Skytec, Inc. v. Municipio Autónomo de Bayamón

Skytec, Inc. v. Municipio Autónomo de Bayamón

KLRA202400137, Tribunal de Apelaciones de Puerto Rico, Panel I (April 26, 2024). Before Sánchez Ramos, J. (President), Pagán Ocasio, J., Marrero Guerrero, J., and Boria Vizcarrondo, J. (Reporting Judge). Administrative review of Auction Board Resolution No. 78, Auction No. 25, Series 2023-2024.

Relevant Facts

• The Municipality of Bayamón issued a public notice for Auction No. 25, Series 2023-2024, to acquire an Automatic Passenger Counting (APC) system for its municipal public transportation service.

• A mandatory pre-auction meeting specified that the equipment must function completely via sensors for both the passenger entry door and the accessibility ramp door. The meeting also established that bidders must identify their Disadvantaged Business Enterprise (DBE) partner.

• Two companies submitted proposals: Skytec, Inc. and Caribe Track, Corp. The Auction Board's Planning Office Director evaluated both and determined neither satisfied the technical requirements or DBE certification requirements.

• On March 7, 2024, the Auction Board unanimously rejected both proposals via Resolution No. 78 and recommended a new auction. Skytec appealed on March 18, 2024.

Legal Issues

• Whether the Auction Board erred in rejecting Skytec's proposal despite Skytec's claim that it met all mandatory technical requirements for the APC system.

• Whether Skytec's proposal adequately demonstrated that one APC unit could satisfy the specification requiring sensors on both the passenger door and the accessibility ramp door.

• Whether the DBE federal certification requirement was properly applied as grounds for rejection.

Positions of the Parties

• Skytec argued it complied with all technical equipment requirements, that only one APC system was required to count passengers at both doors, and that DBE certification was not a mandatory requirement in the auction specifications.

• The Municipality argued Skytec's proposal only specified one APC per unit ('APC-1 puerta'), failed to clarify that its equipment could connect to both door sensors, and that Skytec failed to identify a specific DBE partner as required at the pre-auction meeting, instead stating it could not participate for economic reasons.

Decision of the Court and Reasons

The Court of Appeals affirmed the Auction Board's rejection of Skytec's proposal.

The court applied the standard of deference to administrative agency procurement decisions, requiring reversal only upon showing abuse of discretion, arbitrariness, or irrationality. The court found that the auction specifications and pre-auction meeting minutes clearly required equipment functioning via sensors at both doors. Skytec's proposal offered only one APC unit and failed to clarify its capacity to connect to both door sensors until the judicial appeal—demonstrating non-compliance with the specifications as submitted.

On the DBE requirement, the court found that although DBE was not listed as mandatory in the written specifications, the pre-auction meeting clearly established that bidders must identify their DBE partner. Skytec's response that it could not participate for economic reasons and might contract with companies from a prior DBE list was insufficient. The Auction Board properly exercised its discretion in rejecting the proposal and recommending a new auction.

Innovative Emergency Management, Inc. v. Departamento de la Vivienda de Puerto Rico

KLRA202400177, Tribunal de Apelaciones de Puerto Rico, Panel XI (April 26, 2024). Before Brignoni Mártir, J. (President), Candelaria Rosa, J., Alvarez Esnard, J., and Díaz Rivera, J. (Reporting Judge). Administrative review of RFP CDBG-DRMIT-RFP-2023-02.

Relevant Facts

• The Puerto Rico Department of Housing issued RFP CDBG-DRMIT-RFP-2023-02 for GEO/RAD System Planning Vendor Services to develop Puerto Rico's Strategic Infrastructure Plan for Spatial Data, establish a centralized database system, and create a 'Digital Twin City System' for 78 municipalities.

• Five proposals were received; only Tetra Tech Inc., ICF International LLC, and Innovative Emergency Management Inc. (IEM) met the RFP requirements. On March 18, 2024, the Department awarded the contract to ICF.

• IEM contested the award, alleging that ICF had a conflict of interest by incorporating Trackit LLC's geospatial technology in its proposal, as Trackit was simultaneously under contract with the Department for GEO-RAD supervision services.

