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Sentinel Offender Services, LLC v. G4S Secure Solutions (USA) Inc.

United States District Court, C.D. California

April 26, 2017

SENTINEL OFFENDER SERVICES, LLC, a Delaware limited liability company, Plaintiff,
G4S SECURE SOLUTIONS (USA) INC., a Florida corporation, Defendant.




         Following a three-day bench trial in this matter, the Court issues the following findings of fact and conclusions of law pursuant to Federal Rule of Civil Procedure 52. To the extent that any findings of fact are included in the Conclusions of Law section, they shall be deemed findings of fact, and to the extent that any conclusions of law are included in the Findings of Fact section, they shall be deemed conclusions of law.


         A. Background

         1. Plaintiff Sentinel Offender Services, LLC (“Sentinel”) is a company that provides offender management products and services to the corrections and judicial markets. (Tr. 29:19-21.)

         2. Sentinel is a limited liability company organized under the laws of Delaware with its principal place of business in Irvine, California. (Final Pretrial Conf. Order at 1, Doc. 171.)

         3. Bob Contestabile (“Contestabile”) is the founder and CEO of Sentinel. (Tr. 29:17.)

         4. Darryl Martin (“Martin”) is currently COO of Sentinel. (Tr. 231:18.)

         5. Leo Carson (“Carson”) is currently the VP of Strategic Sales with Sentinel. (Tr. 149:19.)

         6. Defendant G4S Secure Solutions (USA) Inc. (“G4S”) is a security service company that was incorporated, and is headquartered, in Florida. (Final Pretrial Conf. Order, Stipulated Facts ¶ 1.)

         7. Susanne Jorgensen (“Jorgensen”) is a VP of G4S and CFO for the North America Region. (Tr. 377:23, 378:2.)

         8. Prior to April 27, 2012, G4S had been the parent company of G4S Justice Services LLC (“Justice”), a limited liability company that provided electronic monitoring services in the United States. (Final Pretrial Conf. Order, Stipulated Facts ¶ 2.)

         9. The management team of Justice prior to April 27, 2012, consisted of Blake Beach (“Beach”) as CEO, Martin as President, Mike Dean (“Dean”) as VP of Sales, Carson as VP of Strategic Sales, Lisa Dunlin, and Peter Loughlin as CFO. (Tr. 150:3-4, 233: 2, 233:11, 273:11-13, 273:22-24, 274:1-2.)

         10. On April 27, 2012, Justice was sold to Sentinel. (Tr. 32:11-14.)

         B. North Carolina Department of Corrections Request for Proposal No. 4201118

         i. Background

         11. In 2005, Justice was awarded a contract from the North Carolina Department of Corrections (the “NCDOC”). (Tr. 155:13-15.)

         12. In 2008, the NCDOC issued a Request for Proposal (“RFP”) that resulted in a second contract between Justice and NCDOC. (Tr. 155:16-18, 206:20-207:2.)

         13. The second contract was to end on March 31, 2012, with the opportunity to have two one-year renewals. (Tr. 155:15-25; see also Final Pretrial Conf. Order, Stipulated Facts ¶ 9.)

         14. On August 16, 2011, NCDOC issued another RFP (RFP No. 4201118) seeking bids from vendors to provide electronic monitoring services for four different functional areas pursuant to a new one-year contract, with the option for the NCDOC to extend the contract(s) for two additional one year periods. (Final Pretrial Conf. Order, Stipulated Facts ¶ 8, Ex. 1-4.)

         15. Upon receiving the 2011 RFP, officers and management of Justice, including Martin, Carson, and Dean, reviewed the RFP's technical and administrative requirements. (Tr. 156:19-157:1, 235:13-24, 236:19-21.)

         16. Martin, Dean, and Carson together worked as a team on the proposal in response to the NCDOC's RFP. (Tr. 234:3-7.)

         17. Carson reported directly to Dean, and both Carson and Dean reported to Martin. (Tr. 156:19-157:1.)

         18. Dean was responsible for all of Justice's business development efforts and the management of procurement for government contracts. Carson was a member of Dean's sales team. (Tr. 233:10-20.)

         19. Martin reported directly to Beach, and "would have communications upward to [G4S] Secure Solution[s]." (Tr. 226:2-7.)

         ii. 2011 RFP Requirements

         20. The contract to be awarded under the 2011 RFP had substantially different requirements and terms than the incumbent contract that had been awarded to Justice pursuant to the 2008 RFP. (Tr. 351:1-23.)

         21. Section III(A)(2)(d) of the 2011 RFP set forth technical requirements for all functional areas entitled “Offender Monitoring System Technical Specifications” and included the following requirements:

x. It is mandatory that all software be compatible with Windows XP Professional, and at a future date as determined by DOC, Windows 7. All PC software shall function on a Windows XP SP3 Desktop Operating System and Microsoft Internet Explorer Version 7.

(Ex. 1-8.)

         22. Section III(B)(3)(d) of the 2011 RFP entitled “GPS System Specifications” set forth certain requirements and stated in pertinent part:

         d. The system shall provide the following, including but not limited to:

i. Establish inclusion and exclusion zones to include exclusion zones around all elementary and secondary schools in North Carolina (G.S. 14-208.18 (g1))

(Ex. 1-22.)

