Supreme Judicial Court Finds That Awarding Authorities May Conduct Independent Research On Bidders

On May 3, 2012, the Supreme Judicial Court (SJC) issued an important decision affecting the public bid process in Massachusetts.  In Barr Inc. v. Town of Holliston, the SJC held that Chapter 149, the competitive bidding statute, does not restrict a public owner from looking at information outside of the materials compiled as part of the Department of Capital Asset Management (DCAM) certification process. 

In 2008 the Town of Holliston solicited bids for the construction of a new police station.  Barr Incorporated (Barr) was the low bidder.  The Town reviewed Barr’s DCAM certification but also performed its own internet search which raised concerns regarding Barr’s prior work.  The Town asked one of its detectives to investigate further, and it discovered that a number of municipalities had an “overall negative” impression of Barr.  As a result, the Town found that Barr was not a responsible bidder and voted to award the project to the next lowest bidder.

Barr sued in Superior Court, claiming that the Town’s review should have been limited to the DCAM materials and that the Town had breached Chapter 149 by conducting its own independent research.  The Superior Court ruled in the Town’s favor and Barr appealed.    

The SJC affirmed the Superior Court finding that the Town was acting within its right pursuant to Chapter 149 by conducting its own independent research of the low bidder’s qualifications.  The SJC pointed out that the policy concerns underlying the public bid law were to remove corruption from the bid process by assuring contractor competence, providing an avenue for awarding authorities to exchange information, and suggesting guidelines for determining whether a bidder can successfully and timely complete a construction contract. 

While the SJC noted that an awarding authority’s discretion in determining whether a bidder is responsible is not unconstrained, ultimately, the Court found that nothing in either the statute or DCAM’s regulations expressly precludes an awarding authority from conducting an independent investigation into the past performance of potential bidders.  While public owners will view the SJC’s reasoning as sound, contractors will likely see it as an erosion of the measures in the public bid law that protect against corruption and other anti-competitive activity.

About David Fine

David is an partner in the firm's Litigation Group and is chair of the Construction Law Group. David serves as litigation counsel for contractors, subcontractors, suppliers and other business concerns within the construction industry. He regularly advises his clients on matters such as contract drafting and dispute resolution, surety bond claims, mechanics liens and bid protests. David works closely with a number of local and regional trade organizations, and he often lectures and writes about topics pertinent to the construction industry.
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