Business Workshop: New Place For State Contract Disputes

A recent Commonwealth Court decision enables contractors to take their disputes with Pennsylvania’s state government before a venue other than the Pennsylvania Board of Claims — but only if no money is at stake.For years, the precedent was that the Board of Claims served as the exclusive venue for contractual claims against the commonwealth.In the case in question, a company responded to a state request for proposal — or RFP — won the competition, and signed a contract with the Department of General Services.

The incumbent contractor filed a protest based on the fact that a minor math mistake had been made in scoring the RFP responses. Although the mistake did not change the results of the RFP process, the Department of General Services cancelled the RFP and the contract.

The company that lost the contract through the cancelation filed a complaint with the Commonwealth Court. Department of General Services and the incumbent contractor argued that the matter could only be heard before the Board of Claims, and that the contract cancellation could not be challenged until the disgruntled contractor had filed a claim with DGS.

The Commonwealth Court disagreed, citing an obscure 2002 amendment to the Board of Claims Act which allows parties to seek nonmonetary relief “in another forum as provided by law.” The court held that because the contractor was seeking to prevent DGS from cancelling the contract and not a payment of money, the court had the jurisdiction to resolve the dispute.

The decision means that contractors are not necessarily required to go before the Board of Claims in disputes related to Pennsylvania state contracts, but may be able to go directly to a court. The catch is that the claim cannot ask for monetary relief. If asking for money, the contractor will still have to take its case before the Board of Claims.

For more information on this topic, please contact Chad Michaelson at [email protected].

This article originally appeared in the Pittsburgh Post-Gazette’s Business Workshop section.

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