With nearly $1.8 billion of Tennessee funding forecasted for various government contracts in fiscal year 2022-2023, contractors have a great opportunity to pursue various types of work with the state of Tennessee.¹ Businesses interested in bidding for one of those contracts can learn more about potential opportunities through Tennessee’s Central Procurement Office (CPO), which consistently lists and updates requests for proposals for Tennessee contracts.²

To provide accountability, integrity and transparency related to the use of taxpayer funds in the bidding and contract award process, Tennessee also has implemented procedures governing bid protests. This article provides a guide to the bid protest process in Tennessee, including how disappointed offerors can file protests and how contract awardees can defend against them.

Standing to Protest and Contents of the Protest

A disappointed offeror that has submitted a response to a solicitation from the CPO may file a written protest with the chief procurement officer if they are “aggrieved in connection with the solicitation, award or proposed award of a contract. . . .”³ Tennessee’s regulations state that the chief procurement officer may only consider one or more of the following grounds for bid protests: (1) The contract award was arbitrary, capricious, an abuse of discretion or exceeded the authority of the CPO or the delegated state agency; (2) The procurement process was conducted contrary to the constitution, a statute, or regulation; (3) The CPO or the delegated state agency failed to follow the rules of the procurement as set forth in the solicitation and that failure materially affected the contract award; (4) The procurement process involved responses that were not independently arrived at in open competition, were collusive or were submitted in bad faith; or (5) The contract award resulted from technical or mathematical mistakes or errors during the evaluation process.⁴ Therefore, disappointed offerors should prepare their protests so that the allegations are directed to one or more of the foregoing protest grounds, which are set forth in Tenn. Comp. R. & Regs. 0690-03-01-.12(2)(a)3.

However, since Tennessee’s reported decisions addressing bid protests are more limited than those from federal forums, protestors are wise to rely on reported decisions from both the Government Accountability Office (GAO) and the United States Court of Federal Claims in order to better support one or more of the protest grounds allowed by Tennessee law. The Tennessee Court of Appeals has confirmed that it will review and rely on bid protest decisions from federal courts when addressing Tennessee bid protest claims^.5 Similarly, the United States Court of Federal Claims, which has concurrent jurisdiction with the GAO over the vast majority of federal bid protests, views GAO decisions as persuasive authority.⁶ Protesting parties will be in the best position if they rely on case law from these federal forums to better support their Tennessee protest grounds.

A protest filed with the chief procurement officer must enumerate and detail all grounds upon which the protestor relies to bring the protest. To avoid technical defects, a protesting party should specifically review the regulations at Tenn. Comp. R. & Regs. 0690-03-01-.12 and the statute at Tenn. Code Ann. § 12-3-514 to comply with each required provision. For example, in addition to describing the protest grounds, it is helpful to organize the protest in a way to ensure compliance with the requirements by including headings and descriptions in the protest confirming that the protesting party has standing, the protest is timely, a bond is included and addressing any other requirements relevant to a particular solicitation. While no particular form is required, using this format helps to ensure that all of the requirements are met.

Protests filed in Tennessee must be brought in good faith and the signature of an attorney or the protesting party constitutes a certification that the signer of the protest has made reasonable inquiry and that “the protest is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification or reversal of existing law and that it is not for any improper purpose. . . .”⁷ Notably, if it is determined that the protest does not comply with these good faith requirements, the protesting party’s attorney or the party itself may be sanctioned.

The Protest Bond

The protest must be signed and submitted to the chief procurement officer contemporaneously with a protest bond payable to the state. As explained by the Tennessee Court of Appeals’ recent decision in Guidesoft Inc. v. State Protest Committee, the statute proscribes the amount of the bond depending on the type of contract involved in the protest.⁸ (See chart)

Tennessee is one of a handful of states to require the protest bond, which is branded by some as a deterrent to protesting the public bidding process. However, the Tennessee Court of Appeals recently addressed the constitutionality of the protest bond and noted that “while deterring frivolous bid protests surely is an intended purpose” of the protest bond requirement, the primary intent is to protect the state from exposure to liability on the contract.9 Thus, the bond is only surrendered to the state if the protest committee finds that the protest is pursued in bad faith, not grounded in fact or warranted by existing law, intended for an improper purpose, results in damages to an affected state agency or the protest committee approves another reason for surrender.¹⁰ Otherwise, the chief procurement officer holds the protest bond for at least 11 days after final determination of the protest or, if the determination is appealed, until instructed to return the bond to the protesting party.¹¹

Certain minority-owned, women-owned and Tennessee service-disabled veteran-owned businesses, in addition to businesses owned by persons with disabilities and small businesses, may petition the chief procurement officer to waive the protest bond requirement in certain procurements that are less than $1 million.¹² The chief procurement officer has seven days after receiving the petition to determine whether the business receives an exemption or must post the protest bond in accordance with the statute.¹³ The bid protest process then continues to the resolution phase.

