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The Bid Unit of the Massachusetts Attorney General’s Office Releases Decision on Bidder Responsibility

 The competitive bidding statute for public works projects (M.G.L. c. 30, § 39M) generally requires an awarding authority to award to the lowest eligible and “responsible” bidder on large projects.  Because awarding authorities have discretion when it comes to determining “responsibility,” the awarding authority’s bidder responsibility determination can, in some cases, be used as a trump card to reject a low bidder.  The responsibility determination will usually be upheld so long as there is a rational basis to support it.  Under this legal standard, bid protests challenging bidder responsibility determinations often fail.  But that was not the result in a recent bid protest decision of the Bid Unit of the Massachusetts Office of the Attorney General (“AGO”).

The AGO’s decision in In re: I.W. Harding Construction Co., Inc. arose out of a $2.5 Million municipal roadway improvements project.  Although I.W. Harding Construction Co., Inc. (“I.W. Harding”) had submitted the lowest bid, the awarding authority rejected I.W. Harding in favor of the second-low bidder.  As purported grounds for rejection, the awarding authority pointed to references and alleged prior experience with I.W. Harding.  The awarding authority also took the position that, “since there was only a small differential between [I.W.] Harding and the second lowest bidder ($16,000), it weighed the two contractors and chose the contractor who would, it thought, probably get along best with the abutters” to the project.

I.W. Harding lodged a bid protest, arguing that the awarding authority’s rejection was not justified on the record and that it impermissibly compared the bidders.  The AGO agreed, allowing the protest in a well-reasoned and detailed decision.  Hinckley Allen handled the protest for I.W. Harding.

After briefing and a hearing, the AGO found that I.W. Harding had successfully completed hundreds of public works projects similar to this project in the Commonwealth for more than 35 years.  The AGO made the following additional factual findings concerning several of I.W. Harding’s references:

  • Reference 1. The awarding authority’s former city engineer “praised” I.W. Harding’s project manager, and confirmed that I.W. Harding was cooperative with the owner and engineer on prior projects for the awarding authority and had produced “high quality results.”
  • Reference 2.  A second reference indicated that I.W. Harding aggressively pointed out issues and problems with the specifications at the pre-construction meeting.  However, the reference confirmed that I.W. Harding “was actually correct” and that I.W. Harding “did a good job and demonstrated good judgement.”  The AGO acknowledged I.W. Harding’s testimony that it promptly raises specification issues to avoid project delays.
  • Reference 3.  A third reference confirmed that I.W. Harding was cooperative with the owner and engineer and rated I.W. Harding highly.
  • Reference 4.  A fourth reference also gave I.W. Harding a positive reference, confirming that I.W. Harding was cooperative and “definitely” has the “skills for roadway improvement projects.”

While recognizing the awarding authority’s discretion, the AGO made clear that such discretion is not “unconstrained.”  The bidder responsibility investigation must be reasonable, accurate, and thorough.  The awarding authority cannot disregard facts and circumstances and its decision must be justified on the record.

Rejecting any notion that I.W. Harding was “difficult to work with” as unsupported by the record, the AGO noted that it is “incumbent upon a contractor to bring deficiencies in the plans and specifications to the attention of the awarding authority, in order to avoid future problems during the construction of the project.”
The AGO also rejected conclusory comments by one reference in light of evidence that the reference – which the AGO had previously found to have acted arbitrarily with respect to I.W. Harding – was biased against I.W. Harding.  On the facts of this case, the AGO concluded that the awarding authority’s consulting engineer should have known of such bias when investigating references, and indicated that a different reference should have been contacted.

The AGO further found that there was “absolutely no evidence that [I.W.] Harding could not handle the complexity of this project and any ‘challenging conditions’ that it may encounter” and rejected several other grounds that the awarding authority had raised in support of its rejection.

Lastly, the AGO concluded that the awarding authority impermissibly “weigh[ed]” I.W. Harding against the second-low bidder to determine which bidder would be a “better fit” for the awarding authority.  The AGO made clear that the awarding authority must first determine that the low bidder is not responsible “before the second bidder can be considered.”

This article does not address all the issues involved in In re: I.W. Harding Construction Co., Inc.  Generally speaking, the AGO’s decision makes clear that an awarding authority cannot pick-and-choose among bidders; the awarding authority must investigate the low bidder first.  If the awarding authority decides to reject the low bidder on responsibility grounds, the awarding authority must be able to justify its decision on the record.  Bidders aggrieved by an awarding authority’s bidder responsibility determination must evaluate whether the determination is justifiable.  If not, there may be a narrow avenue to protest.

Published in the May 2018 edition of UCANE's Construction Outlook.