Conduent State & Local Solutions, Inc. v. New Hampshire Department of Transportation & a.

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THE SUPREME COURT OF NEW HAMPSHIRE

___________________________

Merrimack
No. 2017-0548

CONDUENT STATE & LOCAL SOLUTIONS, INC.

v.

NEW HAMPSHIRE DEPARTMENT OF TRANSPORTATION & a.

Argued: May 9, 2018
Opinion Issued: October 16, 2018

Cleveland, Waters and Bass, P.A., of Concord (Bryan K. Gould, Philip R.
Braley, and Cooley A. Arroyo on the brief, and Mr. Gould orally), for the
plaintiff.

Gordon J. MacDonald, attorney general (Jessica King, attorney, on the
brief and orally), for defendant New Hampshire Department of Transportation.

Hinckley, Allen & Snyder, LLP, of Manchester (Daniel M. Deschenes and
Cori P. Palmer on the brief, and Mr. Deschenes orally), for defendant Cubic
Transportation Systems, Inc.

HICKS, J. The plaintiff, Conduent State & Local Solutions, Inc.
(Conduent), appeals an order of the Superior Court (Nicolosi, J.) denying
Conduent’s request for a declaration that defendant New Hampshire
Department of Transportation (DOT) exceeded its statutory authority, and,
therefore, violated the separation of powers doctrine, by procuring from
defendant Cubic Transportation Systems, Inc. (Cubic) a new system to support
DOT’s electronic collection of tolls, using the “best value” method for evaluating
competing bids. See N.H. CONST. pt. I, art. 37. On appeal, Conduent argues
that DOT had no statutory authority to procure the new system because
procurement authority is given to the New Hampshire Department of
Administrative Services (DAS). See RSA ch. 21-I (2012 & Supp. 2017).
Alternatively, Conduent asserts, even if DOT had statutory authority to procure
the new system, it lacked authority to use the “best value” method for
evaluating competing bids. We affirm.

The relevant facts follow. DOT collects tolls electronically through the
“E-ZPass” system, which allows a vehicle with a transponder to pass through
toll lanes without stopping. DOT maintains accounts for all E-ZPass users
and, when a vehicle with a transponder passes through a tollbooth, a toll is
charged to the account associated with the detected transponder.

The E-ZPass system requires a variety of so-called “back office” activities,
such as developing and maintaining software, managing E-ZPass accounts,
distributing E-ZPass transponders, interacting with credit card companies,
identifying and enforcing E-ZPass violations, coordinating with electronic toll
collection systems in other states, staffing E-ZPass service centers, and
developing and maintaining the E-ZPass website.

Conduent has had a contract with DOT to provide these services since
2004.1 In December 2014, DOT issued a request for proposal (RFP) soliciting
bids for “a new back office system and related operations to support electronic
tolling, video tolling, violation processing and E-ZPass . . . reciprocity.” The
RFP required bidders to submit a technical proposal and a price proposal. The
RFP reserved to DOT the “sole discretion” to “reject any and all Proposals at
any time.”

The RFP informed prospective bidders that each proposal would be
evaluated with regard to the services proposed, the qualifications of the
contractor and any subcontractor, the experience and qualifications of
“proposed candidates,” and cost. The RFP informed prospective bidders that
the bids would be evaluated on a 100-point scale with 70 points allocated to
the technical proposal and 30 points allocated to the price proposal. The RFP
identified the weights to be applied to the different components of the technical

1The 2004 contract was between DOT and Xerox State & Local Solutions, Inc., which was a
processing division of Xerox Corporation. After Xerox Corporation divested itself of its processing
divisions, Xerox State & Local Solutions, Inc. became a subsidiary of Conduent Incorporated and
underwent a formal name change to Conduent State & Local Solutions, Inc.

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and price proposals and specified the criteria by which both the technical and
price proposals would be judged. Once the bids were evaluated, the RFP
permitted DOT to enter into contract discussions with the bidder it determined
to be the best qualified based upon the specified criteria.

DOT scored Conduent higher than it scored Cubic on the price proposal,
but scored Cubic higher than it scored Conduent on the technical proposal.
Conduent’s total score for both its price and technical proposals was 80.12;
Cubic’s total score was 80.76. Accordingly, DOT entered into contract
negotiations with Cubic and, ultimately, executed a contract that the Governor
and Executive Council approved in October 2015. We refer to the contract
awarded to Cubic as the “back office system services contract.”