Bid Protest Timing and Procedures

When protesting the award of a contract, the protesting party must submit the written protest within seven days after the chief procurement officer has issued notice of the award or intent to award the contract, whichever is earlier.¹⁴ Failure to timely file the written protest results in waiver of a protesting party’s right to seek review.

Notably, unlike federal bid protest provisions, Tennessee does not expressly provide rules or a process to protest the terms of the solicitation itself.¹⁵ While offerors are required to make objections to the terms of a solicitation in writing “no later than seven (7) calendar days after the solicitation has been posted to the website of the [CPO] or the delegated state agency as the case may be[,]” the applicable regulations do not describe this objection process as a protest.¹⁶ Therefore, if a contractor is concerned that a particular solicitation unfairly favors a competitor or includes ambiguous terms, those objections should be made within seven days after the solicitation is posted to avoid potential waiver of the issue in a later protest. However, until a court rules otherwise or until the regulations are amended to be more clear, it would still be wise to also raise those same objections in any later filed protest since the waiver rules expressly apply to a protest and not an objection to the solicitation.

After a protest is filed, a 60-day clock begins during which time the chief procurement officer must resolve the protest or risk an appeal to the state protest committee.¹⁷ Upon receiving a protest, the chief procurement officer will first confirm that all of the statutory requirements have been met, which again shows the importance of checking your protest against the relevant regulations and statute before you file.¹⁸ If all of the statutory requirements are met, the chief procurement officer will then issue a stay of the solicitation or contract award until the protest is resolved, will send a letter to the protesting party acknowledging receipt of the protest and will begin gathering materials for the protest hearing.¹⁹

Intended awardees are invited to submit a response to the protest, which provides the awardee an opportunity to defend against the protesting party’s claims.²⁰ An awardee should always use this opportunity to defend its award and to be involved with the protest proceedings. An awardee has particular knowledge of its own experience and expertise and can articulate arguments that the state may not be able to make. Therefore, the awardee should actively participate in the protest process.

Similarly, a state agency involved in the award has 10 calendar days from receiving notice of the protest to submit a response for inclusion in the protest hearing materials.²¹ The protesting party then has five days to reply to any position statements submitted by the state agency or the awardee.²² The protesting party’s reply may not raise any new grounds for protest, highlighting the importance of submitting a thorough bid protest from the outset. Once all of the protest filings, responses and replies are submitted, the CPO then collates the parties’ responses and replies with other relevant documents, including a timeline of events, original bid proposals submitted by the intended awardee and protesting party, evaluation score sheets, communication logs and any other documents pertinent to the protest.²³

After all briefing is completed and the protest binder is created, the chief procurement officer will set a date and time for the protest hearing, taking into consideration any contract termination dates and the geographic location of interested parties. The chief procurement officer then notifies the interested parties, including all respondents, state agency contacts and CPO staff, of the hearing date, time and location.²⁴ After the protest hearing is completed, the chief procurement officer must issue a final decision on the protest in writing to the protesting party, the protest committee and the comptroller of the treasury. ²⁵

Appealing the Protest to the State Protest Committee

The protesting party may appeal to the state protest committee if it does not receive the letter of acknowledgement of the protest within 15 calendar days of the filing of the protest, the chief procurement officer fails to resolve the protest within 60 calendar days or if it otherwise receives a decision denying the protest.²⁶ An awardee may also appeal the chief procurement officer’s decision to the protest committee if it is dissatisfied with the chief procurement officer’s determination.²⁷ The protest committee is created by statute and consists of the commissioner of general services, the commissioner of finance and administration and the state treasurer.²⁸ However, the protest committee members can, and often do, assign someone else to sit in their place during meetings of the committee.

The protest committee is authorized to act on any appeal of the chief procurement officer’s decision of a bid protest. The appealing party must submit an appeal request in writing to the protest committee and comptroller of the Treasury within seven days of the chief procurement officer’s final determination or, if the chief procurement officer does not reach a resolution, within seven days after the close of the 60-day window.²⁹ Importantly, the written appeal to the protest committee can only raise grounds that were previously raised before the CPO. Again, being thorough in the original bid protest and ensuring that the record is complete are very important tasks for protesting parties.

