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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Davis Wright Tremaine LLP v. State, Dept. of Administration (5/9/2014) sp-6908

Davis Wright Tremaine LLP v. State, Dept. of Administration (5/9/2014) sp-6908

         Notice:  This opinion is subject to correction before publication in the PACIFIC  REPORTER .  

         Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,  

         303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email  

                                                                                     

         corrections@appellate.courts.state.ak.us.  



                   THE SUPREME COURT OF THE STATE OF ALASKA  



DAVIS WRIGHT TREMAINE LLP,                                )  

                                                          )    Supreme Court No. S-15004  

                           Appellant,                     )  

                                                          )    Superior Court No. 3AN-12-04933 CI  

         v.                                               )  

                                                          )    O P I N I O N  

STATE OF ALASKA, DEPARTMENT                               )
  

OF ADMINISTRATION,                                        )    No. 6908 - May 9, 2014
  

                                                          )  

                           Appellee.                      )  

                                                          )  



                  Appeal from the Superior Court of the State of Alaska, Third  

                                                                                  

                  Judicial District, Anchorage, Michael Spaan, Judge.  



                  Appearances:  Robert K. Stewart Jr., Davis Wright Tremaine  

                                                                     

                  LLP,  Anchorage,  and  John  Parnass,  Pacifica  Law  Group,  

                  Seattle,  Washington,   for  Appellant.                 Rachel  L.   Witty,  

                                                                                     

                  Assistant  Attorney  General,  Anchorage,  and  Michael  C.  

                  Geraghty, Attorney General, Juneau, for Appellee.  Susan  

                  Orlansky  and  Jeffrey  M.  Feldman,  Feldman  Orlansky  &  

                  Sanders, Anchorage, for Amicus Curiae Van Ness Feldman,  

                                                     

                  A Professional Corporation.  



                  Before:  Fabe, Chief Justice, Winfree, Stowers, and Bolger,  

                                                                       

                  Justices.  [Maassen, Justice, not participating.]  



                  WINFREE, Justice.  



I.       INTRODUCTION  



                  A state agency issued a request for proposals for legal services.  A law firm  

                                                                                                       



delivered its proposal after the submission deadline, but the procurement officer accepted  


----------------------- Page 2-----------------------

                                                   

the proposal and forwarded it to the evaluation committee.  After the agency issued a  



                                                                             

notice of intent to award that law firm the contract, a second law firm protested, alleging  



                                              

that the evaluation committee made scoring errors and that consideration of the late-filed  



                                                                                                          

proposal  was  barred  by  a  relevant  regulation  and  the  request  for  proposals.    The  



                                                                

procurement officer sustained the protest, rescinded the original award, and awarded the  



                                                                                                                    

second law firm the contract.  The first law firm then protested, claiming:  (1) the second  



                                                                                              

law firm's protest should not have been considered because it was filed after the protest  



deadline; (2) the first law firm's proposal was properly accepted because the delay in  



                                                                                         

submission was immaterial; and (3) the second law firm's proposal was nonresponsive  



                                       

because that firm lacked a certificate of authority to transact business in Alaska.  The  



procurement officer rejected that protest and the first law firm filed an administrative  



             

appeal.  The administrative agency denied the appeal, and the first law firm appealed the  



                                    

agency decision to the superior court, which affirmed the administrative agency ruling.  



                                                                            

                    We conclude that the administrative agency acted reasonably in accepting  



the second law firm's late-filed protest and deeming that firm's proposal responsive  



notwithstanding its lack of a certificate of authority.  We also conclude that the agency's  



                                                                                                        

interpretation that its regulation barred acceptance of the first firm's late-filed proposal  



is  reasonable  and  consistent  with  statute.    We  therefore  affirm  the  superior  court's  



decision upholding the final agency decision.  



II.       FACTS AND PROCEEDINGS  



          A.        Facts  



                                                                                                                   

                    In early 2011 the State of Alaska, Department of Law, issued a Request for  



                                                                                   

Proposals (RFP) for legal counsel to assist the Alaska Energy Authority in obtaining a  



federal  license  for  construction  and  operation  of  a  hydroelectric  project.    The  RFP  



                                                                            

required that, to receive consideration, a proposal must be received at the Department of  



                          

Law  in  Juneau  by  3:00  p.m.  on  June  17,  2011.    The  RFP  warned:    "It  is  your  



                                                               -2-                                                         6908
  


----------------------- Page 3-----------------------

responsibility to ensure that the proposal arrives at the address indicated above before  



                                                                   

the deadline for receipt.  Proposals received after 3:00 pm, on June 17, 2011, will be  



                                                              

rejected and returned to the sender."  The RFP reserved the State's right to "[r]eject any  



                                                                                                                

or all proposals received and to waive deviations from the terms of the RFP if the State  



                                                                                                  

determines the deviations are not material." The RFP also required that "all offerors hold  



a  valid  Alaska  business  license  and  any  necessary  applicable  professional  licenses  



required by Alaska Statute."  The Department of Law notified prospective offerors on  



June 14 that the deadline for receipt of proposals had been changed to 3:00 p.m. on  



June 29.  



                                                                                                                 

                    Van Ness Feldman and six other law firms delivered proposals before the  



June  29  deadline.    Davis  Wright  Tremaine,  in  partnership  with  another  law  firm,  



                                                                                                

prepared to mail its proposal on June 27, but discovered an error in the cover letter and  



recalled its office services messenger before the proposal actually was mailed.  Davis  



                                                                                  

Wright Tremaine delivered the corrected proposal to  the U.S. Postal Service in San  



                                                                                    

Francisco the next day - June 28 - for Express Mail delivery to the Department of  



                                                                                      

Law in Juneau. The Postal Service guaranteed delivery by 3:00 p.m. on June 30, the day  



after  submissions  were  due.    After  the  package  mistakenly  was  routed  through  



                                                                                               

Wenatchee, Washington, the Postal Service attempted delivery at the Department of Law  



                                                                                       

on June 30, but found no one available to accept delivery.  The Postal Service delivered  



the package to the Department of Law on July 1.  



