The losing bidder for a $55 million contract has filed a complaint saying Grady hospital board member Clayton Shepherd exhibited a conflict of interest in the awarding of the contract.

University HealthSystem Consortium, the losing bidder, complained the bidding process was compromised "by a conflict of interest in that one of the trustees involved in the award decision has a financial or other interest" in the company that won the contract late last year.

In the formal protest filed with Grady hospital, the company adds that the contract award "is not only inconsistent with Grady's best interest, it causes actual harm to Grady."

Grady Board Chairwoman Pam Stephenson has denied the protest. She added, "This represents the final decision of the Grady Health System in this matter.

The complaint doesn't identify Shepherd, but company spokeswoman Barbara Anason confirmed the complaint refers to Shepherd.

Shepherd is an official with Health Careers Foundation, a nonprofit that awards scholarships and loans to those pursuing careers in nursing and pharmacy. MedAssets, the company that won the bid, has donated money to the nonprofit, Grady officials said.

Shepherd did not respond to several phone messages.

Tim Jefferson, the Grady attorney, said Shepherd did not vote on the contract or participate in any discussion on the matter. In addition, Shepherd gave the board notice of the potential conflict of interest ahead of time, he said.

The protest comes as the Grady board is poised to hand control of daily policy decisions to a nonprofit corporation, a move that has been urged by state political and business leaders. Some public officials have said they have lost confidence in the Grady board.

The protest documents, obtained Thursday through the state open records law, claim there was "significant deviation from [Grady board] bylaws, purchasing policies and precedence" in the bidding process.

A Jan. 3 letter from UHC states it will later supplement the complaint with evidence, and it requests that Grady scrap the contract with MedAssets.

Stephenson responded in a Jan. 31 letter to UHC, "We see no basis for the protest based upon the alleged conflict of interest by a member of the [Grady] board or that the award procedure deviated from the bylaws, purchasing policies and procedures."

Anason said the company is now reviewing documents to decide how to proceed.

The contract pertains to the provision of medical supplies to the hospital system, including gowns, needles and other supplies.

Jefferson said that UHC had the contract for 10 years without a competitive bid, and that it failed to offer Grady the financial savings the hospital desired. He said a consultant to Grady recommended switching to MedAssets.