Brasi Dev. Corp. v. Attorney Gen. & Another

• Decision Date: 10 May 2010
• Docket Number: SJC-10527
• Parties: BRASI DEVELOPMENT CORP.v.ATTORNEY GENERAL & another.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

456 Mass. 684

925 N.E.2d 82

BRASI DEVELOPMENT CORP.v.ATTORNEY GENERAL & another.¹

SJC-10527

Supreme Judicial Court of Massachusetts Middlesex.

Argued Jan. 7, 2010.

Decided May 10, 2010.

Karla E. Zarbo, Assistant Attorney General (Kate J. Fitzpatrick, Assistant Attorney General, with her) for the Attorney General.

Andre A. Sansoucy (John C. McCullough, Charlestown, with him) for the plaintiff.

Elizabeth A. Sloane & Nicole Horberg Decter, Boston, for Massachusetts Building Trades Council & another, amici curiae, submitted a brief.

Present: MARSHALL, C.J., IRELAND, SPINA, COWIN, CORDY, BOTSFORD, & GANTS, JJ.

COWIN, J.

In this case we consider whether an agreement for the development, maintenance, and long-term lease of dormitory facilities by the University of Massachusetts, Lowell (university), was subject to the competitive public bidding requirements of G.L. c. 149, §§ 44A-44H (competitive bidding statute), where the developer agreed to assume the risks of construction and maintain ownership of the land and buildings, but the university provided detailed specifications for the facility and retained significant control over the construction process. A judge in the Superior Court concluded that the competitive bidding statute did not apply because the agreement was for the lease of a completed student dormitory and not a contract for construction of a dormitory by the university. She therefore allowed the developer's motion for summary judgment. We reverse.²

1. Background and procedural history. We set forth the undisputed material facts gleaned from the summary judgment record, reserving for later discussion certain terms in the request for proposals (RFP) and the agreement subsequently entered into between the plaintiff and the university.

In February and March of 2008, the university, a division of the publicly-funded University of Massachusetts system, see G.L. c. 75, § 1, issued an RFP for the lease of a student dormitory in the city of Lowell (city) to provide housing for 120 to 400 students.³ The RFP sought a five-year lease with the potential to extend the agreement for two additional five-year terms. The RFP did not provide that the resident housing complex be newly constructed but did provide detailed requirements for the proposed dormitory, particularly in the area of building security.⁴

The RFP set forth an occupancy schedule under which, if construction were required the project was to be completed within fifteen months, and stated that the occupancy date was a critical factor in any proposal; the facility had to be available for occupancy by August, 2009, in time for the university's fall, 2009, term.⁵ The university was not required to make any payments until the dormitory was available for occupancy, and there were substantial penalties, including costs of replacement housing and storage of goods, if the selected bidder did not meet the work schedule. The university was responsible only for the lease payment amounts, and not for any increases in construction costs or other costs during the lease period.

Under the terms of the RFP, the selected bidder would maintain the building and grounds in good repair for the period of the lease; provide day-to-day upkeep such as snow removal, landscape maintenance, trash removal, and daily cleaning of the facility; and assume all costs of operation and maintenance. The bidder was responsible for all utility payments, including telephone, Internet access, and cable television. The bidder was required to maintain liability insurance on the property, with the university as an additional named insured. The RFP included a sample form lease; ⁶ among other provisions, the sample lease stated that it could not be assigned, nor could any easement be granted on the property, without the university's written approval. The bidding process was open and public, but the RFP did not conform to the competitive bidding statute.⁷ To the contrary, the RFP stated that selection would not necessarily be based on the lowest price among “responsible” bidders. See G.L. c. 149, § 44D, and note 15 infra.

The plaintiff, Brasi Development Corp. (Brasi), was one of seven companies to respond with bid proposals. Three of the bidders, including Brasi, proposed to construct new buildings; two proposed renovation of existing structures; and two proposed using existing structures “as is.” Brasi had never built student housing ⁸ and had not been certified by the Division of Capital Asset Management (DCAM) as a “responsible” public bidder under G.L. c. 149, § 44D.⁹ Brasi was eventually chosen as the developer, subject to additional conditions not included in the terms of the original RFP. The university and Brasi entered into negotiations for a “Lease Agreement” based on the terms of the sample lease agreement that had been attached to the RFP. The “Lease Agreement” was for an initial five-year term, renewable in five-year terms, at the university's option, for up to a total of thirty years; this term was different from that in the RFP. See part 3.d infra. The property would at all times be owned by Brasi.