                    The Department of Law's procurement officer initially believed she had  



discretion to waive Davis Wright Tremaine's failure to deliver its proposal before the  



                                                                       

deadline.  Because she believed Davis Wright Tremaine "tried in good faith to make  



                                            

[the] deadline and the delays caused by the [Postal Service] were out-of-[Davis Wright  



                    

Tremaine's]  control,"  the  procurement  officer  forwarded  Davis  Wright  Tremaine's  



proposal to the evaluation committee for consideration.  



                                                             -3-                                                        6908
  


----------------------- Page 4-----------------------

                                                                                        

                       The reviewers determined that Davis Wright Tremaine's proposal was the  



                                                            

"most advantageous" to the State, and on July 22 the Department of Law issued a Notice  



                                                                                         

of Intent to award Davis Wright Tremaine the legal services contract.  On August 5 Van  



                                                                                               

Ness Feldman - which had the third-ranked proposal - asked the procurement officer  



to  provide  the  scoring  breakdown,  comments  from  the  reviewers,  and  the  two  top- 



scoring proposals.  On August 16 Van Ness Feldman filed a protest of the Notice of  



                                                                                                                   

Intent - 11 days after it received the requested documents and 25 days after the Notice  



of Intent's issuance.  



                       Van Ness Feldman asserted three deficiencies in the Department of Law's  



                                                                                                            

evaluation and processing of proposals:  (1) the weighting of categories in the scoring  



                                                                     

was inconsistent with the RFP's terms; (2) the reviewers inappropriately considered an  



evaluation factor not specified in the RFP; and (3) the procurement officer erred by  



accepting  Davis  Wright  Tremaine's  late-filed  proposal  in  violation  of  2  Alaska  



                                                                1  

                                                                                                                          

Administrative Code (AAC) 12.250.   Van Ness Feldman also stated that, although its  



                                                                                                2 

                                        

protest was filed after the ten-day deadline for protests,  it should be considered under 

the "good cause" exception to the deadline.3  



            1          2 AAC 12.250 (2013) provides:  "Unless otherwise provided in the request   



for proposals, a proposal, correction, modification, or withdrawal received after the date                                       

and time set for receipt of proposals is late, and may not be accepted unless the delay is         

due to an error of the contracting agency."  



            2  

                                                                                                         

                       AS 36.30.565(a) provides, in relevant part:  "A protest based upon alleged  

                                                                     

improprieties in an award of a contract or a proposed award of a contract must be filed  

                                                                                                      

within 10 days after a notice of intent to award the contract is issued by the procurement  

officer."  



            3          AS  36.30.565(b)  provides:    "If  the  protester  shows  good  cause,  the  



procurement officer of the contracting agency may consider a filed protest that is not  

timely."  



                                                                        -4-                                                                  6908
  


----------------------- Page 5-----------------------

                                                

                    The procurement officer determined Van Ness Feldman had shown good  



                                                                             

cause  under  AS  36.30.565(b)  and  responded  to  the  merits  of  Van  Ness  Feldman's  



                                                          

protest.    The  procurement  officer,  acting  on  the  advice  of  the  Department  of  



Administration's Chief Procurement Officer, concluded that 2 AAC 12.250 prohibited  



                                    

consideration of Davis Wright Tremaine's late-filed proposal and that correction of the  



                        

scoring  errors  Van  Ness  Feldman  noted  resulted  in  a  determination  that  Van  Ness  



                                                                                                      

Feldman's proposal was the most advantageous to the State.  The Department of Law  



                                                                          

issued  a  second  Notice  of  Intent,  declaring   Davis  Wright  Tremaine's  proposal  



nonresponsive for lateness and awarding Van Ness Feldman the legal services contract.  



                                                                                                      

                    Davis Wright Tremaine timely protested the Notice of Intent awarding Van  



Ness Feldman the contract, arguing that Van Ness Feldman had failed to show good  



                                                                                                        

cause for the late-filed protest and that Van Ness Feldman was not a qualified offeror  



                                                 

because Van Ness Feldman did not have a certificate of authority to transact business in  



Alaska.  Davis Wright Tremaine also asserted that the procurement officer should not  



                                                                        

have rescinded the acceptance of Davis Wright Tremaine's late proposal because (1) the  



                                                                             

Alaska Administrative Code provides discretion to accept late proposals and (2) the State  



                                                                                                 

should follow the federal government's practice of allowing its procurement officers to  



accept late proposals.  



                    The   procurement   officer   denied   Davis   Wright   Tremaine's   protest,  



                                                                                                

explaining that the procurement code did not give her authority to accept late proposals.  



                                     

She also reiterated that Van Ness Feldman's protest was properly considered for good  



                                                                                                                      

cause and deemed all other grounds of Davis Wright Tremaine's protest moot. The State  



awarded Van Ness Feldman the legal services contract.  



                                                               -5-                                                         6908
  


----------------------- Page 6-----------------------

           B.        Proceedings  



                                                                                   

                     Davis Wright Tremaine appealed the procurement officer's denial of its  

                                                                                                         4   The Commissioner  

                                                                                                            

protest to the Commissioner of the Department of Administration. 

referred the matter to the Office of Administrative Hearings.5  A hearing officer reviewed  

                               



briefs from the Department of Law, Davis Wright Tremaine, and Van Ness Feldman, and  

                                                                                                



ultimately  recommended  that  the  Commissioner  reject  the  appeal  and  confirm  the  



contract award to Van Ness Feldman.  



