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SJC-12126

SERVICE EMPLOYEES INTERNATIONAL UNION, LOCAL 509, & others1 vs. 

AUDITOR OF THE COMMONWEALTH & others.

2

Suffolk. September 6, 2016. - December 9, 2016.

Present: Gants, C.J., Botsford, Lenk, Hines, Gaziano, Lowy, & 

Budd, JJ.

Privatization Act. Auditor. Commissioner of Mental Health.

Public Welfare, Department of Health and Human Services.

Mental Health. Practice, Civil, Action in nature of 

certiorari.

Civil action commenced in the Supreme Judicial Court for 

the county of Suffolk on April 8, 2016.

The case was reported by Spina, J.

Ian O. Russell (Katherine D. Shea & James F. Lemond with 

him) for the plaintiffs.

Bryan F. Bertram, Assistant Attorney General (Daniel J. 

Hammond, Assistant Attorney General, with him) for the 

defendants.

 

1 Massachusetts Nurses Association, and American Federation 

of State, County and Municipal Employees Council 93.

2 Department of Mental Health, and Executive Office of 

Health and Human Services (EOHHS).
2

LENK, J. The plaintiffs, Service Employees International 

Union, Local 509 (SEIU), the Massachusetts Nurses Association, 

and the American Federation of State, County and Municipal 

Employees, Council 93, challenge a decision by the Auditor of 

the Commonwealth approving a proposed privatization contract 

pursuant to G. L. c. 7, §§ 52-55 (Pacheco Law). The Pacheco Law

establishes "[p]rocedures that agencies must follow when 

beginning the bidding process for and entering into a 

privatization contract." Massachusetts Bay Transp. Auth. v. 

Auditor of the Commonwealth, 430 Mass. 783, 786 (2000) (MBTA). 

The Auditor of the Commonwealth must review all privatization 

proposals to determine if they comply with the Pacheco Law. Id.

In January, 2016, the Department of Mental Health (DMH) 

submitted a proposal to the Auditor that would privatize certain

of its State-run mental health services. Under the terms of the 

proposal, the Massachusetts Behavioral Health Partnership 

(MBHP), a privately owned State-wide mental health provider, 

would take over from DMH the provision of mental health services 

in the Southeast region of Massachusetts. In March, 2016, the 

Auditor issued a written decision concluding that DMH's 

privatization proposal met the requirements of the Pacheco Law, 

specifically, that the privatization was procured properly, that 

it would not result in a net cost to the Commonwealth, and that 

it would not cause a decline in the quality of mental health 
3

services provided in the Southeast region. The plaintiffs then 

filed a petition in the nature of certiorari in the county 

court, seeking review of the Auditor's decision. A single 

justice reserved and reported the matter to the full court.

We conclude that the Auditor did not abuse her discretion 

in determining that DMH's privatization proposal met the 

requirements of the Pacheco Law. Accordingly, we affirm the 

Auditor's decision.

1. Background. DMH administers mental health services to 

low and moderate income residents of the Commonwealth through 

the "MassHealth" program.

3 The provision of these services is 

divided into five geographic regions within the Commonwealth, 

each containing several emergency service programs (ESPs): 

Metro Boston, Western Massachusetts, Central Massachusetts, 

Southeast and Northeast-Suburban.

4 In each region, the ESPs 

provide twenty-four hour emergency mental health services to 

MassHealth members, uninsured individuals, and others requiring

mental health crisis intervention. Prior to the effective date 

of the Pacheco Law in 1993, DMH contracted with private

 

3 DMH is an agency within EOHHS. For clarity, we will refer 

to DMH as the contracting party throughout the opinion, even 

though EOHHS simultaneously played a role in the contracting 

process.

4 The Southeast region encompasses Brockton, Cape Cod and 

the Islands, Fall River, and Taunton/Attleboro.
4

contractors to provide ESP services throughout Massachusetts,

5

with the exception of the Southeast region.

6

DMH entered into the most recent contract concerning the 

provision of ESP services on July 1, 2012. After a competitive 

procurement process, DMH awarded a five-year contract7 to MBHP

to manage all of the ESPs in the Commonwealth except those in 

the Southeast region.

