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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Laidlaw Transit Inc. v Anchorage School District (08/12/2005) sp-5931

Laidlaw Transit Inc. v Anchorage School District (08/12/2005) sp-5931

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,


) Supreme Court No. S- 10796
Appellant, )
) Superior Court No.
v. ) 3AN-01-4545 CI
Appellees. ) [No. 5931 - August 12, 2005]
Appeal    from     the
          Superior Court of the State of Alaska,  Third
          Judicial   District,  Anchorage,   Peter   A.
          Michalski, Judge.

          Appearances:   Sean Halloran,  Hartig  Rhodes
          Hoge   &   Lekisch   P.C.,   Anchorage,   for
          Appellant.   Andrena L.  Stone  and  Saul  R.
          Friedman,  Jermain Dunnagan  &  Owens,  P.C.,
          Anchorage,  for  Appellee  Anchorage   School
          District.  Stephen H. Hutchings and  Tina  M.
          Grovier,  Birch, Horton, Bittner and  Cherot,
          Anchorage, for Appellee First Student, Inc .

          Before:   Bryner,  Chief  Justice,  Matthews,
          Eastaugh,  and  Carpeneti, Justices.   [Fabe,
          Justice, not participating.]

          BRYNER, Chief Justice.

          Laidlaw  Transit  and First Student  both  bid  on  the
Anchorage School Districts pupil transportation contract for 2001-
2006.   The district deemed both bids responsive and awarded  the
contract  to  First  Student, finding the  award  to  be  in  the
districts  best interests.  Laidlaw sued the district  and  First
Student,   seeking  to  overturn  the  award,   alleging   fraud,
miscalculation  of the value of its proposal,  violation  of  its
right  to procedural due process, and other errors.  The superior
court converted the suit to an administrative appeal, declined to
hold  an  evidentiary hearing, and affirmed the boards  decision.
Laidlaw  appeals,  claiming  that the  superior  court  erred  in
treating its suit as an administrative appeal, in denying a trial
de  novo,  and in affirming the contract award to First  Student.
We  affirm the award, concluding that (1) Laidlaws superior court
action was properly treated as an administrative appeal, (2)  its
claims of fraud and miscalculation were barred by its failure  to
exhaust  available administrative remedies, (3) a trial  de  novo
was unnecessary because the school districts proceedings complied
with  due  process,  and  (4)  the  districts  bid-responsiveness
determinations and best-interests findings comply with applicable
law and are rationally grounded.
          The   background   facts  of  the  case   are   largely
undisputed.  Anchorage School District began soliciting bids  for
a  new  pupil  transportation contract in October  2000.  Laidlaw
Transit,  Inc.,  held the then-existing contract,  which  was  to
expire  June  30,  2001, and had provided  some  or  all  of  the
districts  pupil  transportation for the previous  twenty  years.
The   district  and  the  Alaska  Department  of  Education  were
concerned  about  lack  of competition for  pupil  transportation
contracts,  so  the district coordinated with the  Fairbanks  and
Matanuska-Susitna Borough school districts to issue Requests  for
Proposals at the same time, hoping to attract more proposers.  In
response  to  its  Request  for  Proposals  (RFP),  the  district
received  five  bids,  including  bids  from  Laidlaw  and  First
Student, Inc.
          The  district certified all the proposals as responsive
to  the  RFP.   Laidlaw submitted the low bid, offering  a  total
daily  rate  of $50,465.42.  First Students proposal fell  within
five   percent   of  Laidlaws.   The  Department  of   Educations
regulations allowed the district to select a proposal other  than
the  low  proposal if the other proposal fell within five percent
of  the  low  proposal, the proposer offered  to  match  the  low
proposal,  and the district found that awarding the  contract  to
that  proposer  would be in the districts best interest.1   First
Student offered to match Laidlaws proposal.
          The  districts staff recommended that the school  board
award  the contract to First Student.  At its meeting on  January
22,  2001,  the  Anchorage School Board considered the  proposals
from  Laidlaw and First Student.  District staff spoke in support
of  its  recommendation of First Student.  Executives from  First
Student  spoke in support of their proposal.  Laidlaw  executives
and  a Laidlaw driver spoke in support of Laidlaws proposal.  The
board  asked questions of several of the speakers.  At the  close
          of the meeting, the board voted to award the contract to First
          After  reviewing First Students proposal and supporting
documents, Laidlaw notified the school board that it had  elected
not to file a petition for reconsideration.  Instead, the company
filed an original civil action in superior court challenging  the
districts   determinations  that  First  Students  proposal   was
responsive  to  the RFP and was in the districts best  interests.
Laidlaws  complaint further alleged fraud by district  staff  and
First  Student,  defamation and slander  by  First  Student,  and
breach  of contract by the district.  Laidlaw asked the court  to
enjoin  or invalidate the districts contract with First  Student,
to  award  the  contract to Laidlaw, and, in addition,  to  award
Laidlaw  bid  preparation costs, contract damages, and  attorneys
fees.   Laidlaw also advanced independent claims for interference
with economic advantage and restraint of trade.
          On  the  motion of the district and First Student,  and
over  Laidlaws opposition, the superior court converted the  case
into  an  administrative appeal, treating it as a matter  calling
for  review  of  the  districts responsiveness and  best-interest
determinations, based on the agency record.  The court called for
the  parties  to brief these issues and stayed Laidlaws  separate
claims pending resolution of the appeal.
          The  superior court affirmed the districts decision and
awarded  attorneys  fees  to  the  district  and  First  Student.
Laidlaw appeals.
     A.    Conversion  to Administrative Appeal/Denial  of  Trial
          Asserting  that  the  school boards  decision  did  not
amount  to  an  agency proceeding and that, even if  it  did,  it
failed  to comport with the requirements of due process,  Laidlaw
initially argues that the superior court erred in converting  the
case  to  an  administrative appeal and/or in denying  Laidlaw  a
trial de novo.
          Whether Laidlaws superior court action qualifies  as  a
case  reviewable in superior court as an appeal is a question  of
law  that  we decide independently.2  Questions of constitutional
compliance are also subject to independent review.3
          1.   Conversion to administrative appeal
          Laidlaw  notes  that an agencys action  is  subject  to
review in the superior court if it is an adjudicative proceeding.4
Citing Hickel v. Halford,5 it contends that the district did  not
conduct  an adjudicative proceeding, so the action Laidlaw  filed
in   superior  court  should  not  have  been  converted  to   an
administrative appeal.
          In   Hickel,  we  cited  three  common  attributes   of
administrative proceedings:
          1.   A dispute must exist.
          2.    A  document reflecting the fact of  the
          dispute  which serves a function  similar  to
          that of a complaint in a civil action, or  an
          accusation or statement of issues  under  the
          Administrative Procedure Act,  AS  44.62.360,
          370, must be served by one party on the other
          3.     The   document  must  set  in   motion
          mechanisms    prescribed   by   statute    or
          regulation  under  which  the  dispute   will
          ultimately be resolved.[6]
Laidlaw  asserts  without explanation that the districts  actions
fail each of these standards.
          But  the  accuracy of this assertion is debatable.   In
Hickel, we cited the Blacks Law Dictionary definition of dispute,
which  reads, in part: a conflict or controversy; a  conflict  of
claims  or  rights; an assertion of a right, claim, or demand  on
one  side,  met by contrary claims or allegations on the  other.7
Here,  the  districts staff decided to recommend that  the  board
award the contract to First Student.  Because Laidlaw sought  the
award itself, a dispute existed; the first Hickel factor was thus
met.   The  second  factor    a formal,  complaint-like  document
reflecting the conflict  might be viewed as having been met  when
the  district faxed Laidlaw its formal notice of intent to  award
the contract to First Student.  And finally, this notice arguably
triggered a formal mechanism for resolving the dispute prescribed
by  the  controlling regulation then in effect,  4  AAC  27.085.8
This  provision required the board to determine if  awarding  the
contract to First Student instead of Laidlaw was in the districts
best  interest;  it  further granted Laidlaw the  right  to  seek
reconsideration in the event of an adverse decision.9
          In   other   cases,  we  have  also   noted   that   an
administrative  action  is adjudicatory when  it  relates  to  an
individual and results in a record capable of appellate review.10
Here,  the  board based its approval of the districts  intent  to
award  the  contract to First Student instead of  Laidlaw  on  an
extensive documentary record submitted by First Student, Laidlaw,
and  the districts staff; and the boards hearing on the issue was
recorded  and  transcribed, thus generating a record  capable  of
meaningful  review  on appeal.  Under this view  and  the  Hickel
factors,  the  boards  decision awarding the  contract  to  First
Student  might be considered to be an administrative adjudication
          reviewable by the superior court under the formal standards
governing administrative appeals.11
          Alternatively,  and perhaps more plausibly,  the  best-
interest hearing before the board might be viewed as an executive
or  legislative action rather than an adjudicative determination.
This  view  conforms to the structure and basic  purpose  of  the
boards   best-interest   determination.    The   relevant   state
regulation,  4  AAC  27.085, adopted an orderly  and  expeditious
process  for awarding transportation contracts through evaluation
of  written  offers  responding  to  an  RFP.   The  process  was
essentially  executive,  not adjudicative:  its  basic  goal  was
simply  to  select a winning offer of a contract, not to  resolve
disputes among competing holders of vested contract rights.
          This    alternative    view   of   the    best-interest
determination  as a non-adjudicative function also comports  with
the  treatment  commonly  given  to  similar  determinations   in
analogous  administrative settings.  A good illustration  may  be
found   in  the  state  procurement  code.12   Under  the   code,
purchase/award  decisions  are made by  the  procurement  officer
based on a most advantageous determination that is much like  the
school boards best-interest determination here.13  Only after the
procurement  officer  makes  the most-advantageous  determination
does  the  administrative adjudication process begin:  interested
parties  may protest the award; the procurement officer issues  a
written decision on the protest; and the aggrieved party may then
appeal  to  the commissioner.14  If genuine issues  of  fact  are
raised, either the commissioner or a hearing officer must  decide
them  after holding a hearing.15  The commissioners decision  may
then be appealed to the superior court.16
          The  state  regulations governing school bus  contracts
defined a similar adjudicative process in 4 AAC 27.085(g),  which
gave   disappointed   bidders   the   right   to   petition   for
reconsideration of the school boards best-interest determination.
As we more fully explain below in discussing Laidlaws due process
claim,   while   subsection  .085(g)   limited   the   right   of
reconsideration   to   claims   alleging   fraud,   duress,    or
calculational error, these limitations seem closely  tailored  to
fit  the  limited  scope of a disappointed bidders  interests  in
receiving a given award.
          On balance, then, we agree with Laidlaws assertion that
the  school  boards best-interest hearing was not an adjudicative
proceeding,  and its best-interest finding does not constitute  a
formal adjudication.  Yet it hardly follows that the boards best-
interest  determination  is  not  subject  to  an  administrative
appeal.  As mentioned above and more fully described below in our
discussion  of  Laidlaws  due  process  claim,  4  AAC  27.085(g)
established  a  formal  adjudicative process  for  administrative
review   of   the   boards  best-interest  determination.    More
important,  even  in the absence of subsection .085(g),  Laidlaws
superior   court  action  challenging  the  boards  best-interest
determination  would  still  properly  be  characterized  as   an
administrative appeal.
          Laidlaw  starts  from  the  mistaken  premise  that  an
agencys actions can give rise to an administrative appeal in  the
          superior court only if the agency takes those actions in a formal
administrative proceeding.  But our cases uniformly point to  the
opposite   conclusion.   We  have  frequently  emphasized   that,
[h]owever  denominated, a claim is functionally an administrative
appeal if it requires the court to consider the propriety  of  an
[administrative]  determination.17  To  be  sure,  the  technical
requirements  that formally govern administrative appeals  attach
only when cases arise from administrative adjudications.18  But we
have  nonetheless traditionally reviewed a wide variety  of  non-
adjudicative administrative and executive actions under the  same
narrow  and  deferential standards that apply  in  administrative
appeals.19  In such cases, although the applicable procedures are
sometimes  improvised,  the superior court  typically  bases  its
ruling  on the administrative record; the court usually  confines
its  consideration to asking whether the agency has taken a  hard
look at the disputed issue, whether it has decided the case on  a
rational  basis;  or  whether  its  decision  was  arbitrary  and
capricious; and the court often issues its decision in  the  form
of a declaratory or summary judgment.20
          Here,  Laidlaws action requested the superior court  to
issue an order voiding First Students contract and directing  the
district to award it to Laidlaw instead. The superior court could
not   have  considered  granting  this  relief  unless  it  first
determined that the district erred in its decision to  award  the
contract  to  First Student.  Even though the board  entered  its
decision  in  a non-adjudicative proceeding, then,  the  superior
court accurately characterized Laidlaws action as a challenge  to
the  boards decision, and on that basis properly converted it  to
an  administrative appeal, rather than treating  it  as  a  fresh
superior court action.
          2.   Denial of trial de novo
          Laidlaw  nonetheless contends that the  superior  court
erred  in failing to conduct a trial de novo because, in Laidlaws
view,  the  boards proceedings denied Laidlaw  due  process.   As
Laidlaw  correctly  notes, our case law indicates  that  when  an
administrative  proceeding  fails  to  conform  to  the   minimum
requirements of procedural due process,  the superior  court  may
not  review the case on the agency record but must instead remand
for  a  new agency hearing or grant a trial de novo as needed  to
cure the procedural defect.21  But here, Laidlaw fails to convince
us  that  any  of  the  deficiencies it  asserts  amounted  to  a
violation of its right to procedural due process.
               a.   Due process rights of disappointed bidder
          We  reject  at  the outset Laidlaws position  that  its
status as a disappointed bidder entitled it to the entire panoply
of  formal  procedural safeguards that attach when  a  proceeding
concerns a vested property interest.22  Laidlaw cites Aloha Lumber
Corporation v. University of Alaska23 for this proposition.   But
Laidlaw  misreads that decision.  In Aloha Lumber,  we  expressly
assumed  that a vested interest existed, merely holding  that  no
due  process violation had been shown in any event.24   In  sharp
contrast  to Aloha Lumbers arguendo assumption, we have generally
recognized that rights do not arise under a public contract until
a  bid is accepted.25  In King v. Alaska State Housing Authority,
          for example, we specifically held that a responsive bidder on an
RFP  lacked any vested right to claim a preference if the winning
bidders  contract was ultimately declared void.26  And though  we
recognized  that  the state owed all bidders a  fair  and  honest
consideration of their proposals, we expressly ruled  that,  even
if  the  state  failed  to  meet this obligation,  strong  public
interests   precluded  the  disappointed  bidder  from   claiming
anything more than the reasonable costs incurred in preparing the
unsuccessful bid.27
          Laidlaw  attempts  to  distinguish  its  situation   by
claiming  that the district had no discretion not  to  award  the
contract  to  Laidlaw if First Students bid proved fraudulent  or
non-responsive.  In support of this claim, Laidlaw  cites  4  AAC
27.085(f)(1), which stated that the district
          shall  offer the contract either (A)  to  the
          proposer  whose responsive proposal  contains
          the  lowest  dollar  amount;  or  (B)  to   a
          proposer whose responsive proposal is  within
          five  percent of the responsive proposal with
          the  lowest  dollar amount  if  the  proposer
          agrees to match the responsive proposal  with
          the   lowest  dollar  amount  and  the  board
          determines that the offer to other  than  the
          low  proposer is in the best interest of  the
          Laidlaw argues that this language made it mandatory for
the  district  to award it the contract, thus effectively  giving
Laidlaw, as the low bidder, a vested interest in the contract  if
the district erred awarding it to First Student.
          But this argument fails, since 4 AAC 27.085(f)(2)   the
paragraph  of  the regulation that immediately followed  the  one
cited by Laidlaw  expressly empowered  the district to reject all
responsive proposals if, in its judgment, the proposals  are  too
costly.29    Because   paragraph  (f)(2)  granted   comprehensive
discretion  not  to  award the contract to any bidder,  paragraph
(f)(1)  cannot  properly  be read as having  created  a  property
          Under  King,  then, Laidlaws position as a disappointed
bidder and current incumbent gave it no special hold on the pupil
transportation contract and no right to claim the full  array  of
procedural protections surrounding vested property interests.
          This is not to say that Laidlaw had no right at all  to
procedural   due   process.   We  have  held  that   the   Alaska
Constitutions  due  process clause must be  flexibly  applied  by
balancing three factors:
          the private interest affected by the official
          action;  the risk of an erroneous deprivation
          of  such interest through the procedures used
          and the probable value, if any, of additional
          or   substitute  procedural  safeguards;  and
          finally,  the governments interest, including
          the  fiscal  and administrative burdens  that
          additional     or    substitute    procedural
          requirements would entail.[31]
In  keeping  with  this flexible standard, we noted  in  Frontier
Saloon, Inc. v. Alcoholic Beverage Control Board that due process
does not require a full-scale hearing in every situation to which
due process applies.32
          More specifically, regarding administrative matters, we
observed in Hickel v. Halford that
          minimal  due process requirements  do  define
          necessary  requirements of  all  adjudicatory
          proceedings.   Without  providing  at   least
          notice and the opportunity to participate  to
          those    who    might   be    affected,    no
          administrative action can either resolve  the
          dispute  to  the satisfaction of all  of  the
          parties or be considered final despite  later
          Hickel  sets  the  baseline for the minimum  procedural
rights  due in adjudicative proceedings.  But as we have  already
determined  above,  the  school bus  award  process  was  not  an
adjudicative proceeding.  The detailed provisions of 4 AAC 27.085
defined  limited procedural rights for disappointed bidders  like
Laidlaw.   We  must  look  to  those  sources  for  guidance   in
determining  whether the district denied Laidlaw its due  process
rights.  In interpreting 4 AAC 27.085, we must also be mindful of
its structure and basic purpose.
          As  already noted, the regulations provisions described
an  orderly  and  expeditious process for awarding transportation
contracts through evaluation of written offers responding  to  an
RFP.   The regulations basic goal was simply to select a  winning
offer  of  a  contract, not to resolve disputes  among  competing
holders  of  vested contract rights.  And as a matter  of  public
policy,  the need for efficiency in government commands that  the
process  be able to function quickly and dependably.   Given  its
structure  and  purpose,  then,  we  think  that  4  AAC   27.085
