State Supreme Court considers legality of grader purchase

The Nevada Supreme Court is considering whether the Department of Transportation violated state law by purchasing a total of 27 new road graders without first advertising for contracts to supply the graders.

Instead of asking for bids for the equipment, NDOT used a Permissive Price Agreement - a system put into state regulations eight years ago so that state agencies didn't have to use the bidding process for recurring purchases of small supplies and equipment.

NDOT used that process to buy 27 road graders for a total of $3.6 million over the course of a year.

Matt Callister and Brooke Bohlke, attorneys for Blaine Equipment Co., argued the system was never designed to allow purchases of large equipment such as road graders.

They said NDOT and the state's purchasing department violated state law by declaring both Blaine and Cashman "lowest responsible bidders." They questioned how both could be the lowest bidder - especially when he says Cashman's road graders cost the state $25,000 more apiece.

Blaine won that argument at the district court in Clark County. But while Judge Sally Loehrer agreed the state violated the law in the purchase, she refused to void the year-old purchases or to award attorneys fees. She said there was no evidence of bad faith in the deal and that voiding the contract would be unfair to Cashman Equipment, which would have to refund the full price paid for what is now used equipment.

Blaine appealed to the high court seeking to void the contracts, return the equipment to Cashman and force NDOT to buy from the "lowest responsible bidder" - Blaine Equipment.

Callister said the clear language of state law requires the contracts of sale be voided and the equipment returned.

"In the present case, the Nevada State Purchasing Division was required to use a fair bidding process and award the contract to the lowest responsible bidder," they argued.

"Notwithstanding this requirement, the Purchasing Division awarded the contracts to another vendor whose prices greatly exceeded Blaine's."

He said if the law isn't enforced and the contracts aren't voided, "then there will exist no deterrent to negligent, reckless or even intentional violations of the statute."

Deputy attorneys general George Campbell and Teresa Thienhaus argued voiding the contracts would be completely unfair to Cashman Equipment, which sold the equipment to NDOT in good faith. They said that's unfair especially since Cashman was not named as a party to the lawsuit.

They argued lowest price "is not the sole criteria for public purchases" - that contracts can be awarded even when the cost is higher if it is "in the best interests of the state."

As for the attorneys fees, they argued any award of fees as damages "rests in the discretion of the court."

The Supreme Court took the case under submission.

• Contact reporter Geoff Dornan at gdornan@nevadaappeal.com or 687-8750.