Kutak Rock Lawyers Aid in Push to Improve Nebraska State Government Contracting and Business Climate

January 24, 2018

Members of Kutak Rock’s state contract procurement team authored a July 2017 article in The Nebraska Lawyer, the Nebraska State Bar Association’s monthly journal. The article, recommending state contract procurement reform in Nebraska, has led to legislation now pending before the Unicameral (LB 814). Through the legislation, Senator Paul Schumacher and other legislators seek to reform Nebraska’s bid protest laws to provide unsuccessful bidders some basic rights to challenge improper state contract award decisions, rights that now do not exist in Nebraska, leading to severe problems, especially for out-of-state national businesses. LB 814 is moving now through the legislative hearing process and should be acted upon soon, especially given the Unicameral’s short, 60 day session in 2018.

As reported in the article, entitled Caveat Vendor, each year Nebraska’s state agencies invite national, international and hometown vendors to bid on valuable state contracts for goods and services. State officials routinely reach out to major corporations, seeking to attract quality companies to serve Nebraskans, and to bring quality services, expertise, investment and jobs to the State. But lurking in Nebraska’s statutory scheme and procurement practices are hidden dangers to all prospective Nebraska vendors: Nebraska law does not offer those vendors a judicial hearing process to challenge improper procurement decisions; Nebraska law does not provide an express right of judicial review when the State wrongfully awards a contract to an unqualified vendor; Nebraska procurement officials do not consider their published “Vendor Manual” to be legally binding on the State. Instead, Nebraska offers vendors only vague protest procedures that severely restrict disadvantaged vendors’ rights to protest an improper award, and ostensibly vests in one unelected agency official total discretion to decide bid protests on contracts worth millions, and even billions, in taxpayer dollars. Unlike in many other states and in the federal system, Nebraska law provides no explicit right to appeal, or effectively challenge, an agency’s contract award decision, even if the agency acted unlawfully, arbitrarily, or in violation of its own Vendor Manual or other bidding rules.

The current system has deprived qualified companies of any meaningful right to challenge the state’s contract award decisions, which in turn has caused those vendors to lose contracts worth millions, and in at least one case, billions in revenues. That system has also led to significant losses in tax revenues and has led Fortune 100 companies to avoid Nebraska as a place to do business. The firm and our state contract procurement experts have taken the initiative to advocate a proper and well established state contract procurement process fair to all, especially the taxpayers of the state.

In 2018, the Unicameral stands ready to repair Nebraska’s broken procurement system, as outlined in LB 814. Companies seeking to contract with the State of Nebraska should carefully evaluate this legislation and consider making their voices heard as it moves through the Unicameral.

Additional Information

If your organization is interested in learning about, or supporting LB 814, or has other questions about Nebraska’s procurement and bid protest process, please contact the undersigned members of Kutak Rock’s Government Relations or Government Disputes Groups. In the past two years alone, we have assisted clients with major state contract procurement disputes in Nebraska, Colorado, Iowa, Arkansas, Missouri, Oklahoma, Nevada and Michigan, and would be happy to discuss your or your clients’ specific needs.