                                                                                           

                     The hearing officer rejected Davis Wright Tremaine's argument that the  



procurement  officer  erred  in  considering  Van  Ness  Feldman's  late-filed  protest,  



concluding that the procurement officer properly exercised her discretion in finding good  



cause  to  consider  the  protest.    The  hearing  officer  found  that,  although  Van  Ness  



                                                                                                   

Feldman did not show sufficient reason for the delay in filing, Van Ness Feldman raised  



serious  and  substantial  claims  that  the  procurement  code  had  been  violated  -  the  



                                                        

assertions that proposals were not evaluated consistently with the RFP criteria and that  



                                                                                                    

a late proposal was wrongly accepted provided good cause to consider the late protest.  



                     The hearing officer also rejected Davis Wright Tremaine's argument that  



the procurement code and RFP did not prohibit the procurement officer from accepting  



                                                                                                 

Davis Wright Tremaine's late proposal.  The hearing officer interpreted 2 AAC 12.250  



to  mean  that  "absent  an  explicit  provision  in  the  RFP,  a  late  proposal  may  not  be  



accepted unless the delay is due to an error of the contracting agency."  After finding that  



the RFP did not contain such an explicit provision, the hearing officer concluded that  



           4         We refer to the Department of Administration as the "Department," and to       



the Commissioner of the Department of Administration as the "Commissioner."  



           5         See AS 36.30.670; AS 44.64.030(a)(25).  



                                                                   -6-                                                                6908  


----------------------- Page 7-----------------------

                                                                                                          

"the procurement officer ought not to have accepted [Davis Wright Tremaine's] late  



proposal."  



                    Finally, the hearing officer rejected the argument that Van Ness Feldman  



could  not  be  awarded  the  contract  because  it  lacked  a  certificate  of  authority.    The  



                                       

hearing officer noted that the RFP did not require offerors to possess a certificate and that  



                                                                    

"the  lack  of  a  certificate  does  not  prevent  [Van  Ness  Feldman]  from  being  legally  



qualified to enter into a contract."  



                                                                                         

                    The Department, through the Commissioner, adopted the hearing officer's  



                             6  

                                                                                                              

decision and order.   Davis Wright Tremaine appealed the Department's decision to the  

superior court.7  



                                                                     

                    The   superior   court   held   the   Department   acted   reasonably   when   it  



interpreted  the  RFP  and  2  AAC  12.250  to  prohibit  consideration  of  any  late-filed  



                           

proposal.  It also held the Department's determination of good cause to accept Van Ness  



                                                                                                                   

Feldman's late-filed protest was reasonable, applying the same three factors used by the  



hearing  officer.    Finally,  it  held  the  Department  reasonably  considered  Van  Ness  



Feldman's  initial  proposal  to  be  responsive  despite  Van  Ness  Feldman's  lack  of  a  



certificate of authority to conduct business in Alaska.  Accordingly, the superior court  



affirmed the Department's final decision.  



                    Davis Wright Tremaine appeals.  



III.      STANDARD OF REVIEW  



                                                                                                                  

                    "When the superior court is acting as an intermediate court of appeal in an  



administrative   matter,   we   independently   review   the   merits   of   the   agency   or  



          6         Because   the   Commissioner   adopted   the   hearing   officer's   decision,  the  



rationale and interpretations contained in the decision are attributed to the Department       

through the Commissioner.  See AS 36.30.675, .680.  



          7         See AS 36.30.685(a).  



                                                               -7-                                                             6908  


----------------------- Page 8-----------------------

                                                            8  

administrative board's decision."   We apply different standards of review to agency  



decisions depending on the subject of review.   



                        We  apply  the  reasonable  basis  standard  to  questions  of  law  involving  



"agency expertise or the determination of fundamental policies within the scope of the  



                                                      9  

agency's statutory functions."   When applying the reasonable basis test, we "seek to  



                                                                                                                      

determine whether the agency's decision is supported by the facts and has a reasonable  



                                                                                                                                               10  

                                                                                                                                                   We  

basis in law, even if we may not agree with the agency's ultimate determination." 



apply  the  substitution  of  judgment  standard  to  questions  of  law  where  no  agency  



                                      11 

                                                                                  

expertise is involved.                    Under the substitution of judgment standard, we may "substitute  



                                                                                                              

[our] own judgment for that of the agency even if the agency's decision had a reasonable  

basis in law."12  



            8           Shea v. State, Dep't of Admin., Div. of Ret. & Benefits                                        , 267 P.3d 624, 630   



(Alaska 2011) (citing                  Hester v. State, Pub. Emps.' Ret. Bd.                            , 817 P.2d 472, 474 (Alaska  

 1991)).  



            9           Marathon Oil Co. v. State, Dep't of Natural Res. , 254 P.3d 1078, 1082  



                                                                                                                                          

(Alaska 2011) (citing Matanuska-Susitna Borough v. Hammond , 726 P.2d 166, 175  

                                                                                             

(Alaska 1986)); see also May v. State, Commercial Fisheries Entry Comm'n , 175 P.3d  

                                                                                              

 1211, 1215 (Alaska 2007) (citing Handley v. State, Dep't of Revenue , 838 P.2d 1231,  

 1233 (Alaska 1992)).  



            10  

                                                                                   

                        Tesoro Alaska Petroleum Co. v. Kenai Pipe Line Co., 746 P.2d 896, 903  

(Alaska 1987) (citing Kelly v. Zamarello , 486 P.2d 906, 918 (Alaska 1971)).  



