Source: https://www.sauerconstructionlaw.com/notable-cases/
Timestamp: 2019-04-26 00:15:51+00:00

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Many times a bid protest heard by the Attorney General’s Office can spell the difference between the survival or demise of a construction company. Bid protests are typically emergencies and require immediate, research-intensive legal analysis. Although a decision by the Attorney General in the contractor’s favor does not have the force of law, such a decision will often persuade the contracting agency in question to re-procure or do the “right thing.” The following bid protest case argued by Jonathan Sauer is an important “win” for the bid laws. This case holding directed a public owner to comply with the procedural and substantive requirements of the Massachusetts bid laws rather than employ a far less stringent administrative regulation as a procurement mechanism, which would have afforded the awarding authority far greater discretion and potential for “wiggle room” at the expense of Massachusetts bidders.
In Re: Pool Mechanical Maintenance Contract – Department of Conservation & Recreation – Protester: Allied Weatherproofing, Inc.
June 3, 2005 Bid Protest Decision - Investigation Summary - Pursuant to M.G.L. c. 149, §44H, the undersigned conducted an investigation to determine if the Department of Conservation & Recreation (DCR) awarded a contract for Pool Mechanical Maintenance (the contract) in violation of the bidding laws for public construction. As part of this investigation, a hearing was held on April 20, 2005. Representatives from Allied Weatherproofing, Inc. (Allied), Aquatic Technology, Inc. (Aquatic) and DCR attended the hearing and presented testimony and documentary evidence. Prior to the hearing, Allied submitted a memorandum in support of its position with attached exhibits A-H. At the hearing, Allied requested and was granted two additional days in which to submit a supplementary memorandum in support of its protest. Allied submitted its supplementary memorandum on April 22, 2005. Both DCR and Aquatic were provided the opportunity to respond to Allied’s supplementary memorandum, but neither chose to do so.
The question presented by the protest is whether this contract to maintain 41 pools (some indoor, some outdoor) constitutes a contract for the “alteration … or repair of any public work, or for the purchase of any material,” as defined by G.L. c. 30, §39M (c. 30) or “construction, reconstruction, installation, demolition, maintenance or repair of any building,” under G.L. c. 149, §44A-J (c. 149). DCR seeks to award the contract to Aquatic after having conducted a limited bidding process under 801 C.M.R. 21.00 et seq. 801 C.M.R. 21.00 et seq. lacks many of the safeguards that are contained in the competitive bidding laws, c. 149, §44 A-J and c. 30. For example, the advertising requirements for c. 149 and c. 30 contracts are more extensive, compare G.L. c. 149, §44J (setting forth requirements for both) with 801 C.M.R. 21.06(5); and awarding authorities must select the “lowestresponsible and eligible bidder” for c. 149 and c. 30 contracts, see G.L. c. 149, §44 A(2) and G.L. c. 30, §39M(a) (emphasis added), as compared to the “Best Value Response,” see 801 C.M.R. 21.06(11)(b). For further examples, see infra, Parties’ Position section. Following investigation, we conclude that the contract, as presently structured, is subject to c. 149 and that essential requirements of this statute were not complied with. Thus, the protest is allowed.
Later in 2003, the MDC and the former Department of Environmental Management (DEM) merged to form DCR. This protest involves a contract by DCR for pool mechanical maintenance that is scheduled to begin after Allied’s contract with the former MDC expires. At the hearing, DCR did not explain why it did not bid the contract out pursuant to the bid laws, as one of its predecessor agencies, the MDC, had done in the past, most recently in 2003.
Bids were received from three contractors: Allied, Rizzo Pool Co. and Aquatic. All three bid differently. Allied provided a bid price of $42,000 for the first year of the contract, followed by a breakdown of the hourly rates that apply to the project and the material markup. Allied indicated that its bid was for work on all 41 pools. Rizzo and Aquatic both provided unit prices for their work (as opposed to set, overall bid prices.) However, Rizzo indicated that it was bidding only on 7 of the 41 pools. Whereas, Aquatic, like Allied, bid on the entire contract work for all 41 pools.
According to the testimony from DCR’s representative, DCR plans to enter into separate Tradesperson Agreements under 801 C.M.R. 21.00 et seq. for each pool, if the current protest is allowed, so as to meet pool opening deadlines. Tradesperson Agreements have been utilized in the past to provide maintenance to DEM pools.
