The last time this was done was 1977. The book in question was A River Runs Through It by Norman MacLean, which was vetoed by the board. Other non-award years for fiction includes 1974 (Gravity's Rainbow), 1971 (with books by Welty, Bellows, and Oates), 1957 (Elizabeth Spencer's The Voice at the Backdoor) and 194 for For Whom the Bell Tolls, which the President of Columbia University found offensive.
The way the Pulitzer seems to work is: the judges select a book, the board decides if they like it or not. The winner is announced, or no winner is selected. This year, the board decided no fiction book was worthy for the $10,000 prize.
Here's more on the process from Wikipedia:
Each year, 103 judges are selected to "serve on 20 separate juries" for the 21 award categories (one jury for both photography awards). Most of the juries consist of five members, except for those of "public service, investigative reporting, beat reporting, feature writing and commentary categories", which have seven members. For each award category, a jury makes three nominations. The board selects the winner by majority vote from the nominations or bypass the nominations and select a different entry with a 75% majority vote. The board can also vote no award. The board gets no compensation for its work. The jurors in letters, music, and drama get a $2000 honorarium for the year, while each chair gets $2500.The question is: who is this mysterious board? And why do they have the power to judge fiction--even if it's on the basis of "offensiveness" as it was obviously the case in at least one point in its history.
There's some people from Columbia University, but it's mostly a mixture of high-ranked journalists. There is one professional creative writer, Junot Diaz.
With the board citing no further information, one is left only to ponder the possible reasons why a book was not selected and why the books that were nominated were not worthy--though of course, worthiness, taste, and literary prizes are always questionable. Someone in literary journalism would've been outraged if any one of the nominees won.