Others v. Town Of Hanover & Others
| Decision Date | 09 July 2010 |
| Docket Number | SJC-10643. |
| Citation | 929 N.E.2d 929,457 Mass. 248 |
| Parties | Kirt FORDYCE & others v.TOWN OF HANOVER & others. |
| Court | United States State Supreme Judicial Court of Massachusetts Supreme Court |
Kevin Conroy, Assistant Attorney General, for the Commonwealth.
Christopher N. Souris, for the plaintiffs.
James A. Toomey (Bryan R. LeBlanc with him), Quincy, for town of Hanover.
Paul W. Losordo, Quincy, for Callahan, Inc.
The following submitted briefs for amici curiae:
Patrick J. Sullivan & James G. Grillo, Newton, for TLT Construction Corp.
Donald J. Siegel & James A.W. Shaw, Boston, for Foundation for Fair Contracting of Massachusetts & another.
Joel Lewin, Boston, & Robert V. Lizza, for Construction Industries of Massachusetts, Inc., & another.
Christopher J. Petrini, Framingham, Peter L. Mello, & Thomas J. Urbelis, Boston, for City Solicitors and Town Counsel Association.
Stanley A. Martin, Boston, & Edwin L. Hall, for Associated General Contractors of Massachusetts.
Christopher A. Kenney & Michael P. Sams, for Associated Builders and Contractors, Inc.
Present: MARSHALL, C.J., IRELAND, SPINA, COWIN, CORDY, BOTSFORD, & GANTS, JJ.
This case comes to us on appeal from an order of a single justice of the Appeals Court vacating a preliminary injunction issued by a judge in the Superior Court against the town of Hanover (town) and Callahan, Inc. (Callahan), a general contractor with whom the town has entered into a contract for the construction of a new high school. The injunction ordered the town and Callahan to cease further work on the school pending a trial on the merits of the plaintiffs' claim that the contract had been entered into in violation of the public bidding statutes, G.L. c. 149, §§ 44A-44H, because Callahan had made intentional misrepresentations to the town's prequalification committee regarding its experience in school building projects. We affirm the order of the single justice, though on different grounds from those expressed in his order. Although a contractor's intentional misrepresentation in seeking prequalification may allow an awarding authority to terminate a previously awarded contract, we conclude that where, as here, there is no allegation that any member of the town's prequalification committee acted corruptly in deciding to prequalify Callahan, there is unrefuted evidence that the committee did not act in reliance on any of the alleged misrepresentations, and the town wishes to proceed with the contract, the motion judge committed an error of law in issuing a preliminary injunction requiring the town to cease further work on the school.3
1. Background. Under G.L. c. 149, § 44A(2)(D), contracts for the construction of public buildings that are estimated to cost more than $100,000 may only be awarded to “the lowest responsible and eligible general bidder” on the basis of competitive bids and in conformity with procedures set forth in §§ 44A-44H. Where, as here, a public construction project has an estimated cost in excess of $10 million, a general contracting firm must satisfy two requirements to be deemed a “[r]esponsible” and “[e]ligible” bidder. G.L. c. 149, § 44A(1). First, the contractor must hold a certificate of eligibility, issued by the commissioner of the division of capital asset management and maintenance (DCAM), showing that the firm has the expertise and financial capacity to perform the work required. G.L. c. 149, §§ 44A(2)(D), 44D(1)( a ). Second, the contractor must be prequalified to bid on the project by a four-member committee of the awarding authority, that is, the agency, municipality, or other governmental authority awarding the contract,4 based on the contractor's responses to questions contained in a written request for qualifications (RFQ) issued by the committee. G.L. c. 149, § 44D 1/2( a ) & ( c ).
While the questions that must be asked in the RFQ and the potential points to be awarded in each category of questions are specified by statute, the relative value assigned to each individual question and the scoring of contractor responses is committed to the discretion of the prequalifying committee.5 This allows a prequalification committee to evaluate a general contractor's experience and qualifications in light of the specific needs of the particular project for which the awarding authority will be soliciting bids. G.L. c. 149, § 44D 1/2( a )-( h ). Only general contractors whose responses to the RFQ receive a score of seventy points or more may be prequalified by the committee, and only prequalified contractors may be invited to submit bids on the project. G.L. c. 149, § 44D 1/2( h ). “The prequalification committee shall select a minimum of [three] qualified general contractors to submit bids....” Id. Section 44D 1/2( h ) protects the considerable discretion vested in the prequalification committee by providing that all decisions of the committee “shall be final and shall not be subject to appeal except on grounds of arbitrariness, capriciousness fraud or collusion” (emphasis added). Id.
