Court Opinion

ID: 1046254
Source: CourtListenerOpinion
Date Created: 2013-10-08 02:34:28.471972+00
Date Added: 2024-06-11T12:17:05.757244
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE
                            AT NASHVILLE
                                  June 29, 2012 Session

    WASTE SERVICES OF DECATUR, LLC V. COUNTY OF LAWRENCE, ET AL.

                Appeal from the Chancery Court for Lawrence County
                   No. 1525911    Stella L. Hargrove, Chancellor

                No. M2011-01947-COA-R3-CV - Filed August 14, 2012

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.

 Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court Reversed
                                  and Remanded

A NDY D. B ENNETT, J., delivered the opinion of the Court, in which F RANK G. C LEMENT, J R.
and R ICHARD H. D INKINS, JJ., joined.

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.

                                         OPINION

                        F ACTUAL AND P ROCEDURAL B ACKGROUND

        Lawrence 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 RFP
further 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 committee

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member, 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.

                                   S TANDARD OF R EVIEW

        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,

                                              -3-
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.

                                          A NALYSIS
                                              1.

      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 . . . .

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10 McQuillin, T HE L AW OF M UNICIPAL C ORPORATIONS § 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 Waste Recycling Auth., 267 N.W.2d
659, 665 (Wis. 1978). The rationale for this principle is that public bodies must be able to
“judge the professional qualifications of those who perform services requiring scientific
knowledge and professional skill.” Id.; see also Emerald Corr. Mgmt. v. Bay Cnty. Bd. of
Cnty. Comm’rs, 955 So. 2d 647, 651 (Fla. Dist. Ct. App. 2007). Thus, for some matters, such
as solid waste disposal, a governmental body must be able to evaluate professional
qualifications.

       The evaluation criteria set forth in the County’s RFP are:

       1. Prior experience in solid waste services, transfer station management and
       operation, and loading, transportation and disposal of waste.
       2. Specifics of the proposal regarding the Contractor’s financial stability.
       3. Ability to provide the most comprehensive guarantees, performance and
       level of insurance coverage to the County.
       4. Completeness of information requested.
       5. References and reputation of Contractor.
       6. Cost.
       7. Contract terms and conditions.
       8. Overall benefit to the County.

These criteria allow the County to consider the proposers’ expertise and experience in the
area of solid waste management, not price only. Based upon the nature of the services being
procured and the language of Tenn. Code Ann. § 5-14-108(a)(1), we conclude that the
County did not act illegally, arbitrarily, or fraudulently in opting to use the RFP process.1

                                                  2.

        WSD next asserts that the County acted illegally, arbitrarily, and capriciously by
failing to follow the procedures announced in the RFP and the pre-proposal meeting. WSD
puts forth a number of ways in which the County allegedly failed to follow the prescribed
procedures: by awarding the contract based solely upon the initial price instead of evaluating
the proposals under the eight criteria in the RFP, by failing to follow through on further

       1
         According to the statements of counsel at oral argument, WSD was awarded its previous contract
with the County for waste management services pursuant to an RFP process. Moreover, WSD did not object
to the use of the RFP process here until it learned it was not the winning proposer.

                                                  -5-
negotiations after the submission of proposals, by failing to have the proposals reviewed by
the solid waste committee, and by failing to have the purchasing committee review the
proposals under the criteria set forth in the RFP. These assertions embody two basic
arguments: that the County erred in failing to follow the procedures set forth in the RFP, and
that the County’s decision was not supported by any material evidence.

       One of the grounds for relief under the common law writ of certiorari is a
determination that the administrative body employed an unlawful procedure. Demonbreun
v. Metro. Bd. of Zoning Appeals, 206 S.W.3d 42, 46 (Tenn. Ct. App. 2005). Several of
WSD’s objections focus upon whether the County employed an unlawful procedure in
making its decision. In RFP cases, the RFP governs the relationship between the parties. See
generally EnGenius Entm’t, Inc. v. Herenton, 971 S.W.2d 12 (Tenn. Ct. App. 1997); Danis
Clarkco Landfill Co. v. Clark Cnty. Solid Waste Mgmt. Dist., 653 N.E.2d 646, 657 (Ohio
1995). As with competitive bidding, the fairness and public confidence promoted by the RFP
process requires that all proposers be evaluated in accordance with the same rules. See
Metro. Air Research Testing Auth., Inc. v. Metro. Gov’t of Nashville & Davidson Cnty., 842
S.W.2d 611, 616-17 (Tenn. Ct. App. 1992); Computer Shoppe, Inc. v. State, 780 S.W.2d 729,
737 (Tenn. Ct. App. 1989). Thus, as the parties implicitly agree in this case, the propriety
of the County’s procedure depends upon the terms of the RFP.