permissibly  defined a non-adversarial, document-based  selection
process in which the trappings of formal evidentiary hearings had
minor significance.
               b.   Due process requirement for school board best-
                    interests hearing
          With  these  principles in mind, we  turn  to  Laidlaws
specific due process contentions.  Laidlaw argues initially  that
because the district did not send out its memorandum recommending
the  award to First Student until after the close of business  on
the  Friday  before the boards Monday meeting,  Laidlaw  received
insufficient notice of the issues needing to be addressed at  the
meeting.  Laidlaw further asserts that the district intentionally
delayed release of the information to Laidlaw.
          The   district  acknowledges  that  its  RFP  expressly
entitled  all  responsive  bidders  to  receive  notice  of   its
recommendations  as  far  in advance  of  the  board  hearing  as
possible.   But  the  record indicates  that,  as  required,  the
district  conscientiously did try to provide Laidlaw the earliest
          notice possible.  On the morning of Friday, January 19, 2001,
immediately  after  reaching its decision to recommend  that  the
contract  be  awarded  to First Student,  the  district  informed
Laidlaw by fax of its intent to present its recommendation at the
board  meeting, which had already been scheduled for the  evening
of   Monday,  January  22,  2001.   The  district  finalized  the
memorandum supporting its recommendation, and faxed it to Laidlaw
when it was completed at 6:04 p.m. on Friday, January 19.  As the
district and First Student point out, this notice enabled Laidlaw
to appear at the Monday meeting and speak meaningfully in support
of its own proposal.
          Citing Fairbanks North Star Borough Assessors Office v.
Golden  Heart  Utilities, Inc.,34 the district and First  Student
assert that Laidlaw had adequate notice under the requirements of
due process.  In Golden Heart we found that receipt of an agencys
position  memorandum  on  the Friday before  a  Monday  board  of
assessment  hearing  gave the taxpayer,  Golden  Heart,  adequate
notice  under  due process.35  Similarly, the RFP  in  this  case
required  the district to provide notice of its intent  to  award
the contract only as far in advance as possible.  And here, as in
Golden  Heart, the record indicates that Laidlaw understood,  and
adequately addressed, the districts position at the hearing.36
          Laidlaws attorney wrote and delivered a letter  to  the
school  board members in advance of the meeting, addressing  many
of  the  issues  raised  in the districts memorandum:  liquidated
damages,  labor relations, and First Students ability to  provide
sufficient  equipment.  Laidlaw was able  to  fly  at  least  two
executives  to  Anchorage for the meeting, and  it  was  able  to
notify  several local employees who were present at the  meeting.
Seven  speakers  represented Laidlaw at the board  meeting;  they
further  addressed  the  concerns  the  district  raised  in  its
memorandum,   such  as  communication  difficulties,   liquidated
damages, bus size, and drivers attendance at training and  safety
meetings.   We  find no indication that Laidlaw was substantially
hampered in preparing its presentation.
          These  circumstances  are readily distinguishable  from
the ones that recently led us to find a due process violation  in
State,  Department  of  Natural Resources v.  Greenpeace,  Inc.37
There, Greenpeace had appealed DNRs decision to issue a water use
permit  to BP Exploration (Alaska) (BPXA); under applicable  law,
the appeal entitled Greenpeace to a mandatory stay of the permit.
BPXA  filed an expedited motion requesting DNR to lift the  stay;
it  then  left Greenpeaces attorney a telephone message informing
him  that  an opposition was due the following day.  The attorney
was  out  of  town  and failed to receive the  message  until  he
returned several days later.  By then, DNR had already lifted the
stay.38    In   concluding  that  the  one-day  notice   violated
Greenpeaces right to due process, we emphasized the importance of
the  stay  and its mandatory nature, the serious and  irreparable
harm  potentially threatened by lifting the stay, the absence  of
any  clear  need  for emergency action, and  the  fact  that  the
truncated  period for response completely deprived Greenpeace  of
an  opportunity to respond before DNR acted on BPXAs  motion  and
lifted the stay, which left Greenpeace with no adequate recourse.39
          Here, by contrast, the school boards hearing was not  a
formal adjudicative proceeding, the fact that the board would  be
required  to  decide the best-interest issue was well understood,
and  the  date of the school board meeting had been scheduled  in
advance.  More important, the record establishes that the  three-
day notice actually given sufficed to enable Laidlaw to submit  a
cogent   and  well-prepared  response  to  the  district   staffs
recommendations.    Additionally,   the   boards    best-interest
determination  had  no immediate or irreparable  impact;  to  the
contrary, 4 AAC 27.085(g) expressly entitled Laidlaw to  petition
for  reconsideration and provided for an automatic  stay  of  the
award pending a ruling on the petition.
          Moreover,   the   record  fails  to  support   Laidlaws
assertion  that the district intentionally delayed releasing  its
intent-to-bid memorandum to Laidlaw.  It shows that the  district
faxed  the  memorandum to all the proposers at approximately  the
same  time on January 19.  The record also indicates that as late
as  January  17, First Student continued to provide the  district
with  supplemental information regarding its ability  to  provide
the  required  buses  and  its position  on  labor  unions.   The
affidavit   of   Steve   Kalmes,  the   districts   Director   of
Transportation,  states  that  Superintendent  of  Schools  Carol
Comeau did not make her determination regarding which company  to
recommend the award to until January 18, 2001.  The record  as  a
whole  thus  supports  an inference that  the  district  did  not
intentionally delay release of its bid recommendation to Laidlaw.
          Considering  the  totality of these  circumstances,  we
conclude  that Laidlaw has failed to establish that the three-day
notice at issue here violated its right to due process.
          Laidlaw  alternatively contends that  its  due  process
rights  were violated by the manner in which the board  conducted
its  meeting.   In asserting this contention,  Laidlaw  complains
that the district failed to give Laidlaw a copy of First Students
proposal in advance of the meeting, that Laidlaw was not  allowed
to call or cross-examine witnesses, and that some of the speakers
who favored Laidlaw were limited to three-minute presentations.
          But Laidlaw builds this claim on a premise that we have
already  rejected:  its  assumption   that  the  conduct  of   an
adjudicatory hearing must be consistent with the essentials of  a
fair trial. 40  As we have indicated, the boards hearing was  not
an  adjudicatory proceeding; and even if it had been, because the
hearing  was  not meant to resolve competing property  interests,
due  process would not have automatically entitled Laidlaw to the
trappings   of  a  formal  trial.   As  First  Student  correctly
observes,  and as we have previously held, due process  does  not
require  a  full-scale hearing in every situation  to  which  due
process  applies.41   Here, while the board  did  not  model  its
meeting on a trial, the procedures actually used provided Laidlaw
with an adequate opportunity to argue its position.  Although the
district  did not give Laidlaw a copy of First Students  proposal
until  after  the  board meeting, the districts  memorandum  gave
Laidlaw  ample notice of the arguments that the district intended
to  make  in  support of an award to First Student.  Furthermore,
the  districts actions accorded with 4 AAC 27.085(i),  which  did
          not require the district to send non-winning bidders copies of
its  recommended proposal, but merely required  it  to  make  all
proposals available for public inspection during business hours.42
Notably, Laidlaw has not alleged that the district failed to make
First Students proposal available for inspection.
          Although Laidlaw insists that the school board erred by
denying  cross-examination and limiting testimony, 4  AAC  27.085
did  not require the board to grant cross-examination or to  hear
unlimited  testimony  in  deciding  whether  the  districts  best
interests  would  be  served by awarding the  contract  to  First
Student;  indeed,  the  regulation  does  not  appear   to   have
envisioned  any  formal evidentiary presentation during  a  board
hearing on the best-interest issue.43
          Despite the absence of any provision requiring a trial-
like  hearing on the best-interest issue, the board in  fact  did
allow two senior Laidlaw representatives unlimited time to speak,
and permitted other witnesses to make three-minute presentations.44
And  Laidlaw  fails to identify any specific prejudice  resulting
from   the  procedures  used  during  the  boards  best-interests
hearing.   In  short, we find no procedural deficiencies  in  the
January  board  hearing  that would have compelled  the  superior
court to grant Laidlaw a trial de novo on appeal.
               c.   Due         process         rights         on
                    reconsideration/exhaustion of  administrative
          Since  our conclusion above focuses mainly on  Laidlaws
procedural  rights at the January 22 hearing,  it  only  resolves
Laidlaws  procedural  due  process claim  insofar  as  the  claim
relates  to  matters finally resolved at that hearing  primarily,
whether  the districts best interest would be served by  awarding
the  pupil  transportation contract to First Student.  In  ruling
that  Laidlaw  received fair treatment at the hearing,  then,  we
have not considered whether Laidlaw possessed, or might have been
denied, additional procedural rights after the hearing concluded.
          In  particular, we note that 4 AAC 27.085(g)  expressly
identified  two  situations  in which disappointed  bidders  were
granted the right to receive reconsideration of a boards decision
awarding a contract:
               Within  five working days following  the
          district school boards offering a contract, a
          proposer  whose responsive proposal  was  not
          accepted  may petition the board, in writing,
          for  reconsideration of its action. Petitions
          for   reconsideration  are  limited  to   the
          following  grounds, which must be  specified:
          (1)  fraud  or duress by the district  school
          board  or  a  proposer; or (2) error  of  the
          district  school board in calculating  dollar
          amounts. The aggrieved proposer shall deliver
          the  petition  to  all other  proposers.  The
          district school board shall decide the  scope
          and   form  the  reconsideration  will  take,
          except that all responsive proposers must  be
          given  the  opportunity to be  heard  on  the
               petition. [45]
          Though confined to petitions alleging fraud, duress, or
miscalculation  of dollar values, subsection .085(g)  appears  to
have  provided for reconsideration as a matter of course on these
issues;  moreover, the subsection expressly gave the  board  wide
latitude  to  decide the scope and form the reconsideration  will
take  and granted all responsive proposers a right to be heard.46
If  a  petition advanced disputed factual allegations of material
fraud  or  miscalculation, fundamental fairness might  require  a
formal evidentiary hearing to resolve the dispute; the provisions
of  the  regulation seem broad enough to allow appointment  of  a
hearing officer.
          Here,  the  central  theme  of Laidlaws  administrative
appeal  to  the superior court was its allegation  of  fraud  and
collusion  between First Student and the school districts  staff;
and   secondary  arguments  supporting  this  claim   essentially
asserted  that the board miscalculated the true value of Laidlaws
proposal.  In both these respects, Laidlaws administrative appeal
fell squarely within the ambit of subsection .085(g).  Thus,  had
Laidlaw   raised   these  claims  in  a   timely   petition   for
reconsideration, the board may well have provided the more formal
evidentiary   process   that   Laidlaw   now   claims   it    was
constitutionally due.
          Yet  the  record  establishes that Laidlaw  consciously
decided  to  forgo reconsideration.  The deadline for Laidlaw  to
petition  for  reconsideration of the boards Monday,  January  22
contract award would have been Monday, January 29.  The day after
the  board  meeting, Tuesday, January 23, Laidlaw  contacted  the
district  and  requested a copy of First Students  bid  proposal.
The  district supplied a copy to Laidlaw the following  day.   On
Thursday,  January 25, Laidlaw contacted the district  and  asked
for  copies  of  all  supporting information submitted  by  First
Student.   On  Friday, January 26, having not yet received  these
supplemental documents, Laidlaws attorneys informed the  district
that  Laidlaw  was  prepared to file a superior  court  complaint
challenging  the boards decision and an emergency  motion  for  a
temporary  restraining order seeking to stay  the  award  of  the
contract  to  First  Student.   In response,  the  district  gave
Laidlaw  copies  of  all  the requested  documents  on  Saturday,
January 27.
          In  a  letter  faxed  to  the districts  counsel  early
January  29  the deadline for filing  Laidlaws counsel  confirmed
that  the documents had been received at noon Saturday, had  been
promptly shipped to Seattle for review by Laidlaw officials,  and
that  [a]  final  determination on whether or not  Laidlaw  wants
reconsideration by the Board will be made this afternoon. By  the
end  of  the  day,  Laidlaw  chose not to  seek  reconsideration,
electing instead to file its superior court complaint three  days
later on February 1.
          Laidlaw  now  contends that it  did  not  have  a  fair
opportunity to file for reconsideration.  First, Laidlaw  asserts
that  filing  a  petition on January 29 would  have  been  futile
because  the district had already forwarded the proposed contract
          to the Commissioner of Education for approval on January 23.
Referring to 4 AAC 27.085(h), Laidlaw argues that by sending  the
proposed contract on January 23, the district made plain that  it
had   already  concluded  any  board  actions  on  petitions  for
reconsideration by proposers.
          Laidlaws  argument bends the regulations language.   As
already indicated, 4 AAC 27.085(g), required the board to  accept
and decide any properly framed petition for reconsideration filed
within  five  working days of a decision awarding a contract  for
transportation  of  pupils.   The  regulations  next  subsection,
.085(h), specified that, following any board actions on petitions
for reconsideration by proposers, the district school board shall
forward a copy of the proposed contract, successful proposal, and
minutes containing board actions to the commissioner.  The  plain
language  of these provisions gave Laidlaw five days  to  file  a
petition  for  reconsideration; and nothing in  these  provisions
suggests  that  the  school  board could  have  circumvented  the
required  process  for reconsideration by simply  forwarding  its
paperwork  to  the  commissioner prematurely.  Nor  does  Laidlaw
point to any special circumstances in the present case creating a
reasonable inference that the boards early communication  to  the
commissioner  was  meant  to  supplant  or  override   subsection
.085(g)s  provisions allowing reconsideration.  To the  contrary,
Laidlaws own correspondence to the district on January 29 evinces
its awareness that it still had the right to petition.
          Laidlaw  next  asserts  that  the  districts  delay  in
forwarding  it  copies of First Students bid materials  prevented
Laidlaw from discovering First Students misrepresentations before
the  deadline for reconsideration.  The superior court found that
the   districts  delivery  of  the  bid  materials  on  Saturday,
January  27  allowed Laidlaw enough time to decide by January  29
whether to file for reconsideration.  The superior courts finding
is not clearly erroneous.  As the court pointed out, 4 AAC 27.085
merely  require[d] that [the district] make the proposals  public
during  normal  business hours . . . .  It  [did]  not  make  any
mention  of  when  the  proposal must  be  made  available  to  a
disappointed  bidder.   Laidlaw  has  alleged  neither  that  the
district failed to make the proposals available for inspection by
the  public nor that Laidlaw unsuccessfully attempted to  inspect
the  bid  materials  at  the  districts  offices.   Moreover,  as
previously  indicated,  Laidlaws attorney acknowledged  receiving
First  Students bid materials on January 27 and failed to express
any doubt as to Laidlaws ability to make an informed decision  on
reconsideration by the deadline on January 29.
          Last,  Laidlaw suggests that it could not  have  sought
reconsideration because it alleged fraud by the districts  staff,
whereas subsection .085(g) only allowed reconsideration based  on
fraud  by  school board members and the successful proposer.  But
Laidlaw  overlooks that its superior court complaint  did  allege
precisely  what  subsection .085(g) allowed it  to  allege  as  a
ground  for  reconsideration: fraud by First  Student  acting  in
collusion with the districts staff.
          We thus conclude that Laidlaw has failed to demonstrate
that  its  decision  to  forgo reconsideration  was  grounded  on
futility or inadequate notice.  We further conclude that Laidlaws
conscious  choice  to bypass reconsideration  precludes  it  from
claiming  that  a trial de novo was necessary on  appeal  to  the
superior  court  because  the board had  denied  Laidlaw  a  full
hearing  on  the  issues  of fraud and proper  valuation  of  its
proposal   procedural rights that Laidlaw might have received  on
          Our  decision  on this point accords with the  decision
reached by the superior court.  After considering the totality of
the circumstances, the superior court ruled that Laidlaws failure
to  seek  reconsideration  amounted to an  unexcused  failure  to
exhaust its administrative remedies.47
          Laidlaw disputes the courts finding that exhaustion  of
remedies was required.48  But insofar as Laidlaws superior  court
action  raised  issues  within the scope of  subsection  .085(g)s
provision  for reconsideration, we disagree.  As to those  points
falling  outside the subsections sphere, on the  other  hand,  we
note  that  the  superior  court  fully  addressed  and  resolved
Laidlaws  administrative  appeal  on  its  merits.   Given  these
circumstances, we hold that the superior court did not abuse  its
discretion  in converting Laidlaws complaint to an administrative
appeal and denying its request for de novo proceedings.
     B.   Merits of Laidlaws Administrative Appeal
          Laidlaw  next challenges several aspects of the  boards
and  superior  courts  rulings  on  the  merits  of  its  claims,
contending  that  the  board  erred  in  finding  First  Students
proposal responsive, that the record fails to support the  boards
award  of the contract to First Student, and that the board erred
in   basing  its  best-interests  determination  on  factors  not
included in the RFP.
          1.   Responsiveness of First Students proposal
          At  the  time  of its decision, the school board  could
offer  the  pupil  transportation contract only to  a  responsive
proposer.49  4 AAC 27.085(e)(2) required the district to certify a
proposal as nonresponsive if:  (A) it does not materially conform
to  the  request  for  proposals; or (B) it contains  a  material
alteration  or  erasure  which has  not  been  initialed  by  the
proposer;  or (C) the proposer omits or is unwilling  to  provide
services specified in the request for proposals.50  The districts
RFP  further provided that the district shall certify a  proposal
as  nonresponsive  if, among other requirements,  [t]he  proposer
fails  to  include  with its proposal a signed acknowledgment  of
receipt of any addendum(s) to this Request for Proposal issued by
the  District.  Laidlaw argues that First Students  proposal  was
not responsive to the RFP.
          We  have held that a variance from the requirements  of
an RFP will render a proposal nonresponsive only if that variance
is material.51  A variance is considered material if it gives one
bidder  a  substantial advantage over other bidders  and  thereby
restricts or stifles competition.  52  Laidlaw cites a New Jersey
Supreme Court case for the proposition that  [t]he materiality of
a  particular specification is to be determined as  a  matter  of
law.  53   But  that case is inapposite, for we have consistently
recognized  that  we  must  review an  agencys  determination  of
          responsiveness under the reasonable basis standard.54  As we said
in  applying  the  reasonable basis standard in State  v.  Bowers
Office  Products, the question is not the proper legal definition
of  the  terms non-responsive or material, but an application  of
legal  concepts  to facts, based on the nature  of  the  business
being conducted.55