8 It is undisputed that the 2012 contract 

was not subject to the requirements of the Pacheco Law because 

the services awarded to MBHP were already privately operated. 

 

5 Mental Health Management of America, a private company,

apparently began to provide mental health services to mentally 

ill patients covered by Medicaid in 1992. See Weld to Privatize 

Acute Care for Uninsured Mentally Ill, Boston Globe, Jan. 25, 

1995, at 1 ("Since 1992, Mental Health Management of America 

. . . has been responsible for providing acute care to mentally 

ill patients on Medicaid"); The Massachusetts Behavioral Health 

Partnership (MBHP) took over the provision of such services from 

Mental Health Management of America in 1996. See State Chooses 

New Firm to Provide Managed Care For Mentally Ill, Boston 

Herald, Jan. 20, 1996, at 6 ("[MBHP] will provide mental health 

and substance abuse services to 400,000 Medicaid clients as well 

as 30,000 residents who are covered directly by [DMH]").

6 During that period, DMH provided emergency service program 

(ESP) services in the Southeast region directly through its own 

employees.

7 The contract required MBHP to procure contracts with ESP 

providers to deliver "direct care for behavioral-health crises 

and emergency services to subscribers to ['MassHealth'],

subscribers to private health insurers, or the uninsured."

8 In procuring the 2012 contract, DMH issued a blanket 

request for responses (RFR) seeking a vendor to provide various 

medical services in accordance with the provisions of 801 Code 

Mass. Regs. §§ 21.00 (2003) and 801 Code Mass. Regs. § 21.06

(1997), which mandate a competitive procurement process for 

agency contracts.
5

Under the terms of the contract, DMH reserved the right to amend 

it "to implement new initiatives or to modify initiatives."

In 2015, DMH amended its 2012 contract with MBHP in an 

effort to privatize ESP services in the Southeast region. 

Pursuant to the terms of the amended contract (2015 amendment),

MBHP would take over management of the remaining State-run ESP 

services in that region. Toward that end, MBHP was required to 

"contract with one locally based provider to administer the ESP 

for each catchment area,"

9 issue a "request for responses (RFR)"

to procure ESP services for the Southeast region and "select 

winning bidders" to provide services in accordance with a set of 

guidelines established by DMH. DMH created the criteria for 

selection of the winning bids and retained final approval 

authority over the selection of the winning bidders. After 

seeking interested bidders, MBHP ultimately recommended two 

organizations to provide ESP services in the Southeast region.

In accordance with its obligations under the Pacheco Law, 

in January, 2016, DMH provided written notice and certification

to the Auditor of its privatization proposal and a comprehensive 

analysis of how the proposal comported with the Pacheco Law.

10 

 

9 A "catchment area" is a geographical term used by DMH to 

divide the Commonwealth into different divisions.

10 The Pacheco Law requires that any agency that wishes to 

enter into a privatization contract must, "in consultation with 

the executive office for administration and finance, first 
6

The submission included a detailed analysis of the financial 

benefits of privatization,11 the structure of services that the 

private ESP providers would deliver, and a model contract 

between MBHP and each private ESP provider in the Southeast 

region.

12 Shortly thereafter, SEIU submitted a series of 

objections to the Auditor, pursuant to provisions in the Pacheco 

Law, challenging a number of aspects of the privatization 

proposal.

On March 30, 2016, the Auditor issued her "Independent 

State Auditor's Determination on the Department of Mental 

Health's Proposal to Privatize Its Southeast Emergency Services 

Program," approving the privatization proposal. Shortly after 

 

compl[y] with" several requirements. G. L. c. 7, § 54. The 

agency head must certify in writing to the Auditor that the 

agency solicited "competitive sealed bids for the privatization 

contracts," G. L. c. 7, § 54 (1); that the privatization 

contract provides a guaranteed minimum wage rate set out in the 

statute and the same health insurance benefits for each 

previously public position as was provided by the State, G. L. 

c. 7, § 54 (2); that the privatization contract results in net 

savings compared to "the costs of regular agency employees[] 

providing the subject services in the most cost-efficient 

manner," G. L. c. 7, § 54 (4); and that the "quality of services 

to be provided" will "equal or exceed the quality of services 

which could be provided by regular agency employees," G. L. 

c. 7, § 54 (7) (ii).