         23. Section III(B)(7) of the 2011 RFP entitled “General Equipment Requirements” set forth additional requirements and stated in pertinent part:

b. The Offeror shall provide all equipment that meets the highest level of ruggedness and durability available, in accordance with current industry standards for the following features as applicable: . . . minimum internal operating battery life up to forty-eight (48) hours with a maximum recharge time of four (4) hours per day.

(Ex. 1-23.)

         24. Section V(B) of the 2011 RFP entitled “THE PROCUREMENT PROCESS” stated:

6. State Agency employees will evaluate all proposals. All proposals will be initially classified as being responsive or non-responsive. If a proposal is found non-responsive, it will not be considered further. All responsive proposals will be evaluated based on stated evaluation criteria. Any references in an answer to another location in the RFP materials or Proposal shall have specific page numbers and sections stated in the reference. To be eligible for consideration, a Offeror must meet the intent of all requirements. Compliance with the intent of all requirements will be determined by the State. Responses that do not meet the full intent of functional requirements listed in this RFP may be subject to point reductions during the evaluation process or may be deemed non-responsive. Further a serious deficiency in the response to any one factor may be grounds for rejection regardless of overall score. Offerors are advised that DOC is not obligated to ask for, or accept after the closing date for receipt of proposal, data that is essential for a complete and thorough evaluation of the proposal.

(Ex. 1-30.)

         25. Martin, Dean, and Carson specifically reviewed the RFP's language regarding non-responsive proposals in Section V(B). (Tr. 235:21-236:11.)

         iii. Communications Between Justice and NCDOC Regarding 2011 RFP

         26. As early as August 2011, Martin, Carson and Dean became concerned that Justice might not be able to meet the technical specifications of the RFP as they were depending on their supplier, 3M/Elmotech, for equipment and software. (Tr. 157:2-8, 237:17-238:4.)

         27. Carson, after discussing with Martin and Dean, forwarded the entire RFP to 3M/Elmotech and sought their opinion on whether their equipment and software would meet the RFP's requirements. (Tr. 157:9-20, 245:16-23.)

         28. 3M/Elmotech's Vice President of Technical Services and Information Technology, Ronen Shraga, after reviewing the technical requirements of the RFP, "identified a number of areas that would be challenges to 3M being able to comply." (Tr. 157:21-158:8.)

         29. Carson then spoke with the NCDOC at a mandatory pre-bid meeting to seek relaxation of the technical specifications and submitted questions regarding the flexibility of those technical requirements. (Tr. 158:15-161:12, 246:6-10.)

         30. Carson followed up his verbal questions with written questions to the NCDOC. (Tr. 159:16-23.)

         31. Carson wrote: "As an RFP, with regard to use of the words 'shall' and 'must, ' how will [the NCDOC] treat vendor responses to such items that do not address such requirements as worded and/or offer advanced and/or alternative methodologies for accomplishing the same overall requirements?" (Ex. 4-1; Tr. 160:1-9.)

         32. On October 4, 2011, the NCDOC issued an Important Bid Addendum to RFP No. 4201118 (“Bid Addendum”). The Addendum stated, among other things, that its current contract with Justice would end on March 31, 2012. If all offerors were rejected, the State would cancel and negotiate the contract, and “the current contract would only be extended until a new one could be issued.” (Final Pretrial Conf. Order, Stipulated Facts ¶ 9; Ex. 4.)

         33. The NCDOC responded to Carson's question by repeating verbatim the same language from the 2011 RFP regarding its flexibility to determine compliance with the technical specifications. (Compare Ex. 1-30 at § V(B)(6) with Ex. 4-1 at ¶ A.1.)

         34. On January 18, 2012, the NCDOC sent Justice a letter requesting clarification of its bid as to nineteen separate issues and requested that Justice provide a response by February 1, 2012. (Ex. 7.)

         35. Question Nos. 3, 4, and 14 by the NCDOC asked whether Justice's proposed offender management software was compatible with the NCDOC's current environment which used Internet Explorer Version 7. (Ex. 7-1 to 7-2.)

         36. Question No. 16 by the NCDOC asked whether Justice's system would allow exclusion zones around all primary and secondary schools in North Carolina. (Ex. 7-2.)

         37. Question No. 17 by the NCDOC asked whether the battery life of Justice's proposed equipment was at least 48 hours with a 4 hour charge time. (Ex. 7-2.)

         38. Although the NCDOC letter inquired into nineteen separate issues, on January 27, 2012, Carson sent an e-mail to Melissa Keefe (“Keefe”) of 3M/Elmotech asking for her assistance in responding to NCDOC's clarification questions regarding just three of those nineteen issues: Internet Explorer 7, exclusion zones around schools, and 48 hour battery life. (Ex. 8-6 to 8-7.)

         39. The razor-sharp focus on those three issues shows that Justice knew exactly which issues were potentially the most problematic in its bid for the NCDOC contract.

         40. Based on 3M's responses to Justice, Justice was concerned that it faced “exposure for potential non-compliance” on the clarification items pertaining to Internet Explorer 7, exclusion zones around schools, and 48 hour battery life. (Ex. 8-1.)

         41. On January 31, 2012, Justice submitted its response to the NCDOC's January 18, 2012 letter ...

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