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Syringa Networks, LLC v. Idaho Dept. of Admin.

Supreme Court of Idaho, Boise

March 29, 2013

SYRINGA NETWORKS, LLC, an Idaho limited liability company, Plaintiff-Appellant,

Rehearing Denied Aug. 29, 2013.

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David R. Lombardi, Givens Pursley, Boise, argued for Syringa Networks.

Steven F. Schossberger, Hawley Troxell Ennis & Hawley, Boise, argued for Idaho Department of Administration, J. Michael Gwartney, and Jack G. Zickau.

Phillip S. Oberrecht, Greener Burke Shoemaker Oberrecht, Boise, argued for ENA Services.

Steven J. Perfrement, Holme Roberts & Owen, Denver, Colorado, argued for Qwest Communications Co.

EISMANN, Justice.

This is an appeal out of Ada County from a judgment dismissing an action challenging the bidding process for the Idaho Education Network. We affirm the dismissal of all claims except the claim contending that the bidding process violated the statutes governing purchases by the division of purchasing. We remand this case for further proceedings consistent with this opinion.


Factual Background.

In 2008, the legislature enacted legislation to establish the Idaho Education Network (IEN), which is to be a high-bandwidth telecommunications distribution system for distance learning in every public school in the state. Ch. 260, § 3, 2008 Idaho Sess. Laws 753, 754. The Department of Administration (Department) was given administrative oversight of the IEN, including " [p]rocur[ing] telecommunications services and equipment for the IEN through an open and competitive bidding process." I.C. § 67-5745D(5)(h).

On December 15, 2008, the Department issued a Request for Proposals (RFP) to purchase goods and services for the first phase in establishing the IEN, which is to " connect each public high school with a scalable, high-bandwidth connection, including connections to institutions of higher education as necessary." Subsequent phases would include connecting each elementary and middle school, connecting libraries, and connecting state agencies. The closing date for submitting proposals was January 12, 2009, at 5:00 p.m. Any proposal submitted in response to the RFP had to be in writing and, pursuant to the terms of the RFP, was considered " an offer to perform a contract in full response to the request for proposals," which had to remain valid for 180 days after the scheduled closing date for submitting proposals.

The Department held a bidders conference on December 29, 2008, to solicit questions

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and input regarding the RFP. It then issued a written statement of questions asked and the answers to those questions. One of the questions was whether this was a single or multiple award contract, and the Department responded that it was a multiple award contract of five years with three five-year extensions for a total of twenty years. Another question was whether it was permissible to bring in an out-of-state partner, and the answer was, " Yes, we need to establish partnerships, both inside and outside of our state as applicable."

The Department issued an amendment to the RFP on January 6, 2009, which stated that the contract would be for a five-year period, with three extensions of five years each. It also issued a list of written questions that had been submitted after the bidders conference, with answers to those questions. One of the questions asked about apparently conflicting statements in the RFP which were that the contract " will be awarded to up to four providers" and that " highest consideration will be given to the Partner or Partners presenting the best and most cost effective ‘ total end-to-end service support solution’ and supporting network architecture." The Department answered that while " the State reserves the right to make multiple awards, it is the State's preference to choose a single response that represents comprehensive partnerships and coverage but still provides a single point of accountability per end user community." Another question asked who would coordinate the development, outsourcing, and implementation of the statewide network if multiple vendors are selected, and the Department answered that " it is still the desire of the State to contract with a single end-to-end managed internet service provider with existing partners and/or a willingness to form partnerships."

Syringa Networks, LLC (Syringa), is an Idaho telecommunications company. On January 7, 2009, it entered into a " teaming agreement" with ENA Services, LLC (ENA), a Tennessee company that specializes in providing education network services. Pursuant to their agreement, ENA submitted a proposal in response to the RFP, although the cover letter stated that both ENA and Syringa were responding jointly to the proposal. Qwest Communications Company, LLC (Qwest), and Verizon Business Network Services, Inc., also submitted responsive proposals.

The proposals were then scored based upon six specific criteria, with the maximum possible score being 1000 points. The ENA and Qwest proposals received the highest scores, with ENA's proposal being given a score of 856 and Qwest's proposal being given a score of 635. On January 20, 2009, the Department issued a letter of intent to award contracts to Qwest and ENA. On January 28, 2009, the Department issued statewide blanket purchase orders to Qwest and ENA, with each of them having the same scope of work. One month later, it issued amendments to the two purchase orders to alter the scope of work that each would perform. Qwest became " the general contractor for all IEN technical network services" (providing the " backbone" ) and ENA became " the Service Provider listed on the State's Federal E-rate Form 471" and was to " coordinate overall delivery of all IEN network services and support." The effect of these amendments was to make Qwest the exclusive provider of the backbone, which is what Syringa intended to provide as a subcontractor of ENA.