11 DMH's submission noted that privatization would save the 

Commonwealth $7,007,864 in its first year, and would provide 

similar savings in subsequent years.

12 The sample contract between MBHP and each ESP provider

included a list of metrics by which MBHP would measure the 

performance of each provider, and noted that the contract would 

be in effect until June 30, 2017.
7

the decision was issued, the plaintiffs filed a petition in the 

nature of certiorari, G. L. c. 249, § 4, in the county court. 

The parties then jointly asked the single justice to reserve and 

report the case to the full court. The single justice did so.

13

The plaintiffs maintain that the Auditor's decision was 

arbitrary and capricious because DMH failed to seek competitive 

bids before entering into the 2015 amendment with MBHP; DMH 

improperly delegated the solicitation process of ESP providers

to MBHP; the privatization proposal fails to uphold the minimum 

wage and benefits protections of the Pacheco Law; the Auditor 

failed to take into account the costs of "bumping" and seniority 

rights; and the quality of services provided by MBHP would be 

lower than those currently provided by DMH.

2. Discussion. a. Standard of review. In the absence of 

a statutory right of appeal, the plaintiffs sought review of the 

Auditor's decision by requesting relief in the nature of 

certiorari, G. L. c. 249, § 4. "The function of a civil action 

in the nature of certiorari . . . is 'to relieve aggrieved 

parties from the injustice arising from errors of law committed 

in proceedings affecting their justiciable rights when no other 

means of relief are open.'" Figgs v. Boston Housing Auth., 469 

 

13 The defendants' attorney represented during argument

before us that DMH has not proceeded with implementation of the 

2015 amendment pending the outcome of this litigation.
8

Mass. 354, 361 (2014), quoting Swan v. Justices of the Superior 

Court, 222 Mass. 542, 544 (1916).

An action in the nature of certiorari is an appropriate 

means by which to challenge the Auditor's determination whether 

a privatization contract complies with the Pacheco Law. See

MBTA, 430 Mass. at 790-791. "The legislative history of the 

[Pacheco Law] and the law itself express the Legislature's 

intent that the Auditor exercise discretion in reviewing the 

contract." Id. at 791. In considering a discretionary decision 

by an administrative agency, as here, "a reviewing court . . . 

is limited to determining whether the decision is legally 

erroneous or so devoid of factual support as to be arbitrary and 

capricious." MacLaurin v. Holyoke, 475 Mass. 231, 238 (2016).14 

In conducting our review, we are mindful that "[a] decision 

is . . . arbitrary and capricious [where] there is no ground 

which 'reasonable [persons] might deem proper' to support it." 

Garrity v. Conservation Comm'n of Hingham, 462 Mass. 779, 792

(2012), quoting T.D.J. Dev. Corp. v. Conservation Comm'n of N.

Andover, 36 Mass. App. Ct. 124, 128 (1994).

b. Procurement process. We first address the plaintiffs' 

argument that, in contravention of the Pacheco Law, DMH did not 

 

14 The plaintiffs' counsel acknowledged at argument before 

us that the arbitrary and capricious standard of review was 

applicable.
9

publicly procure the services covered by the 2015 amendment.

