Calendar Date: June 8, 2018Before: McCarthy, J.P., Egan Jr., Lynch, Clark andPritzker, JJ.__________Roemer Wallens Gold & Mineaux LLP, Albany (Matthew J. Kellyof counsel), for appellant.Barbara D. Underwood, Attorney General, Albany (Owen Demuthof counsel), for respondents.__________Pritzker, J.Appeals (1) from a judgment of the Supreme Court (Collins,J.), entered February 16, 2017 in Albany County, which dismissedpetitioner’s application, in a proceeding pursuant to CPLRarticle 78, to review a determination of respondents rejectingpetitioner’s bid for a contract, and (2) from an order of saidcourt, entered May 4, 2017 in Albany County, which deniedpetitioner’s motion to vacate the judgment.In 2011, respondent New York State Office of Temporary andDisability Assistance (hereinafter OTDA) identified a need topurchase certain commodities and services, and it subsequentlyissued an invitation for bids (hereinafter IFB) for six distinctlots that would result in six separate contracts. Petitionersubmitted bids for lots 5 and 6 and was thereafter advised byOTDA that it was the responsive and responsible bidder on bothlots, but OTDA requested additional information from petitionerregarding lot 6. On March 1, 2013, OTDA informed petitioner, byemail, that it was being awarded the lot 5 contract, but thatOTDA planned to award the lot 6 contract to New York StateIndustries for the Disabled (hereinafter NYSID), which was apreferred source for photocopying and reproduction services, butnot for printing services that were being sought by the IFB.In May 2014, NYSID applied to the Office of GeneralServices (hereinafter OGS) for permission to add digital printingservices as part of its preferred source offering, but theapplication was denied. Following that denial, petitioner wroteto the Director of Contracts for the Office of the StateComptroller (hereinafter OSC) requesting that the contract beawarded to petitioner, who was the lowest bidder, and assertingthat OTDA was attempting to circumvent the competitive bidprocess. Petitioner did not receive a response. Ultimately,negotiations between NYSID and OTDA failed and no contract wasexecuted. Subsequently, OTDA rejected all bids on lot 6 andpurchased the required services through its discretionarypurchasing authority pursuant to State Finance Law § 163 (6).In June 2016, OSC released a report (hereinafter the auditreport) following an audit of agency contracts with preferredsource member agencies, including NYSID. OSC found, among otherthings, that “[m]any NYSID contracts awarded for reproductionservices appear to have circumvented the competitive process . .. [because] these contracts were actually for digital printing, aservice that the Procurement Council has specifically excludedfrom the [p]rogram.” Based upon the findings and conclusions ofthe audit report, petitioner commenced this CPLR article 78proceeding in August 2016 on the ground that the lot 6 contractis among those that were tainted by the manipulation andcircumvention of the competitive bidding statutes by OTDA andNYSID. Supreme Court dismissed the petition, and petitionersubsequently moved to renew and reargue. Supreme Court, treatingthe motion as one to vacate pursuant to CPLR 5015, denied themotion. Petitioner now appeals from both the judgment and theorder. We affirm.“It is hornbook law that one who objects to the act of anadministrative agency must exhaust available administrativeremedies before being permitted to litigate in a court of law”(Watergate II Apts. v Buffalo Sewer Auth., 46 NY2d 52, 57 [1978][citation omitted]; see Town of Oyster Bay v Kirkland, 19 NY3d1035, 1038 [2012], cert denied 568 US 1213 [2013]). “Theexhaustion rule, however, is not an inflexible one. It issubject to important qualifications. It need not be followed,for example, when an agency’s action is challenged as eitherunconstitutional or wholly beyond its grant of power, or whenresort to an administrative remedy would be futile or when itspursuit would cause irreparable injury” (Watergate II Apts. vBuffalo Sewer Auth., 46 NY2d at 57 [citations omitted]; accordMatter of Kravitz v DiNapoli, 122 AD3d 1199, 1201 [2014]).Here, the IFB set forth the procedure for an aggrievedbidder to challenge the bid and procurement process and/or thecontract award. Specifically, an aggrieved bidder was requiredto file a formal written protest with the Director of OTDA’sBureau of Contract Management setting forth the legal and factualgrounds for disagreement with a purchasing decision or pendingcontract award within seven days after the protesting party knewor should have known of the facts forming the basis of theprotest. Inasmuch as petitioner did not file a formal writtenprotest as required, Supreme Court properly determined thatpetitioner failed to exhaust its administrative remedies (seeWatergate II Apts. v Buffalo Sewer Authority, 46 NY2d at 57;Matter of AAA Carting & Rubbish Removal, Inc. v Town of StonyPoint, N.Y., 159 AD3d 1036, 1039 [2018]).Petitioner, however, claims that it is excused frompursuing administrative remedies. Initially, we are unpersuadedby petitioner’s contention that resorting to administrativeremedies would have been futile because it “remain[ed] in thedark” by OTDA as to the status of the lot 6 contract. To thecontrary, petitioner was unequivocally informed on March 1, 2013that OTDA planned to award the lot 6 contract to a preferredsource and, as such, we disagree with petitioner that resortingto administrative remedies would have been futile (compare LehighPortland Cement Co. v New York State Dept. of Envtl.Conservation, 87 NY2d 136, 142 [1995]; Matter of Kaneev v City ofNew York Envtl. Control Bd., 149 AD3d 742, 743-744 [2017]).Further, we find petitioner’s reliance on the 2016 audit reportand the alleged longstanding policy of awarding contracts toNYSID to be irrelevant and insufficient to demonstrate that aformal written protest would have been futile.Petitioner also contends that it is excused from exhaustingavailable administrative remedies because, given its allegedpattern of unlawful conduct, OTDA acted ultra vires. Ultimately,to decide whether OTDA acted unlawfully, it must be determinedwhether the services required for lot 6 were properlycharacterized as “reproduction” or “printing” because printingservices are governed by rules protecting the competitive biddingprocess. Here, the requirement of exhaustion is particularlyimportant as this question of fact would be examined in anadministrative proceeding prior to judicial review (see WatergateII Apts. v Buffalo Sewer Auth., 46 NY2d at 57; Coleman v Daines,79 AD3d 554, 563-564 [2010], affd 19 NY3d 1087 [2012]). Further,petitioner has not established, by its papers alone, that OTDAacted wholly beyond its grant of power, given that OTDA waspermitted to procure work on lot 6 by a preferred source, ifappropriate, and that it retained the power to reject all bidsunder certain circumstances (see State Finance Law § 163 [4] [a];[9] [d]; see generally Watergate II Apts. v Buffalo Sewer Auth.,46 NY2d at 58). Accordingly, we find that petitioner was notexcused from exhausting its administrative remedies and, as such,Supreme Court properly dismissed petitioner’s application. Tothe extent that petitioner’s other arguments have not beendirectly addressed by this decision, said arguments have beenconsidered and found to be without merit.McCarthy, J.P., Egan Jr., Lynch and Clark, JJ., concur.ORDERED that the judgment and order are affirmed, withoutcosts.ENTER:Robert D. MaybergerClerk of the Court
