Interstate Engineering Corp. v. City of Fitchburg

• Decision Date: 16 May 1975
• Citation: Interstate Engineering Corp. v. City of Fitchburg, 329 N.E.2d 128, 367 Mass. 751 (Mass. 1975)
• Parties: INTERSTATE ENGINEERING CORP. v. CITY OF FITCHBURG et al. 1
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 128

329 N.E.2d 128

367 Mass. 751

INTERSTATE ENGINEERING CORP. v.CITY OF FITCHBURG et al.¹

Supreme Judicial Court of Massachusetts, Middlesex.

Argued Oct. 15, 1974.

Decided May 16, 1975.

Sally A. Corwin, Boston (Joseph M. Corwin, Boston, with her), for plaintiff.

Francis H. Fox, Boston, for Limbach Co.Robert J. Sherer, Boston, for Westcott Const. Corp.

Before TAURO, C.J., and REARDON, QUIRICO, BRAUCHER, HENNESSEY, KAPLAN and WILKINS, JJ.

TAURO, Chief Justice.

The plaintiff appeals from a final decree which declared valid a subbid for certain mechanical work, which had been filed with the defendantcity of Fitchburg by the defendantLimbach Company(Limbach).

The judge made findings of fact, which are not challenged.In the early part of 1973, the city invited general bids and subbids for the construction of a wastewater treatment facility.As authorized by G.L. c. 149, § 44C(as amended through St.1970, c. 497), the city established interior piping work as a separate category of work for the receipt of subbids.²Although certain exterior piping was included in the project, no subbids were requested for that work.Therefore, that exterior work was to be done as part of the work covered solely by the bid of the general contractor.

On May 9, 1973, various subbids were submitted for the interior piping work.³The plaintiff's bid in the amount of $3,038,000 was the lowest.Limbach submitted the second lowest bid, in an amount which was $86,000 higher than the bid of the plaintiff.

On May 15, 1973, the day before bids from general contractors were due, a representative of Limbach told the president of the defendantWestcott Construction Corporation(Westcott), a company planning to submit a general bid, that Limbach was working on a price for the exterior piping work.The president of Westcott advised Limbach that he was interested in the combined price for the interior and exterior piping work.On the morning of May 16, 1973, before the general bids were filed, Limbach quoted to Westcott a price of $76,000 for the exterior piping work and stated that the combined price for all piping work would be $3,200,000.Westcott and Limbach clearly understood that as a condition to the availability of a price of $76,000 for the exterior piping work, Westcott would have to list Limbach as the subcontractor to do the interior piping work.They also understood that Limbach was willing to do the interior work for the bid price of $3,124,000 in any event.Before bids were opened, the plaintiff quoted to Westcott a price of $305,350 for the exterior piping work.

Westcott submitted a general bid to the city, listing Limbach as its selected subbidder for the interior piping work, at Limbach's filed subbid price.In arriving at its total bid for the general contract Westcott took into account Limbach's proposed price of $76,000 for the exterior piping work.Westcott entered into separate subcontracts with Limbach for the interior and exterior piping work at the prices previously advanced by Limbach.⁴Westcott's bid was the lowest, and the city awarded the contract to Westcott.

The plaintiff protested to the city Westcott's inclusion of Limbach.However, Westcott rejected the city's request to substitutethe plaintiff for Limbach as the subcontractor for the interior piping work.SeeG.L. c. 149, § 44F(as amended through St.1961, c. 604, § 5), and G.L. c. 149, § 44I(2)(as amended through St.1967, c. 884).After a hearing on the plaintiff's request, the Department of Labor and Industries ruled on June 6, 1973, that there had been 'no violation of the Fair Competitive Bid Law on the facts as presented.'This bill for declaratory relief was filed on July 25, 1973.

The judge did not find, and had no evidence from which he could find, the precise amount by which Limbach's bid of $76,000 for the exterior piping work was below the reasonable cost of doing that work.He did find, however, that 'the estimated cost of the exterior piping work on the sewer treatment plant would substantially exceed $76,000.'We conclude, as we may, that Limbach bid the exterior piping work well below cost as an inducement to Westcott to select it as the subcontractor for the interior piping work.⁵The judge also found that the award of the two subcontractors to Limbach resulted in an over-all saving to the city of approximately $143,000 compared to the price at which the plaintiff would have done the same work.