          Laidlaw  initially claims that First Students  proposal
was  automatically nonresponsive because First Student failed  to
acknowledge  an addendum to the RFP. Shortly before the  proposal
deadline, Laidlaw asked the district to clarify whether the  cost
of  mid-day  transportation for kindergarten and gifted  students
should  be treated the same or differently in the proposal.   The
district  responded  by issuing Addendum  5  to  the  RFP,  which
          The  District has divided mid day  work  into
          two  categories,  routes that  will  be  paid
          based  on an hourly rate and routes that  are
          included   in  the  daily  rate.    Mid   day
          kindergarten  routes and routes  serving  the
          Martin Luther King Career Center will be paid
          on  an hourly rate.  All other mid day routes
          are to be included in the daily rate.
Laidlaw  was  the only one of the five proposers who  returned  a
signed acknowledgment of receipt of Addendum 5.
          Laidlaw   argues  that  First  Students  proposal   was
nonresponsive for failure to acknowledge Addendum 5.  In order to
determine   whether   First  Students  failure   to   acknowledge
Addendum  5  was  a  material  omission  rendering  the  proposal
nonresponsive,  the proper inquiry is whether the  omission  gave
First Student a substantial advantage over the other proposers.56
          The   record  here  shows  that  the  district  had   a
reasonable  basis for concluding that First Students  failure  to
return  Addendum 5 did not give it a substantial  advantage  over
the  other  proposers.  As the district and First  Student  point
out,  Addendum 5 restates language that was already in  the  RFP.
An  underlined  paragraph in the RFP independently  provided,  in
relevant part:
          Mid   day  kindergarten  routes  and   routes
          serving  the M.L. King Career Center are  not
          eligible  for reimbursement from  the  Alaska
          Department    of    Education    and    Early
          Development.  These routes cannot be included
          in  the daily bus rate.  The contractor shall
          be  reimbursed for these routes on an  hourly
The   record  indicates  that  no  proposer  other  than  Laidlaw
expressed uncertainty about this requirement before the  district
issued Addendum 5, and only Laidlaw returned an acknowledgment of
the  addendum.  First Students proposal properly included  hourly
rates  for mid-day kindergarten and Career Center routes  in  its
proposal;  it thus derived no substantial advantage over  Laidlaw
through its failure to acknowledge Addendum 5.
          Laidlaw relies on the RFPs language providing that  the
district shall certify a proposal as nonresponsive if it does not
acknowledge an addendum.  But this language cannot reasonably  be
construed   as   precluding  the  district  from   applying   the
conventional  standard of materiality to relax  an  unduly  harsh
application  of  the  acknowledgment  requirement.    Under   the
circumstances   presented  here,  rigid   enforcement   of   this
requirement  would have elevated form over substance, frustrating
the  districts  and  the regulations clear  intent  to  create  a
competitive bidding process for pupil transportation.   In  Kelly
v. Zamarello, where an agency found a bid nonresponsive, we said:
A  decision rejecting a bid for nonresponsiveness has application
beyond  the  instant case, going to the integrity of  the  entire
competitive bidding process.57  Here, strict enforcement  of  the
RFPs   requirement  to  acknowledge  each  addendum  would   have
undermined  the  competitive  bidding  process  by  placing   the
district  in the position it sought to avoid, that of  having  no
opportunity to compare multiple responsive bids.

