A District Court judge has ruled against the state in a long-running dispute over a grants management system contract, leading officials to start over on a six-figure contract that could help Nevada bring in millions of dollars from federal grants.

Issued on May 23 by Carson City District Court Judge James Russell, the order rejected the state purchasing department’s appeal of a lawsuit filed by a company that didn’t receive the software system contract put out to bid in 2017, but sued and alleged that the head of the grant management office based the contract on a proposal submitted by a preferred vendor (eCivis) that later promised her professional opportunities and other benefits — something Russell said there was “substantial evidence” of having occurred.

“In particular, there was substantial evidence that a member of eCivis made an impermissible offer of a thing of value to a member of the evaluation committee,” he wrote. “Beyond that, there was substantial evidence that, among other things, a member of the evaluation committee scored the RFP responses inconsistently and based on her preconceived bias in favor of eCivis and against Streamlink, in violation of (Nevada Administrative Code).”

The order has also led to a decision to drop future appeals; Department of Administration spokeswoman Stephanie Klapstein said in an email that while the purchasing department still " disagree(s) with many aspects of Judge Russell’s interpretation of the law in this case," nonetheless planned to reopen the contract to competitive bidding.

“The state needs a grant management system,” she said. “Every day that we go without one is a day that federal grant dollars are lost to the state, local governments, nonprofits, and businesses in Nevada. We believe the most prudent and expedient way to get a functional system in place is to put it out for bid again. We are working on that request for proposal now, and we expect to have it out in early fiscal year 2020.”

Government grants account for roughly one third of state spending across the country, but a 2018 report from the Guinn Center found Nevada routinely lagged behind other states in the region. The report found that in 2017, even as grants continued to make up roughly 34 percent of the state budget, Nevada’s per-capita grant money ranked just 44th nationwide.

Though the company that sued the state’s purchasing department, StreamLink, began its appeal in late 2017, no ruling was made until last year when an administrative appeals officer found grants management head Connie Lucido had applied “no reasonable methodology” in her scoring of each bid, all while ignoring key cost overruns by her preferred vendor, eCivis.

The appeals officer, Rajinder Nielsen, also found that Lucido had remained in contact with high-level representatives of eCivis both before and during the open bid, violating state statute in the process. Court documents also allege eCivis had improperly offered Lucido a number of professional perks, including increased interaction with state officials and conference visits — something Nielsen defined as a “thing of value,” and therefore another violation of state law.

But the state’s purchasing division challenged those conclusions, arguing that Nielsen had overreached, misinterpreted the law and misused certain legal procedures to improperly obtain documents, text messages and emails from Lucido and eCivis representatives.

Russell’s order denied many if not all of the arguments made by the state purchasing division, represented by the attorney general’s office.

Klapstein the department still had concerns with Russell's order, saying that his definition of a "thing of value" (in this case an invitation to appear on a grants panel in Winnemucca without financial compensation) was a novel standard that did not apply to federal employees or judges.

"Ultimately, even though we disagree with the ruling, our priority is to get a grant management system in place sooner rather than later so federal grant dollars can get into the hands of Nevada’s entities that need them," she said in an email after this story was published. "Again, the most expeditious way to do this is to go back out for bid rather than investing more time in the appeals process."

In spite of the lawsuit, state lawmakers in 2019 again approved $200,000 per year over the two-year budget for use towards a grant management system.

Effects of the lawsuit also surfaced during the legislative session in the form of AB86, a wide-ranging bill brought on behalf of the purchasing division that in its initial form would have prohibited administrative hearings officers from ordering discovery in any disputed case — a key portion of StreamLink’s lawsuit. That language was removed from the final version of the bill, which was passed unanimously and signed into law by Gov. Steve Sisolak on May 25.

Starting July 1, any party wishing to appeal a competitive bid is required to specify specific violations of state law when filing an appeal and requires a hearing officer to make a decision on an appeal within 60 days.

StreamLink Software vs. ECivis_State of Nevada Appeal 2018_Purchasing Appeal_Conclusion by Riley Snyder on Scribd

Updated at 11:08 a.m. to add additional comments from the Department of Administration.