When the protesting party appeals to the protest committee, no additional protest bond is required. The chief procurement officer is authorized to hold the party’s protest bond until instructed by the protest committee to either keep the bond or return it to the protesting party.³⁰

Before making a final decision on the appeal, the protest committee will convene in a public meeting to consider the appeal and the underlying proceedings, which typically includes argument from the parties who participated in the underlying protest before the chief procurement officer. Within 15 business days after the state protest committee convenes, the chief procurement officer will post the final determination to the CPO’s website.   

Appealing An Adverse Decision to the Tennessee Courts

A protesting party must exhaust its administrative remedies with the chief procurement officer and protest committee before it can appeal to the chancery court and, if necessary, the court of appeals.³¹ A party brings the matter for the chancery court’s consideration through a common law writ of certiorari. By statute, a reviewing court considering a common law writ of certiorari may grant relief only when the protest committee has exceeded its jurisdiction, followed an unlawful procedure or acted illegally, fraudulently or arbitrarily without material evidence to support its actions.³²

Chancery courts and appellate courts have the same narrow scope of review, which “does not extend to a redetermination of the facts found by the board or agency whose decision is being reviewed.”³³ Nor can the reviewing court inquire into the intrinsic correctness of the decision, reweigh the evidence or substitute their judgment for that of the board or agency.³⁴ Instead, the court will determine if there is any material evidence supporting the board’s decision, which is a question of law to be determined from the record made before the protest committee. The material evidence “‘must exceed a scintilla of evidence but may be less than a preponderance of the evidence.’”³⁵ If sufficient evidence exists and if the protest committee did not act illegally in denying a protesting party’s appeal, the court will affirm the final determination.³⁶

Thus, appeals of bid protests to the Tennessee courts can be rare and narrow in scope. For example, in Lanier Worldwide Inc. v. State, the Tennessee Court of Appeals considered a limited review of whether a board improperly allowed post-award modifications to the winning bid.³⁷ The second-lowest bidder filed a protest after they raised issues about the winning proposal’s specifications, arguing that the procuring agency should have selected another bid if the winning proposal was not responsive to the bid solicitation. After an unfavorable ruling from the predecessor of the current state protest committee, the second-lowest bidder appealed to the chancery court, which reversed the committee’s determination. The contract winner then appealed to the court of appeals, which relied heavily on the statements made during the protest committee hearings in its reversal of the chancery court. The court of appeals found that the board did not act illegally in allowing permissible clarifications rather than outright modifications.

However, in another case, Waste Servs. of Decatur LLC v. County of Lawrence, a protesting party brought a common law writ of certiorari related to a county’s selection of a waste services provider, alleging that the selection process was conducted unfairly and contrary to the terms of the request for proposals (RFP).³⁸ While the county commission and the chancery court both ruled that the contract award was proper, the court of appeals disagreed because the record did not include material evidence showing that the evaluation was completed in accordance with the terms of the RFP. Compliance with the RFP’s evaluation criteria was not documented in the record and the county did not have the solid waste committee participate in the evaluation, which was a requirement of the RFP. Therefore, the court of appeals reversed both the county commission and the chancery court’s findings.

Conclusion

While Tennessee’s significant funding for various government contracts provides excellent opportunities for businesses to increase revenue, government contractors and the attorneys representing them should closely review the referenced statutes and regulations and should know and understand the available bid protest rights at the beginning of the bidding process. The statutes and regulations have unforgiving deadlines. Significant rights may be lost without the correct counsel. Reviewing and understanding these requirements at the beginning of the process allows the protesting party to quickly raise all available protest grounds while also building a full administrative record to support any later necessary appeals. |||

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JOSH MULLEN is a partner with the law firm of Womble Bond Dickinson (US) LLP where he practices in the Nashville, Tenn. and Washington, D.C. offices and represents several government contractors. He may be reached at josh.mullen@wbd-us.com. CLARE MAGEE is a 2L at Wake Forest University Law School, a 2022 Summer Associate with Womble Bond Dickinson (US) LLP and is originally from Jackson, Tenn.