Conduent subsequently brought the instant action, maintaining in count
IX of its complaint that DOT exceeded its statutory authority, thereby violating
the separation of powers doctrine, by conducting the procurement at issue.
See N.H. CONST. pt. I, art. 37. Conduent moved for partial summary judgment
on count IX. DOT moved to dismiss count IX, asserting, in pertinent part, that
count IX was unsupported as a matter of law. Cubic moved to dismiss count
IX on similar grounds and also on the ground that Conduent lacked standing
to bring a claim for violation of separation of powers. The trial court resolved
Conduent’s partial summary judgment motion and the defendants’ motions to
dismiss in a single, narrative order in which the court assumed without
deciding that Conduent has standing and ruled that DOT had authority to
procure the back office services system contract under RSA chapter 237 and to
use the “best value” method under RSA 21-I:22-a and :22-b (Supp. 2017).
Conduent unsuccessfully moved for reconsideration, and this appeal followed.

I. Conduent’s Standing

Before addressing the merits of Conduent’s appellate arguments, we
consider Cubic’s assertion that Conduent has failed to establish standing to
raise them. See Duncan v. State, 166 N.H. 630, 640 (2014) (explaining that
“standing is a question of subject matter jurisdiction”).

“When a motion to dismiss challenges the [plaintiff’s] standing to sue, the
trial court must look beyond the [plaintiff’s] unsubstantiated allegations and
determine, based on the facts, whether the [plaintiff has] sufficiently
demonstrated [its] right to claim relief.” Johnson v. Town of Wolfeboro
Planning Bd., 157 N.H. 94, 96 (2008) (quotation and ellipsis omitted). Because
the underlying facts are not in dispute, we make the standing determination de
novo. See id.

“Standing under the New Hampshire Constitution requires parties to
have personal legal or equitable rights that are adverse to one another, with
regard to an actual, not hypothetical, dispute, which is capable of judicial

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redress.” State v. Actavis Pharma, 170 N.H. 211, 214 (2017) (quotation and
brackets omitted). “In evaluating whether a party has standing to sue, we
focus on whether the party suffered a legal injury against which the law was
designed to protect.” Id. at 215 (quotation omitted). “Neither an abstract
interest in ensuring that the State Constitution is observed nor an injury
indistinguishable from a generalized wrong allegedly suffered by the public at
large is sufficient to constitute a personal, concrete interest.” Id. (quotations
omitted). “Rather, the party must show that its own rights have been or will be
directly affected.” Id. (quotation omitted).

In arguing that Conduent lacks standing, Cubic relies primarily upon
Actavis. The issue in that case was whether the defendant pharmaceutical
companies had standing to claim that a contingency fee agreement between the
Office of the Attorney General (OAG) and outside counsel was ultra vires
because the OAG had failed to obtain legislative and executive approval before
retaining such counsel, as required by statute. Id. at 212-13. The defendants
argued that they had standing because the contingency fee agreement tainted
the OAG’s investigation of them and because they were the targets of
subpoenas issued in that investigation. Id. at 214. We rejected that argument,
holding that the defendants had failed to establish an actual dispute “[b]ecause
the alleged injury — an investigation allegedly inherently biased by [the outside
counsel’s] participation — cannot fairly be traced to the challenged violation —
the State’s failure to obtain legislative and executive approval before retaining
outside counsel on a contingency fee basis.” Id. at 216 (quotation omitted).

Cubic contends that, similar to the defendants in Actavis, Conduent
“cannot demonstrate that it sustained an injury traceable to the alleged
separation of powers violation.” Cubic asserts that “if [DOT] lacked the
authority [to] conduct the procurement, this would not result [in] a contract
award to Conduent,” observing that Conduent “did not seek this relief through
Count IX,” but rather sought only a declaration that the procurement was
unlawful and that the resulting contract with Cubic was void.

We conclude that Conduent has demonstrated the requisite causal
connection between its injury — not being selected as the successful bidder —
and the claimed violation — a procurement conducted by DOT using the best
value method to evaluate bids — sufficient to establish standing. The fact that
Conduent sought declaratory relief, rather than an injunction, is not
dispositive, particularly in light of the trial court’s determination that sovereign
immunity renders DOT immune from Conduent’s previously-pleaded claim for
injunctive relief.

II. Conduent’s Appeal Issues

We turn now to the merits of Conduent’s appeal. Although the issues in
this case were presented to the trial court in the context of a partial summary

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judgment motion and two motions to dismiss, the only issues on appeal
concern pure questions of law. Resolving the issues on appeal requires that we
engage in statutory interpretation. We review the trial court’s statutory
interpretation de novo. Polonsky v. Town of Bedford, 171 N.H. ___, ___ (decided
June 28, 2018) (slip op. at 4). In matters of statutory interpretation, we are the
final arbiter of the intent of the legislature as expressed in the words of the
statute considered as a whole. Id. We first look to the language of the statute
itself, and, if possible, construe that language according to its plain and
ordinary meaning. Id. We interpret legislative intent from the statute as
written and will not consider what the legislature might have said or add
language that the legislature did not see fit to include. Id. We construe all
parts of a statute together to effectuate its overall purpose and to avoid an
absurd or unjust result. Id. Moreover, we do not consider words and phrases
in isolation, but rather within the context of the statute as a whole. Id. This
enables us to better discern the legislature’s intent and to interpret statutory
language in light of the policy or purpose sought to be advanced by the
statutory scheme. Id. Absent an ambiguity, we will not look beyond the
language of the statute to discern legislative intent. Id. (slip op. at 4-5).