Allied argues that the contract calls for “the maintenance or repair of [a] building by a public agency estimated to cost more than $100,000,” see c. 149, §44(A)(2)(D), insofar as it involves the maintenance and repair of pools, which constitute an intrinsic part of the buildings in which they are housed. In the alternative, Allied contends that the contract is subject to c. 30, as a contract “for the construction, reconstruction, alteration, remodeling or repair of any public work, or for the purchase of any material.” C. 30, § 39 M(a).
Additionally, Allied argues that by bidding the contract pursuant to 801 C.M.R. 21.00, DCR failed to comport with essential requirements of both c. 149 and c. 30. Allied provides several instances in which DCR failed to comply with essential c. 149 and c. 30 requirements because it bid the contract pursuant to 801 C.M.R. 21.00, which lacks many of the safeguards that promote openness and protect against favoritism and financial risk for awarding authorities that are central to c. 149 and c. 30. First, no public bid opening was held. See c. 149, §44(A)(2)(C) and c.30, §39M; see also DCR Memorandum, dated March 7, 2005, containing minutes from a Pre-Proposal Conference for the contract, which states, “There will be no public bid opening.” Second, the bid documents did not require award of the contract to the “lowest, responsible and eligible bidder.” See c. 149, §44(A)(2) and c. 30, §39 M; see also R.F.R. at 11; “Vendors will be chosen on a combination of criteria, including: [experience, staff resources, fee schedule, references].” Third, no performance or payment bond was required to be posted to protect the Commonwealth against monetary loss if the work under the contract is not completed. See c. 149, §44(B)(2) and c. 30, §39M(a) and J. D’Amico, Inc. v. Worcester, 19 Mass.App.Ct. 112 (1984). Fourth, the awarding authority could alter the terms of the contract after the bid had been accepted. See M.G.L. c. 149, §44(B)(1) and c. 30, §39M(b) (requiring awarding authority to prepare identical specifications for contract for distribution to prospective bidders at time of invitation to bid). Finally, bidders could write their own specifications insofar as they could choose to bid on as many or as few pools to maintain as they chose. See Sweezey v. Mayor of Malden, 273 Mass. 536, 540, 174 N.E. 269 (1931) (prospective bidders were not placed upon the equal footing essential to fair competition) and R.F.R. at 9, 17.
Allied further submits that DCR’s stated intention to utilize so-called ‘Tradesperson Agreements’ under 801 C.M.R. 21.00 to obtain maintenance for its pools, if it is found to have violated the bid laws in this matter, would amount to an attempt to thwart the requirements of the laws. Allied argues that the bid laws would be rendered obsolete if contractors were permitted to divide contracts up in order to stay below the $10,000 monetary bid thresholds in c. 149 and c. 30. See c. 149, §44A(2)(B)-(D) and c. 30, §39(M)(a).
DCR does not dispute that it is a public entity covered by c. 149 and c. 30 or that it failed to comply with the essential requirements in both statutes. Instead, it takes the position that the pool mechanical maintenance contract does not implicate the bid laws because the “repair” aspect of the contract, if indeed it is “repair” work as defined by c. 149 and c. 30, represents only a fraction of the contract. DCR submits that the terms of the contract supports its position. Specifically, if the contract, which it estimates would cost $2.5 million per year over 5 years, is divided by the number of pools, which is 41, then the approximate value for the work for each pool is $12,000.00. And, since “repair” is only one of six items called for in the contract to maintain each pool, we must estimate that it represents something less than $10,000 of the $12,000 contract per pool.
In determining whether a contract is subject to statutes such as c. 149 or c. 30, we must examine the character of the RFR which resulted in the contract. See Datatrol Inc. v. State Purchasing Agent, 379 Mass. 679, 695, 400 N.E.2d 1218 (1980). The only difference between a c. 149 and c. 30 “repair” work seems to be that the former is performed in connection with a building and the latter involves some other improvement on land other than a building. If both types of work are present, “the more onerous public buildings bidding procedures of [c. 149], rather than the less onerous public works bidding procedures of [c. 30] apply.” Thorn Transit Systems Intern. Ltd. v. Massachusetts Bay Transp. Authority, 40 Mass.App.Ct. 650, 655 (1996) (citing Modern Continental Constr. Co. v. Lowell, 391 Mass. 829 (1984)). We therefore begin with the issue of whether c. 149 applies to the contract.