• IEM also claimed that insufficient consideration was given to its Section 3 Business Concern and M/WBE (Minority and Women-Owned Business Enterprise) certification, and that the Department improperly denied full access to the unredacted administrative record.

Legal Issues

• Whether ICF's inclusion of Trackit LLC's technology in its proposal constituted a material conflict of interest requiring disqualification.

• Whether the evaluation committee properly considered IEM's M/WBE certification as a preference factor in the evaluation.

• Whether the Department violated due process by providing only a redacted administrative record.

Positions of the Parties

• IEM argued that Trackit's simultaneous contract with the Department gave ICF an unfair competitive advantage, that ICF failed to disclose the conflict in its certification, that IEM's M/WBE certification should have been given significant weight, and that the Department wrongfully denied access to the unredacted record.

• ICF argued that Trackit was included merely as an illustrative example of an available database, not as a team member or subcontractor, that its proposal did not depend on Trackit's tools, and that the proposal was submitted before the Trackit contract was in place. The Department argued that multiple databases exist in the market, that Trackit played no decisive role, and that RFP Section 10.14 properly authorized redacted copies to protect confidential information.

Decision of the Court and Reasons

The Court of Appeals affirmed the Department of Housing's award to ICF.

On the conflict of interest claim, the court applied deference to the agency's finding that ICF did not name Trackit as a subcontractor and later clarified it would not use that database. The court found no unfair competitive advantage because multiple alternative databases exist in the market and the Trackit mention was illustrative rather than material to ICF's performance ability.

On the M/WBE preference, the court held that while the RFP indicated M/WBE businesses should receive preference to ensure minority participation, the regulation did not mandate automatic award to M/WBE-certified firms. ICF exceeded IEM in all evaluation categories, including price, rendering the M/WBE preference not dispositive.

On access to records, the court confirmed that the right to administrative records is not absolute and that confidentiality protections apply to trade secrets and proprietary information. The Department properly balanced transparency with bidder confidentiality protection under the RFP's provisions.

Sonnell Fleet Solutions II, LLC v. Junta de Subastas del Municipio de Patillas

KLRA202400224, Tribunal de Apelaciones de Puerto Rico, Panel X (June 28, 2024). Before Lebrón Nieves, J. (President), Barresi Ramos, J., and Santiago Calderón, J. (Reporting Judge). Administrative review of Auction No. SM2023-005.

Relevant Facts

• The Municipality of Patillas issued a public notice soliciting sealed bids for maintenance and repair services of FTA (Federal Transportation Administration) vehicles. The bid specifications contained 56 conditions and requirements.

• Two companies submitted proposals: Sonnell Fleet Solutions II and JE Sales & Services, Inc. On March 19, 2024, the Bid Jury adjudicated the contract to JE Sales as the 'reasonably lowest' price bidder ($654/month for preventive maintenance versus Sonnell's $1,977/month).

• The first adjudication notice lacked adequate explanation, violating municipal regulations. Following court intervention, the Jury issued a revised notice on April 23, 2024, again awarding to JE Sales.

• Sonnell challenged the award, alleging JE Sales failed to comply with multiple mandatory specifications including: providing a replacement vehicle (only offered towing), proof of operation permits, mechanic certifications, financial statements, banking references, and listing of mechanics with experience. Sonnell also alleged JE Sales was not registered in the federal SAM (System for Award Management) database, a mandatory requirement for federally-funded procurement.

Legal Issues

• Whether JE Sales was a 'responsive' bidder that complied with all mandatory bid specifications.

• Whether the Bid Jury erred in adjudicating the contract to JE Sales despite alleged non-compliance with multiple critical requirements.

• Whether the lowest price may override mandatory specification compliance in government procurement.

Positions of the Parties

• Sonnell argued that JE Sales failed to meet multiple mandatory specifications (replacement vehicle, operation permits, mechanic certifications, financial statements, banking references, mechanic lists, and SAM registration), rendering its proposal non-responsive and disqualifying.

• The Municipality argued that budgetary constraints required selecting the lowest-cost proposal and that JE Sales' significantly lower pricing justified the award.