On December 15, 2009, Syringa filed this lawsuit against the Department; its director, J. Michael Gwartney; Jack G. Zickau, the chief technology officer; ENA; and Qwest. Syringa sued the individuals in both their individual and official capacities. The district court ultimately dismissed Syringa's lawsuit against all of the Defendants on their respective motions for summary judgment. Syringa timely appealed the grants of summary judgment, and the State Defendants timely cross-appealed the refusal to award them attorney fees.


Did the District Court Err in Dismissing Syringa's Challenge to Qwest's Amended Purchase Order for Failure to Exhaust Administrative Remedies?

For competitively bid contracts, the administrator of the division of purchasing must

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provide a notice that " describe[s] the property to be acquired in sufficient detail to apprise a bidder of the exact nature or functionality of the property required." I.C. § 67-5718(2). " Property" is defined as " [g]oods, services, parts, supplies and equipment, both tangible and intangible, including, but nonexclusively, designs, plans, programs, systems, techniques and any rights and interests in such property." I.C. § 67-5716(3). The contract is to be awarded to the lowest responsible bidder, I.C. § 67-5718(4), as determined by the administrator, I.C. § 67-5717(3).

However, the administrator " may make an award of a contract to two (2) or more bidders to furnish the same or similar property where more than one (1) contractor is necessary." I.C. § 67-5718A(1). To do so, the administrator must make a written determination that it is necessary to award the contract to more than one contractor in order to (a) " furnish the types of property and quantities required by state agencies" ; or (b) " provide expeditious and cost-efficient acquisition of property for state agencies" ; or (c) " enable state agencies to acquire property which is compatible with property previously acquired." I.C. § 67-5718A(1) & (2). All contracts made in violation of these statutes are void and any money advanced by the State in consideration of such contracts must be repaid. I.C. § 67-5725.

The initial contracts awarded to ENA and Qwest on January 28, 2009, constituted an award to two bidders to furnish the same or similar property. The material provisions of their contracts were identical. There was no differentiation as to the scope of work each was to perform under their respective contracts. However, the administrator did not make the required written determination to award the contract to two bidders until after Syringa requested a copy of that determination. In response to Syringa's public records request for the required written determination, the administrator sent a letter dated June 30, 2009, to a deputy attorney general stating that on December 3, 2008, he had a discussion with the state purchasing manager and they " agreed that no one vendor had the capability to service the State of Idaho and its geography to enable the network." The administrator's letter concluded: " At that time, I did not document this decision in writing. Please accept this statement as that written determination." On February 22, 2010, the administrator issued a formal written determination that two of the required criteria were met ((a) and (b) quoted above). That determination was based upon the administrator's finding that " no one vendor had the capability to service the State of Idaho (‘ State’ ) and its geography to enable the network." On appeal, Syringa does not challenge the multiple award.

Although the written determination indicated that the decision to award two contracts was based upon Idaho's geography, the Department decided not to divide the work to be done by ENA and Qwest geographically. On February 26, 2009, the administrator issued change orders with respect to ENA's and Qwest's contracts. Qwest became the statewide provider of the backbone, and ENA became the statewide E-rate service provider. With that change, ENA and Qwest were no longer providing the same or similar property under their respective contracts. Qwest became the exclusive provider of what Syringa was to provide as a subcontractor of ENA.

Syringa sought to challenge the amended contracts. The State Defendants (the Department and Messrs. Gwartney and Zickau) moved for summary judgment with respect to this count on the ground that Syringa did not have standing to challenge the amended awards, and, if it had standing, it failed to exhaust its administrative remedies under Idaho Code section 67-5733. The district court held that Syringa had standing, but failed to exhaust its administrative remedies under section 67-5733. On appeal, the State Defendants contend that Syringa both lacked standing and failed to exhaust its administrative remedies.

a. Syringa has standing.

" The doctrine of standing focuses on the party seeking relief and not on the issues the party wishes to have adjudicated." Miles v. Idaho Power Co., 116 Idaho 635, 641, 778 P.2d 757, 763 (1989). To satisfy the requirement of standing, " litigants generally must allege or

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demonstrate an injury in fact and a substantial likelihood that the judicial relief requested will prevent or redress the claimed injury." Id. " The injury must be distinct and palpable and not be one suffered alike by all citizens in the jurisdiction." Selkirk-Priest Basin Ass'n, Inc. v. State ex rel. Batt, 128 Idaho 831, 833-34, 919 P.2d 1032, 1034-35 (1996). There must also be a fairly traceable causal connection between the claimed injury and the challenged conduct. Young v. City of Ketchum, 137 Idaho 102, 104, 44 P.3d 1157, 1159 (2002). " An interest, as a concerned ...

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