        The RFP, as amended, states: “Final selection will be made by the Lawrence County
Solid Waste Committee and the Purchasing Committee.” It is undisputed that the County did
not submit the proposals to the solid waste committee, an express requirement of the RFP.
We find no merit in the County’s argument that this failure is inconsequential since all of the
solid waste committee members also serve on the county commission, which ultimately
approved the choice of WCM. The RFP established a process, and the County failed to
follow it. Without a separate meeting of the solid waste committee, it is impossible to know
what action that committee would have taken. Not every procedural defect provides a basis
for judicial relief under the common law writ of certiorari. See Willis v. Tenn. Dep’t of Corr.,
No. M2000-01397-COA-R3-CV, 2002 WL 1189730, at *13 (Tenn. Ct. App. 2002). In this
case, however, we conclude that the County acted illegally and arbitrarily in failing to send
the proposals to the solid waste committee for review.2

        2
         We find no merit in WSD’s contention that the County was required to conduct further negotiations
with the proposers. In making this argument, WSD relies upon the following exchange at the pre-proposal
meeting:

        DP [David Peppers, representative of WSD]: It’s real obvious you won’t be looking at price
        only but there may be a negotiation period.

                                                                                            (continued...)

                                                   -6-
        Under the common law writ of certiorari, a reviewing court “may review the record
solely to determine whether it contains any material evidence to support the decision because
a decision without evidentiary support is an arbitrary one.” Leonard Plating, 213 S.W.3d at
903 (citing Watts, 606 S.W.2d at 276-77). We have previously stated that “a reviewing court
cannot determine if there was material evidence to support a decision if the reviewing court
is unaware of the basis for the decision.” Hoover, Inc. v. Metro Bd. of Zoning Appeals, 924
S.W.2d 900, 905 (Tenn. Ct. App. 1996). In this case, we are unaware of the basis of the
decision and, thus, we find no material evidence to support the decision reached by the
County.

        Under the RFP, the County was to evaluate each proposal under eight criteria. In
arguing that the County applied the appropriate criteria, the County emphasizes the following
points:
        •      At the pre-proposal meeting, the county purchasing agent stated:
               “Under Criteria of Evaluation, we’re going to look at everything but
               cost is going to be one of the major things.”
        •      The county purchasing agent reviewed every proposal and completed
               a checklist for each.
        •      The county purchasing agent provided the purchasing committee with
               her file and recommendation.
        •      The purchasing committee voted to send WCM’s proposal to the county
               commission.
        •      The county commission heard comments from representatives from
               WCM and WSD and, after debate, awarded the contract to WCM
               “because it had a significantly lower price.”

These points fail to constitute material evidence that the County’s decision was based upon
the RFP criteria. The checklist completed by the county purchasing agent is a list of the
deadlines and documentary submissions required of each proposer. The final item on the
checklist references “[a]ll other specified information required by proposal documents.” This

        2
        (...continued)
        Carla [Burden, county purchasing agent]: Right.

This exchange is consistent with the language of the RFP, which allows but does not require further
negotiations with proposers. The RFP provides that the County “may request interviews to discuss in detail
the services to be provided.” Moreover, the “County reserves the right, at its sole discretion, to select as the
preferred Contractor(s) for negotiations, the individual or entity who in the County’s judgment, is deemed
to be fully qualified and best suited among those submitting proposals . . . .” The fact that the county
attorney scheduled meetings with two proposers but these meetings never took place does not establish that
such meetings were mandatory under the RFP process.

                                                      -7-
statement hardly constitutes evidence of the basis for the County’s decision.

       Neither this checklist nor any other document in the purchasing agent’s file reflects
a consideration of any of the RFP criteria. In fact, the purchasing agent did not make a
recommendation to the purchasing committee; she and the county attorney explained the
various positions and opinions regarding the appropriate decisionmaking process, including
the comptroller’s advice that “a proposal and a bid are the same thing.” 3 At the end of the
meeting, the chair stated: “All in favor of taking the low bid, let me know by saying aye.”
That motion passed, and the matter was sent to the county commission. Based upon the
minutes of the purchasing committee and the county commission and the other evidence in
the record, there is no material evidence to reflect consideration of the eight RFP criteria.

       While we agree with the County’s assertion that public bodies should be accorded
broad discretion in awarding contracts, the County may not act illegally or arbitrarily in
making such decisions. We conclude that the County acted illegally and arbitrarily in this
case by failing to follow the RFP procedures and because the decision is unsupported by
material evidence.

      In light of this conclusion, we decline to address the remaining issue concerning the
County’s post-approval negotiations with WCM.

                                            C ONCLUSION

       We reverse the trial court’s decision, vacate the County Commission’s decision, and
remand the matter to the trial court with instructions to return the case to the County for
further action consistent with this opinion. We are not requiring that the County begin the
process anew with a new RFP, but that is an option that the County may choose. Costs of
appeal are assessed against the County, and execution may issue if necessary.

                                                            ______________________________
                                                                 ANDY D. BENNETT, JUDGE

       3
         As we have previously discussed, a request for proposal and a competitive bid are not the same
thing. See infra, section 1 of the analysis.

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