Scientific Games Int'l, Inc. v. Commonwealth

• Decision Date: 25 March 2013
• Citation: 66 A.3d 740
• Parties: SCIENTIFIC GAMES INTERNATIONAL, INC. v. COMMONWEALTH of Pennsylvania, Department of Revenue, Commonwealth of Pennsylvania, Department of General Services and GTECH Corporation. Appeal of GTECH Corporation. Scientific Games International, Inc. v. Commonwealth of Pennsylvania, Department of Revenue, Commonwealth of Pennsylvania, Department of General Services and GTECH Corporation. Appeal of Commonwealth of Pennsylvania, Department of Revenue, Commonwealth of Pennsylvania, Department of General Services.
• Court: Pennsylvania Supreme Court

66 A.3d 740

SCIENTIFIC GAMES INTERNATIONAL, INC.

v.COMMONWEALTH of Pennsylvania, Department of Revenue, Commonwealth of Pennsylvania, Department of General Services and GTECH Corporation.

Appeal of GTECH Corporation.

Scientific Games International, Inc.

v.Commonwealth of Pennsylvania, Department of Revenue, Commonwealth of Pennsylvania, Department of General Services and GTECH Corporation.

Appeal of Commonwealth of Pennsylvania, Department of Revenue, Commonwealth of Pennsylvania, Department of General Services.

Supreme Court of Pennsylvania.

Argued Oct. 16, 2012.

Decided March 25, 2013.

Sally A. Treweek, Harrisburg, for Board of Claims, Amicus Curiae.

Stephen A. Aichele, Michael Clark Barrett, Harrisburg, Michael F. Eichert Jr., Philadelphia, David Robert Kraus, Harrisburg, for Appellant.

Jan L. Budman II, Holly Lechliter Cline, Jayson R. Wolfgang, Buchanan Ingersoll & Rooney, P.C., Harrisburg, for GTECH Corporation, Appellee.

Stephen A. Cozen, Robert William Hayes, Abby L. Sacunas, Cozen O'Connor, Philadelphia, for Scientific Games International, Inc., Appellee.

BEFORE: CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, ORIE MELVIN, JJ.

OPINION

Justice SAYLOR.

In this interlocutory appeal by permission, we consider the contours of the Board of Claims' exclusive jurisdiction pertaining to procurement litigation against Commonwealth agencies. More specifically, we are asked to determine whether such jurisdiction forecloses original jurisdiction proceedings in the Commonwealth Court, challenging a Commonwealth agency's cancellation of a request for proposals and seeking declaratory and injunctive relief.

I. Background

A. Relevant Statutory Provisions

The procurement of supplies, services, and construction for the public in Pennsylvania is governed by the Commonwealth Procurement Code.¹ Under this statutory regime, the Department of General Services (“DGS”) is empowered to act as a purchasing agent for Commonwealth agencies. See62 Pa.C.S. § 321(1). One method which may be available for procurement, under certain conditions, is the competitive sealed proposal process. See id.§ 513. See generally Pa. Associated Builders & Contractors, Inc. v. DGS, 593 Pa. 580, 584–87, 932 A.2d 1271, 1274–76 (2007) (discussing such process and its interrelationship with the default, competitive sealed bidding process).

The Procurement Code, as substantially rewritten via 2002 amendments,² also contains a scheme for resolution of disputes arising in connection with the solicitation or award of a contract, commencing with a pre-litigation process encompassing a protest procedure administered by the purchasing agency and a right of appeal to the Commonwealth Court. See62 Pa.C.S. § 1711.1. For those attaining the status of contractor, the Procurement Code establishes a claim procedure before the contracting officer, subject to review in the independent administrative board known as the Board of Claims. See id. § 1712.1. Significantly, as well, the Procurement Code “reaffirms sovereign immunity,” prescribing, with limited exceptions, that “no provision of this part shall constitute a waiver of sovereign immunity[.]” Id. § 1702(a); see also1 Pa.C.S. § 2310 (“[T]he Commonwealth ... shall continue to enjoy sovereign immunity ... and remain immune from suit except as the General Assembly shall specifically waive the immunity.” (emphasis added)).³ The only exceptions in the Procurement Code pertainto the protest and claim procedures described above, and to proceedings in the Board of Claims “to the extent set forth in” the chapter pertaining to legal and contractual remedies. 62 Pa.C.S. § 1702(b).

Also of special relevance here, Section 521 of the Procurement Code allows for cancellation of solicitations by a Commonwealth agency or purchasing agent, as follows:

An invitation for bids, a request for proposals or other solicitation may be canceled, or any or all bids or proposals may be rejected, at any time prior to the time a contract is executed by all parties when it is in the best interests of the Commonwealth. Bids may be rejected in part when specified in the solicitation. The reasons for the cancellation or rejection shall be made part of the contract file.

