SJC Confirms Municipal Discretion in Awarding Contracts
Deutsch Williams has counseled its municipal clients that Massachusetts procurement law does not require that a contract must always be awarded to the lowest bidder if the contractor’s performance on other projects was sub-standard. We have successfully represented clients in actions on this issue, (see Weston & Sampson CMR v. Town of Foxborough, Norfolk Superior Court, motion for preliminary injunction against town, denied). The Massachusetts Supreme Judicial Court has just issued its decision in the case of Barr Incorporated v. Town of Holliston that both confirms this advice and gives guidance to awarding authorities how to document a decision not to award a contract to the apparent low bidder because of that bidder’s lack of competence.
In the case, the Town of Holliston had bid a contract for the construction of a new police station under M.G.L. ch. 149. Town officials reviewed the documents and files of the Massachusetts Division of Capital Asset Management (“DCAM”) relating to the bidder, Barr Incorporated, as required by the law and applicable regulations. This review raised questions about the bidder’s ability to perform and the town did further investigation. This additional investigation indicated that the contractor had a history of unsatisfactory performance on most of its recent public construction projects. The town determined that the apparent low bidder was not a “responsible” bidder within the meaning of the statute and awarded the contract to the next lowest bidder. Barr sued, arguing that it was improper for the town to have investigated beyond the information in the DCAM files and documents.
In its decision in the Barr Incorporated case, the SJC stated that the town was obliged to award the contract to the “lowest responsible and eligible bidder” as required by statute. It recited the statutory definition that, to be deemed to be “responsible”, a bidder must “…demonstrably possess…the skill, ability and integrity necessary to faithfully perform the work….” To do make its evaluation, the town was obligated to review the DCAM files and documents. However, the SJC said the town was not limited to that review and that the town’s additional investigation was an appropriate exercise of its authority as the awarding authority. In response to the contractor’s argument that an investigation by an awarding authority that went beyond a review of the DCAM documents could lead to unfairness if a favored bidder received less scrutiny that a disfavored bidder, the SJC outlined the protections available to a disqualified bidder and gave guidance to awarding authorities how to document such a case.
The SJC decision in Barr Incorporated v. Town of Holliston is very helpful to municipalities acting as awarding authorities. First, it confirms the principle that awarding authorities have significant discretion in reviewing bidders and awarding contracts. Second, it also provides clear guidance on how to conduct any additional investigation of bidders and how to document finding so as to preserve the fundamental fairness that is required of awarding authorities in dealing with bidders.
Finally, it should be noted that, although the Barr Incorporated decision arises out of a public building project under M.G.L. ch. 149, Massachusetts courts generally apply the same principles to all public procurements situations, whether they be public buildings or public works projects or other types of procurements. Because of that fact, the principles stated by the SJC have a wider application in this area.
Please contact Atty. Rod Hoffman of Deutsch Williams’ Municipal Law Department for further information. His email address is firstname.lastname@example.org.