15 

The 2015 amendment, inter alia, transferred managerial 

responsibilities concerning the Southeast region ESPs from DMH 

to MBHP and tasked MBHP with procuring private vendors to run 

the ESPs. The Auditor's analysis of the privatization 

proposal's compliance with the procurement requirements of the 

Pacheco Law began with the unremarkable determination that the 

privatization contract at issue here constituted a "series or 

combination of agreements."16 She then determined that "[i]n a 

more complicated privatization proposal such as this, it is 

essential that all the agreements are subject to a public 

procurement process . . . ." The Auditor went on to construe 

the Pacheco Law as requiring that only "[t]he essential 

contracts in a series of contracts" must be competitively 

procured "at the time of the privatization." "[E]ssential 

contracts" are, in this regard, "the contracts that govern the 

provision of public services formerly provided by [S]tate 

 

15 Here, the plaintiffs object to the procurement process as 

provided by the Pacheco Law, not as set forth in the regulations 

established in 801 Code Mass. Regs. § 21:06. Although the 

plaintiffs earlier made an objection to the Auditor that the 

procurement process in this case did not comport with State 

procurement regulations, before us the plaintiffs explicitly 

disclaim that objection.

16 Insofar as the language of the statute defines a 

"[p]rivatization contract" as "an agreement or combination or 

series of agreements," G. L. c. 7, § 53, this determination is 

patently reasonable. The plaintiffs do not contend otherwise.
10

employees." Additionally, the Auditor noted that the

2015 amendment was "part" of the 2012 contract, which had been 

publicly procured by competitive bidding at its inception,17

because the additional obligations that the amendment placed 

upon MBHP were explicitly contemplated in the language of that 

contract.

The Auditor then concluded that the agreements between MBHP 

and the ESP providers were the only "essential contracts" in the 

series or combination of agreements constituting the proposed 

privatization contract. Only those contracts had to be procured

under the Pacheco Law at the time of the privatization. Because 

MBHP had in fact solicited competitive bids for the ESP 

contracts pursuant to its obligations under the 2012 contract as 

amended in 2015, the Auditor concluded that the proposed 

privatization contract had met the procurement requirements of 

the Pacheco Law.

The plaintiffs contend that the Auditor erred in several

respects. They chiefly object to her determination that the 

2015 amendment did not constitute an "essential agreement" in 

the privatization contract, contending that it was the vehicle 

that set in motion the proposed privatization. Accordingly, 

they argue that DMH was obligated to publicly procure the 

 

17 The 2012 contract had been subject to a competitive 

procurement process under State procurement regulations. See 

801 Code Mass. Regs. § 21:06.
11

services covered by the amendment.18 The plaintiffs do not 

assert that either the 2012 contract or MBHP's contracts with 

ESP providers failed to satisfy the public procurement 

requirements of the Pacheco Law. We address each of the 

Auditor's conclusions in turn.

The Auditor's determination that only the "essential"

agreements in a privatization contract, the agreements which

"govern the provision of public services formerly provided by 

 

18 While both the Pacheco Law and state procurement 

regulations set forth in 801 Code Mass. Regs. §§ 21:00 require 

that public agencies solicit competitive bids with reference to 

the procurement of services, the Pacheco Law places several 

additional requirements on agencies asking to privatize 

services. See 801 Code Mass. Regs. § 21:06 ("All acquisitions 

of Commodities or Services, or both, must be competitively 

procured unless the acquisition qualifies as an exception under 

[801 Code Mass. Regs. § 21:05]"); G. L. c. 7, § 54 (1) ("The 

[privatizing] agency shall solicit competitive sealed bids for 

the privatization contracts based upon [a written statement of 

the services to be privatized]"). For example, the Pacheco Law 

provides that "[n]o amendment to a privatization contract shall 

be valid if it has the purpose or effect of avoiding any 

requirement of this section." Id.

Additionally, the Pacheco Law does not contain the broad 

list of exempt institutions that are in the procurement 

regulations. See 801 Code Mass. Regs. § 21:01 (2) (2003)

(exempting institutions of higher learning, elected offices, 

military division, and independent public authorities). The 

differences between the State regulations and the procurement 

requirements of the Pacheco Law are not without consequence. 

For example, in 2015, the Auditor rejected a privatization 

proposal from Roxbury Community College on the basis that 

although it was exempt from State procurement regulations, it 

was still bound by and had not complied with the procurement 

requirements of the Pacheco Law. See Letter dated Nov. 17, 

2015, at http://www.mass.gov/auditor/docs/privatization/11-17-

15-signed-objection-letter-for-roxbury-community-college.pdf

[https://perma.cc/NB9Q-T88A].
12

[S]tate employees," must be procured publicly by competitive 

bidding "at the time of the privatization" is itself reasonable. 