            11          Marathon Oil , 254 P.3d at 1082 (quoting Hammond , 726 P.2d at 175);  



May , 175 P.3d at 1215 (citing Handley , 838 P.2d at 1233)).  



            12  

                                                                             

                        Tesoro  Alaska,  746  P.2d  at  903  (citing  Earth  Res.  v.  State,  Dep't  of  

Revenue , 665 P.2d 960, 965 (Alaska 1983)).  



                                                                          -8-                                                                    6908
  


----------------------- Page 9-----------------------

                  We apply the "reasonable and not arbitrary" test to review the validity of  

                                                                                                     

administrative regulations.13  We review an agency's interpretation and application of its  

                                                                                                  

                                                                                       14  "We will defer to the  

own regulations using the reasonable basis standard of review.  

                                                                                                  



agency  unless  its  'interpretation  is  plainly  erroneous  and  inconsistent  with  the  

regulation.' "15  "We give more deference to agency interpretations that are 'longstanding  



and continuous.' "16  



                  We  also  "will  evaluate  an  agency's  interpretation  of  regulations  for  

                                                                     17  This is a question of law to which  

consistency with the statute on which it is based."  

                                                                                                            



we apply the appropriate standard  of review based on the level of agency expertise  

                                                  



involved.  "Even under the independent judgment standard we '[give] some weight to  

                                                                                                           



what      the    agency       has    done,      especially      where       the    agency      interpretation        is  



                       18  

longstanding.' "           When interpreting statutes and regulations, seemingly conflicting  



         13       May , 175 P.3d at 1215 (citing Handley , 838 P.2d at 1233).  



         14       Kuzmin v. State, Commercial Fisheries Entry Comm'n , 223 P.3d 86, 89  



(Alaska 2009) (citing Copeland v. State, Commercial Fisheries Entry Comm'n, 167 P.3d  

682, 683 (Alaska 2007)).  



         15       Id. (quoting Copeland, 167 P.3d at 683).  



         16       Marathon Oil , 254 P.3d at 1082 (quoting Premera Blue Cross v. State,   



Dep't of Commerce, Cmty. & Econ. Dev., Div. of Ins. , 171 P.3d 1110, 1119 (Alaska  

2007)).  



         17       Forquer v. State, Commercial Fisheries Entry Comm'n , 677 P.2d 1236,  



1241 (Alaska 1984) (citing State, Commercial Fisheries Entry Comm'n v. Templeton,  

598 P.2d 77, 81 (Alaska 1979)).  



         18       Palmer v. Municipality of Anchorage, Police & Fire Ret. Bd. , 65 P.3d 832,  

                                                                                                       

837 n.7 (Alaska 2003) (alteration in original) (quoting Usibelli Coal Mine, Inc. v. State,  

Dep't of Natural Res. , 921 P.2d 1134, 1142-43 (Alaska 1996)).  



                                                          -9-                                                   6908
  


----------------------- Page 10-----------------------

provisions   must be harmonized unless such an interpretation would be at odds with  



                          19  

statutory purpose. 



IV.	      DISCUSSION  



          A.	      The Department's Decision To Accept Van Ness Feldman's Late-Filed  

                                                                    

                   Protest For "Good Cause" Was Reasonable.  



                   Alaska       Statute      36.30.565(a)         requires       a   protest     based      on     alleged  



improprieties in a contract award to be filed within ten days after the notice of intent to  

                                                                 



award the contract is issued.  The statute allows consideration of a late-filed protest "[i]f  

                                                                                          

the protestor shows good cause."20  "Good cause" in this context is not defined by statute  

                                                                                  



or regulation.  



                   Davis Wright Tremaine argues that the Department erred in considering  



                                                                                                 

Van Ness Feldman's protest because it was filed after the statutory deadline for protests  



                                                                                                          

and Van Ness Feldman failed to show "good cause."  The implication of this argument  



is that the procurement officer could not have rescinded the contract award to Davis  



                                                                                                        

Wright Tremaine absent Van Ness Feldman's protest.  Although we are skeptical of the  



                                                                                               

proposition that a procurement officer cannot sua sponte rescind a contract award after  



                      

discovering a material error in the procurement process, we do not need to address it  



                                                                                     

because the procurement officer's determination that there was good cause to accept Van  



Ness Feldman's late-filed protest is reasonable.  



                   The parties do not disagree that the protest was filed after the statutory  



                                                                                   

deadline.  They instead dispute whether the Department erred in concluding Van Ness  



Feldman demonstrated good cause.  The Department relied on factors established in prior  



administrative adjudications, considering the timing of the protest, the nature of the  



          19       Progressive Ins. Co. v. Simmons , 953 P.2d 510, 516-17 (Alaska 1998).  



          20       AS 36.30.565(b).  



                                                            -10-                                                         6908  


----------------------- Page 11-----------------------

                                                                                                      21  

objections raised, and the strength of the evidence presented.                                             Although the Department  



                                                                                                                            

found that Van Ness Feldman did not show "sufficient reason for filing its protest late,"  



                

it  found  that  the  claims  raised  in  the  protest  were  "serious  and  substantial"  and  the  



                                                                                           

proffered evidence "undisputed" for at least two of the issues, including Davis Wright  



Tremaine's late proposal submission.  The Department therefore concluded that there  

was good cause to consider Van Ness Feldman's protest despite its untimeliness.22  



                                                                                                   

                       We review the Department's application of its "good cause" factors to the  



                                           23  

                                                                                                          

facts for reasonableness.                      An assertion that a proposal was unlawfully accepted after  



the deadline raises a serious concern about the procurement process.  And the evidence  



            21         See  Payroll City v. Dep't of Envtl. Conservation , OAH No. 05-0583-PRO,  



at 5 (Jan. 30, 2006); see also  Scientific Fishery Sys., Inc., Dep't of Admin. No. 98-08                          

(July 26, 1999) ("[T]he term 'good cause' in AS 36.30.565(b) includes not only 'good     

cause' for a delay in filing the protest, but also 'good cause' for considering the merits                    

of the protest, even though it is untimely.").  



