Title: Service Employees International Union, Local 509 v. Department of Mental Health
Citation: N/A
Docket Number: SJC-12035
State: Massachusetts
Issuer: Massachusetts Supreme Court
Date: November 22, 2016

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SJC-12035 
 
SERVICE EMPLOYEES INTERNATIONAL UNION, LOCAL 509  vs.  
DEPARTMENT OF MENTAL HEALTH & others.1 
 
 
Suffolk.     September 6, 2016. - November 22, 2016. 
 
Present:  Gants, C.J., Botsford, Lenk, Hines, Gaziano, Lowy, & 
Budd, JJ. 
 
 
Privatization Act.  Commissioner of Mental Health.  
Commonwealth, Contracts.  Contract, Validity.  Public 
Employment.  Laches.  Practice, Civil, Judgment on the 
pleadings. 
 
 
 
 
Civil action commenced in the Superior Court Department on 
February 15, 2012. 
 
 
Following review by this court, 469 Mass. 323 (2014), the 
case was heard by Janet L. Sanders, J., on motions for judgment 
on the pleadings. 
 
                     
 
1 Advocates, Inc.; Alternatives Unlimited, Inc.; Bay Cove 
Human Services; The Bridge of Central Mass, Inc.; Brien Center, 
Brockton Area Multi Services, Inc.; Carson Center for Human 
Services; Center for Human Development, Inc.; Community 
Counseling of Bristol County; Community Healthlink, Inc.; 
Edinburg Center, Inc.; Eliot Community Human Services, Inc.; 
Fellowship Health Resources, Inc.; Mental Health Association of 
Greater Lowell, Inc.; North Suffolk Mental Health Association; 
Riverside Community Care, Inc.; Servicenet, Inc.; South Shore 
Mental Health Center, Inc.; and Vinfen Corporation. 
 
2 
 
 
 
The Supreme Judicial Court granted an application for 
direct appellate review.  
 
 
 
Ian O. Russell (Katherine D. Shea with him) for the 
plaintiff. 
 
Iraida J. Álvarez, Assistant Attorney General, for 
Department of Mental Health. 
 
Carl Valvo & Ariel G. Sullivan, for Advocates, Inc., & 
others, were present but did not argue. 
 
Mark G. Matuschak & Robert Kingsley Smith, for Pioneer 
Institute, Inc., were present but did not argue. 
 
Anita S. Lichtblau & Robert E. Cowden, III, for 
Massachusetts Council of Human Services Providers, Inc., & 
others, amici curiae, submitted a brief. 
 
 
 
LENK, J.  This is the second time that the plaintiff labor 
union appeals from dismissal of the declaratory judgment action 
it first brought against the Department of Mental Health (DMH or 
agency) in 2012.  Service Employees International Union, Local 
509 (SEIU or union) maintains that certain contracts DMH made in 
2009 with private vendors are "privatization contracts" subject 
to the requirements of the Pacheco Law, G. L. c. 7, §§ 52-55.  
The Pacheco Law establishes certain prerequisites that agencies 
must meet when seeking to enter into privatization contracts. 
Because DMH had determined that the subject contracts were not 
privatization contracts, however, it did not comply with those 
statutory prerequisites.  In bringing this action, the union 
seeks, among other things, a declaration invalidating the 
contracts on the basis of G. L. c. 7, § 54 (§ 54), which 
3 
 
 
provides that no privatization contract "shall be valid" where 
an agency did not follow the necessary procedures. 
 
In our previous decision in this case, Service Employees 
Int'l Union, Local 509 v. Department of Mental Health, 469 Mass. 
323, 324 (2014) (SEIU I), we rejected DMH's contention that the 
union lacked standing to challenge, in a declaratory judgment 
action, the agency's unilateral determination that the contracts 
were not privatization contracts.  While recognizing that the 
Pacheco Law does not expressly provide a private right of 
action, we also recognized that the Legislature did not 
contemplate the situation presented there (and here), in which 
an agency determines on its own that it need not comply with the 
requirements of the statute.  Id. at 335-336.  Because 
unreviewable agency decision-making on such a matter would 
thwart legislative intent, we concluded that in these 
circumstances "declaratory judgment is an appropriate vehicle 
for relief to ensure that agencies may not evade the 
requirements of the Pacheco Law with impunity."  Id. at 336.  We 
accordingly vacated the judgment of dismissal and remanded the 
case to allow joinder of necessary parties.2  Id. at 339. 
                     
