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Friday, July 07, 2006
Ind. Decisions - Court of Appeals hears challenge to bidding statute
Niki Kelly reports this morning in the Fort Wayne Journal Gazette about a Court of Appeals argument heard yesterday. Some quotes:
INDIANAPOLIS – A dispute heard by the Indiana Court of Appeals on Thursday over $4.8 million worth of fire trucks bought by Fort Wayne in 2004 could substantially alter long-standing public purchasing law.The case is City of Fort Wayne v. Pierce Manufacturing, Inc. Unfortunately, the oral argument does not appear to be available online. The panel was Sharpnack, Najam and Robb. The statute involved is IC 5-22.The crux of the issue is whether a disappointed bidder has standing – or the legal right – to sue.
Mark Keaton, who represented the city, said more than 100 years of case law shows such bidders do not sue unless fraud or collusion is involved. He added that any changes to state statute in the late 1990s narrowed – not expanded – the situation further.
But James Fenton – arguing for Pierce Manufacturing Inc. of Wisconsin – said his client fits under a section added to state purchasing laws specifying a remedy for an aggrieved person.
The case began in 2004 when the city used a relatively new “reverse auction” process to solicit bids from Pierce and American LaFrance Corp. of South Carolina.
Essentially, rather than taking sealed bids, the city asked for proposals from fire truck builders, then began negotiating down the prices simultaneously. In the end, LaFrance won the contract for the 14 trucks at a cost of $4.8 million. * * *
A few months later Pierce sued, alleging the city didn’t treat both bidders fairly. The case was moved out of Allen County, where Wells Circuit Judge David L. Hanselman Sr. decided in October that Pierce did have standing and the city failed to follow the statutory procedure.
He canceled the contract and ordered a new bidding process – the only remedy allowed by law. Pierce cannot seek cash damages. * * *
Fenton argued that the legislature set up the remedy for an aggrieved person and that his client counts.
“If Pierce doesn’t have the right to seek a remedy, then who does?” he asked. One of the three appellate judges noted that during the negotiation process, the city told LaFrance that its bid was not competitive – which is like a red flag to lower the price.
Fenton also explained that while the original bid specifications required the fire trucks to have an independent front suspension system, the city later told LaFrance it would be willing to listen to bids without that component. That same information was not conveyed to Pierce, Fenton said, and that could have knocked $10,000 off the price of each truck.
“The record is pretty clear that, if we have standing, we were harmed,” he said.
Keaton said the city vigorously denies it did anything inappropriate.
He noted that if the court opens up case law to allow failed bidders to sue, then every negotiation will be scoured over by attorneys – stalling important projects and purchases.
“We think there are aggrieved persons but we don’t believe the legislature meant to include disappointed bidders,” he said.
Both attorneys acknowledged the case is one of “first impression” for the court, which means it has not decided the issue since the law was changed.
The three-judge appellate panel can rule just on the narrow subject of standing or can go further and decide the merits of the entire case.
Posted by Marcia Oddi on July 7, 2006 06:55 AM
Posted to Ind. App.Ct. Decisions