Annese Electrical Serv., Inc. v. City of Newton
| Decision Date | 06 March 2000 |
| Docket Number | SJC-08172 |
| Citation | 431 Mass. 763,730 N.E.2d 290 |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
| Parties | (Mass. 2000) ANNESE ELECTRICAL SERVICES, INC., v. CITY OF NEWTON. <A HREF="#fr1-1" name="fn1-1">1 No.: Argued: |
[Copyrighted Material Omitted]
Jonathan P. Sauer for the plaintiff.
Donnalyn B. Lynch Kahn for the defendant.
Marshall, C.J., Abrams, Lynch, Greaney, Ireland, Spina, & Cowin, JJ.
Annese Electrical Services, Inc. (Annese), brought suit against the city of Newton (Newton), claiming that it was entitled to the subcontract for electrical work on a public building project and that Newton's resolicitation of electrical subbids for the project violated G. L. c. 149, § 44E (1). The parties filed cross motions for summary judgment. A Superior Court judge denied Annese's motion and granted Newton's motion, concluding that Newton acted within its discretion to rebid the work. On appeal, Annese argues that the judge erred because (1) Newton lacked discretion under G. L. c. 149, § 44E (1), to resolicit subbids after its first solicitation yielded five bids, none of which had been rejected; (2) Newton was required to award the electrical subcontract to Annese under G. L. c. 149, § 44F (4) (c); (3) Newton's sole and impermissible purpose for resoliciting electrical subbids was to obtain a lower price; and (4) the decision of the Attorney General that Newton's resolicitation was contrary to law was not given appropriate weight. The plaintiff further claims it is entitled to damages in the form of bid preparation costs or lost profits. We transferred this case from the Appeals Court on our own motion. We affirm.
1. Background facts. We summarize the material facts which are undisputed and present only a question of law.2 On May 8, 1995, Newton invited general contractors and subcontractors to bid on a project to renovate and make additions to Newton South High School (project). The project required general construction work as well as work in numerous subtrades, including electrical. Newton had estimated the cost of the proposed electrical work to be $487,000. In accordance with G. L. c. 149, §§ 44A-44H, Newton invited electrical subcontractors to submit bids for the work by May 31, 1995. On that date, Newton opened five filed electrical subbids3 with the following prices:
Company Base Bid
Campbell Electric, Inc. $496,000
The Sentry Corporation $620,000
James Galvin Electrical Contracting Corp. $675,000
Annese Electrical Services, Inc. $855,000
CNM Electrical Construction, Inc. $883,000
The bids, including limitations as to use by general contractors, were placed on a list and sent to "every person on record as having taken a set of plans and specifications," conformably with G. L. c. 149, § 44F (3).
On June 14, 1995, the general bids were opened. Later that day Campbell Electric, Inc. (Campbell), and James Galvin Electrical Contracting Corp. notified Newton that they had made errors in their bid calculations and requested withdrawal of their bids. Newton determined that each subcontractor had made a bona fide clerical error of a substantial nature in its bid and returned their bid deposits.4
On July 7, 1995, Newton awarded5 the general contract to TLT Construction Corporation (TLT). In its award letter to TLT, Newton followed the procedure set out in G. L. c. 149, § 44F (4) (c), and adjusted TLT's bid price to reflect the substitution of The Sentry Corporation (Sentry) for Campbell, which had been named in TLT's original bid.6 On July 13, 1995, Sentry requested permission to withdraw its bid because of a clerical error. Its bid deposit was returned after Newton determined that Sentry had made a bona fide clerical error of a substantial nature in its bid. As a consequence, there remained only two filed electrical subbids: Annese at $855,000 and CNM Electrical Construction, Inc. (CNM), at $883,000. The remaining bids were significantly higher than the $487,000 Newton had estimated for the electrical work. Due to the substantial difference in price between the remaining bids and Newton's cost estimate, Newton deemed the bids uneconomical without further competition, and on August 4, 1995, invited electrical subcontractors to bid on the project again. The second set of bid documents was restructured so that part of the original scope of work was set out as an alternate, giving Newton the option whether to proceed with the additional work.