          Laidlaw  next  claims that First Students proposal  was
nonresponsive  because it failed to include the signature  of  an
authorized  corporate  officer.   The  RFP  required   that   all
proposals  be  signed  by an individual authorized  to  bind  the
corporation.  Further, all proposals were required to  include  a
certified   corporate  resolution  stating  the  names   of   the
individuals  authorized to bind the corporation.  First  Students
corporate resolution stated that E. Bruce Lyskawa, Carey  Paster,
and  Steve  Hebborn  were authorized the  bind  the  corporation.
Although  none  of  these  individuals  personally  signed  First
Students  proposal,  Lyskawa gave approval for  his  name  to  be
signed  by  John  BeGasse,  First Students  Business  Development
Manager,  who  inserted his own initials,  J.B.,  after  Lyskawas
          Laidlaw  asserts  that because none of the  individuals
authorized to bind First Student actually signed the proposal, it
was  nonresponsive  to  the RFP.  The superior  court  disagreed,
accepting  First  Students argument that Lyskawa  had  authorized
BeGasse  to sign Lyskawas name, which in turn bound First Student
to  the  terms of its proposal.  The courts finding was supported
by  BeGasses affidavit, verifying that Lyskawa had authorized him
to  sign  Lyskawas name because there was insufficient  time  for
BeGasse  to  forward  the proposal to Lyskawa  for  his  personal
signature  before  the  deadline.   Moreover,  Lyskawa   ratified
BeGasses action by testifying on behalf of First Student  at  the
board meeting.
          In Bruton v. Automatic Welding & Supply Corporation, we
observed that an agents
          authority  to  do an act can  be  created  by
          written  or spoken words or other conduct  of
          the  principal which, reasonably interpreted,
          causes   the  agent  to  believe   that   the
          principal  desires  him  so  to  act  on  the
          principals account.[58]
Laidlaw  cites no convincing authority establishing that  BeGasse
lacked  sufficient  authority to bind First  Student  by  signing
Lyskawas   name   with   his  express  approval.    Under   these
circumstances, we conclude that the district had a rational basis
for  concluding  that  First  Students  proposal  was  responsive
despite  the  fact that BeGasse signed the proposal  on  Lyskawas
          Laidlaw   claims  that  First  Students  proposal   was
nonresponsive   to  the  RFP  for  several  additional   reasons.
Specifically,  Laidlaw  alleges  that  First  Student  failed  to
certify  that  it  was  able to supply  adequate  facilities  for
Anchorage  operations,  that it did  not  submit  the  names  and
resumes of its Anchorage management team, that it did not  supply
sample  driver route notebooks, and that it failed  to  submit  a
benefit  scale for drivers and attendants.  Laidlaws reply  brief
also  accuses  First  Student  of  failing  to  provide  adequate
financial  data.   According to Laidlaw, the RFP  required  First
Student to supply all this information.
          The district and First Student acknowledge that some of
this  information was omitted from First Students  proposal,  but
they  insist  that  none  of the omissions  were  material.   The
district   and  First  Student  further  argue  that   the   RFPs
requirements  pertaining to some of the  alleged  omissions  were
more flexible than Laidlaw admits.  To illustrate this point, the
district  and  First Student note that under the strict  standard
Laidlaw now seeks to apply, its own proposal would have contained
omissions  making  it  nonresponsive.   Regarding  other  alleged
omissions, First Student contends that Laidlaws strict test would
have  made it nearly impossible for any proposer other  than  the
incumbent to provide proof of existing facilities or driver route
manuals for Anchorage.
          We  find Laidlaws arguments to be unpersuasive.  In our
view,  the  district had a reasonable basis for  concluding  that
First  Students information about facilities materially  complied
with  the RFP.  The RFP required only that the proposer supply  a
letter  of  intent from a recognized third party certifying  that
arrangements have been made for the purchase, lease  or  rent  of
necessary vehicles and/or facilities and that necessary financing
is  available, and that such vehicles and/or facilities  will  be
available  in  time  to  provide the  services  required  by  the
contract.  First Student supplied a letter from Bond, Stephens  &
Johnson, a commercial real estate service, certifying that  First
Student had identified locations in Anchorage and Eagle River  in
which  to locate facilities.  Although the letter did not discuss
financing,  the  district could reasonably  have  concluded  that
First  Students  proposal  was  sufficiently  responsive  as   to
          First  Student also provided a sample driver  handbook.
It did not prepare a handbook specific to Anchorage, but provided
its  national handbook.  First Student explained in its  proposal
that  it would develop specific policies for Anchorage if it were
awarded the contract.  Again, the district could reasonably  have
concluded   that   First  Students  proposal   was   sufficiently
responsive to the RFPs request for driver handbooks.
          First  Students proposal further stated that  it  would
          provide a three-percent increase over the then-existing pay
scale.   First  Student went on to explain that it could  not  be
more  specific about wages because of ongoing salary negotiations
and  pending  changes to Alaskas minimum wage  laws.   Under  the
circumstances, the district could reasonably have concluded  that
First   Students  information  about  benefits  was  sufficiently
responsive to the RFP.
          First  Student provided financial data for  its  parent
company,  First Group,  but not separate data for First  Student,
Inc.   Laidlaw  cites  Matter of Alpha  Q,  Inc.,  a  Comptroller
General opinion holding that parent company data is informational
and  has  no  bearing on the bids responsiveness.60  But  Laidlaw
quotes  Alpha  Q out of context.  There, the unsuccessful  bidder
was   challenging  the  Army  procurement  officers  finding   of
responsiveness as to a successful bid that included  the  bidding
companys financial data, but omitted its parent companys  data.61
Reviewing the Armys decision under the reasonable basis standard,
the   Comptroller  General  found  that  omitting   the   parents
information did not render the proposal nonresponsive.62  Alpha Q
neither   explicitly  nor  implicitly  addresses   the   converse
situation  at  issue  here,  where the  district  relied  on  the
financial  status  of  First  Students  corporate  parent  as   a
sufficient  basis  to  find that First  Student  was  financially
sound.   Here,  reviewing the districts decision under  the  same
deferential standard applied in Alpha Q, there was unquestionably
a reasonable basis for the finding of financial health.
          In summary, the district could properly find that First
Students proposal was responsive to the RFP.
          2.   Best-interest finding
          Because  Laidlaw was the low proposer and First Student
offered  to match Laidlaws bid, the board was permitted to  award
the  contract  to First Student only if it found  that  doing  so
would  be in the best interest of the district.63  Laidlaw claims
that  the boards best-interest finding was not supported  by  the
record,  was not based on the evaluation factors set out  in  the
RFP,  was impermissibly based on factors not in the RFP, and  was
the  product  of misrepresentation and favoritism.   The  parties
agree that we review the districts best-interest finding only  to
determine whether it has a reasonable basis in the record.64  But
Laidlaws  claim  that the board was required to  base  its  best-
interest  finding  on  factors set out  in  the  RFP  presents  a
question of law that we review de novo.65