            22         Davis Wright Tremaine contends on appeal that use of the merit-based  



                                                

factors - the nature of the objections and the strength of the evidence - "extends the  

                                                                             

 'good cause' standard beyond its statutory language and should be rejected."  Davis  

Wright Tremaine waived this argument by accepting the propriety of the merit-based  

                                                                                                                                          

factors' use in its arguments at the administrative and superior court levels.  See Trs. for  

                                                                                  

Alaska v. State, Dep't of Natural Res. , 865 P.2d 745, 748 (Alaska 1993) ("[A] party must  

                                      

raise an issue during the administrative proceedings to preserve the issue for appeal.");  

                                                                                  

Zeman v. Lufthansa German Airlines, 699 P.2d 1274, 1280 (Alaska 1985) ("As a general  

                                                    

rule, a party may not present new issues or advance new theories [on appeal] to secure  

a reversal of a lower court decision." (citing O'Neill Investigations, Inc. v. Ill. Emp'rs  

Ins. , 636 P.2d 1170, 1175 n.7 (Alaska 1981))).  



                       We nonetheless note that AS 36.30.565(b) does not restrict the definition  

                                                                                                                  

of "good cause," and it is not readily apparent that it is unreasonable for the Department  

                                                                                

to interpret "good cause" to encompass the merits of a protest to promote a policy of  

                                                   

correcting serious errors in the procurement process.  



            23         See Kelly v. Zamarello, 486 P.2d 906, 917 (Alaska 1971).  



                                                                       -11-                                                                  6908
  


----------------------- Page 12-----------------------

that Davis Wright Tremaine's proposal was filed late is uncontested.  We thus hold that  



                                                                         

the Department's conclusion that there was good cause to consider Van Ness Feldman's  



late-filed protest was reasonable.  



          B.	       The  Department's  Interpretation  That  It  Was  Not  Permitted  To  

                    Accept Davis Wright Tremaine's Late-Filed Proposal Is Reasonable  

                    And Not Inconsistent With Statute.  



                                             

                    The Department relied on 2 AAC 12.250 in determining that Davis Wright  



Tremaine's proposal should have been rejected as untimely.  The Department interpreted  



                                                                                                    

the regulation's "unless otherwise provided" phrase to mean that no exception to the bar  



            

on late proposals is available unless a proposal request contains an explicit provision  



                                                 

"stating under what conditions a late proposal would be accepted."  And the Department  



                                                                              

determined  the  RFP  did  not  contain  a  sufficiently  specific  waiver  to  overcome  the  



                                                                                               

regulation's general prohibition on acceptance of late proposals. Evaluating whether the  



Department's determination is lawful involves four inquiries:  (1) whether 2 AAC 12.250  



is valid; (2) whether the Department's interpretation of that regulation is reasonable;  



                                             

(3) whether the Department's interpretation of that regulation is consistent with statute;  



and  (4)  whether  the  Department's  determination  that  the  RFP  lacked  the  necessary  



waiver is reasonable.  Davis Wright Tremaine does not contest that 2 AAC 12.250 is  



consistent with statute and is reasonable and not arbitrary, and therefore is valid.  It  



                               

instead  argues  that  the  Department's  strict  interpretation  of  2  AAC  12.250  is  not  



                                                                                                             

reasonable and is inconsistent with statute because the regulation must be interpreted to  



                                                                                  

give effect to a "common law materiality standard" the procurement code preserved for  

                             24   Davis Wright Tremaine also contends that it is unreasonable for  

late-filed proposals.            



          24        Under  the  common  law  materiality  standard,  "a  variance  from  the  

                                                            

requirements of an RFP will render a proposal nonresponsive only if that variance is  

                                            

material."  Laidlaw Transit, Inc. v. Anchorage Sch. Dist. , 118 P.3d 1018, 1032 (Alaska  

                              

                                                                                                           (continued...)  



                                                            -12-	                                                          6908  


----------------------- Page 13-----------------------

the Department to conclude that the RFP's general waiver provision does not satisfy  



2 AAC 12.250's "unless otherwise provided" clause.  



                    Assuming   a   regulation   is   valid,   we   review   whether   an   agency's  



interpretation  of  its  regulation  is  "  'plainly  erroneous  and  inconsistent  with  the  



                                                                                 25  

regulation' " - i.e., whether it has a reasonable basis.                             Davis Wright Tremaine does  



                            

not argue that the Department's interpretation is plainly erroneous or inconsistent with  



the regulation itself, only that Davis Wright Tremaine's interpretation is better.  Davis  



                                                                          

Wright Tremaine essentially asks us to apply a substitution of judgment standard to  



review whether the Department's interpretation is consistent with the regulation.  But it  



is well established that an agency's interpretation of its own regulations is reviewed  



                                                                                                                     

under the reasonable basis standard; this standard "recognizes that the agency is best able  



                                                                                          26  

                                                                                              And the Department's  

to discern its intent in promulgating the regulation at issue."  



                                                                                

interpretation of 2 AAC 12.250 is a reasonable one.  Requiring an RFP to specifically  



                                   

provide  an  exception  to  the  lateness  rule  is  not  inconsistent  with  2  AAC  12.250's  



                                                                                

provision that an RFP must "otherwise provide" an exception for the Department to  



                                                                         

accept late-filed proposals.  Moreover, requiring a specific exception promotes a policy  



          24        (...continued)  



2005).  "A variance is material if it gives the bidder a substantial advantage over other  

                                                                                                  

bidders and thereby restricts or stifles competition."  Chris Berg, Inc. v. State, Dep't of  

                               

Transp. & Pub. Facilities, 680 P.2d 93, 94 (Alaska 1984).  



