages the County will use to determine the cost of each proposal. Moreover, even if there were an advantage, the very point of having a usage matrix disclosed, in advance, for the purpose ofcalculating cost proposals, necessarily levels the playing field and eliminates any argument concerning who is advantaged and who is not. Allcontractors would have equal knowledge, in advance, as to how the dollar amounts of their cost proposals would be calculated. The County is also wrong in arguing that Acme's prices were so much higher in all categories that a usage matrix for determining the dollar cost of each cost proposal "would not affect the pricing proposals" (Co. Br., p. 35). That is pure speculation without any attempt to demonstrate the truth of the statement by reference to the record or any mathematical calculations or analysis. 31 POINT III THE COUNTY'S UNLAWFUL ABANDONMENT OF ITS OWN RFP EVALUATION CRITERIA IS NOT EXCUSED BY THE INFORMATION REQUESTED OR GIVEN AT OR AFTER THE PRE-BID CONFERENCE. The County infers that Acme Bus should be faulted for not securing "clarification" of RFP terms and conditions at the pre-bid conference (Co. Br., p. 8), suggesting that the failure of Acme Bus to submit written questions after the conference constitutes some type of waiver or equitable estoppel. Yet, as we demonstrated, the County was specifically asked as part of the pre-bid conference whether the experience of affiliated companies could satisfy the requirements of the RFP and the answer was no (see App. Br., pp. 53-54; R. 30, 117). Similarly, the County was asked about the usage matrix as part of the pre-bid conference and declined to provide any meaningful response (see App. Br., p. 68; R. 116). 32 reasoning: POINT IV EDUCATION LAW § 305Q4)(fl AND 8 NYCRR $ 156.12(b) GOVERN THE RFP. NOT GENERAL MUNICIPAL LAW § 403-b. THE NINE SPFCIFTC ALLY ENUMERATED PERFORMANCE CATEGORIES REQUIRED BY THIS STATUTE AND REGULATION WERE NOT ALL INCORPORATED AS EVALUATION CRITERIA IN THE RFP. In our main brief, we demonstrated the following chain of a. Education Law § 4410(8) requires the County to provide transportation for preschool handicapped children "pursuant to the procedures set forth" in Family Court Act §236. See App. Br., pp. 71-72. b. Section 3(b) of Family Court Act § 236 requires either (i) competitive bidding pursuant to General Municipal Law § 103; or (ii) an RFP pursuant to the statutory requirements of Education Law § 305(14). See App. Br., pp. 72-74. c. Education Law § 305(14)(f) mandates nine enumerated performance categories and Section 156.12(b) of the implementing regulations of the Commissioner of Education, repeats those same nine enumerated categories and recites the tenth category — namely, cost. See App. Br., pp. 74-76. d. Here, the "Award Criteria" in the County RFP assigned points to only a total of nine categories (not 10), and 33 included only six of the categories required by Education Law § 305(14)(f) and 8 NYCRR § 156.12(b). See App. Br., pp. 76-77. None of this is disputed. What the County argues, however, is threefold: First, the County contends that Education Law § 305(14), by its terms refers only to boards of education and addresses only the transportation of school age, not preschool, children (Co. Br., pp. 41-44). That is true, but it is of no moment because, as demonstrated, the RFP procedures of Education Law § 305(14) are incorporated by reference into Family Court Act § 236(3)(b)which are, in turn, incorporated by reference into Education Law§ 4410(8). It is necessary to read these three statutes together to see the mandate, but it is clearly there. Second, the County argues that Family Court Act § 236(b) is limited to situations where preschool handicapped children are being transported by Family Court order (Co. Br., p. 44). This is the argument that prevailed before the court below (R. 6), but it is wrong. See App. Br., Point III(B), pp. 77-88. 