          4  AAC  27.085 did not specify what factors  the  board
should  consider in making its best-interest finding.66  But  the
boards   discretion  is  generally  constrained  by   our   cases
recognizing that an agency has a basic duty to consider all  bids
honestly and fairly.67  Laidlaw claims that Alaska case law  also
requires an agency to consider only those factors set out in  the
RFP;  because  the  RFP in the present case  did  not  list  past
performance  as  a  qualifying factor, Laidlaw reasons  that  the
board  had  no  authority  to consider it  in  finding  that  the
districts best interest would be served by awarding the  contract
to First Student.
          But  the  cases  Laidlaw cites do not  support  such  a
blanket  rule.  Laidlaw cites Aloha Lumber68 for the  proposition
that  past experience with the contracting agency under different
contracts . . . is irrelevant if it is not identified by the  RFP
as  a factor for evaluation.  Laidlaw misconstrues our ruling  in
Aloha  Lumber, which addressed a question of responsiveness,  not
one  of  best interests.  Aloha Lumber claimed that its  proposal
should  have  been  found  responsive  despite  being  incomplete
because  the  RFPs requirements did not take into  account  Aloha
Lumbers  experience in other bidding processes.69  We found  that
Alohas  experience  in a prior RFP involving a  different  timber
sale  is  irrelevant  to  determining responsiveness  under  this
timber  sale RFP.70  It is not clear why Laidlaw would read  this
language regarding responsiveness to support its contention  that
the  district  was not permitted to consider past performance  in
deciding which responsive proposal would serve the districts best
          Laidlaws reliance on State, Department of Education  v.
Nickerson  is  also misplaced, because the disappointed  proposer
there  claimed  violation of a statute  requiring  the  state  to
follow  the  evaluation criteria published in its  RFP.71   Here,
although  4  AAC  27.085 expressly provided  that  the  RFP  must
contain  the  criteria the district school board  will  apply  in
determining certification of proposals72 the regulation used  the
words  certification and certify exclusively in reference to  the
responsiveness     determination,    not    the     best-interest
determination.73   By  contrast, in explaining  the  process  for
choosing  among  responsive proposers,  the  regulation  made  no
reference  to  the RFP.  Under 4 AAC 27.085(f), the only  factors
the  board  was  required to consider were  price  and  the  best
interest of the district:
          [T]he district . . . shall offer the contract
          either  (A)  to the proposer whose responsive
          proposal  contains the lowest dollar  amount;
          or   (B)   to  a  proposer  whose  responsive
          proposal  is  within  five  percent  of   the
          responsive  proposal with the  lowest  dollar
          amount  if  the proposer agrees to match  the
          responsive  proposal with the  lowest  dollar
          amount  and  the  board determines  that  the
          offer  to other than the low proposer  is  in
          the best interest of the district.[74]
          Laidlaw has not alleged that the district impermissibly
considered  factors  not  mentioned in the  RFP  when  certifying
proposals  as  responsive.  And we find no support  for  Laidlaws
contention  that the board could only consider the  same  factors
when   making  its  best-interest  determination.   Indeed,   the
fundamental  difference  between a  proposals  responsiveness,  a
technical  matter,  and its ability to serve the  districts  best
interest,  a  policy matter, suggests the need  for  a  different
evaluative   framework.  While the factors listed for determining
responsiveness  were undoubtedly germane to  the  districts  best
interest,  we  conclude that those factors did not  preclude  the
          board from considering any other factors it deemed appropriate to
ensure  that  all responsive proposals obtained fair  and  honest
            Laidlaw  next alleges that the districts bid  process
was tainted by misrepresentation and favoritism.  We require[]  a
disappointed bidder to meet a high standard of proof in order  to
recover for breach of an agencys implied promise to consider bids
honestly and fairly.76  Laidlaw fires a barrage of unsubstantiated
assertions  accusing  the districts staff of falsely  criticizing
Laidlaws past performance.  With the exception of the driver wage
scale,  Laidlaw  has failed to identify anything  in  the  record
suggesting that the districts statements concerning Laidlaw  were
inaccurate.   And even assuming that the disputed  statements  by
district  staff  were  incorrect, Laidlaw fails  to  advance  any
support  for  its  contention  that  the  inaccuracies  reflected
collusion  between the district and First Student or  intentional
falsehood by either party.
          The  cases  Laidlaw  cites to  support  its  claims  of
collusion   and  fraud  involved  proven  instances   of   covert
negotiations between an agency and a favored proposer.77   Courts
understandably condemn private negotiations of this kind  because
they create the appearance of impropriety and seriously undermine
the competitive bidding process.  But here Laidlaw fails even  to
allege  any specific instance of covert negotiations or collusion
between  the district and First Student.  Similarly, we  find  no
specific   description  or  offer  of  evidence  in  the   record
supporting  Laidlaws conclusory and self-serving claim  that  the
district never had any intent to award a contract to any proposer
other  than First Student, regardless of which proposer  was  the
lowest  price responsive and responsible proposer.  These  claims
therefore appear wholly meritless.
          In  any event, as previously mentioned, because Laidlaw
passed   up   the   opportunity  to   raise   these   claims   on
reconsideration,  thereby  allowing First  Students  contract  to
attain  final approval, the only remedy available to  Laidlaw  at
this  late  juncture if it managed to prove fraud  and  collusion
would be bid preparation costs.78

