Today’s post is by Doug Amen, one of our new associates at Lamson, Dugan and Murray LLP.
With the competition for jobs today, the fight for lucrative government construction contracts is tougher than ever. Often contractors find themselves on the outside looking in and want to do something about it. Unfortunately, for anyone attempting to challenge a construction contract bid the cards are stacked against them.
That’s because in order to challenge an agency’s award of a project, a challenger must show that the agency’s decision was “arbitrary and capricious.” In Nebraska this has been defined as: “…action taken, in disregard of the facts or circumstances of the case, without some basis which would lead a reasonable and honest person to the same conclusion.” Wagner v. City of Omaha, 236 Neb. 843 (1991). In other words a court will not substitute its judgment for that of an administrative agency. As long as a government agency follows their own rules, their decision will not be disturbed by a court; even if the court disagrees with the decision.
This also means that a court will give administrative agencies wide latitude in interpreting their own rules. In a recent Florida decision, a second-place finisher in a bid contest, challenged an agency’s decision. The issue was whether the Florida agency followed its own statutory requirements for awarding the bid. The challenger presented a “hyper-technical argument”, arguing for a very literal reading of the agency’s rules. The court rejected this approach and reasoned that courts should not construe an agency’s rules too narrowly. But perhaps more importantly the court noted “courts [are encouraged] to overlook noncompliance with technical bidding requirements where there is otherwise substantial statutory compliance.” Here is a copy of the Florida case.
What does this mean for someone challenging a construction bid? As long as an administrative agency follows their own rules, a court will not second guess them and the challenger is out of luck.