62 Pa.C.S. § 521 (emphasis added). Moreover, the right of protest is expressly cabined so as to exclude cancellations per Section 521. See id. § 1711.1(a) (establishing a right of protest for bidders, offerors, and certain others aggrieved in connection with the solicitation or award of a contract, “except as provided in section 521 (relating to cancellation of invitations for bids or requests for proposals)”).

The 2002 amendments to the Procurement Code also reconstituted the Board of Claims,⁴see62 Pa.C.S. § 1721(a), and reposited “exclusive jurisdiction” in that tribunal to arbitrate claims arising from contracts entered into by Commonwealth agencies in accordance with the Procurement Code, id. § 1724(a)(1). Of particular significance to the present appeal, the pertinent section also contains the following proviso:

(d) Nonmonetary relief.—Nothing in this section shall preclude a party from seeking nonmonetary relief in another forum as provided by law.

Id. § 1724(d).

B. Factual and Procedural Background

In 2010, DGS, on behalf of the Department of Revenue, issued a request for proposals for design, development, implementation, and maintenance of a computer control system to monitor slot machines at gaming venues across the Commonwealth. See62 Pa.C.S. § 513(b).⁵ The plan was to replace an existing system which had been provided by Intervenor/Appellant, GTECH Corporation (with the Department of Revenue and DGS, collectively, “Appellants”). GTECH and Appellee, Scientific Games International, Inc. (“SGI”), each submitted proposals, and DGS selected SGI for the award and proceeded with contract negotiations. See id. § 513(g).

Several months later, an agreement on contract terms was reached. Draft contract documents were exchanged between DGS and SGI, and DGS's Office of Chief Counsel transmitted a final draft to SGI. The signature document (denominated the “cover contract”) contained execution signature lines for SGI and the Secretary or designee of the Department of Revenue; a general-approval signature line for the Commonwealth Comptroller; and signature lines to reflect the approval as to the form and legality of the documents of the Offices of Chief Counsel, General Counsel, and Attorney General. Above each of the lines for Commonwealth-agency signatures was the notation: “[Signature Affixed Electronically],” and corresponding date lines were not completed. ⁶ Complaint in Equity and Action for Declaratory Relief (“Complaint”), Ex. A. An electronic cover memorandum indicated as follows:

Please confirm that all of the documents are accurate. If so, please sign the Cover Contract and mail the original to me and email a scanned version for us to enter into our contracting system to route for Commonwealth signatures. It will likely take at least 60 days [to] get all of the required Commonwealth signatures.

Petition for Preliminary Injunction, Ex. D (emphasis added). SGI returned a signature page executed by its president, along with the following observation: “As you confirmed, the Commonwealth will affix the necessary signatures electronically and send a fully executed copy back to [SGI].” Id., Ex. E.

The Commonwealth signature and approval process proceeded at least to the stage of development where the cover contract was signed by the Secretary of the Department of Revenue, but the documents were not yet approved as to form and legality by the Offices of General Counsel and Attorney General. In terms of the effectiveness of the contract documents, a contract term was that SGI “must be granted a manufacturer's license from the [Gaming Control] Board as a condition precedent to the commencement of this Contract.” IT Contract Terms and Conditions ¶ 1(d).⁷

GTECH was informed that the contract had been awarded to SGI and submitted a protest in May 2011. See62 Pa.C.S. § 1711.1(b). Two months later, DGS's Deputy Secretary for Administration issued a final determination denying GTECH's protest, in material part, with prejudice. See id. § 1711.1(f). GTECH appealed from the determination, see id. § 1711.1(g), and requested, among other things, that the request for proposals be cancelled.

In August 2011, DGS announced that it was canceling the request for proposals per Section 521, as well as any associated award.⁸ DGS sent a letter to SGI indicating, with little elaboration, that the cancellation was in the best interests of the Commonwealth. See N.T., Oct. 3–4.2011, Ex. P–024. The letter also indicated that, although the contract document had been signed by SGI, it had not been executed by the Commonwealth. See id. Finally, the letter observed that “the RFP was not cancelled due to any actions or inactions by [SGI].” Id.⁹

Subsequently, SGI commenced an action seeking declaratory and injunctive relief against the Departments of Revenue and General Services in the Commonwealth Court's original jurisdiction and petitioned for a preliminary injunction. SGI invoked the Commonwealth Court's original jurisdiction under Section 761(a) of the Judicial Code, 42 Pa.C.S. § 761(a) (“The Commonwealth Court shall have original jurisdiction of all civil actions or proceedings ... [a]gainst the Commonwealth government,” subject to enumerated exceptions).¹⁰ In detailing the jurisdictional basis for the filing of its claims before the Commonwealth Court, SGI also alluded to Section 521 of the Procurement Code, albeit that Section 521, by its terms, does not establish jurisdiction in any court.

In the substantive averments of the complaint, SGI advanced two counts, both entitled “Violation of 62 Pa. Cons.Stat. § 521 (Declaratory Judgment).” Complaint at 10, 13. SGI alleged that DGS and SGI had executed an enforceable contract, and, therefore, cancellation was not available under Section 521. See62 ...