Conduent first argues that DOT lacked statutory authority to procure a
new back office services system contract. According to Conduent, pursuant to
RSA chapter 21-I, “[a]ll procurements” for executive branch administrative
agencies “must be conducted by [DAS] unless they are carried out by a
statutorily exempt agency or they fall within [DOT’s] authority to procure
construction contracts for highways, bridges, and the like.” Conduent
maintains that DOT is not a statutorily-exempt agency and that “the parties
. . . agree that the [back office services system] contract is not for such forms of
construction.” Thus, because RSA chapter 21-I “assigns to [DAS] the authority
to procure for [DOT] except in limited specified cases not present here, [DOT’s]
procurement of the E-ZPass [back office services system] and the resulting
contract with Cubic were ultra vires.”

We do not share Conduent’s interpretation of RSA chapter 21-I. Rather,
we agree with DOT that, pursuant to the plain meaning of the statute
governing DAS’s procurement authority, the legislature did not intend DAS’s
authority to be exclusive. DAS’s procurement authority is set forth in RSA 21-
I:11 (Supp. 2017). RSA 21-I:11, I(a)(1) provides, in pertinent part, that, “in
accordance with applicable law,” the division of procurement and support
services, which is part of DAS, “shall be responsible for,” among other things,
“[p]urchasing all materials, equipment, supplies, and services for all
departments and agencies of the state including contracting for the purchase
or rental of data processing equipment . . . , except as otherwise provided by
law.” (Emphases added.) Under the plain meaning of that provision, DAS’s
procurement authority is not absolute, but rather is qualified by other laws.
Although Conduent asserts that the only law to which DAS’s procurement
authority is subject are other provisions in RSA chapter 21-I, the plain

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language of RSA 21-I:11, I(a)(1) is not so limited. Thus, we reject Conduent’s
argument that DOT could not have had authority to procure the back office
services system contract because the legislature delegated that authority,
exclusively, to DAS.

Conduent next asserts that the trial court erred when it ruled that RSA
chapter 237 gave DOT the authority to procure the back office services system
contract. RSA chapter 237 grants DOT broad authority to improve, operate,
and maintain the “New Hampshire Turnpike System,” which comprises the toll
highways in the state. RSA 237:1, III (2012); see RSA 237:2, :5 (Supp. 2017).
In order to improve, operate, and maintain the turnpike system, DOT has the
authority to: (1) acquire land, see RSA 237:2, II, VII(a), :5, II(b); (2) engage in
construction projects, see RSA 237:2, II-c, II-d, II-e, IV(b), (d), (g), VII, : 5, II(e),
(f); and (3) commission or conduct studies, see RSA 237:2, II-a, VII(a), 5, II(k),
(l). RSA chapter 237 requires DOT to award construction contracts to “the
lowest responsible bidder.” RSA 237:14 (2012). Otherwise, RSA chapter 237
does not refer to how DOT may conduct competitive bidding.

Specifically included in DOT’s authority to operate and maintain the
turnpike system is the authority to “[e]nter into contractual relations on behalf
of the state,” RSA 237:5, II(i), and “perform all such acts as are necessary for
the public good,” RSA 237:5, II(j). As well, DOT may employ “such assistants,
engineers or consulting services” as may be necessary to conduct certain
studies and, upon legislative approval, “extend or add” to the turnpike system
based upon their recommendations. RSA 237:5, II(m); see RSA 237:5, II(k), (l).

DOT has the authority, with the approval of the Governor and Executive
Council, to “establish toll rates and other charges” for using the turnpike
system. RSA 237:9 (Supp. 2017); see RSA 237:24 (2012) (referring to tolls for
using the eastern New Hampshire turnpike), :40 (2012) (referring to tolls for the
use of the central New Hampshire turnpike). DOT is authorized to install
“intelligent transportation systems infrastructure” on a portion of the “F.E.
Everett Turnpike,” RSA 237:2, IV(i), and “[a]cquire and install new toll
collection equipment,” RSA 237:2, VIII.

