Massachusetts Bay Transportation Authority v. Auditor of the Commonwealth

• Decision Date: 07 December 1999
• Citation: 724 NE 2d 288,430 Mass. 783
• Parties: MASSACHUSETTS BAY TRANSPORTATION AUTHORITY v. AUDITOR OF THE COMMONWEALTH.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

430 Mass. 783

724 NE 2d 288

MASSACHUSETTS BAY TRANSPORTATION AUTHORITY v. AUDITOR OF THE COMMONWEALTH.

Supreme Judicial Court of Massachusetts, Suffolk.

December 7, 1999.

February 16, 2000.

Present: MARSHALL, C.J., ABRAMS, LYNCH, GREANEY, IRELAND, SPINA. & COWIN, JJ.

H. Reed Witherby for the plaintiff.

Judith S. Yogman, Assistant Attorney General, for the Auditor of the Commonwealth.

ABRAMS, J.

The Massachusetts Bay Transportation Authority (MBTA) appeals from a decision by the Superior Court allowing the Auditor of the Commonwealth's (Auditor's) motion for judgment on the pleadings. See Mass. R. Civ. P. 56 (b) (1), 365 Mass. 824 (1974). On appeal, the MBTA argues that the Auditor's objections to a proposed contract between the MBTA and a private corporation, Outdoor Systems, Inc. (Outdoor Systems), did not meet the procedural and substantive standards of G. L. c. 7, §§ 54 and 55. The MBTA also argues that G. L. c. 7, § 55 (a), is unconstitutional. We conclude the judge did not err in allowing the Auditor's motion for judgment on the pleadings. We also conclude that the MBTA does not have standing to challenge the constitutionality of a State statute and, thus, we do not address the constitutional claim.

1. Facts. The pleadings reveal the following facts. In an effort to raise revenue, the MBTA decided to hire a contractor to install advertising on MBTA bus shelters. Through research, the MBTA learned that such contractors generally require that they also have responsibility for cleaning and maintaining the bus shelters. The MBTA had assigned this cleaning and maintenance work to some of its own employees. On December 19, 1995, the MBTA issued an invitation for bids (IFB). The IFB provided that the chosen contractor would have advertising rights on 198 specified bus shelters. It also provided that the chosen contractor would clean, repair, and replace existing shelters and install new ones.

Because the contract would shift work that was done by MBTA employees to a private contractor, the contract was required to comply with the privatization law, G. L. c. 7, §§ 52-55.¹ The MBTA chose Gannett Systems, Outdoor Systems' predecessor-in-interest, as the contractor. As required by the privatization law, see G. L. c. 7, § 55, the MBTA presented the proposed contract to the Auditor on July 19, 1996. The Auditor objected to this contract on August 15.

Although the MBTA contended that the Auditor's objection was incorrect, it presented a second contract to the Auditor on November 12. Outdoor Systems was named as the proposed contractor and Robinson & Robinson was named as Outdoor Systems' proposed subcontractor for cleaning and maintenance. The Auditor rejected this proposed contract in a letter dated December 11, stating two objections.

First, the Auditor stated that the MBTA did not meet the requirements of G. L. c. 7, § 54 (7) (iii), because it did not "certify and demonstrate that the proposed contract cost will be less than the estimated cost of keeping the service in-house." The Auditor expressed this concern because the MBTA and the proposed contractor each used a different number of shelters to calculate their cost estimates. Because the MBTA had not reconciled this variance before the end of the period the Auditor had to review the proposed contract, the Auditor stated that "[t]his flaw in the [IFB] calls into question the validity and reliability of the MBTA's procurement process regarding this proposal."

The Auditor's second objection was that the MBTA failed to fulfil the requirements of G. L. c. 7, § 54 (7) (iv), because "the agency [did not] certify and demonstrate that the designated bidder and its supervisory employees have historically complied with the relevant federal or state statutes." This objection was based on the failure of the MBTA to provide certificates of good standing from the State and Federal tax collection agencies for the proposed subcontractor, Robinson & Robinson.

On December 19, the MBTA filed a complaint seeking judicial review of the Auditor's objections.² The complaint also objected to the privatization law on constitutional grounds.³ The MBTA moved for judgment on the pleadings and for summary judgment. The Auditor moved for judgment on the pleadings. In allowing the Auditor's motion for judgment on the pleadings, the court affirmed the Auditor's objections and "decline[d] to address the constitutional ... issues." We granted the MBTA's application for direct appellate review.