See Dowling v. Registrar of Motor Vehicles, 425 Mass. 523, 525

(1997), quoting Massachusetts Med. Soc'y v. Commissioner of 

Ins., 402 Mass. 44, 62 (1988) ("Where the [agency's] statutory 

interpretation is reasonable . . . the court should not supplant 

[its] judgment"). The statutory language does not speak 

directly to whether all or only some parts of a privatization 

contract consisting of a series or combination of agreements 

must be competitively procured. The Pacheco Law defines a 

privatization contract, however, as a contract by which a 

private entity "agrees with an agency to provide services . . . 

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. The Auditor's judgment that 

the "essential contracts" are those which actually include the

private providers taking over public services directly aligns 

with this definition.

The Auditor's challenged determination that the 

2015 amendment does not constitute an "essential agreement" in 

the privatization contract that must be publicly procured at the 

time of the privatization presents a somewhat closer question. 

Her conclusion rests on two grounds. First, she determined that 

the 2015 amendment was part of the 2012 contract, which already
13

had been publicly procured. Second, she found that the only 

contracts that actually "govern the provision of public services 

formerly provided by [S]tate employees" are the contracts 

between MBHP and the ESP providers. Hence, in her view, the 

2015 amendment did not constitute an "essential" agreement 

because it was part of the 2012 contract and did not actually 

effectuate the privatization.

The disagreement between the plaintiffs and the Auditor 

boils down to whether the 2015 amendment "govern[s] the 

provision of public services formerly provided by [S]tate 

employees." The Auditor's determination that the 

2015 amendment, which provided for the expansion of MBHP's 

oversight and solicitation obligations, did not govern the 

provision of public services formerly provided by State workers

is not an unreasonable resolution of that question. The 

2015 amendment merely extends MBHP's oversight of State ESP 

services under the 2012 contract and directs it to solicit the 

private providers that will take over the State positions. 

Given that the Auditor advances a reasonable interpretation and 

application of the procurement requirements of the Pacheco Law,

we cannot conclude that her interpretation, in these 

circumstances, was arbitrary and capricious. See Massachusetts 

Med. Soc'y v. Commissioner of Ins., 402 Mass. at 62 ("Where [an 
14

agency's] statutory interpretation is reasonable . . . the court 

should not supplant [its] judgment").19

c. Delegation by DMH. We next address the plaintiffs' 

argument that DMH improperly delegated to MBHP the procurement 

process for the privatization contract, in violation of the 

Pacheco Law. The 2015 amendment charged MBHP with issuing a 

"request for responses (RFR)" to procure ESP services for the 

Southeast region and "select[ing] winning bidders" to provide 

services in accordance with a set of guidelines established by 

DMH. The plaintiffs contend that DMH's assignment of these 

tasks to MBHP contravened the requirements of the Pacheco Law. 

The Pacheco Law provides, in relevant part, that an "agency"

intending to enter into a privatization contract "shall solicit 

competitive sealed bids for the . . . contracts," and then 

"publicly designate the bidder to which it proposes to award the 

contract." G. L. c. 7, § 54 (1), (6). An "agency" is defined 

as "an executive office, department, division, board, 

commission, or other office or officer in the executive branch 

of the government of the [C]ommonwealth." G. L. c. 7, § 53. 

The plaintiffs contend that the definition of "agency" in the 

 

19 The plaintiffs also argue that the amendment was invalid 

in any case because it "had the purpose or effect of avoiding" 

the procurement requirements of the Pacheco Law. See G. L. 

c. 7, § 54 (1). This argument is unavailing because, as the 

Auditor notes and the plaintiffs repeatedly state in their 

argument, the 2012 contract was not a privatization contract.
15

Pacheco Law unambiguously required that DMH itself solicit the 

bids and publicly designate the winning proposals in its 

privatization. By contrast, the Auditor, in approving DMH's 

delegation of certain solicitation-related tasks to MBHP,

determined that it was "unreasonable to assume that the 

Legislature would only permit an agency to undertake [the tasks 

associated with the solicitation process] directly, even when 

indirectly undertaking those tasks" would best serve the 

purposes of the law as expressed in its preamble.