34 In summarizing this admittedly complex statutory analysis, we stated, "There still may be some isolated cases where special education services, including transportation services, are required as a result ofa Family Court placement order but, on the whole, the references are a historical anomaly, as school boards . . . have replaced the Family Court as the public bodies vested with the authority for determining the services to which these children are entitled" (App. Br., p. 87). The County seizes on this sentence as constituting some type of concession or contradiction (Co. Br., p. 45). It is not. Certainly, the system we have in place, as a society, for identifying special needs ofhandicapped preschoolers is now school based, and does not originate in the Family Court. But we cannot say whether or not there are occasions when Family Court Act § 236 may be used by third parties who have not been able to secure a placement order from a board of education. It might happen. It might not. It is not part of this record. What is important is that a textual analysis of the statutory scheme shows that the Legislature, in 2012, authorized RFPs in addition to competitive bidding as one of two lawful means for the County to provide transportation services for preschool 35 handicapped children. And those RFPs, again by statute, must conform to the RFP requirements of Education Law § 305(14). Third and finally, the County argues that it has, defacto, complied with the requirements of Education Law § 305(14)(f) and 8 NYCRR § 156.12 because the RFP "included all criteria as required" by these provisions (Co. Br., pp. 46-48). The County is wrong. As demonstrated in our main brief, Education Law § 305(14)(f) mandates that each RFP proposal be evaluated, at a minimum, in accordance with nine enumerated performance criteria — (1) experience, (2) owner information, (3) safety, (4)accidents, (5)driver history, (6)vehicle inspection, (7) vehicle maintenance, (8) financial analysis and (9) insurance (App. Br., pp. 74-76). As also demonstrated, Section 156.12(c) of the Commissioner's Regulations requires any issued public notice soliciting proposals pursuant to an RFP to identify each of the 10 prescribed criteria (nine performance categories plus cost), that will be utilized to evaluate proposals and the assigned point allocation for each such criterion (App. Br., p. 76). Here, the "Award Criteria" in the RFP identified and assigned points to only nine instead of ten categories as a basis for scoring proposers, 36 and those nine categories omitted four of the 10 categories required by Education Law § 305(14)(f) and 8 NYCRR 156.12(b) — namely, ownership information (Criterion 2), driver records (Criterion 5), maintenance schedules (Criterion 7) and insurance (Criterion 9). See App. Br., pp. 76-77. That some of this information may have been tangentially submitted in connection with other evaluation criteria does not cure the defect (see Co. Br., pp. 48-49). The law requires evaluation and a specific point weighting in each enumerated category, plus public notice of the categories and the weightings. It cannot fairly be said that the County's RFP substantially complied with these requirements. POINT V THE PRIOR UNSUCCESSFUL MOTION FOR LEAVE TO APPEAL. MADE TO THE APPELLATE DIVISION. IS IRRELEVANT. The County contends that this Court is without jurisdiction to entertain the instant appeal because Acme Bus made a prior unsuccessful leave motion to the Appellate Division which identified "fact specific 37 questions" for this Court's review and this Court does not have jurisdiction to determine facts (see Co. Brief, p. 52). The County has confused and conflated a number of issues. First, this Court's preservation requirement relates to the record made in the trial court and in the appellate court. That record does not include a post-affirmance motion for leave to appeal. Although not prejudicial, the County's submission of a supplemental appendix including the Appellate Division leave motion papers is improper. Second, "orders" are appealable (see, CPLR §§ 5602, 5611), not "issues." Once this Court has granted leave to appeal from an Appellate Division order, every preserved issue of law in the case is available to appellant for advocating in favor of reversal. Third, there is no authority that an argument not made to the Appellate Division in a leave motion has been "abandoned" and cannot be raised in the Court of Appeals if this Court subsequently grants leave and the issue is properly preserved in the appellate record. "Ordinarily a grant of leave to the Court ofAppeals brings before that Court every reviewable issue in that case." Karger. The Powers of the New York Court ofAppeals. § 10:3, 38 p. 330 (rev'd 3rd Ed. 2005) (citing Ouain v. Buzzetta Construction Corp.. 69 N.Y.2d 376, 380(1987)). Fourth, that Acme Bus, in its Appellate Division motion, alleged that the County "disregarded" its evaluation criteria is not a materially different