          25  

                                              

                    Kuzmin v. State, Commercial Fisheries Entry Comm'n , 223 P.3d 86, 89  

(Alaska 2009) (quoting Copeland v. State, Commercial Fisheries Entry Comm'n, 167  

P.3d 682, 683 (Alaska 2007)).  



          26  

                                                                                          

                    Rose v. Commercial Fisheries Entry Comm'n , 647 P.2d 154, 161 (Alaska  

           

 1982) (citing 2 KENNETH CULP  DAVIS ,  ADMINISTRATIVE LAW TREATISE   7.22, at 105- 

08 (2d ed. 1979)); see also May v. State, Commercial Fisheries Entry Comm'n , 175 P.3d  

 1211, 1215-16 (Alaska 2007); Lauth v. State, Dep't of Health & Soc. Servs., Div. of Pub.  

                                                                                                                       

Assistance , 12 P.3d 181, 184 (Alaska 2000).  



                                                             -13-                                                        6908
  


----------------------- Page 14-----------------------

                                

of giving offerors, as well as procurement officers, clear guidance as to when and under  



                                                                        27  

                                                                                    

what circumstances a lateness waiver is available.                          The Department's interpretation is  



                   28                                                          29 

                                                  

longstanding          and is entitled to particular deference.                      Therefore, the Department's  



                                                                                       

interpretation that 2 AAC 12.250 bars acceptance of late proposals absent a specific  



exception in the RFP is reasonable.  



                                                                           

                    We also review whether the agency's interpretation is inconsistent with or  



                                                                                30  

                                                                                    An agency's interpretation is  

contrary to the statute on which the regulation is based.  



          27        The Department contends that its interpretation is necessary to protect the  



integrity of the process and treat all offerors equally.  See Geo-Seis Helicopters, Inc. v.  

 United States, 77 Fed. Cl. 633, 646 (2007) (recognizing that the federal strict lateness  

rule " 'alleviates confusion, ensures equal treatment of all offerors, and prevents an  

offeror from obtaining a competitive advantage that may accrue where an offeror is  

                                                                                                                 

permitted to submit a proposal later than the deadline set for all competitors' " (quoting  

                                                                                             

Argencord Mach. & Equip., Inc. v. United States , 68 Fed. Cl. 167, 173 (2005))).  And  

the Department's Chief Procurement Officer testified:  



                    Creating  a  new  rule  that  would  vest  procurement  officers  

                    with  the  discretion  to  determine  on  a  case-by-case  basis  

                    whether to accept a late proposal would impose significant  

                    administrative burdens on our division and other procurement  

                    units and introduce uncertainty into what has been a well- 

                    understood tenet of state procurement law.  



          28        See, e.g., Kalen & Assocs. v. Dep't of Natural Res. , OAH No. 08-0123-PRO  



(May 13, 2008) (affirming agency's rejection of late proposal even though offeror was  

                                         

not at fault).  The Department's Chief Procurement Officer asserted that in his 28 years  

                                                                                                          

in state procurement, neither he nor his staff has ever allowed a late proposal or bid to  

     

be considered for an award.  



          29       Marathon Oil Co. v. State, Dep't of Natural Res. , 254 P.3d 1078, 1082  



                                                                                                                     

(Alaska 2011) (quoting Premera Blue Cross v. State, Dep't of Commerce, Cmty. & Econ  

Dev., Div. of Ins. , 171 P.3d 1110, 1119 (Alaska 2007)).  



          30  

                                                                                      

                    See  Trs.  for  Alaska  v.  Gorsuch,  835  P.2d  1239,  1245  (Alaska  1992)  

                                                                                                           (continued...)  



                                                            -14-                                                       6908
  


----------------------- Page 15-----------------------

                                                                                                   

consistent   with   statute   unless   the   statute's   text   and   purpose   prohibit   such   an  



                     31  

interpretation.            Davis  Wright  Tremaine  contends  that  the  procurement  code  -  



                                                                          

AS 36.30.005-.995 - preserves the common law materiality standard for proposals.  It  



                                                                                           

argues that interpreting 2 AAC 12.250 to prohibit accepting late proposals absent an  



express exception in the RFP nullifies the common law materiality exception and is thus  



inconsistent with the procurement code.  



                                                                                              

                   Davis Wright Tremaine can prevail on its argument only if the procurement  



                                            

code requires the Department to apply the common law materiality standard to late-filed  



                                                                                                        

proposals.  This is a question of law not involving agency expertise, to which we apply  

our own judgment.32  



          30        (...continued)  



(explaining that because an agency's interpretation of its own regulations was "neither  

plainly erroneous nor inconsistent with the regulations[,] it should be given effect unless  

it is contrary to [the applicable statute]"); Forquer v. State, Commercial Fisheries Entry  

                                                                                                         

Comm'n,  677  P.2d  1236,  1241  (Alaska  1984)  (noting  "this  court  will  evaluate  an  

                                                              

agency's interpretation of regulations for consistency with the statute on which [the  

regulation] is based" (citing State, Commercial Fisheries Entry Comm'n v. Templeton,  

                                                                                              

598 P.2d 77, 81 (Alaska 1979))).  



          31        Compare Natural Res. Def. Council, Inc. v. U.S. Envtl. Prot. Agency, 25  



                                   

F.3d 1063, 1070 (D.C. Cir. 1994) (holding agency's interpretation of its regulation not  

inconsistent   with   statute   when   nothing   in   statute's   language   prohibited   such  

interpretation or required a different interpretation), with Cont'l Training Servs., Inc. v.  

