In 2015, the Massachusetts Department of Transportation (“MassDOT”) issued Supplemental Specifications to its Standard Specifications for Highways and Bridges. One of the changes in the Supplemental Specifications was the addition of a percentage cap to MassDOT’s Mobilization Item 748. The mobilization cap provides that:

• The unit bid price for Mobilization (Item 748) shall not exceed 3% of the contract bid total, exclusive of this item. Failure to observe this requirement may result in rejection of the bid…

On February 14, 2018, the Bid Unit of the Massachusetts Attorney General’s Office (“AGO”) addressed this requirement in a case where the low bidder’s bid price for mobilization significantly exceeded the 3% cap.

The protest arose out of an over-the-water MassDOT bridge rehabilitation project. Among other things, the work entailed repairs to stone masonry walls (both below and above the surface of the water). MassDOT’s estimated Project cost was $760,000. The low bidder’s total bid price was $794,040, and its unit price for Mobilization was $234,000. As a result, the low bidder’s unit price for Mobilization exceeded the 3% mobilization cap by a sizable margin.

The second-low bidder also exceeded the mobilization cap. These exceedances prompted the third-low bidder to file a protest, even though the third-low bidder also exceeded the mobilization cap (albeit to a lesser extent). The protestor argued that the two low-bids must be rejected because: (1) they are unbalanced; (2) they are “artificially inflated”; and (3) MassDOT deviated from its own standard operating procedures. The AGO denied the protest.

Before addressing the protestor’s arguments, the AGO noted that the “Basis of Payment” provision of MassDOT’s Standard Specifications “contemplates that mobilization costs may exceed 3%.” The AGO then considered and rejected each of the protestor’s arguments in turn.

Although the AGO acknowledged that the low bid was “mathematically” unbalanced, the AGO concluded that it is not also “materially” unbalanced so as to warrant rejection. The AGO stated that “[a] materially unbalanced bid must, by necessity, involve unit price items, rather than lump sum prices, since the fear is that the quantity of the unit price items may have been underestimated by the awarding authority.” Because the Mobilization Item is a fixed lump sum item, the AGO stated that “there is no risk” that MassDOT understated quantities or would face “overruns.” The AGO further noted that MassDOT and its consulting engineer performed an investigation of the low- bidder’s prices and stood by the accuracy of its estimated quantities.

The AGO also rejected the protestor’s assertion that the low bid was “artificially inflated.” Citing to the Appeals Court’s landmark 1984 decision in Department of Labor & Industries v. Boston Water & Sewer Commission, the AGO concluded that there was no artificial inflation since the low-bid was “undeniably the lowest; and is $313,000 lower than [the protestor’s] bid.”

Lastly, the AGO considered whether MassDOT violated its standard operating procedures when it failed to require the low-bidder to explain in writing any major variances in pricing. Because these procedures are not statutorily required, the AGO concluded that MassDOT had discretion to waive them. In any event, given MassDOT’s comprehensive review of the low-bid (with the help of its bridge engineers and outside Project designer), the AGO stated that “MassDOT was within its rights to forego seeking a written explanation” from the low- bidder.

The AGO carefully tailored its decision to the facts of this particular case. As a result, bidders should not view this decision as a license to deviate from MassDOT’s standard mobilization cap without the risk of bid rejection. Under a different set of facts, and in light of MassDOT’s discretion, your bid very well may be rejected.

It is clear that MassDOT retains discretion when it comes to its mobilization cap. In addition – in the eyes of the AGO – the fact that Mobilization Item 748 is a fixed lump sum item puts a damper on the type of unbalanced-bid arguments that the protestor asserted on the specific facts of this case.

Hinckley Allen handled the defense of this protest on behalf of the low-bidder.

Originally published in the February edition of the Construction Journal.