The Auditor's determination that, in these circumstances, 

DMH's assignment of certain tasks to MBHP did not violate the 

Pacheco Law is reasonable because DMH retained control over the 

solicitation process. Nothing in the statutory text of the 

Pacheco Law proscribes an agency from implementing the 

solicitation process through an intermediary acting under the 

agency's direction. Furthermore, doing so would not contravene 

the purpose of the Pacheco Law where, as the Auditor noted in 

her decision, the agency "indirectly undertaking those 

tasks . . . ensures that the Commonwealth receives high-quality 

public services at low cost with due regard for the taxpayers of 

the Commonwealth and the needs of public and private workers." 

See G. L. c. 7, § 52.

Here, there was ample evidence before the Auditor that DMH 

controlled the procedure, criteria, and outcome of the 
16

solicitation process. The 2015 amendment provided DMH with 

control over how MBHP conducted the solicitation process, the 

performance standards that bidders responding to the RFR would 

have to meet in order to qualify as an ESP provider, and final 

approval rights over the selection of the winning bidders. 

Accordingly, the Auditor's determination that DMH's delegation

of solicitation-related tasks to MBHP did not run afoul of the 

Pacheco Law was not arbitrary and capricious.

d. Minimum wage and benefit provisions. We next turn to 

the plaintiffs' argument that the model contract between MBHP 

and the ESP providers included in the privatization proposal 

fails to require compliance with the minimum wage and benefit 

protections of the Pacheco Law beyond June 30, 2017. Under the 

Pacheco Law, "[e]very bid for a privatization contract and every 

privatization contract shall include provisions specifically 

establishing the wage rate for each such position, which shall 

not be less than" "the lesser of step one of the grade or 

classification under which the comparable regular agency 

employee is paid, or the average private sector wage rate for 

said position." G. L. c. 7, § 54 (2). The statute also

mandates that successful bidders provide health insurance 

benefits comparable to those previously provided by the 

Commonwealth to State employees performing the same services. 

Id.
17

The plaintiffs argue that the model contract improperly 

terminates these protections at the end of the current contract 

period, June 30, 2017. First, they contend that these

protections cannot be terminated as long as the corresponding, 

previously State-employed jobs still exist. In the alternative, 

the plaintiffs maintain that the guarantee of the wage and 

health insurance protections for merely one year in the model 

contract constitutes an impermissible end run around the Pacheco 

Law.

In considering this issue, the Auditor found that the 

Pacheco Law "sets forth no minimum standard for the term of a 

privatization contract." She then determined that the test that 

she would use in "assessing the legitimacy of the term of a 

privatization contract is whether the contract's term has some 

rational basis or is designed to avoid the requirements of the 

[Pacheco Law]." Applying this standard to DMH's privatization 

proposal, she found that "the limited timeframe for the contract 

[and therefore for the protections] results from [DMH's] 

preference to provide all ESP services under one umbrella 

contract with MBHP, or whoever the successful bidder is at the 

expiration of the [2012 contract]."

The Auditor concluded that this was a "rational basis" for 

the short duration of the ESP contracts and the protections they 

provided. During the review period, DMH had written to the 
18

Auditor that it intended to extend its then-current contract 

with MBHP and would extend these protections under that

contract. As noted in the decision, the Auditor's approval of 

the privatization proposal was based in part on that 

representation.

20 We conclude that there was no abuse of 

discretion in the Auditor's reliance on DMH's written 

representation that it would comply with her interpretation of 

the Pacheco Law as a factor in her decision to approve the

privatization proposal.