Cavazos, 893 F.2d 877, 892 (7th Cir. 1990) (holding regulation could not be interpreted  

                                    

to exclude hearing on the record that was required by statute's text), and United Transp.  

                                                             

Union v. Dole, 797 F.2d 823, 829 (10th Cir. 1986) (holding regulation could not be  

interpreted to permit specific construction project where statute's text prohibited "any"  

                                            

construction).  



          32       See, e.g., Harrod v. State, Dep't of Revenue , 255 P.3d 991, 995 (Alaska  



                                                                                         

2011) (citing Temple v. Denali Princess Lodge, 21 P.3d 813, 815 (Alaska 2001)).  Even  

under the independent judgment standard of review, we recognize "that an agency's  

                                                                                                           (continued...)  



                                                            -15-                                                       6908
  


----------------------- Page 16-----------------------

                     The procurement code's text does not expressly adopt the common law  



                               33  

materiality  standard.               And  the  procurement  code  directs  the  Department  to  adopt  



                   

regulations pertaining to "the opening or rejection of bids and offers, and waiver of  



                                                                                   

informalities in bids and offers," without any reference to the common law materiality  

standard.34  



                    Davis  Wright  Tremaine  asserts,  however,  that  the  specific  structure  of  



AS  36.30.100  through  AS  36.30.290  evidences  a  legislative  intent  to  preserve  the  



common law materiality standard for the proposal submission process.  These statutes  



                                                                                                          35  

                                                                                                               The statute  

provide different frameworks for procurement by bids and by proposals. 



governing bids expressly prohibits acceptance of bids received after the due date and  



                                                                                                         36  

                                                                                                               The  statute  

time  unless  the  delay  was  due  to  an  error  of  the  contracting  agency. 



          32        (...continued)  



interpretation of a law within its area of jurisdiction can help resolve lingering ambiguity,  

                                                                                                   

particularly when the agency's interpretation is longstanding."  Bartley v. State, Dep't  

                                                                                                              

of Admin., Teacher's Ret. Bd., 110 P.3d 1254, 1261 (Alaska 2005) (citing Union Oil Co.  

v. State, Dep't of Revenue, 560 P.2d 21, 23, 25 (Alaska 1977)).  In such cases, we "look  

                                                                                              

for 'weighty reasons' before substituting our judgment for the agency's."  Id. (quoting  

                                                              

Kelly v. Zamarello , 486 P.2d 906, 910-11 (Alaska 1971)).  



          33  

                                                                                             

                    The statute's general savings clause is insufficient to impose specific extra- 

statutory  common  law  restrictions  on  the  discretion  the  statute  confers  on  the  

Department.  See AS 36.30.860 ("Unless displaced by the particular provisions of this  

                                                                                                      

chapter, the principles of law and equity . . . shall supplement the provisions of this  

                                                                                                     

chapter.").  



          34        AS 36.30.040(b)(5) (emphasis added).  



          35        Compare AS 36.30.100-.190 (competitive sealed bids), with AS 36.30.200- 



.250 (competitive sealed proposals).  



          36        AS 36.30.160(a).  



                                                            -16-                                                       6908
 


----------------------- Page 17-----------------------

                                                      

governing proposals contains no provision relating to timeliness of submission, other  

than that an RFP "must contain the date, time, and place for delivering proposals."37  



                     We do not agree that this structure demonstrates legislative intent to require  



the  Department  to  adopt  and  apply  the  common  law  materiality  standard  for  late  



                                                                                                                

proposals.  Nor has Davis Wright Tremaine cited any legislative history in support of this  



                                                                         

assertion.  Although a provision's omission in a statute typically is interpreted to be  

intentional when the provision is present in a similar statute,38 it does not follow that the  



                                                                                        

statute's rule for bid submissions necessarily prohibits the Department from adopting a  



                                                               

similar rule for proposal submissions.  The difference instead can be read to mean that  



the Department is not required to adopt a policy rejecting all late proposals, as it must  



            

do for bids.  But nothing in the statute's structure requires the Department to adopt and  



                                                                                                       

apply  the  common  law  materiality  standard  to  proposals,  and  nothing  in  the  statute  



                                                                                                      

prohibits the Department from interpreting 2 AAC 12.250  to  bar acceptance of late  



                                                            

proposals absent a specific exception in the RFP.  Had the legislature intended to require  



                                                                                     

the Department to apply the common law materiality standard to late proposals, it could  



                                                                      39  

                                                                               The   Department's   interpretation   of  

have   done   so   explicitly,   but   it   did   not. 



2 AAC 12.250 is not inconsistent with the procurement statute.  



                     The  final  inquiry  relates  to  the  reasonableness  of  the  Department's  



determination that the RFP did not contain the specific waiver necessary to overcome the  



           37        AS 36.30.210(a).  



           38        See  2B  NORMAN  J.   SINGER   &   J.D.   SHAMBIE  SINGER ,   SUTHERLAND  ON  



STATUTES AND STATUTORY CONSTRUCTION  51:2, at 213-14 (7th ed. 2007).  



           39        As the U.S. Supreme Court has stated, "Congress . . . does not alter the   



fundamental details of a regulatory scheme in vague terms or ancillary provisions - it         

does not, one might say, hide elephants in mouseholes."                                         Whitman v. Am. Trucking  

Ass'ns , 531 U.S. 457, 468 (2001).  