2. Statutory framework. We begin by setting forth background information concerning the privatization law. The General Court stated that "[t]o ensure that citizens of the commonwealth receive high quality public services at low cost, with due regard for the taxpayers of the commonwealth and the needs of public and private workers, [it found] it necessary to regulate such privatization contracts in accordance with sections fifty-three to fifty-five, inclusive." G. L. c. 7, § 52.

Section 53 defines "privatization contract" as "an agreement or combination or series of agreements by which a nongovernmental person or entity agrees with an agency to provide services, valued at one hundred thousand dollars or more, which are substantially similar to and in lieu of, services theretofore provided, in whole or in part, by regular employees of an agency." G. L. c. 7, § 53.

Procedures that agencies must follow when beginning the bidding process for and entering into a privatization contract are set forth in G. L. c. 7, § 54. The statute requires the head of the agency to provide written certification to the Auditor that "(iii) the contract cost ... will be less than the estimated cost [without privatization] ... [and] (iv) the designated bidder and its supervisory employees, while in the employ of said designated bidder, have no adjudicated record of substantial or repeated willful noncompliance with any relevant federal or state regulatory statute." G. L. c. 7, § 54 (7) (iii) & (iv).

Section 55 requires the Auditor to review proposed privatization contracts. Specifically, it states that the proposed contract will not be valid if the Auditor objects within thirty days of receiving the certification required by § 54 (7). The objection "shall be in writing and shall state specifically the state Auditor's finding that the agency has failed to comply with one or more requirements of said [§ 54], including that the state Auditor finds incorrect, based on independent review of all the relevant facts, any of the findings required by paragraph (7) of said [§ 54]." G. L. c. 7, § 55 (a). Section 55 also authorizes the Auditor to "adopt regulations and prescribe forms to carry out the provisions of [sections 54 and 55]." G. L. c. 7, § 55 (c). Finally, it provides that "[t]he objection of the state Auditor... shall be final and binding on the agency, unless the state Auditor thereafter in writing withdraws the objection, stating the specific reasons, based upon a revised certificate by the agency ... and upon the Auditor's review thereof." G. L. c. 7, § 55 (d).

3. The Auditor's powers. The Auditor was not designated a constitutional officer when the Massachusetts Constitution was adopted in 1780. However, during the debates of the constitutional convention of 1853, the drafters indicated that it was important to recognize the Auditor as a constitutional officer rather than allowing these duties to be completed by a committee of the Legislature or by any other officer. Official Report of the Debates and Proceedings on the State Convention 703 (1853). The drafters also noted the desirability of allowing the people to elect the Auditor, rather than permitting another official to appoint the Auditor, because our theory of government places "the supreme power ... with the people." Id. at 704. Thus, the Auditor became a constitutional officer in the executive branch, elected by popular vote, after the Constitution was amended in 1855.⁴ See art. 17 of the Amendments to the Massachusetts Constitution.

The amendment elevated the office of the Auditor to true constitutional stature. See Secretary of Admin. & Fin. v. Attorney Gen., 367 Mass. 154, 161 (1975). We have repeatedly confirmed the authority of constitutional officers to exercise independent judgment. See, e.g., Alliance, AFSCME/SEIU, AFCIO v. Commonwealth, 425 Mass. 534, 538 n.6 (1997) ("By virtue of this separate election, the Attorney General does not operate in a wholly subordinate role to the Governor, but may exercise independent judgment ..."); Secretary of Admin. & Fin. v. Attorney Gen., supra at 163 (Attorney General may refuse to prosecute appeal, although requested to do so by Governor, where such appeal does not further public interest); Sears v. Secretary of the Commonwealth, 369 Mass. 392, 411-412 (1975) (State Secretary may use discretion in determining whether to accept late filed nomination papers).

In addition, the privatization law itself clearly grants power to the Auditor. The law and its history repeatedly reveal that the drafters of the privatization law were concerned that privatization was not always in the best interest of the public. See G. L. c. 7, § 52 (finding "that using private contractors to provide public services formerly provided by state employees does not always promote the public interest"); Senate Committee on Ways and Means, Fiscal Year 1994 Budget Recommendations 2-21 (June 1993) (concluding "some privatization has indeed come at the citizens' expense").

In response to this concern, the drafters crafted the privatization law to enable an elected official to review proposed privatization contracts. An early version of the bill charged the secretary of administration and finance, an official appointed by the Governor, with reviewing proposed privatization contracts. 1992 Senate Doc. No. 1257. However, the bill as ultimately enacted charged the Auditor, an elected official, with reviewing proposed privatization...