On August 10, 1995, Newton and TLT executed the general contract, which contained a clause stating that Sentry was entitled by statute to withdraw its bid, that Newton intended to rebid the electrical work, and that the parties agreed to amend the contract to reflect the bid price of the lowest responsible and eligible electrical subbidder in the second round of bidding. On August 21, 1995, the second round of electrical subbids were opened, the results of which were as follows:
Company Base Bid
CNM Electrical Construction, Inc. $663,000
Annese Electrical Services, Inc. $696,000
James Galvin Electrical Contracting Corp. $805,000
In the interim, on August 11, 1995, Annese protested the second solicitation for electrical work to the Commissioner of Labor and Industries (commissioner), pursuant to G. L. c. 149, § 44H. The protest was heard by the Attorney General, the commissioner's designee.7 On September 6, 1995, the Attorney General concluded that Newton's second solicitation of electrical subbids was a violation of the public bidding laws.8 Notwithstanding the decision of the Attorney General, and with Newton's approval, TLT executed a subcontract with CNM, which subsequently performed and completed the electrical work.9
2. Overview. General Laws c. 149, §§ 44A-44H, is known as the competitive bidding statute. It provides comprehensive and detailed requirements for public agencies that award building contracts estimated to cost more than $25,000. G. L. c. 149, § 44A (2). "We construe G. L. c. 149, §§ 44A-44[H], as we must, in light of the legislative objectives which were served by its enactment so as to effectuate the purpose of the framers." John T. Callahan & Sons v. Malden, 430 Mass. 124, 128 (1999), quoting Interstate Eng'g Corp. v. Fitchburg, 367 Mass. 751, 757 (1975). The purposes of the competitive bidding statute are "to ensure that the awarding authority obtain the lowest price among responsible contractors" and "to establish an open and honest procedure for competition for public contracts." John T. Callahan & Sons v. Malden, supra, quoting Modern Cont. Constr. Co. v. Lowell, 391 Mass. 829, 840 (1984), and James J. Welch & Co. v. Deputy Comm'r of Capital Planning & Operations, 387 Mass. 662, 666 (1982). The statute "places all general contractors and subbidders on an equal footing in the competition to gain the contract." John T. Callahan & Sons v. Malden, supra. Interstate Eng'g Corp. v. Fitchburg, supra at 757-758. "The statutory procedure facilitates the elimination of favoritism and corruption as factors in the awarding of public contracts and emphasizes the part which efficient, low-cost operation should play in winning public contracts." John T. Callahan & Sons v. Malden, supra. Interstate Eng'g Corp. v. Fitchburg, supra.
3. Newton's discretion to resolicit bids. Annese argues that because Newton had "received" five bids in response to the first solicitation it was not entitled to resolicit subbids for the electrical work. General Laws c. 149, § 44E (1), provides that "[i]n inviting sub-bids . . . the awarding authority shall reserve the right to reject any sub-bid on any sub-trade, if it determines that such sub-bid does not represent the sub-bid of a person competent to perform the work as specified or that less than three such sub-bids were received and that the prices are not reasonable for acceptance without further competition" (emphasis added). Annese further asserts that, because the third lowest bidder withdrew after the general bids were opened, Newton and TLT were required to award the electrical contract to the next lowest bidder, Annese, in accordance with G. L. c. 149, § 44F (4) (c), which provides: "If a selected sub-bidder fails, within five days . . . after presentation of a subcontract by the general bidder selected as the general contractor, to perform his agreement to execute a subcontract . . . such general bidder and the awarding authority shall select, from the other sub-bids duly filed with the awarding authority . . . the lowest responsible and eligible sub-bidder at the amount named in his sub-bid . . . and the contract price shall be adjusted by the difference between the amount of such sub-bid and the amount of the sub-bid of the delinquent sub-bidder." See Paul Sardella Constr. Co. v. Braintree Hous. Auth., 371 Mass. 235 (1976) ( identical provisions of former G. L. c. 149, § 44I [3]). Resolution of the central issue of this case depends upon the meaning of the words "sub-bids . . . received," which are not defined in the statute.
Implicit in Annese's argument is the notion that a subbid is "received" when it is delivered to the awarding authority, without regard to its validity. A subbid may be delivered but subsequently rendered invalid under any of several methods set forth in the competitive bidding statute. For example, a subbid may be rejected for failure to "conform with [§§ 44A-44H], inclusive, or which is on a form not completely filled in, or which is incomplete, conditional or obscure, or which contains any addition not called for." G. L. c. 149, § 44F (3). See J. & J. Elec. Co. v. Government Center Comm'n, 349 Mass. 172 (1965) (). A subbidder may be rejected for lack of competence. See G. L. c. 149, § 44F (4) (b), (c). See also Rudolph v. City Manager of Cambridge, 341 Mass. 31 (1960) (...
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