          Laidlaw  further asserts that the boards  best-interest
finding lacks any rational basis.  After the board voted to award
the contract to First Student, the board president said:
          [T]he  Board has found [by] 6 to 0 vote  that
          giving  the contract to First Student was  in
          the  best  interest of the  District  in  the
          areas  that  new equipment will be  provided,
          larger  capacity buses and a  better  working
          relationship  with employees  and  facilities
          [will be] provided to them.
Laidlaw challenges these reasons as unsupported in the record.
          But  the  board  heard positive and negative  testimony
concerning  both  Laidlaw and First Student.   On  the  issue  of
management relations with employees, Laidlaw informed  the  board
that  First  Students  drivers had been involved  in  a  two-week
          strike in Providence, Rhode Island, over health benefits; yet
First Students Vice President for Human Resources addressed  this
issue   in  his  oral  presentation,  apparently  to  the  boards
satisfaction.  District staff further reported that the  Seattle,
Washington  and Charleston, South Carolina school districts  were
very  pleased with First Student and its treatment of  employees,
although  Minneapolis  reported some problems.   As  to  Laidlaws
relations,  the  board heard testimony from district  staff  that
drivers who had worked both for Laidlaw and for the district were
less  satisfied with Laidlaw.  District staff also reported  that
Laidlaws employees were upset when Laidlaw located a facility for
drivers  in a former fish processing plant that still smelled  of
fish.   Of the two Laidlaw drivers who spoke at the meeting,  one
supported  the Laidlaw proposal, and the other simply  asked  the
district  to  choose a company that would treat the drivers  with
dignity  and  respect.  Given the totality of this evidence,  the
board  had a rational basis for finding that First Student  would
have a better working relationship with employees than Laidlaw.
          With   regard  to  facilities,  district  staff  raised
criticisms  of  Laidlaws  past provision of  various  facilities.
They  were  particularly  critical of a  facility  that  formerly
housed a fish processing plant, a facility that lacked electrical
outlets  for  the buses to plug into during the  winter,   and  a
facility that generated complaints about diesel fumes because  it
was  too  near  a  residential area.  The  staff  also  expressed
displeasure  about  a terminal in South Anchorage  that  was  not
ready  in  time for the school year.  By contrast, First  Student
told the board that it had a short list of sites and would select
them in consultation with the district.  Given this evidence,  we
think that the boards preference for First Student was rationally
          Laidlaw  also challenges the boards determination  that
the new, higher capacity buses proposed by First Student were  in
its  best  interest.  But the board received  a  vast  amount  of
competing  evidence and testimony about passenger  buses.   First
Student proposed to offer all new buses, while the average age of
Laidlaws  buses would be 3.56 years.  First Student also  offered
to  provide buses that would seat 84 students rather than 72.   A
Laidlaw  representative  told the board that  84-passenger  buses
would be difficult to handle on some routes.  Two members of  the
board  raised concerns about 84-passenger buses, but the district
responded  by indicating that higher capacity buses  would  allow
for  growth  without  hiring  more drivers  and  were  likely  to
decrease  discipline  problems.  Laidlaw  now  asserts  that  its
proposal  provided for larger special education buses than  First
Students  proposal.  Yet even if true, this assertion  would  not
have  undercut the existence of a rational basis for  the  boards
finding  that  the  buses proposed by First Student  for  regular
routes were in the districts best interest.
          In  summary, we have previously deferred to an  agencys
or  districts oversight in analogous contexts.79  In light of the
broad  discretion afforded to the district by 4 AAC 27.085(f)(1),
and  the existence of substantial record evidence supporting  the
boards  statement  explaining its finding, we conclude  that  the
          district had a reasonable basis to find that awarding the pupil
transportation  contract to First Student was  in  the  districts
best interest.
     C.   Attorneys Fees
          The district and First Student requested twenty percent
of  their actual attorneys fees incurred before conversion of the
civil  case  to  an administrative appeal, and forty  percent  of
their  actual fees incurred after conversion.  The superior court
awarded  nothing for fees incurred before conversion but  awarded
each  appellee  twenty  percent  of  their  fees  incurred  after
conversion.   The  award totaled $5,537.20 for the  district  and
$9,966.20 for First Student.
          Laidlaw  challenges  these  awards  as  excessive   and
unsupported.   It  claims  that  the  work  was  duplicative  and
wasteful,  and that the appellees claimed an unreasonable  number
of   hours.   It  further  claims  that  First  Students  billing
statements  are too heavily redacted to substantiate its  claimed
          We  review a trial courts award of attorneys  fees  for
abuse of discretion80  and will not overturn the award unless  it
is  manifestly unreasonable.81  Alaska Appellate Rule 508 is  the
appropriate authority for an award of fees in an appeal  from  an
administrative  decision.82  The rule gives the  appellate  court
broad  discretion  to allow attorneys fees in  an  amount  to  be
determined  by  the court.83  In Rosen v. State Board  of  Public
Accountancy, we offered this guidance to superior courts  sitting
as intermediate courts of appeal:
          The  extent  to  which  litigants  have  been
          involved in prior administrative proceedings,
          and  the cost thereof, as well as the  nature
          of  judicial review and its cost, are factors
          which  a trial court may wish to consider  in
          determining the application of Appellate Rule
          508(e).  Likewise,  the  importance  to   the
          litigants  of rights asserted is a factor  to
          be considered.[84]
          Although  the  superior  court  did  not  explain   its
attorneys fees award,85 the court awarded substantially less than
the  district  and  First Student requested, suggesting  that  it
considered  the  Rosen  factors or made an  equivalent  analysis.
Moreover,  the court could properly have relied on uncontradicted
affidavits  from  counsel  for the  district  and  First  Student
averring  that  [a]ll attorney fees incurred by  [the  appellees]
were  reasonable and necessary.  Finally, we think that,  barring
any  particularized  reason to question specific  entries,  First
Students  redacted billing statements were sufficiently clear  to
support its request.86  Our review of the record reveals no abuse
of discretion.
          The  superior  court properly converted Laidlaws  civil
action to an administrative appeal and was not required to  grant
Laidlaws  request for a trial de novo to resolve the appeal;  the
Anchorage  School Board had a reasonable basis for  finding  that
First  Students  proposal  was responsive  and  that  the  school
districts  best  interest would be served by awarding  the  pupil
transportation contract to First Student; and the superior  court
did  not abuse its discretion in awarding attorneys fees  to  the
district  and First Student.  Accordingly, we AFFIRM the superior
courts judgment.
     1     See 4 Alaska Administrative Code (AAC) 27.085(f)(1)(B)
(repealed 6/4/2004, Reg. 170).

