Waste Servs. of Decatur, LLC v. Cnty. of Lawrence
| Decision Date | 14 August 2012 |
| Docket Number | No. M2011-01947-COA-R3-CV,No. 1525911,1525911,M2011-01947-COA-R3-CV |
| Parties | WASTE SERVICES OF DECATUR, LLC v. COUNTY OF LAWRENCE, ET AL. |
| Court | Court of Appeals of Tennessee |
Appeal from the Chancery Court for Lawrence County
Stella L. Hargrove, Chancellor
Losing proposer for solid waste management services challenges Lawrence County's decision to contract with another proposer. Because we find that the County acted arbitrarily and illegally in making its decision, we reverse the decision of the trial court and remand for further proceedings.
and Remanded
James L. Murphy, III, Josh J. Phillips and Peter C. Sales, Nashville, Tennessee, for the appellant, Waste Services of Decatur, LLC.
Darwin A. Hindman, III, and Joshua A. Mullen, Nashville, Tennessee, for the appellee, Waste Connections of Mississippi, Inc.; Charles William Holt, Jr., Lawrenceburg, Tennessee, for the appellees, County of Lawrence and County Commission of the County of Lawrence.
OPINIONLawrence County issued a request for proposals ("RFP") on December 13, 2010 soliciting proposals for "the loading, transportation and disposal of the county's solid waste for a period of (5) years beginning March 1, 2011." The RFP included the requirements for submitting proposals, eight criteria for the evaluation of proposals, and the procedures to be used by the county in selecting a proposal. The County reserved "the right to reject any or all proposals and to award a contract based upon the best value for the County." The RFPfurther stated: "This is a request for proposal, not a competitive proposal process." The contents of the RFP will be described more fully below as relevant to the issues on appeal.
The County conducted a pre-proposal meeting on January 4, 2011 to allow prospective proposers to ask questions. Representatives of Waste Services of Decatur, LLC ("WSD"), Waste Connections of Mississippi, Inc. ("WCM"), and others attended the meeting. After this meeting, the County issued an addendum to the RFP addressing several topics raised at the meeting. The addendum changed the selection process to state: "Final Selection will be made by the Lawrence County Solid Waste Committee and the Purchasing Committee." (Amendments in italics). Under the RFP, the selected proposal then went to the county commission "for approval and issuance of the contract."
The County received proposals from three entities, WSD, WCM, and another company. On January 18, 2011, the purchasing committee held an open meeting at which the committee announced the pricing provisions of the three proposals. At the end of the meeting, the committee stated that it would take a week to ten days to evaluate the proposals and would then contact the proposers. On January 18, 2011, the county attorney sent e-mails to WSD and WCM to set up meetings regarding their proposals. In one e-mail to WCM, the county attorney stated:
Let me see what I can work out. Got your earlier email. I'm at [the] river tonight but will be back in town tomorrow and will try to contact necessary parties. Sharpen your pencil. We are looking at $300,000 in repairs to transfer station. Would like for someone to build us another. Might entertain a 10 year deal if good enough. We will also be discussing with WSD.
Problems arose at this point. WCM sent an e-mail back to the county attorney expressing shock that "WSD would get another opportunity" because WCM's "bid" was lower. The county purchasing agent sought an opinion from the state comptroller's office and was advised that, under the County Purchasing Law of 1957, it was not permissible for the County to negotiate price with multiple proposers. The comptroller's office advised the County to "accept the lowest and/or best bid." On January 28, 2011, the county purchasing agent cancelled the meetings set up by the county attorney.
On February 14, 2011, the purchasing committee met and discussed the proposals. The county attorney expressed concerns that the RFP was ambiguous regarding further negotiations on price and advised the committee that it could choose one of three options: reject all of the proposals and start again, continue to negotiate with the two lower proposers, or award the contract to one proposer according to the eight criteria. Representatives from WSD and WCM addressed the committee. In response to a question from a committeemember, the county purchasing agent stated: "According to the Comptroller's office, a proposal and a bid are the same thing." The committee passed a resolution recommending that the County approve the agreement with WCM.
