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Contractors Must Follow Correct Administrative Procedures to Pursue Lawsuits Against Government Boards



By Doug Hanson

In 2008, the contractor submitted the lowest bid on an MDHA project and was awarded the contract. Again, in 2010, the contractor submitted another bid for an MDHA contract, but he, ultimately, was not awarded the contract. Approximately one year later, in August of 2011, the contractor filed a lawsuit against MDHA, alleging the agency had violated its policy of awarding contracts to the lowest qualified bidders.  Specifically, the contractor alleged that the MDHA had awarded numerous contracts to higher bidders who were less qualified than him. The contractor sought an award of lost income and an order directing the agency to follow proper bidding procedures and the applicable laws. The contractor argued MDHA’s bidding policies are clearly set forth in the agency’s handbook, and it provides that the agency is required to solicit price quotations from three (3) offerors for contracts valued between $2,000 and $100,000.  The contractor further pointed out the MDHA’s handbook specifically states “awards shall be made to the offeror providing the lowest acceptable quotation unless justified in writing.” He alleged that he squarely met those qualifications and the MDHA never justified any deviation in writing.

Trial Court

The MDHA filed a motion to dismiss on procedural grounds, arguing that the sole manner of challenging the bid process was through a writ of certiorari filed in chancery court within 60 days of the award being contested. The MDHA argued that the contractor’s suit was filed well outside of the 60-day requirement, as his suit was filed approximately one year later. In response, the contractor argued that the writ of certiorari was not intended to be the sole remedy at law.  The trial court disagreed with contractor and dismissed the action. The contractor appealed.

Appellate Court affirmed: Contractor failed to follow proper procedures
The Tennessee Court of Appeals examined the proper procedures for the challenge to MDHA’s actions.  The Court focused on the specific governing statutory language that “[a]nyone aggrieved by any final order or judgment of any board or commission functioning under the laws of this state may have the order or judgment reviewed by the court, where not specifically provided, in the manner provided by this chapter.”  The Court of Appeals noted that a party “shall, within (60) days of the order or judgment, file a petition of certiorari in the chancery court . . .”

The Court of Appeals interpreted the statute as providing an administrative prerequisite to filing a lawsuit.  The Court noted that MDHA’s procedure provides for potential resolution of a grievance at the administrative level prior to resorting to the courts.  The MDHA handbook contained a section addressing the procedure for protesting MDHA’s decisions: “…any protest against an award of solicitation must be received from an offeror within fifteen (15) day calendar days of award…”  The Court of Appeals found the contractor did not follow the handbook’s procedures, did not pursue available administrative remedies, and did not comply with the 60-day requirement for filing a writ of certiorari.  Therefore, the Court of Appeals concluded the trial court correctly ruled that it lacked jurisdiction as a result of contractor’s failure to adhere to the handbook and pursue administrative remedies.

Practice points
This case highlights the need for contractors to promptly pursue grievances against government boards and commissions under the applicable agency procedures in order to preserve the right to appeal the matter to chancery court in Tennessee.

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