21

e. Costs of "bumping" and seniority rights. The 

plaintiffs maintain that, while the Auditor discussed the 

subject of transition costs resulting from the termination of 

employees as a result of the proposed privatization, she failed 

 

20 The Auditor stated in her decision that "if the 

procurement of a successor agreement to the agreement between 

[DMH] and MBHP is not completed by the end of June 2017 and 

instead the present agreement is extended until a new contract 

is negotiated, the wage and benefit requirements of the [Pacheco 

Law] should continue to apply as well until that new contract is 

finalized." Elaborating on her view, she added that "[a]ny 

amendment at that time that would, in extending the length of 

the contract, also affect the wage and benefit protections of 

the [Pacheco Law] would be inconsistent with this view." 

Finally, she noted that "[i]n a communication with this 

office . . . DMH took the same position, and this office's 

decision not to object to the privatization proposal is based, 

in part, on this assurance."

21 The Auditor did not address the contention that the 

protections provided by the Pacheco Law extend in perpetuity as 

long as the State jobs they correspond to exist. We, like the 

Auditor, do not reach the question of the length of time a

private provider must continue to meet the minimum wage and 

benefits requirements of the Pacheco Law.
19

to account for the costs22 stemming from "bumping" and seniority 

rights in determining that the privatization would provide the 

Commonwealth over-all cost savings.

23

DMH provided the Auditor with a calculation of the 

potential transition costs incurred as a result of the 

privatization, based on the assumption that every DMH employee 

affected by the privatization accepted a layoff and received the 

maximum unemployment benefits to which the employee was 

entitled. The cost of this worst-case scenario was estimated to 

be approximately $2.2 million. Taking those transition costs 

into account, the Auditor determined that the reductions in cost

from the proposed privatization of the Southeast region would 

result in savings of approximately $7 million over the first 

year of privatization.

The plaintiffs contend that, although the Auditor took 

notice of these cost data, she erred by not taking into account 

 

22 The Pacheco Law mandates that the cost of a privatization 

contract must "be less than the estimated cost" of the "costs of 

regular agency employees[] providing the subject services" "in 

the most cost-efficient manner." See G. L. c. 7, § 54 (4), (7)

(iii).

23 "Bumping" is a process by which employees with greater 

seniority whose jobs are being eliminated or who face being laid 

off may displace less senior employees. See, e.g., Andrews v. 

Civil Serv. Comm'n, 446 Mass. 611, 619 (2006); Boston v. 

Salaried Employees of N. Am., Local 5198, 77 Mass. App. Ct. 785, 

786 (2010); Herlihy v. Civil Serv. Comm'n, 44 Mass. App. Ct. 

835, 835 (1998). For example, a senior DMH employee whose 

position was terminated as part of the privatization could opt 

to take the comparable job of a less senior employee.
20

the specific costs of retraining transferred employees who moved 

into different jobs as a result of "bumping." The plaintiffs 

have not, however, made a showing that those retraining costs 

could equal or outweigh the $7 million in savings that the 

Auditor found would stem from the privatization, nor do they 

otherwise contest the Auditor's conclusion concerning the 

reduction in costs the privatization would afford the 

Commonwealth. Hence, even if the plaintiffs' contention that 

the Auditor did not take into account costs associated with 

"bumping" and seniority rights is correct, her conclusion that 

the privatization would provide savings to the Commonwealth in 

accordance with the requirements of the Pacheco Law would still 

be accurate. We therefore discern no basis on which to conclude 

that her judgment on this issue was arbitrary and capricious.

f. Quality of ESP services following privatization. The 

plaintiffs' final objection concerns the Auditor's determination 

that there will be no reduction in the quality of services as a 

result of the proposed privatization. The Pacheco Law requires 

an agency advancing a privatization proposal to demonstrate to 

the Auditor that "the quality of the services to be provided by 

the designated bidder is likely to . . . equal or exceed the 

quality of services which could be provided by regular agency 

employees," G. L. c. 7, § 54 (7) (ii), "providing the subject
21

services in the most cost-efficient manner," G. L. c. 7, 

§ 54 (4).

We review the Auditor's conclusions as to the quality of 

services under the privatization proposal to determine if they 

rest on at least one "ground which reasonable [persons] might 

deem proper to support it" (quotation and citation omitted). 

