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ALASKA PUBLIC AGENCY ACTED WITHIN ITS AUTHORITY IN SPECIFYING EQUIPMENT WHICH EXCLUDED THE CONTRACTOR FROM THE BIDDING PROCESS

By John P. Ahlers

The Alaska Energy Authority ("AEA") is a public state agency which provides technical support to hundreds of Alaskan villages located off the electrical grid that produce and distribute their own energy needs. The AEA sought to upgrade the utilities in the native villages by installing new switch gear. The standard switch gear or "computer brain" operating switch gear is a programmable logic controller ("PLC"). A contractor bidding on the project, an Alaska subsidiary of an Australian firm, manufactured an alternative switch gear which ran off a personal computer ("PC"). For PC-based switch gear is used in Australia, but has never been used in the United States.

The AEA, in determining which switch gear should be used, conducted two pilot programs in which native villages used the PLC-based switch gear and other villages used the PC-based switch gear. Before the pilot program was completed, and a final determination was made, the AEA issued an invitation to bid for statewide installation of PLC-based switch gear, not PC-based switch gear. The AEA indicated that it was compelled to act before the pilot programs were completed that it could meet a funding deadline.

The PC-based switch gear supplier filed a bid protest contending that the specifications were unduly restrictive, because the specs excluded the use of PC-based switch gear. The hearing officer denied the protest on the grounds that the agency had acted within its discretion.

The Alaska Supreme Court affirmed the hearing officer's decision. The contractor which had anticipated furnishing the PC-based switch gear argued that the agency made the wrong decision with regard to the relative merits of the PLC and PC systems. The Court held that the protestor's "arguments largely missed the point: the question at issue here is not whether the agency made the right decision in preferring one operating system over the other or in deciding to buy now rather than later; instead, the question is whether the agency had the authority to specify the system it wanted and, if so, whether it had a rational basis for its ultimate choice."

Full post as published by Construction Law Blog on April 24, 2008 (boomark / email).