The county commission met on February 24, 2011 and considered the resolution from the purchasing committee. WSD and WCM addressed the county commission, and there was significant discussion about the selection process. Several commissioners expressed concern with the fairness of the process, and the county attorney stated his opinion that the proposers had been led to believe that they would have an opportunity to negotiate price prior to the final selection. A motion to reject all proposals and begin the procurement process again failed to pass. The county commission then voted to allow the purchasing agent and county executive to negotiate terms with WCM.
WSD filed a petition for writ of certiorari on March 1, 2011 asking the court to reverse the County's decision to award the contract to WCM. After a hearing in August 2011, the court issued an order denying WSD's petition, ruling simply that there was "material evidence in the record to support the County's decision and that the County did not act illegally, arbitrarily, or fraudulently."
On appeal, WSD presents a number of issues and subissues. The three main issues are (1) whether the County acted illegally, arbitrarily, and capriciously by failing to follow the evaluation procedures set forth in the RFP; (2) whether the County acted illegally, arbitrarily, and capriciously by authorizing the county executive and the purchasing agent to conduct negotiations with WCM regarding the services to be provided after the award to WCM had been approved; and (3) whether the County violated the County Purchasing Law of 1957 by issuing an RFP and failing to competitively bid the work.
The scope of review with respect to a common law writ of certiorari is limited. Watts v. Civil Serv. Bd., 606 S.W.2d 274, 276 (Tenn.1980); Leonard Plating Co. v. Metro. Gov't of Nashville & Davidson Cnty., 213 S.W.3d 898, 903 (Tenn. Ct. App. 2006). A reviewing court may grant relief only when the board or agency has exceeded its jurisdiction or acted illegally, arbitrarily, or fraudulently. Tenn. Code Ann. § 27-8-101; McCallen v. City of Memphis, 786 S.W.2d 633, 638 (Tenn.1990). The scope of review by the appellate courts is no broader than that of the chancery court in these cases with respect to evidence presented before the board. Watts, 60 S.W.2d at 277.
Reviewing a common law writ of certiorari "does not extend to a redetermination of the facts found by the board or agency whose decision is being reviewed." Leonard Plating,213 S.W.3d at 903. Courts are not permitted to "(1) inquire into the intrinsic correctness of the decision, (2) reweigh the evidence, or (3) substitute their judgment for that of the board or agency." Id. at 903-04 (citations omitted). Rather, the courts must review the board's decision to determine whether there is any material evidence to support the decision; "a decision without evidentiary support is an arbitrary one." Id. at 904. The determination of whether the board's decision is supported by material evidence is a question of law. Id. To support a board's decision, the material evidence "must exceed a scintilla of evidence but may be less than a preponderance of the evidence." Id.
We begin by considering the impact of the County Purchasing Law of 1957, Tenn. Code Ann. § 5-14-101 et seq., which has been adopted by the County. WSD argues that the County Purchasing Law of 1957 required the County to use competitive bidding rather than the RFP process.
Tennessee Code Annotated § 5-14-108(a)(1) provides, in pertinent part, as follows:
All purchases of and contracts for purchases of supplies, materials, equipment and contractual services, and all contracts for the lease or rental of equipment, and all sales of county-owned property that has become surplus, obsolete or unusable, shall be based wherever possible on competitive bids.
(Emphasis added). This provision requires the County to use competitive bidding for certain purchases "wherever possible." Thus, the provision contemplates the use of other procurement procedures in situations where competitive bidding is not possible.
While there is scant caselaw in Tennessee regarding the appropriate uses of the request for proposal method of procurement rather than competitive bidding, the following general principles are instructive:
In contrast to bids, a request for proposals (RFP) is used when the public authority is incapable of completely defining the scope of work required, when the service may be provided in several different ways, when the qualifications and quality of service are considered the primary factors instead of price, or when responses contain varying levels of service which may require subsequent negotiation and specificity. A request for proposals (RFP) is a more flexible alternative to competitive bidding for a public contract . . . .
10 McQuillin, THE LAW OF MUNICIPAL CORPORATIONS § 29.33 (3rd ed. 2012) (footnotes omitted). Courts have recognized that "services requiring scientific knowledge and professional skill do not call for the performance of work which must be submitted to competitive bidding." Waste Mgmt., Inc. v. Wis. Solid...
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