     2     See  Brandon v. State, Dept of Corr., 938  P.2d  1029,
1031-32   (Alaska  1997)  (exercising  independent  judgment   to
determine   whether  prisoner  classification   hearing   is   an
adjudicative proceeding).

     3    Id. at 1031.

     4     See,  e.g., Kilmer v. Dillingham City Sch. Dist.,  932
P.2d 757, 762 (Alaska 1997).

     5    872 P.2d 171 (Alaska 1994).

     6    Id. at 175.

     7    Id. at 178 n.11 (quoting Blacks Law Dictionary 472 (6th
ed. 1990)).

     8      4   AAC   27.085,  the  regulation  governing   pupil
transportation contracts in effect at the time that the  district
awarded  First Student the transportation contract, was  repealed
in  2004,  apparently because of significant amendments in  state
law  governing  funding  of  transportation  contracts.   See  AS
14.09.010, as amended by ch. 54  1, SLA 2003; Regulation repealed
6/4/2004, Reg. 170.  As of the publication date of this  opinion,
it  does  not  appear a replacement regulation has been  adopted.
Because  this  case is controlled by provisions of  the  repealed
regulation,  this  opinion discusses that  regulation  as  if  it
remained in effect.

     9     See 4 AAC 27.085(f)(1) & (g) (repealed 6/4/2004,  Reg.

     10    See Brandon, 938 P.2d at 1032-33.

     11    See Alaska R. App. P. 602.

     12    See AS 36.30.550-.699.

     13    See AS 36.30.250.

     14    See AS 36.30.560-.680.

     15    See AS 36.30.670.

     16    See AS 36.30.685.

     17    Haynes v. State, Commercial Fisheries Entry Commn, 746
P.2d  892,  893  (Alaska 1987); see also Kleven v.  Yukon-Koyokuk
Sch.  Dist., 853 P.2d 518, 524 (Alaska 1993); Owsichek v.  State,
Guide Licensing & Control Bd., 627 P.2d 616, 620 (Alaska 1981).

     18    See Alaska R. App. P. 602.

     19    See, e.g., Southeast Alaska Conservation Council, Inc.
v.  State,  665 P.2d 544, 548 (Alaska 1983); Moore v. State,  553
P.2d 8, 31-33 (Alaska 1976).

     20     Southeast Alaska Conservation Council, Inc., 665 P.2d
at 548-49.

     21     See  Aloha Lumber Corp. v. Univ. of Alaska, 994  P.2d
991,  998 n.14 (Alaska 1999); State v. Lundgren Pac. Constr. Co.,
Inc., 603 P.2d 889, 895 (Alaska 1979).

     22     See,  e.g.,  Chijide v. Maniilaq  Assn  of  Kotzebue,
Alaska,  972  P.2d  167, 171-72 (Alaska 1999) (referring  to  due
process  protections  that apply only when an  individual  has  a
life, liberty, or property interest to protect).

     23    994 P.2d 991.

     24    Id. at 998-99.

     25     Earthmovers  of  Fairbanks, Inc. v.  State,  Dept  of
Transp.  &  Pub.  Facilities, 765 P.2d 1360, 1364  (Alaska  1988)
(citing  Beirne v. Alaska State Hous. Auth., 454  P.2d  262,  264
(Alaska 1969)).

     26     633  P.2d  256, 259-60 & 263 n.8 (Alaska  1981);  cf.
Associated  Builders & Contractors, Inc. v. City of Seward,   966
F.2d  492,  499 (9th Cir. 1992) (wishful bidders . .  .  have  no
constitutionally  protected  property  interest  in   [a   public

     27    King, 633 P.2d at 260.

     28    4 AAC 27.085(f)(1) (repealed 6/4/2004, Reg. 170).

     29    4 AAC 27.085(f)(2) (repealed 6/4/2004, Reg. 170).

     30    Laidlaw further argues that it had a property interest
in  having $56,603 deducted from its bid.  When Laidlaw  and  the
district  negotiated  revisions to  their  existing  contract  in
February  1999,  Laidlaw offered to refund  that  amount  to  the
district   if   Laidlaw   were   awarded   the   districts   next
transportation contract, provided that this amount is  considered
in  the bid evaluation as a reduction in our proposed costs under
the  contract proposal for the 2001-2002 school year.  But as the
superior  court essentially recognized in rejecting this argument
below,  Laidlaws  agreement vested it with  a  contractual  right
under its prior contract, and that right could have had no effect
on  Laidlaws  rights  in relation to the district  or  the  other
bidders under the current RFP.

     31    Midgett v. Cook Inlet Pre-Trial Facility, 53 P.3d 1105,
1111  (Alaska  2002)  (adopting test articulated  in  Mathews  v.
Eldridge, 424 U.S. 319, 335 (1976)).

     32    524 P.2d 657, 661 (Alaska 1974).

     33    872 P.2d at 179-80.

     34    13 P.3d 263 (Alaska 2000).

     35    Id. at 274.

     36    See id.

     37    96 P.3d 1056 (Alaska 2004).

     38    Id. at 1059.

     39    Id. at 1065-66.

     40     Laidlaw  wrongly cites Balough v. Fairbanks  N.  Star
Borough, 995 P.2d 245, 266 (Alaska 2000) for this proposition.

     41    Frontier Saloon, Inc., 524 P.2d at 661; see also Stacy
&  Witbeck, Inc. v. City & County of San Francisco, 44 Cal. Rptr.
2d  472, 479 (Cal. App. 1995) (holding that due process does  not
invariably require the full panoply of judicial trial procedures,
such as cross-examination).