                                                                 -17-                                                            6908
  


----------------------- Page 18-----------------------

                                                           

general prohibition on acceptance of late proposals in 2 AAC 12.250.  The original RFP  



                                                                                                     

stated:  "Proposals received after 3:00 pm on June 17, 2011, will be rejected and returned  



                          40  

to  the  sender."                The  RFP  also  contained  a  general  waiver  provision:    "The  State  



reserves  the  right  to  .  .  .  waive  deviations  from  the  terms  of  the  RFP  if  the  State  



                                                                                                         

determines the deviations are not material."  The Department determined "[t]his general  



clause allowing a waiver of non-material deviations from the RFP does not allow waiver  



                                                                                                                    

of a deviation from a regulation" - that is, the general waiver clause was not sufficiently  



                                                                                                                            

specific to "demonstrate the purchasing agency's intent" to render the prohibition in  



2 AAC 12.250 inapplicable.  



                       The Department's determination that the RFP did not contain a specific  



                                                                                                                   

exception is a question of law involving the Department's expertise and is thus reviewed  



                                                                 41  

                                                                        The  RFP  contained  no  provision  expressly  

under  the  reasonable  basis  standard. 



                   

indicating that 2 AAC 12.250's prohibition on accepting late-filed proposals did not  



                                                                 

apply. And the clause cautioning that all late proposals would be rejected reaffirmed the  



regulation's prohibition.  We therefore hold that the Department's conclusion that the  



RFP did not contain an explicit provision permitting acceptance of late proposals is  

reasonable.42  



           40          The RFP later was amended to change the deadline date to June 29.  



           41          See Burke v. Houston NANA, L.L.C., 222 P.3d 851, 858 (Alaska 2010); May  



v. State, Commercial Fisheries Entry Comm'n, 175 P.3d 1211, 1215 (Alaska 2007).  



           42          Davis Wright Tremaine's contention that it is unreasonable to conclude the                           



RFP's general waiver clause is insufficient to overcome 2 AAC 12.250's prohibition on                                        

acceptance of late proposals is based on the assumption that the Department cannot  

lawfully interpret the regulation's "unless otherwise provided" clause as requiring an  

                

RFP exception to be specific.  But the Department's interpretation is lawful, so Davis  

Wright Tremaine's argument fails.  Davis Wright Tremaine does not argue that it is  

                                                                                                                    

                                                                                                                             (continued...)  



                                                                      -18-                                                                 6908
  


----------------------- Page 19-----------------------

         C.	      The  Department's  Decision  That  Van  Ness  Feldman's  Lack  Of  A  

                  Certificate   Of  Authority  Did  Not  Render  Van  Ness  Feldman's  

                  Proposal Nonresponsive Is Reasonable.  



                  Davis Wright Tremaine argues that the Department erred in concluding that  



Van Ness Feldman's failure to obtain a certificate of authority before submitting its  

                                                                                             43   We review the  

proposal did not render Van Ness Feldman's proposal nonresponsive.  

                                                                                                 

Department's responsiveness determination under the reasonable basis standard.44  



                  Responsiveness requires that a proposal respond to the terms and conditions  

set forth in the RFP.45   The RFP did not expressly require offerors to possess a certificate  

                                                                                       



of authority.  Davis Wright Tremaine argues that such a requirement is implied in all  

                                                                                                           46  But  

RFPs because "general principles of law . . . are applicable to all procurements."                             



compliance with a statutory certification requirement is not necessary for a proposal to  

                                                        

be responsive when the request for proposals does not require such compliance.47                                In  

                                                                                      



addition, the Department provides good reason for not requiring that offerors hold a  

                                                                                                



certificate  of  authority  prior  to  proposal  submission:    imposing  such  a  requirement  

                                                                                                 



         42       (...continued)  



otherwise unreasonable for the Department to conclude the RFP lacked a specific waiver.  



         43       AS 10.06.705  provides:  "A foreign corporation may not transact business  



in this state until it has been issued a certificate of authority . . . ."  



         44       Laidlaw Transit, Inc. v. Anchorage  Sch. Dist., 118 P.3d 1018, 1032 (Alaska  



2005).  



         45       See Gunderson v. Univ. of Alaska, Fairbanks, 922 P.2d 229, 235 (Alaska  



1996).  



         46       See AS 36.30.860 ("[T]he principles of law and equity, including . . . law  



relative to capacity to contract . . . shall supplement the provisions of this chapter.").  



         47       See State, Dep't of Educ. v. Nickerson, 711 P.2d   1165, 1167-68 (Alaska  



1985).  



                                                       -19-	                                                 6908
  


----------------------- Page 20-----------------------

"could limit competition as some corporations may not wish to complete the required  



                                                                                                          

[certificate] application if they are not awarded the contract."  Accordingly, we hold the  



Department reasonably concluded a certificate of authority was not required for Van  

Ness Feldman's proposal to be responsive.48  



V.       CONCLUSION  



                   We AFFIRM the superior court's decision upholding the Department of  



                                                           

Administration's denial of Davis Wright Tremaine's protest and the award of the legal  



services contract to Van Ness Feldman.  



         48        Davis Wright Tremaine also argues that Van Ness Feldman does not qualify  



for    the    interstate      commerce         exception       to    the    certificate      requirement.           See  

AS 10.06.718(9).  The superior court held, without explanation, that Van Ness Feldman  

                                                                                                

"is a foreign corporation involved in interstate commerce."  Because we have determined  

                                   

that the Department reasonably concluded that Van Ness Feldman was not required to  

                                                                                  

hold a certificate of authority for its proposal to be responsive, we do not need to reach  

                                                                 

the issue whether its proposal submission constituted "transacting business in interstate  

                                                                                                          

commerce" under AS 10.06.718(9).  



                                                          -20-                                                       6908  

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