Pataula Elec. Membership Corp. v. Whitworth, 91-8098

• Citation: 951 F.2d 1238
• Decision Date: 29 January 1992
• Docket Number: No. 91-8098,91-8098
• Parties: PATAULA ELECTRIC MEMBERSHIP CORPORATION, Plaintiff-Appellant, v. Bobby WHITWORTH, Individually and in his official capacity as Department of Corrections Commissioner, Clyde Stovall, Individually and in his official capacity as Assistant Commissioner of Department of Corrections, David C. Evans, Individually, Georgia Power Company, Defendants-Appellees. FLINT ELECTRIC MEMBERSHIP CORPORATION, Plaintiff-Appellant, v. Bobby WHITWORTH, Individually and in his official capacity as Department of Corrections Commissioner, Clyde Stovall, Individually and in his official capacity as Assistant Commissioner of Department of Corrections, David C. Evans, Individually, Georgia Power Company, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1238

951 F.2d 1238

60 USLW 2488

PATAULA ELECTRIC MEMBERSHIP CORPORATION, Plaintiff-Appellant, v. Bobby WHITWORTH, Individually and in his official capacity

as Department of Corrections Commissioner, Clyde Stovall,

Individually and in his official capacity as Assistant

Commissioner of Department of Corrections, David C. Evans,

Individually, Georgia Power Company, Defendants-Appellees.

FLINT ELECTRIC MEMBERSHIP CORPORATION, Plaintiff-Appellant, v. Bobby WHITWORTH, Individually and in his official capacity

as Department of Corrections Commissioner, Clyde Stovall,

Individually and in his official capacity as Assistant

Commissioner of Department of Corrections, David C. Evans,

Individually, Georgia Power Company, Defendants-Appellees.

No. 91-8098.

United States Court of Appeals,

Eleventh Circuit.

Jan. 29, 1992.

Rehearing Denied March 31, 1992.

James Allen Orr, Kathy Renee Bess, Paul, Hastings, Janofsky & Walker, Atlanta, Ga., James Elwood Friese, Cuthbert, Ga., for plaintiff-appellant.

William F. Amideo, Asst. Atty. Gen., Atlanta, Ga., Daryl Alan Robinson, Neal B. Childers, for defendants-appellees.

Robert P. Edwards, Jr., Troutman, Sanders, Lockerman, & Ashmore, Susan P Wilkerson, Carlton E. Johnson, Atlanta, Ga., for Georgia Power Co.

Appeal from the United States District Court for the Northern District of Georgia.

Before JOHNSON ^*, CLARK ^*, and PECK ^**, Senior Circuit Judges.

JOHNSON, Senior Circuit Judge:

This case arises on appeal following the district court's dismissal of plaintiffs' complaints for failure to demonstrate a constitutionally protected property interest in the award of utility contracts. For the reasons that follow, we reverse the order of dismissal.

I. STATEMENT OF THE CASE

In April of 1989, Pataula Electric Membership Corporation (Pataula EMC) and Georgia Power Company (Georgia Power) submitted bids to the Department of Corrections (DOC) for the provision of electric service to a new prison in Calhoun County, Georgia. A consultant for the DOC analyzed the proposals and recommended Pataula EMC on the basis of probable savings in cost.

This same consultant assessed bids from Flint Electric Membership Corporation (Flint EMC) and Georgia Power for service to a Macon County prison in 1990. The consultant recommended Flint EMC on the basis of its projected lower costs. Nonetheless, the DOC chose Georgia Power to service both of the prisons.

In July of 1990, Pataula EMC and Flint EMC (plaintiffs) filed separate suits challenging the DOC's refusal to award the contracts to the "lowest responsible bidders." On November 21, 1990, these cases were consolidated and dismissed for failure to state a claim upon which relief can be granted. See Fed.R.Civ.P. 12(b)(6). The district court held that the plaintiffs could not demonstrate that they were entitled to the service contracts, and thus that they had no property interest protected under section 1983 of title 42.

This Court reviews de novo the district court's dismissal of plaintiffs' complaints for failure to state a claim. See Thomas v. Evans, 880 F.2d 1235, 1239 (11th Cir.1989). Dismissal of a complaint for failure to state a claim is error " 'unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.' " Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90 (1974) (quoting Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-102, 2 L.Ed.2d 80 (1957); Powell v. United States, 945 F.2d 374, 375-76 (11th Cir.1991)).

II. DISCUSSION

Plaintiffs argue on appeal that under Georgia law they possess a constitutionally protected property interest in the contracts. They also contend that the DOC defendants are not entitled to qualified immunity.

A. Property Interest in the Contracts

Defendants advance three arguments for plaintiffs' lack of a property interest in the contracts: (1) Georgia statutes and regulations do not require electric utility contracts to be awarded to the lowest responsible bidder, (2) Georgia law expresses no intent to grant an entitlement to the lowest responsible bidder, and (3) applicable statutes and regulations grant procurers discretion sufficient to prevent bidders from forming a property interest.