The judge entered a final decree after hearing, declaring that the Limbach bid was valid, that Limbach entered into two separate, valid contracts with Westcott, and that the plaintiff had no right to the subcontract for the interior piping work.The plaintiff appealed.We granted the plaintiff's request for direct appellate review.⁶

The plaintiff argues that the city, as the awarding authority, was obligated to reject Limbach's subbid because (1) that subbid was 'conditional' and (2) the arrangement between Limbach and Westcott constituted in effect, if not in fact, an unlawful variance of Limbach's filed subbid.In support of its first contention, the plaintiff points to the language of G.L. c. 149, § 44H(as amended through St.1965, c. 836, §§ 4, 5, 6), which provides that the awarding authority 'shall reject every sub-bid which is . . . conditional.'In support of its second argument, the plaintiff relies on the provision in § 44H that condemns any variance from a filed subbid and on its view of the legislative purpose for the public bidding requirements of G.L. c. 149, §§ 44A--44L.

We agree with the plaintiff's second argument and hold that the arrangement between Limbach and Westcott constituted an unlawful variance in Limbach's filed subbid.Accordingly, we do not decide whether the arrangement rendered the filed subbid 'conditional.'

1.We deal here with the competitive bidding statute, G.L. c. 149, §§ 44A--44L.The statute provides that certain public contracts '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 forty-four B to forty-four L.'G.L. c. 149, § 44A(as amended through St.1967, c. 899).General contractors must select their subcontractors for so called Item 2 ⁷ work from a list of subbidders circulated to all prospective general contractors by the awarding authority ⁸ after the opening of sealed, filed subbids.G.L. c. 149, § 44H.⁹Each subbidder is 'bound' to every general bidder 'not excluded' from the use of its subbid by the terms of the subbid.G.L. c. 149, § 44H.The statute specifically provides that 'any variance from such sub-bid communicated to a general bidder shall be of no effect.'G.L. c. 149, § 44H.'(I)n matters of substance there must be strict compliance with the requirements' of G.L. c. 149, §§ 44A--44L.Chick's Constr. Co., Inc. v. Wachusett Regional High Sch. Dist. Sch. Comm., 343 Mass. 38, 41, 175 N.E.2d 502, 505(1961).Accord, Poorvu Constr. Co., Inc. v. Nelson Elec. Co., Inc., 335 Mass. 545, 552, 140 N.E.2d 891(1957).

We construe G.L. c. 149, §§ 44A--44L, as we must, in the light of the legislative objectives which were served by its enactment so as to effectuate the purpose of the framers.SeeMorse v. Boston, 253 Mass. 247, 252, 148 N.E. 813(1925);Commissioner of Corps. & Taxn. v. Assessors of Boston, 324 Mass. 32, 36, 84 N.E.2d 531(1949);Pacella v. Metroplitan Dist. Commn., 339 Mass. 338, 342, 159 N.E.2d 75(1959).We discern two fundamental, complementary legislative objectives underlying the competitive bidding statute.First, the statute enables the public contracting authority to obtain the lowest price for its work that competition among responsible contractors can secure.¹⁰By binding subbidders (seeG.L. c. 149, § 44H) and general contractors (seeG.L. c. 149, § 44A) to their original filed bids, the statute encourages them to file their lowest profitable bid in the first instance.A subbidder who hopes to win a portion of a contract cannot expect to modify his subbid in the future to meet competition.Second, the statute establishes an honest and open procedure for competition for public contracts and, in so doing, places all general contractors and subbidders on an equal footing in the competition to gain the contract.¹¹The 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.SeeMorse v. Boston, 253 Mass. 247, 252, 148 N.E. 813(1925);Burt v. Municipal Council of Taunton, 272 Mass. 130, 133, 172 N.E. 230(1930);Sweezey v. Mayor of Malden, 273 Mass. 536, 540, 174 N.E. 269(1931).¹²See generallyPacella v. Metropolitan Dist. Commn., 339 Mass. 338, 342, 159 N.E.2d 75(1959).

The provision of G.L. c. 149, § 44H, which condemns a variance from the terms of a filed subbid is a keystone in this statutory scheme.The provision prohibits any change in the terms of the filed subbid.Through such prohibition, it fosters competition among subbidders at the time of the initial filing and helps assure that no general contractor will receive an advantage over its competitors.In construing an earlier version of the current statute, ¹³we observed, 'The recorded subbids, as filed, must be strictly adhered to, and cannot be varied.A subbid once filed by a subcontractor must have an identical meaning for all general contractors.After the time for filing has expired, a subbid is not subject to change, and is, of course, beyond modification by private, confidential, or secret communication between the subcontractor and the general contractor'(emphasis supplied).Gifford v. Commissioner of Pub. Health, 328 Mass. 608, 615, 105 N.E.2d 476, 481(1952).SeePoorvu Constr. Co., Inc. v. Nelson Elec. Co., Inc., 335 Mass. 545, 552, 140 N.E.2d 891(1957).

With the above described...