     42    4 AAC 27.085(i) (repealed 6/4/2004, Reg. 170) read:

          All proposals with the names of the proposers
          and  the  amounts of the proposals,  together
          with  all  documents submitted to the  school
          district  board for consideration in awarding
          the  contract, must be kept on  file  by  the
          district  for at least three years after  the
          close  of  the  school  year  to  which  they
          relate. These records must be open to  public
          inspection during normal business hours.
     43     See  4  AAC 27.085(e) & (f) (repealed 6/4/2004,  Reg.
170).  The absence of any provision for an evidentiary hearing at
the  best-interest  stage  appears  eminently  sensible  when  we
consider  that the regulation as a whole called for all  relevant
information  to be submitted by bidders before the district  made
its  final determination on a proposals responsiveness  and  that
subsection .085(g) defined a reconsideration right that  included
a formal adjudicatory process.

     44     The record fails to support Laidlaws contention  that
this  arrangement  deviated from the  boards  usual  practice  in
awarding  pupil transportation contracts.  When one board  member
noted  that  the boards policy normally allows for a bid  protest
even  before  the board has made a final decision, and  requested
that  Laidlaws representatives be given an extended time to speak
beyond  the  five  minutes  or three minutes  as  typically  [the
boards]  procedures  would  outline  for  public  comments,   the
districts  counsel  correctly  pointed  out  that  4  AAC  27.085
specifies   the  procedures  for  awarding  pupil  transportation
contracts.    See 4 AAC 27.085(a) (repealed 6/4/2004,  Reg.  170)
(All  contracts for pupil transportation awarded  by  a  district
school  board  must be based on the competitive proposal  process
specified in this section.).

     45    4 AAC 27.085(g) (repealed 6/4/2004, Reg. 170).

     46    Id.

     47    The doctrine of exhaustion of remedies requires a court
to  decide the following: (1) is exhaustion of remedies required;
(2)  did the complainant exhaust those remedies; and (3)  is  the
failure  to  exhaust remedies excused?  Eufemio v. Kodiak  Island
Hosp., 837 P.2d 95, 98-99 (Alaska 1992).

     48      Laidlaw bases its contention that exhaustion was not
required  primarily on the United States Supreme Courts  decision
in  Darby v. Cisneros, 509 U.S. 137 (1993). But as First  Student
points  out,  Darby  only  governs cases  to  which  the  federal
Administrative  Procedure Act applies.  See  id.  at  153-54  (Of
course, the exhaustion doctrine continues to apply as a matter of
judicial  discretion in cases not governed by the [Administrative
Procedure  Act].).   We  note that Laidlaw  does  not  raise  any
further  challenge to the superior courts determination  that  it
was required to exhaust its remedies, except by contending that 4
AAC  27.085(g)  was optional because its language was permissive,
providing  only that a litigant may petition for reconsideration.
But  it  seems  obvious that the permissive phrasing  was  simply
designed  to allow litigants the right to waive their  procedural
right:  Laidlaw  cites no statute, regulation, or rule  providing
that a litigant must file an appeal.

     49     See 4 AAC 27.085(f)(1) (repealed 6/4/2004, Reg.  170)
([T]he district school board shall offer the contract only  to  a
proposer whose proposal has been certified as responsive under  4
AAC 27.085(e).).

     50     Further, the district could have certified a proposal
as   nonresponsive  if   (A)  the  proposer  failed   to   render
substantial  performance of a pupil transportation contract  with
any school district in the state within the previous three years;
or  (B) the district cannot assure itself that the proposer  will
provide  the  specified  service. 4  AAC  27.085(e)(3)  (repealed
6/4/2004, Reg. 170).

     51    See King v. Alaska State Hous. Auth. (King I), 512 P.2d
887,  892  (Alaska 1973); see also Gunderson v. Univ. of  Alaska,
Fairbanks,  922  P.2d  229,  235  (Alaska  1996);   cf.   4   AAC

     52     McBirney  &  Assocs. v. State, 753  P.2d  1132,  1136
(Alaska 1988) (quoting Chris Berg, Inc. v. State, Dept of Transp.
& Pub. Facilities, 680 P.2d 93, 94 (Alaska 1984)).

     53     George Harms Constr. Co., Inc. v. Borough of  Lincoln
Park, 391 A.2d 960, 965 (N.J. 1978).

     54     See Gunderson, 922 P.2d at 233; State, Dept of Admin.
v.  Bowers Office Prods., 621 P.2d 11, 13 (Alaska 1980); Kelly v.
Zamarello, 486 P.2d 906, 917 (Alaska 1971).

     55    621 P.2d at 13 n.4.

     56     See Lower Kuskokwim Sch. Dist. v. Found. Svcs., Inc.,
909 P.2d 1383, 1386-87 (Alaska 1996).

     57    486 P.2d at 917.

     58    513 P.2d 1122, 1125 (Alaska 1973) (quoting Restatement
(Second)  of Agency  26 (1958)); see also Sea Lion Corp.  v.  Air
Logistics  of  Alaska, Inc., 787 P.2d 109, 117-19  (Alaska  1990)
(quoting   Bruton,  513  P.2d  at  1127)  (finding  doctrine   of
ratification by silence to be applicable when two characteristics
are  met: (1) the act to be ratified must be done by someone  who
held  himself  out  to  the  third party  as  an  agent  for  the
principal, as BeGasse did by signing Lyskawas name; and  (2)  the
principal  must  then  have  failed  to  act  in  response  under
circumstances  which  according to the  ordinary  experience  and
habits of men, one would naturally be expected to speak if he did
not consent . . . . ).

     59    Cf. H.V. Collins Co. v. Tarro, 696 A.2d 289, 305 (R.I.
1997)  (finding bid responsive despite omission of some documents
[g]iven   the   overall  comprehensiveness  of  [the   successful
proposers]  bid and the absence of any evidence that  the  school
committee acted in a corrupt manner or in bad faith).

     60     Citing  Matter of Alpha Q, Inc., 1989  WL  241317  *2
(Comp. Gen. 1989).

     61    Id.

     62    Id.

     63    4 AAC 27.085(f)(1)(B) (repealed 6/4/2004, Reg. 170).

     64    See King, 633 P.2d at 263.

     65     See State, Dept of Educ. v. Nickerson, 711 P.2d 1165,
1169 (Alaska 1985).

     66    See 4 AAC 27.085(f)(1) (repealed 6/4/2004, Reg. 170).

     67    See King, 633 P.2d at 261.

     68    994 P.2d 991 (Alaska 1999).

     69    See id. at 997.

     70    Id.

     71    711 P.2d at 1169.

     72     4  AAC  27.085(a)(2) (repealed  6/4/2004,  Reg.  170)
(emphasis added).

     73     4  AAC  27.085(e)(1) (repealed  6/4/2004,  Reg.  170)
(Proposals  must be reviewed by the district for conformity  with
the  request  for  proposals, including proposal  specifications,
terms   of   delivery  of  transportation  services,  and   other
conditions imposed by the request for proposals.  Following  that
review,  the  district  shall certify  each  proposal  as  either
responsive or nonresponsive.).

     74     4  AAC  27.085(f)(1) (repealed  6/4/2004,  Reg.  170)
(emphasis added).

     75     Fairbanks N. Star Borough Sch. Dist. v. Bowers Office
Prods.,  Inc.,  851  P.2d 56, 58 (Alaska 1992)  (holding  that  a
government  agency which solicits bids for goods or services  has
an  implied  contractual  duty to fairly  and  honestly  consider

     76    Id. at 59 (citing King, 633 P.2d at 263).

     77     See Paul Wholesale, B.V./HOLS Trading, GMBH, J.V.  v.
State,  Dept  of  Transp. & Pub. Facilities, 908 P.2d  994,  1000
(Alaska  1995); Dick Fischer Dev. No. 2, Inc. v. Dept of  Admin.,
838 P.2d 263, 267 (Alaska 1992); McBirney & Assocs., 753 P.2d  at

     78     See  Dick Fischer Dev. No. 2, Inc., 838 P.2d at  266;
King, 633 P.2d at 263.

     79     Lower Kuskokwim Sch. Dist., 909 P.2d at 1389  (citing
Fairbanks  N.  Star Borough Sch. Dist., 851 P.2d at  59-60);  see
also  State v. Northern Bus Co., Inc., 693 P.2d 319, 322  (Alaska

     80    See United Servs. Auto. Assn v. Pruitt ex rel. Pruitt,
38 P.3d 528, 531 (Alaska 2001).

     81     See  D.H. Blattner & Sons, Inc. v. N.M. Rothschild  &
Sons, Ltd., 55 P.3d 37, 56 (Alaska 2002).

     82     Rosen v. State Bd. of Pub. Accountancy, 689 P.2d 478,
480 n.3 (Alaska 1984).

     83    Appellate Rule 508(e).

     84    Rosen, 689 P.2d at 482-83.

     85    Superior courts presiding over an administrative appeal
need not justify a decision to award attorneys fees.  See id.  at

     86    Cf. Gonzalez v. Safeway Stores, Inc., 882 P.2d 389, 399
(Alaska  1994)  (holding  that redacted billings  are  sufficient
documentation of services performed under Hayes v.  Xerox  Corp.,
718 P.2d 929, 939 (Alaska 1986)).