As to the E-ZPass system, in particular, RSA chapter 237 expressly
authorizes DOT “to execute all documents and perform all other acts necessary
to enter into and carry out the provisions of a regional electronic toll collection
system agreement . . . in order to increase the efficiency of turnpike operation
and to improve traffic management in the state and region,” RSA 237:16-b
(2012). Additionally, DOT has the discretion to “approve the use of the E-ZPass
system for the payment of non-toll based financial obligations voluntarily
incurred by an account holder.” RSA 237:16-g (2012).

We conclude that the broad authority conferred upon DOT by RSA
chapter 237 to improve, operate, and maintain the turnpike system, in general,

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and to operate the E-ZPass system, in particular, includes the authority to
procure a new back office services system for the E-ZPass system. Procuring
such a system involves “[e]nter[ing] into contractual relations on behalf of the
state,” RSA 237:5, II(i); “perform[ing] all such acts as are necessary for the
public good,” RSA 237:5, II(j); “[a]cquir[ing] and install[ing] new toll collection
equipment,” RSA 237:2, VIII; and “perform[ing] all . . . acts necessary to . . .
carry out the provisions of a regional electronic toll collection system agreement
. . . in order to increase the efficiency of turnpike operation and to improve
traffic management in the state and region,” RSA 237:16-b.

Conduent next contends that the trial court erred when it determined
that RSA 21-I:22-a and :22-b allow DOT to use the best value method to
evaluate competing bids. Conduent asserts that, generally, state agencies
must award a state contract to the lowest bidder who meets the project’s
specifications. According to Conduent, the best value method allows a state
agency to evaluate competitive bids based upon subjective factors and to weigh
price less heavily than other factors. See Carl. J. Peckinpaugh & Joseph M.
Goldstein, Best Value Source Selection—Contracting for Value, or Unfettered
Agency Discretion?, 22 Pub. Cont. L. J. 275, 276 (1992) (explaining that, under
the best value method, “an agency reserves the right to trade off cost and
technical considerations in selecting the successful offeror, according to
specific evaluation criteria stated in the solicitation” (footnote omitted)).
Conduent argues that neither RSA 21-I:22-a nor :22-b permit a state agency to
do this. Thus, Conduent maintains that DOT had no authority to use the best
value method to evaluate the competitive bids in this case.

Conduent’s interpretation of RSA 21-I:22-a and :22-b is flawed. Those
statutes allow the use of subjective criteria and do not require price to be given
more weight than any other valid criterion. RSA 21-I:22-a pertains to “every
request for purchases . . . , request for quotes . . . or other procurement which
is greater than $35,000 that is undertaken by the state or by a state agency.”
It provides that every such request must “contain within the body of the
document the objective criteria by which each submission will be reviewed, if
there are particular requirements that will receive more weight in the review of
the submission, and the standards upon which any award will be based.” RSA
21-I:22-a. Although RSA 21-I:22-a refers to “objective criteria,” it does not
preclude the use of subjective factors. Moreover, RSA 21-I:22-a specifically
allows an agency, such as DOT, to weigh criteria and does not require that
price be weighed more heavily than any other factor.

RSA 21-I:22-b provides that “awards which are made by the state or by a
state agency . . . shall not be made on criteria that are unknown to the parties
submitting bids or proposals.” It also provides that “[n]othing in this
subdivision shall prevent the state or a state agency . . . from making
judgments on the capabilities of vendors to complete the work requested if this
option is clearly stated in the body of the document and if used as the reason

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for the award, is so stated.” RSA 21-I:22-b. Thus, RSA 22-I:22-b expressly
allows a state agency, such as DOT, to make “judgments” on the “capabilities
of vendors” to complete the requested work, which necessarily entails making
subjective determinations. Together, RSA 21-I:22-a and :22-b allow a state
agency, such as DOT, to use its subjective judgment and to weigh other factors
more heavily than price.2

Conduent next argues that because DOT acted without statutory
authority, the contract with Cubic is ultra vires and violates the separation of
powers doctrine. See N.H. CONST. pt. I, art. 37. We necessarily reject this
argument in light of our determination that DOT had the statutory authority
not only to procure the back office services system contract, but also to use the
best value method to evaluate the competing bids.

For all of the above reasons, we conclude that the trial court correctly
determined that DOT had the authority to procure the back office systems
contract by using the best value method for evaluating competing bids.

Affirmed.

LYNN, C.J., and BASSETT, HANTZ MARCONI, and DONOVAN, JJ.,
concurred.

2 Although RSA 228:4 (Supp. 2017) requires DOT to select the lowest responsible bidder — in
other words, to weigh price more heavily than any other factor — for “state transportation
project[s],” the trial court ruled that this statute does not apply to the procurement at issue and
its ruling has not been appealed. See RSA 228:1, VII (Supp. 2017) (defining a “project” as “any
construction, reconstruction, alteration, or maintenance of any highway, bridge, building, plant,
fixture, facility or other item directly related to transportation”).

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