1. Lowest responsible bidder requirement

One of the express purposes of Georgia's State Purchasing Act (Act) is to "ensure openness and accessibility by all qualified vendors to the state's purchasing processes so as to achieve the lowest possible costs to the state through effective competition among such vendors." Ga.Code Ann. § 50-5-50(3) (Michie 1990). The Act designates the Department of Administrative Services (DOAS) as the state agency that must oversee competitive bidding for purchases for the state and its agencies. Id. at § 50-5-51(1). The Act requires the DOAS to use competitive bidding to purchase or acquire "all supplies, materials, services other than professional and personal employment services" for use by the state or its agencies. Id. The only exemptions from this competitive bidding requirement are express exemptions for professional and personal employment services, id. at § 50-5-51(1), and purchases below a stated dollar amount, id. at § 50-5-69.

Defendants contend that section 50-5-51(3) separately provides the DOAS with the authority to contract for services or to delegate contracting of services including electric utilities. ¹ Because this provision does not include a competitive bidding requirement, defendants argue that electric utility service is impliedly exempt from the bidding requirement stated in section 50-5-51(1). Section 50-5-51(1), however, simply lists all items subject to competitive bidding, whereas section 50-5-51(3) lists items which the DOAS may contract for directly on behalf of the state or its agencies, or may authorize state agencies to contract for independently. ²

The Georgia Vendor Manual (Manual), promulgated by the DOAS to interpret and implement the terms and provisions of the State Purchasing Act, provides further support for this construction: "Contracts or open market purchases will in all cases be awarded to the lowest responsible bidder." Ga. Dept. of Admin. Services, Ga. Vendor Manual, art. VIII, § 3, at 23; see also id. at art. II, § 4, p. 5 (all procurements by state agencies under Purchasing Act "will be based on competitive bidding whenever possible."). These broad bidding requirements encompass electric utility contracts.

Defendants argue that the Agency Purchasing Manual (APM), which also reviews procedure for state purchases, nonetheless relieves state agencies from using competitive bidding for utility contracts. See Ga. Dept. of Admin. Services, Agency Purchasing Manual (revised Oct. 6, 1987). In the APM, utilities are listed as items subject to "audited authority," thereby permitting an agency procurement officer, instead of the DOAS, to purchase utilities for a specific agency. Id. at 7, 9, 74. Utilities are among many items marked with a "#" symbol, which denotes that "competitive bids are not expected or may be very difficult to obtain due to the nature of the item, purchasing circumstances, market situation or other restrictive conditions." Id. at 69. Although the Manual explicitly assigns the competitive bidding requirement to purchases made according to audited authority, see Ga. Dept. of Admin. Services, Ga. Vendor Manual, art. IV, § 3, at 10, defendants contend, and the district court concluded, that the "#" symbol exempts selected items from competitive bidding.

This interpretation of the "#" symbol is deeply flawed. The APM simply recognizes the fact that competitive bidding may not be possible for the designated items in certain circumstances. ³ The APM does not attempt to exempt these items from competitive bidding when such bidding is possible. Indeed, it cannot: neither the DOAS nor its commissioner is empowered by any statutory section to determine what items will be exempt from competitive bidding requirements; therefore, neither may promulgate rules or regulations to accomplish this result. See Ga. Code Ann. §§ 50-5-54, 50-5-55 (Michie 1990). Where, as in this case, there is no impediment to competitive bidding, the State Purchasing Act and relevant rules mandate competitive bidding. See id. at § 50-5-51(1); Ga. Dept. of Admin. Services, Ga. Vendor Manual, art. II, § 4, at 5 (competitive bidding required "whenever possible"); Ga. Dept. of Admin. Services, Agency Purchasing Manual (revised Oct. 6, 1987), at 117, 118 (agency procurement officer required to obtain competitive prices "whenever possible" for service/maintenance contracts subject to audited authority).

2. Entitlement for lowest responsible bidder

Defendants argue that although utility contracts may be subject to competitive bidding, Georgia does not recognize that a lowest responsible bidder may have a property interest in the award of a contract. ⁴ We disagree.

A disappointed bidder may have a constitutionally protected property interest in the award of a contract under 42 U.S.C.A. § 1983 (1981) if that interest is acknowledged by "existing rules or understandings that stem from an independent source such as state law." Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972); see also Metric Constructors, Inc. v. Gwinnett County, Ga., 729 F.Supp. 101 (N.D.Ga.1990). The directive contained in the Manual represents a rule or understanding sufficient to create an entitlement: "[c]ontracts or open-market purchases will in all cases be awarded to the lowest responsible bidder." Ga. Dept. of Admin. Services, Vendor Manual, art. VIII, § 3, at 23; see also, e.g., Hilton Constr. Co. v. Rockdale County Bd. of Educ., 245 Ga. 533, 266 S.E.2d 157, 161 (1980) (lowest responsible bidder's property interest was defined by the competitive bidding procedures promulgated by the State Board of Education).

3. Discretion of Georgia state procurers

Defen...