articulation of the legal issue posed here that the County "deviated" from its evaluation criteria in awarding the challenged transportation contracts. Fifth, the issues raised here are all preserved in the record (see App. Br., p. 3) and, as indicated in our Jurisdictional Statement, this Court can review agency determinations for compliance with law, to review preserved claims of legal error, and to determine whether the County's determinations constituted "arbitrary and capricious" action or " an abuse of discretion as a matter of law." (Id.). CONCLUSION It is arbitrary and capricious for a governmental subdivision to deviate from its own rules, regulations or polices (see cases and authorities cited at App. Br., pp. 21-23). It is also arbitrary and capricious for a municipality 39 to act in contravention ofstatute, awarding a contract under the authority and RFP structure authorized by General Municipal Law §403-b and the County's procurement policy, rather than the governing RFP structure of Education Law § 305(14)(f) and its implementing regulation, 8 NYCRR § 156.12(b). Here, it is abundantly demonstrated that the County deliberately abandoned and thereby deviated from the evaluation criteria in the RFP related to scoring both the cost proposals and the performance categories. The County's rationale is not hidden or subtle: [T]he [evaluation] committee had a rational basis in determining that given the current fiscal climate facing the County, an estimated cost savings of approximately $8.3 million dollars over five years, where the County was receiving quality services similar or equal to Acme [Bus], it was in the best interests of the County to award the contracts to Respondents VW [Bus] and Quality [Bus]. (Co. Br., p. 50). In other words, notwithstanding that Acme Bus was the highest scoring proposer under the evaluation rubric that the County had fashioned in the RFP, the County's position is that it can do whatever it wants under the banner of "best interests." This cannot be the law. 40 If the County was unhappy with the RFP submissions because the proposed cost of the winning proposer was too high, the County should have rejected all proposals and re-issued an RFP with a revised evaluation rubric either increasing the points awarded for the lowest cost proposal {i.e., more than 20 points) or increasing the point differentials between the lowest cost proposal and higher cost proposals {e.g., deducting 4 or more points for every 10% cost differential instead of 2 points), or both. The order and judgment appealed from should be reversed, and the challenged transportation awards should be vacated and annulled. Dated: Melville, New York January 21,2016 By: Respectfully submitted, HAMBURGER, MAXSON, YAFFE & McNALLY, LLP Attorneys for Petitioner-Appellant Richard Hamburger, Esq. 225 Broadhollow Road, Suite 30IE Melville, New York 11747 631.694.2400 OF COUNSEL; RICHARD HAMBURGER, ESQ. DAVID N. YAFFE, ESQ. ANDREW K. MARTINGALE, ESQ. COA -Appellant's Reply Brief.WPD 4 1 AFFIDAVIT OF SERVICE STATE OF NEW YORK ) ) COUNTY OF SUFFOLK ) LISSA CURRERI, being duly sworn, deposes and says: I am not a party to the action, am over 18years of age and reside in Holtsville, New York. On January 21, 2016,1 served three copies of the within Reply Brief for Petitioner- Appellant, by depositing true copies thereof enclosed in a post-paid wrapper, in an official depository under the exclusive care and custody of the U.S. Postal Servicewithin New York State addressed to each of the following attorneys at the last known address set forth after each name: )SS.: Langdon C. Chapman, County Attorney COUNTY OF ORANGE Attorneyfor County Respondents-Respondents Attn: Carol C. Pierce Senior Assistant County Attorney 15 Matthews Street, Suite 305 Goshen, New York 10924 845.291.3150 ccpierce@orangecountygov.com DICKOVER, DONNELLY, DONOVAN & BIAGI, LLP Attorneys for Respondent-Respondent Quality Bus Service, LLC Attn: David A. Donovan, Esq. 28 Bruen Place P.O. Box 610 Goshen, New York 10924 845.294.9447 David.Donovan@DDDBlaw.com Sworn to before me this 21st day of January, 2016. Notary Public KRISTEN D. CASTELLAN Notary Public, State of New York No. 01CA6195100 Qualified in Suffolk County Commission Expires October 20,2016 FINKELSTEIN & PARTNERS, LLC Attorneys for Respondent-Respondent VW Trans, LLC Attn: Joseph P. Rones, Esq. 1279 Route 300 P.O. Box 1111 Newburgh, New York 12551 845.562.0203 jrones@lawampm.com LISSA CURRERI