In conformity with these statutory requirements, in May, 2009, the town issued a RFQ inviting interested general contractors to submit statements of qualification (SOQs) to prequalify to bid on the construction of a new high school. Eleven general contractors submitted SOQs by the June 5 deadline, and on July 6, the town reported the results of the committee's evaluation in a public register. Callahan was one of nine applicants prequalified by the committee to submit formal bids on the project. General bids were opened by the town on September 11. Callahan was the low bidder, with a base price of $37,099,999. The next low bidder was almost one million dollars higher.6
On September 17, 2009, N.B. Kenney Company, Inc., a heating and air conditioning subcontractor whose subbid had not been adopted in Callahan's winning general bid, filed a bid protest with the Attorney General, who is charged with enforcement of the competitive bidding statutes. See G.L. c. 149, § 44H. The Attorney General also received bid protests from J & J Contractors, Inc., the second lowest bidder among the general contractors, and from the Laborers' New England Region Organizing Fund. The protesters alleged that the committee's decision to prequalify Callahan was obtained through fraud because Callahan's SOQ contained misrepresentations of the firm's prior construction experience that were intended to mislead the committee. Consequently, they argued, Callahan should have been disqualified as an eligible bidder, and the town should be prohibited from entering into a contract with Callahan. Following the filing of the protests, the town requested and received additional information from Callahan about the representations made in its SOQ concerning the company's prior construction experience.
In response to the bid protests, the Attorney General undertook an investigation and asked the town to refrain from awarding the contract or commencing work on the project while her investigation was ongoing. On September 24, however, the town issued Callahan a notice to proceed. At the bid protest hearing later that month, the Attorney General requested that the town suspend further work on the project pending her determination of the bid protests on the merits. Notwithstanding these requests, the town entered into a general contract with Callahan on or about October 15 and proceeded with construction. Two weeks later, on October 30, the Attorney General issued a decision which essentially confirmed the allegations of the bid protestors.
The Attorney General concluded that Callahan had committed “fraud” within the meaning of G.L. c. 149, § 44D 1/2( h ), by knowingly misrepresenting material facts in its SOQ with the intention of misleading the prequalifying committee. The Attorney General found that Callahan had misleadingly identified itself in its SOQ as the “successor corporation” to another general contracting company, J.T. Callahan & Sons, Inc. (JTC). In fact, although many of the senior managers of Callahan were former employees of JTC, Callahan had been incorporated independently, JTC continued to survive as a corporation, and the two companies shared no corporate officers. According to the Attorney General, the effect of this misrepresentation was to permit Callahan in its SOQ to claim JTC's experience in building seventy-five schools in Massachusetts over the preceding twenty years, when Callahan itself lacked this kind of project experience. More specifically, where the SOQ required a listing of “Similar Project Experience” undertaken by the firm in the last five years, defined by the prequalification committee to mean construction of “phased educational facilities,” the only educational facility Callahan included was North Andover High School, a $42 million project completed in 2005.7 In fact, JTC had been the general contractor on this project and had completed nearly all of the work before running into financial difficulties. In order to finish the project, the insurance company serving as JTC's surety recommended the formation of a new corporate entity, Callahan, which employed former JTC personnel and in effect acted as a subcontractor for JTC. Under this arrangement, Callahan completed the final $1.2 million of work on the $42 million project, comprising three per cent of the school's total construction cost. The Attorney General also found that Callahan had made selective use of JTC's prior history in its SOQ: while Callahan took credit for JTC's work on the North Andover High School project and its almost twenty years of public construction experience, Callahan did not list the North Andover High School project where the SOQ required disclosure of projects the applicant had failed to complete, and Callahan similarly failed to disclose pending or adversely concluded legal proceedings against JTC, although the SOQ also called for this information.
Based on these findings, the Attorney General...
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