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Sunday, May 16, 2010

Holding procurement officials personally responsible

Court says Fairbanks businessmen can sue in bidding dispute
Two Fairbanks businessmen won the right to sue four state employees who botched the bidding process on a $60 million state contract — reportedly one of the biggest state contracts for lease space in Fairbanks’ history.

The Alaska Supreme Court on Friday unanimously decided that state procurement officials have only partial immunity from lawsuits. The state had sought absolute immunity. The decision allows Bachner’s and Bowers’ case against the workers to proceed in Fairbanks Superior Court.

The state high court found that “this is not a situation where unfettered discretion is crucial to the best interests of the public,” the opinion stated.

The decision essentially means that if a procurement official acts maliciously, the state employee can be held accountable. But Chief Justice Walter L. Carpeneti, who authored the opinion, wrote that partial or qualified immunity still provides officials with “substantial protection from liability.”

The chief justice wrote that absolute immunity generally is reserved for high-level government officials.

Justice Dana Fabe agreed with the court’s opinion but wrote a separate, concurring opinion.

Fabe pointed out that a provision in the procurement code known as the “exclusive remedy provision” might bar bidders from suing procurement officials for carrying out their duties even where bad faith is alleged.

Lawyers for the state of Alaska had argued that anything less than absolute immunity would encourage losing bidders to sue procurement officials.

“Procurement officials should not be allowed to substitute their own personal criteria for the published criteria,” said attorney Michael Kramer, who argued on behalf of the businessmen. “The ultimate goal in this case is that there be accountability and fairness in the procurement process. Those who want to do business with the state ought to be able to rely on a consistent set of rules that applies to everyone equally.”

An administrative hearing officer agreed, found “grave deficiencies” in the procurement process and awarded Bowers and Bachner bid preparation costs.

They appealed, asking for the bids to be re-scored or re-opened.

The request to re-do the bidding was denied, but a Fairbanks Superior Court judge decided the state procurement officials only have partial immunity from lawsuits and certain allegations, if true, “would fall outside the scope of that immunity.”

The case, JAMES WEED et al. vs BACHNER COMPANY INC., and BOWERS INVESTMENT COMPANY, Alaska Supreme Court Opinion No. 6475 - May 14, 2010, can be read here. The Introduction to the Opinion states:
The sole question in this case is whether state procurement officials are entitled to absolute immunity or qualified immunity for common law claims arising from the bid evaluation process. In this case, a disappointed bidder sued the procurement officials individually after the administrative hearing officer in the bid protest proceeding found serious improprieties in the bid evaluation process. The officials moved for dismissal on the ground that they were absolutely immune. The superior court held that they were protected instead by only qualified immunity, which applies only to actions taken in good faith. Because the complaint alleged bad faith, the court further held that most of the causes of action could go forward. We accepted the officials’ petition for review. Applying our three-factor test, we conclude that the officials are entitled only to qualified immunity, and therefore affirm the decision of the superior court.

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