By: Christopher W. Morog and Robert T. Ferguson, Jr.

As many of you are aware, MassDOT revised its guidance concerning the valuation of Chapter 90 contracts that contain “option” years. In its 2021 “Chapter 90 Program – Municipal Guidance Document,” MassDOT provided that the “total project value” for Chapter 90 contracts with two year “options” is “determined by multiplying the first year value by three.” In other words – as stated by the Bid Unit of the Massachusetts Attorney General (Bid Unit) – the valuation is based on the “entire potential contract term.” As a result, when it comes to contractor prequalification for Chapter 90 projects, “[o]nly firms that are prequalified to provide services for that total contract value may bid unless a waiver is provided.”

MassDOT’s recent guidance was at the center of a March 2, 2022 bid protest decision. The case arose out of a Chapter 90 project for road reclamation and paving. A prospective bidder attended the bid opening and attempted to submit a bid. However, town personnel refused to accept the bid because the bidder was not included on MassDOT’s list of prequalified bidders for the project. This prompted a bid protest in which the protestor argued that the bid documents were ambiguous with respect to: (1) the value of the contract; and (2) the amount for which bidders needed to be prequalified.

Generally speaking, an ambiguity can arise when bid documents contain language that is subject to different interpretations. This does not mean that there is an ambiguity whenever there is a disagreement about the meaning of a given clause or provision. As the Bid Unit emphasized, in order for an ambiguity to exist, the language must be “susceptible to more than one reasonable interpretation.”

The bid documents in this case provided that the contract would be for a one year term, with two option years exercisable “[a]t the sole discretion of the Town.” However, the bid documents stated that MassDOT prequalification was required and reflected MassDOT’s revised valuation policy: “[v]aluation for purposes of MassDOT Prequalification is based on one (1) year plus two (2) years at the discretion of the Town to arrive at an estimated total Prequalification Contract value.” The town advised that contractors that do not meet the three-year prequalification value “should submit a waiver request” prior to bid opening. In an addendum, the town made clear that the total contract value over the possible three-year term was $9 million. The protestor was not prequalified in this amount for the categories of work required by the contract. It does not appear that the protestor sought a waiver or submitted a pre-bid question.

In support of its protest, the protestor argued that because the town reserved the right to extend the contract term at its “sole discretion,” the town could effectively “decide whether the value of the option years are to be included with the value of the first year for purposes of [Mass]DOT prequalification.” The Bid Unit rejected this argument. Concluding that this was not a “reasonable interpretation,” the Bid Unit stated that “such words indicate[d] nothing more than” the fact that the town had discretion to extend the contract term. The Bid Unit added that MassDOT has “always” had power to set the prequalification value for Chapter 90 projects, not municipalities. Noting that the town was not even required to alert bidders to MassDOT’s revised guidance, the Bid Unit closed its decision by cautioning that bidders are “expected to know the law and may not rely on the conduct of Government agents contrary to law.” In these circumstances, the Bid Unit denied the protest.

The decision highlights the importance of keeping abreast of relevant developments (including legal developments) and carefully reading and understanding the requirements of the bid documents. While each situation is different and depends on the facts, it may be advisable to submit a pre-bid question in the event of perceived ambiguities. In addition, a contractor that does not meet applicable prequalification requirements might consider seeking a waiver prior to bid opening.