DOT urges state Appeals Court to step into contractor dispute

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  • The N.C. Department of Transportation is urging the state's second-highest court to step into a contract dispute.
  • Without action at the N.C. Court of Appeals, DOT could be forced to change vendors while the legal fight continues.

The N.C. Department of Transportation is urging the state’s second-highest court to step into a legal dispute over a contract for a state electronic lien and titling system. Without action, a lower court order would force DOT to change its vendor this week.

DOT wants to block a lower court order issued in March. An Appeals Court panel unanimously agreed to grant a temporary stay.

The state agency awarded a contract in June 2020 to a company called Vanguard Direct. But the only competing contractor, eDealer Services, challenged that decision. EDealer Services “had implemented and operated the ELT system since its initial implementation.”

“The bid protest alleged Respondent DOT’s Evaluation Committee improperly applied procurement rules and policies as well as failing to properly weigh the vendor’s proposals, resulting in an erroneous contract award,” according to paperwork DOT’s lawyers filed Wednesday.

Since DOT’s 2020 decision, the dispute has taken several turns. An administrative law judge ruled that DOT should have awarded the contract to eDealer Services, but the state secretary of the Department of Information Technology overruled that decision. The secretary’s final agency decision upheld the contract award for Vanguard.

When the case reached Wake County Superior Court, Judge Keith Gregory determined that the  secretary’s decision “was based on errors of law, arbitrary and capricious, and unsupported by the evidence.” Gregory ordered that the DOT award the contract to eDealer Services.

In a March 5 order, Gregory called on DOT to award the contract to eDealer within 30 days. He later granted DOT’s request for additional time, extending the deadline to May 4.

The department asked Gregory to stay his ruling pending appeal, but Gregory was unavailable to hold a proposed May 3 hearing on that request.

Without an order from the state Appeals Court, DOT argues in its court filing that it will have to comply with Gregory’s order as the legal dispute continues. The department argued that making the vendor change now could cause more problems.

“Respondent DOT filed its Notice of Appeal, wherein it seeks review of the erroneous ruling of the trial court, specifically the relief granted by the trial court requiring the termination and award of contracts,” according to the court filing. “This mandate affects the rights of multiple parties to this case, requiring this transition to occur within a short period of time after entry of the Order.”

“Respondent DOT specifically challenges the Court’s authority to issue relief in the form of judicially requiring a contract award, and a stay of the Order pending appeal is necessary to maintain the State agency’s ability to guarantee the appellate review of its rights,” DOT lawyers argued.

“Further, a stay of the execution is required to protect the rights of the parties, where compliance with the Order would require termination and award of contracts that … would prohibit any relief or regulation by the State of the implemented ELT system for at least two (2) additional years,” according to the filing. Both eDealer and Vanguard “would similarly encounter prejudice as vendors, for they would be required to expend resources, both in workforce and reimbursements to the State for implementation costs, as monetary compensation is only statutorily permitted through fees charged in operation of the ELT system.”

Failure to block the trial court’s ruling “will result in irreparable prejudice to the parties,” according to DOT’s lawyers.

Editor’s note: This article has been updated with details about the N.C. Court of Appeals’ response to the Department of Transportation’s petition.