See Garrity v. Conservation Comm'n of Hingham, 462 Mass. at 792. 

The plaintiffs argue that the Auditor erred in four respects in 

determining that the quality of services would not decline due 

to the proposed privatization. They contend that the proposed 

privatization will fail to provide services to patients with 

commercial health insurance; result in fewer licensed clinicians 

serving patients; lead to a harmful reduction in staffing in the 

Southeast region; and reduce the hours of staff availability at 

community centers in the ESPs. We address each of these 

contentions in turn.

The plaintiffs first maintain that, contrary to the 

Auditor's findings, the model contract contained in DMH's 

submission to the Auditor does not mandate that ESP providers 

deliver services to commercially insured individuals. The 

Auditor noted in her decision that the model contract explicitly 

requires that ESPs must provide services "to individuals . . . 

experiencing a behavioral health crisis," and that DMH 

represented to her that ESPs would be required to provide 
22

service to all individuals, regardless of any insurance 

coverage. The Auditor's reliance on the model contract, as 

augmented by DMH's representation, was not unreasonable.

The plaintiffs also object that the Auditor's decision does 

not adequately address SEIU's arguments that the private ESP 

providers will employ more unlicensed clinicians than does DMH,

24

and that the proposed privatization will result in a significant 

reduction in staffing in the Southeast region. The plaintiffs 

contend that both of these occurrences will result in a decline 

in the quality of services in the Southeast region as a result 

of the privatization. The Auditor's determination addressed

both of these contentions by stating that the model contract 

requires ESP providers to meet the same standards of care 

currently provided by DMH's State employees.

25 Given that the 

Auditor relied on the contractual obligations of the ESP 

 

24 According to the Service Employees International Union, 

Local 509 (SEIU), and undisputed by DMH, eighty-seven per cent 

of DMH clinicians providing ESP services have a professional 

license, while only sixty-eight per cent of ESP clinicians 

Statewide are licensed.

25 In this regard, the Auditor had data before her that,

although disputed by SEIU, she apparently credited. The data,

submitted to the Auditor by DMH, based on studies by MBHP,

purports to show that private ESP providers across the 

Commonwealth have provided equal or better care than the ESPs 

operated directly by DMH. The private ESPs which purportedly 

performed as well or better than their State counterparts were 

subject to similar licensing requirements as the private ESP 

providers in the Southeast region would be under the model 

contract.
23

providers in addressing plaintiffs' contentions, her judgment in 

this instance was reasonable.

Finally, the plaintiffs object to the proposal's reduction 

in walk-in services at community centers in the ESPs from the 

current twenty-four hour per day staffing levels.

26 The Auditor 

noted in her decision that the proposed ESP contract guarantees 

services to those in psychiatric distress twenty-four hours each 

day, seven days per week, regardless of the hours when the 

community-based location is staffed,

27 and that only 0.63 per 

cent of patient encounters in the Southeast region over the 

prior year took place at the community centers during a time 

when staff would not be present under the terms of the model 

contract. She determined that any impact on service would be 

"de minimis." This was not unreasonable.

We accordingly conclude that the Auditor's judgment that 

the quality of services would not decline as a result of the 

proposed privatization was reasonable. See Forsyth Sch. For 

Dental Hygienists v. Board of Registration in Dentistry, 404 

Mass. 211, 218 (1989) ("[An agency's decision] can be disturbed 

 

26 Under the model contract, community-based locations in 

Brockton and Taunton would be open for walk-in services between 

8 A.M. and 8 P.M., Monday through Friday, while the locations in 

Cape Cod and Fall River would be open between 7 A.M. and 11 P.M.

27 DMH represented to the Auditor during the review process 

that ESPs would use mobile service centers to respond to 

patients in distress.
24

only if it is based on a legally untenable ground . . . or is 

unreasonable . . ." [quotations and citation omitted]).

3. Conclusion. The matter is remanded to the county court 

for entry of an order affirming the Auditor's determination that 

DMH's 2016 proposal to privatize its southeastern emergency 

service programs comports with the requirements of the Pacheco 

Law.

So ordered.