Decision of the Court and Reasons

The Court of Appeals revoked the auction adjudication and ordered a new bidding process.

The court found that JE Sales clearly violated multiple mandatory requirements upon detailed examination of the bid documents: it offered roadside towing instead of a replacement vehicle, provided only merchant registration rather than business operation permits, submitted only one mechanic's license rather than complete certification documentation, provided no financial statements or banking references, and was not registered in the mandatory federal SAM database required for FTA-funded contracts.

The court held that under Municipal Regulations 8873 and the Municipal Code, a responsive bid must comply with all specifications. Material non-compliance renders a proposal non-responsive and disqualifying, even if the price is the lowest. The court emphasized that the lowest bidder is not always the best bidder when legally required factors are not met, and that failure to maintain transparent procurement processes undermines good government and public fund protection.

Venegas Construction Corp. v. Autoridad de Acueductos y Alcantarillados (AAA)

KLRA202400242, Tribunal de Apelaciones de Puerto Rico, Panel IX (June 24, 2024). Before Rodríguez Casillas, J. (President), Salgado Schwarz, J. (dissenting), and Ronda Del Toro, J. (Reporting Judge). Administrative review of Bid 23-SP-050.

Relevant Facts

• The AAA published a formal auction for the Culebrinas Water Treatment Plant Rehabilitation Project (BID 23-SP-050) in Aguadilla. The bid documents required a proposal bond (Bid Bond) valid for 180 days after proposal opening.

• The original bid documents contained a discrepancy: the Bid Bond form's second page noted 90-day validity. AAA issued Addendum #2 (June 30, 2023) and Addendum #3 (July 7, 2023) clarifying the 180-day requirement, though the revised form retained some confusing language.

• Two proposals were submitted on August 11, 2023: Acciona Agua Puerto Rico ($94,331,096) and Venegas ($99,571,000). Acciona's Bid Bond had conflicting pages—the first page stated 180 days while the second page retained original language stating 90 days.

• The Evaluation Committee initially deemed Acciona non-responsive due to the Bid Bond defect. On January 31, 2024, the bonding company (Fidelity and Deposit) issued a certification confirming 180-day validity. On February 16, 2024, AAA awarded the contract to Acciona as the lowest responsive bidder.

Legal Issues

• Whether Acciona's Bid Bond with conflicting validity periods (180 days on the first page and 90 days on the second page) rendered its proposal non-responsive.

• Whether the Bid Jury could properly cure the document defect through a post-opening bonding company certification.

• Whether strict compliance with bid specifications applied to the Bid Bond requirement.

Positions of the Parties

• Venegas argued that Acciona did not use the revised Bid Bond form, that the conflicting pages created irreconcilable inconsistencies, that handwritten notations lacked proper initials or signatures as required by AAA Regulation 2732, and that post-opening modifications or clarifications of bond documents are prohibited.

• Acciona and AAA argued that the first page clearly stated 180 days, that the second page's language was a mere template inconsistency, that requesting bonding company confirmation was permissible under Regulation 2732 Article X(B)(j) as a clarification (not a modification), and that the $5.2 million price difference favored awarding to Acciona.

Decision of the Court and Reasons

The Court of Appeals affirmed the AAA's award to Acciona Agua Puerto Rico (2-1, with Judge Salgado Schwarz dissenting).

The majority held that Acciona substantively complied with the 180-day bond requirement. The bond, dated July 27, 2023 (before opening), clearly showed 180-day validity on its first page without alterations. The court found that under Regulation 2732 Article X(B)(j), the Bid Jury may request information to clarify unclear matters in proposals, and that requesting bonding company confirmation about the bond's validity was proper procedure—not a modification of the bond. The bonding company's January 31, 2024 certification merely affirmed facts about the already-issued bond.

Judge Salgado Schwarz dissented, arguing that the formal signature area clearly indicated 90 days, that the handwritten notation was an improper post-delivery modification, and that strict compliance with bid rules protects transparent procurement. The dissent emphasized that 'errors cost' in government contracting and post-facto certification cannot cure an improperly delivered document.