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NOTES

1. “The Forecast of Acquisition Plans for State Departments and Agencies, Fiscal Year 2022-2023,” available at https://bit.ly/3SoAhQd (last visited July 18, 2022).
2.Request for Proposals (RFP) Opportunities, available at https://bit.ly/3Tah71w (last visited July 19, 2022).
3. Tenn. Code Ann. § 12-3-514 (b) (West 2022).
4. Tenn. Comp. R. & Regs. 0690-03-01-.12 (2)(a)3. (2022); See also Tenn. Comp. R. & Regs. 0690-03-01-.02(1)(x) (“‘Delegated State Agency’ means a state agency that, in accordance with Central Procurement Office policy, has authority to award a grant, make a loan consistent with a grant or procure goods or services for an individual program within specified limits and guidelines.”)
5. Metro. Air Research. Testing Auth. Inc. v. Metro. Gov’t of Nashville & Davidson Cnty., 842 S.W.2d 611, 617 (Tenn. Ct. App. 1992) (citing various federal court bid protest decisions to address an appeal of a bid protest related to a procurement involving the Metropolitan Government of Nashville and Davidson County).
6. XTRA Lease Inc. v. United States, 50 Fed. Cl. 612, 618 (2001) (“Although GAO decisions are not binding on this court, . . . they serve as persuasive authority.” (citing DGS Contract Serv., Inc. v. United States, 43 Fed.Cl. 227, 238 (1999)).
7. Tenn. Code Ann. § 12-3-514(c).
8. Guidesoft Inc. v. State Protest Comm., 642 S.W.3d 388, at 397-98 (Tenn. Ct. App. 2021), perm. app. denied (Jan. 12, 2022) (discussing how Tenn. Code Ann. § 12-3-514(d)(1)-(4) is applied to particular types of government contracts).
9. Id. at 398.
10. Tenn. Code Ann. § 12-3-514 (e).
11. Tenn. Code Ann. § 12-3-514 (f).
12. Tenn. Code Ann. § 12-3-514 (g).
13. Id..
14. Tenn. Code Ann. § 12-3-514 (b).
15. Compare 4 CFR 21.2(a)(1) (GAO’s rules related to protests of alleged improprieties in a solicitation) with Tenn. Comp. R. & Regs. 0690-03-01-.12(1)(a) (discussing “objections” to the solicitation but not protests).
16. Tenn. Comp. R. & Regs. 0690-03-01-.12(1)(a).
17. Tenn. Code Ann. § 12-3-514(h).
18. See “Amended Procurement Procedures Manual of the Central Procurement Office,” p. 80, § 8.1, available at https://bit.ly/3D4QxkE (last visited June 26, 2022).
19. See supra note 18, “Amended Procurement Procedures Manual of the CPO” at 80, § 8.
20. Id.. at 81.
21. Id.. at 82.
22.  Id..
23. Id.. at 81, § 8.3.1.
24. Id.. at 82.
25. Tenn. Code Ann.§ 12-3-514(h).
26. Tenn. Code Ann.§ 12-3-514(h); Tenn. Comp. R. & Regs. 0690-03-01-.12(2)(a)5.-6.
27. See, e.g., “State Protest Committee Meeting No. 14, Summary of Decision and Minutes, Protest of RFP # 34901-01225,” available at https://bit.ly/3CxYYne (last visited July 19, 2022).
28. Tenn. Code Ann.§ 4-56-103; 22 Tenn. Prac. Contract Law and Practice § 13:62.
29. Tenn. Code Ann. § 4-56-103; see also Tenn. Comp. R. & Regs. 0690-03-01-.12 (2)(a)6.
30. Id..
31. Tenn. Code Ann. § 12-3-514(j).
32. Tenn. Code Ann.§ 27-8-101; Tenn. Code Ann. § 12-3-514(l).
33. Waste Servs. of Decatur LLC v. City of Lawrence, No. M2011-01947-COA-R3-CV, 2012 WL 3329621 at *3 (Tenn. Ct. App. Aug. 14, 2012) (quoting Leonard Plating Co. v. Metro. Gov’t of Nashville & Davidson Cnty., 213 S.W.3d 898, 903 (Tenn. Ct. App. 2006)).
34. Id..
35. Id..
36. Guidesoft, 642 S.W.3d at 398.
37. Lanier Worldwide Inc. v. State, No. M2006-02630-COA-R3-CV, 2007 LEXIS 225 (Ten. Ct. App. Apr. 17, 2007); see also Metro. Air, 842 S.W.2d at 614.
38. Waste Servs. of Decatur, 2012 WL 3329621 at *2.