Pursuant to G.L. c. 149, §44D(3), the Division of Capital Asset Management [DCAM] has established categories of c. 149 work in order to carry out its responsibility to evaluate the applications of general contractors and issue certificates stating the classes and amount of c. 149 for which they are eligible to submit a bid. Plumbing work is specifically identified in c. 149 as being subject to the statute. See §44F(1)(a). DCAM has established categories for plumbing and mechanical work. The “repair” work to be performed here on pools within buildings, as described in the above-quoted section of the RFR, falls squarely under DCAM’s definition of plumbing work and arguably falls under DCAM’s definition of mechanical work. SeeDCAM Certification Guidelines and Procedures for Prime Contractors and Awarding Authorities, revised April 26, 2005, (I)(A)(18) and (15). On this basis, c. 149 would apply. We also note that MDC must have believed that c. 149 applied previous to its merger with DEM to form DCR, as the previous contract was bid pursuant to c. 149.
801 C.M.R. 21.00 et seq. does not exempt the instant contract from c. 149. As noted above, these regulations specifically state that they yield to state statutes.
DCR argues that there is less than $10,000 in c. 149 work required for each indoor pool (and less than $10,000 in c. 30 work for each outdoor pool). Assuming, for the sake of argument, that it is not the total contract estimate for all work under the contract that governs, this argument suffers from two flaws. First, the c. 149 work for each pool must be treated on an aggregate basis, as all such work was bid under one contract. Second, c. 149 now applies to, and sets forth certain bidding requirements for, “contract[s] for the construction, reconstruction, installation, demolition, maintenance or repair of any building by a public agency estimated to cost less than $10,000”. See G.L. c. 149, §§44(2)(A), inserted by Chapter 193 of the Acts of 2004.
If a public contract for the repair of a building or public work is estimated to exceed $10,000, advertisement of the contract is required. See G.L. c. 149, §44(B)-(D) and c. 30, §39M(a). Advertising requirements for c. 149 and c. 30 contracts are set forth in c. 149, §44J, and “[n]o contract or preliminary plans and specifications shall be split or divided for the purpose of evading the provisions of this section.” G.L. c. 149, §44J(3). DCR’s plan to divide up the work on each pool would seem to be an attempt to do just that. DCR asserts that such division is necessary to open the pools in a timely fashion, but does not explain how this asserted justification applies to work beyond that needed to open the pools for this season.
Based on the foregoing, we conclude that the contract here was subject to c. 149 and was bid in violation of essential c. 149 requirements. See n. 3, infra. Upon a re-bid, DCR may wish to advertise and bid a contract under c. 30 for the outdoor pools and to advertise and bid another contract under c. 149 for the indoor pools. See Modern Continental, 391 Mass. at 833-838 (condoning this type of contract splitting). Whether bidding this season’s pool opening work in accordance with these statutes would prevent the timely opening of the pools and whether the estimates for this work would allow resort to 801 C.M.R. 21.00 et seq., we simply do not have enough information before us to say.
It has been suggested that compliance with c. 149’s bid specification requirements would be impossible given the inherent inability to predict the need for repairs to a pool’s mechanical system, much less the systems of 41 pools. However, specifications can be drawn in such a way that a contractor is well informed as to the particular systems it will be required to maintain and the need to keep it functioning in an orderly manner. As a guide, DCR may wish to consult the prior contracts utilized by the MDC to obtain maintenance and repairs for its pools. The protest is allowed as set forth above.
The same analysis would apply to the contract’s electrical work, as well. SeeDCAM Certification Guidelines and Procedures for Prime Contractors and Awarding Authorities, revised April 26, 2005, (I)(A)(7). See also DCR Memorandum, dated March 7, 2005, containing minutes from a Pre-Proposal Conference for the contract - “Question as to how Vendor is to calculate his cost if the amount of work (hours) is unknown. Vendor is to calculate his cost using past historical data, rates may be adjusted in the future if vendor can justify request.” Further, DCR may choose to seek guidance from the Division of Capital Asset Management.

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