Bid Protests on Massachusetts Public Projects — A How to Guide
Contracts for public construction projects in Massachusetts are competitively bid, and are governed by statutes requiring award to the lowest eligible and responsible bidder. On public building projects, M.G.L. c. 149, §§44 A-H require the general contract and subcontracts for seventeen major trades be selected by competitive bidding. On non-building projects, c. 30, §39M requires only the general contract be awarded on the basis of competitive bids.
These competitive bidding statutes are lengthy and complex; are subject to dual legislative objectives of providing the lowest price for the public and fair and open competition for bidders; and are administered by public authorities whose experience and familiarity with the bid laws vary widely. As a result, mistakes occur in the award of some contracts. Sometimes the awarding authority misinterprets statutory language, or fails to follow correct statutory procedures, or fails to carry out the statutory purpose. Bidders who lose out because the awarding authority makes a mistake face this question: How do I challenge a mistaken award in order to obtain that contract for myself? The first step is to file a written protest with the Massachusetts' Attorney General documenting the statutory violation. M.G.L. c. 149, §44H gives the Attorney General the power to enforce the public bidding laws. That power includes the right to investigate and rule on possible statutory violations.
A protest filed by a disappointed bidder with the Attorney General usually results in a hearing before an assistant attorney general. The affected bidders and the awarding authority are usually present with their lawyers. All parties at the hearing are allowed to present their view of the facts and the law. Thereafter, the Attorney General renders a written decision, either finding a statutory violation or not. In the event the Attorney General finds a violation, the decision will state the action the awarding authority must take to remedy the violation and to conform to statutory bidding requirements. That remedy could include the rejection of one or more bids; or an award to a bidder other than the one originally selected; or, in some cases where a statutory violation has undermined competition, a complete re-bid.
These Attorney General's decisions on bid protests, however, are not self-enforcing. They are more advisory than directory. That means an awarding authority which disagrees with a decision may ignore it, unless a Court issues an order enforcing it.
Most awarding authorities defer to the Attorney General and seek to conform their award to the Attorney General's findings and conclusion. Some do not. However, the Attorney General lacks sufficient resources to go to court to enforce a decision every time an awarding authority refuses to conform. In that event, enforcement is left to the disappointed bidder.
A general or sub-bidder on a public project has standing to file a court action challenging the award of a contract to another bidder. That is so whether the bidder is seeking to enforce an Attorney General's decision or challenging that decision.
Court enforcement of an Attorney General's decision is not automatic. Most judges will carefully consider an Attorney General's findings and rulings in bid cases, but they are not bound to adopt them. The judge is required to make his own determination as to whether the bid statute was violated, and, if so, what the appropriate remedy is to be.
The crucial point in every court action challenging a public contract award comes at the beginning of the case. In order to have any hope of ultimate success, the disappointed bidder seeking award of the contract must convince the judge to enter a preliminary injunction restraining either the award or performance of the contract until the merits of the case are decided.
Obtaining that preliminary injunction is crucial because, without it, the contract work will proceed and will likely reach substantial completion while the case is still being litigated. Once the contract is performed, the challenging bidder loses its right to the contract, even if the court ultimately rules in its favor after trial. The only remedy then available to the bidder who should have had the contract is the award of bid preparation costs. Such an award is nominal and would not begin to pay for the legal cost of obtaining it.
The only time that a wronged bidder may recover substantial damages covering its lost profit is where it can prove the awarding authority acted in bad faith in depriving it of the contract. Proving bad faith is difficult and not worth the effort except in extraordinary circumstances.
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