Before the “Lease Agreement” was executed, an unsuccessful bidder, Academic Village Foundation, Inc. (Academic), filed a bid protest notice with the Attorney General,¹⁰ asserting that there had been unfair collusion between the university and Brasi, and that, since Brasi had previously obtained zoning changes permitting it to build a dormitory for the university, Brasi had an unfair advantage in bidding on the current project. The Foundation for Fair Contracting of Massachusetts filed a separate bid protest on the ground that the proposed dormitory was not a lease, but rather a project to construct a public building, and that the bidding process had failed to comply with the competitive bidding statute.

Brasi and the university signed the “Lease Agreement” while a decision on the bid protests was pending. Following an investigation and a bid protest hearing, see G.L. c. 149, § 44H, the Attorney General issued a combined decision on both protests, concluding that the university's RFP was a proposal to construct a public building, subject to the competitive bidding statute, and that the agreement between Brasi and the university was entered into in violation of those laws.¹¹ In reliance on the Attorney General's bid protest decision, the university attempted to terminate its contract with Brasi.¹²

Brasi filed an action against the university and the Attorney General in the Superior Court, seeking a judgment declaring that the bid protest decision was incorrect and that the provisions of the competitive bidding statute were not applicable to the lease agreement. The Attorney General counterclaimed, asserting that the bid protest decision should be upheld.

The university moved successfully to dismiss on the ground that the plaintiff sought no relief from the university. Brasi and the Attorney General filed cross motions for summary judgment. Concluding that the agreement between Brasi and the university was a lease for a newly-constructed building rather than an agreement to construct a building, and therefore was not subject to the competitive bidding statute, a judge in the Superior Court allowed Brasi's motion for summary judgment and ordered entry of judgment accordingly. We granted the Attorney General's request for direct appellate review. ¹³

2. Statutory requirements. Because the issue here is whether the university's resident housing project was subject to the competitive bidding statute, and because the university's acquisition or lease of real property is subject to the requirements of other statutes, we discuss the relevant portions of these statutes in some detail.

The competitive bidding statute sets forth detailed procedures governing the process that State agencies must follow in soliciting and accepting proposals for public construction projects. Pursuant to G.L. c. 149, § 44A (2)(D), “[e]very contract for the construction, reconstruction, installation, demolition, maintenance or repair of any building by a public agency estimated to cost more than $100,000, except for a pumping station ..., shall be awarded to the lowest responsible and eligible general bidder on the basis of competitive bids in accordance with the procedure set forth in sections 44A to 44H, inclusive.” ¹⁴

The competitive bidding statute was substantially modified in 1980 in response to the findings of the Special Commission Concerning State and County Buildings (Ward Commission) that public construction projects in the Commonwealth were plagued by rampant favoritism in awarding bids and “shoddy” construction practices. See St.1980, c. 579; St.2004, c. 193; LeClair v. Norwell, 430 Mass. 328, 332, 719 N.E.2d 464 (1999); Final Report to the General Court of the Special Commission Concerning State and County Buildings, Vol. 1, 21-39 (Dec. 31, 1980) (Ward Commission Report). The purposes of the competitive bidding statute are to eliminate favoritism and corruption; to ensure an open and honest bidding process and an equal playing field for all bidders; and to ensure that qualified contractors build public buildings that are suitable for the uses for which they are intended. See John T. Callahan & Sons, Inc. v. Malden, 430 Mass. 124, 128, 713 N.E.2d 955 (1999), quoting Modern Cont. Constr. Co. v. Lowell, 391 Mass. 829, 840, 465 N.E.2d 1173 (1984), and James J. Welch & Co. v. Deputy Comm'r of Capital Planning & Operations, 387 Mass. 662, 666, 443 N.E.2d 382 (1982). See also St.1980, c. 579, preamble; Ward Commission Report at 29-30. The statute is designed to safeguard public funds by preventing unqualified contractors from working on public buildings; providing the awarding authority the most favorable price consistent with satisfactory construction; and reducing the risk that construction projects will not be completed. See St.1980, c. 579, preamble; Annese Elec. Servs., Inc. v. Newton, 431 Mass. 763,...