 
2 The Superior Court judge had determined, and we agreed, 
that the initial complaint did not include all necessary 
parties.  Service Employees Int'l Union, Local 509 v. Department 
of Mental Health, 469 Mass. 323, 338-339 (2014) (SEIU I).  On 
remand, SEIU filed an amended complaint joining those parties. 
 
4 
 
 
 
While SEIU I was under advisement in this court, however, 
the five-year term of the subject contracts drew to an end and, 
pursuant to the provisions of those contracts, DMH exercised 
options renewing them for successive one year periods.3  
Following our decision in SEIU I and the amendment of the 
complaint, DMH again successfully moved to dismiss the union's 
declaratory judgment action, this time asserting it was moot.  
The basis for the dismissal was two-fold:  first, the action was 
moot as to the now-expired 2009 contracts, and, second, the 
remaining extant renewal contracts were immune from challenge by 
virtue of G. L. c. 7, § 53 (§ 53) ("any agreement renewing . . . 
a privatization contract[] shall not be considered a 
privatization contract").  The union appealed, asserting, in 
essence, that because the non-compliant 2009 initial contracts 
are invalid under § 54, so too are any renewal contracts made 
pursuant to them. 
 
We are thus called upon to construe §§ 53 and 54 as they 
apply in these unusual circumstances.  Cognizant that the 
Pacheco Law only contemplates the situation, unlike this one, 
where an agency recognizes a potential privatization contract as 
                                                                  
 
 
3 The 2009 contracts were for a period of five years, 
expiring in 2014.  They provided the Department of Mental Health 
(DMH) three unilateral options to renew for periods of one year 
each. 
 
5 
 
 
such and acts in compliance with the statutory requirements to 
assure its validity, see, e.g., SEIU I, 469 Mass. at 329-330; 
Massachusetts Bay Transp. Auth. v. Auditor of the Commonwealth, 
430 Mass. 783, 784-787 (2000) (MBTA), we interpret §§ 53-54 with 
that framework in mind.  Fidelity to the intent and purpose of 
the Legislature in enacting the Pacheco Law, evident in both the 
plain language of the statute when read as a harmonious whole, 
and the legislative history, requires that the protection 
afforded renewal contracts by § 53 not be extended to those 
renewal contracts made pursuant to timely challenged and 
subsequently invalidated privatization contracts under § 54.  We 
accordingly vacate the judgment of dismissal. 
 
1.  Background.  The following facts are taken from SEIU's 
amended complaint, which, at this stage, we assume to be true,  
see, e.g., Iannacchino v. Ford Motor Co., 451 Mass. 623, 636 
(2008), supplemented by undisputed facts in the record.4  For 
more than fifteen years, DMH had employed case managers to 
provide services to individuals with mental illness.  In 
late 2008 and early 2009, DMH initiated a new program, the 
Community Based Flexible Supports program, that was intended to 
                     
 
4 The allegations in the amended complaint are materially 
identical to those in the initial complaint.  See Service 
Employees Int'l Union, Local 509 v. Department of Mental Health, 
469 Mass. 323, 324,326 (2014) (SEIU I). 
 
6 
 
 
provide similar but more personalized services to DMH clients.  
As part of the Community Based Flexible Supports program, DMH 
entered into agreements with nineteen private organizations to 
provide services substantially similar to those previously 
provided by the case managers.  Over the same period, DMH laid 
off approximately eighty case managers.  DMH unilaterally 
determined that these new contracts were not "privatization 
contracts" within the meaning of the Pacheco Law and therefore 
did not attempt to follow any of the procedures that the law 
requires when an agency intends to privatize a service.  
 
Sometime in 2009, SEIU notified the Auditor of the 
Commonwealth of DMH's intent to enter into the contracts and the 
union's objections to the contracts.  The Auditor's office 
undertook an investigation and, in September, 2010, the 
Auditor's general counsel sent DMH, SEIU, and the Attorney 
General a letter and memorandum stating that the contracts 
"[had] the effect . . . of privatizing services previously 
performed by public employees," and therefore should have been 
submitted for review prior to taking effect.  The Auditor's 
office told the Office of the Attorney General "to take whatever 
steps [the Attorney General felt] were appropriate," but the 
Attorney General's office did not take any action.   
 
Having failed to obtain relief through administrative 
channels, the union filed its initial complaint in 2012.  As 
7 
 
 
discussed, a Superior Court judge dismissed that complaint for 
lack of standing; we vacated the decision, concluding that the 
union did have standing, and remanded for further proceedings.  
On remand, a different Superior Court judge dismissed the 
amended complaint, this time as moot; SEIU appealed, and we 
granted direct appellate review. 
 
2.  Discussion.  We have discussed at some length in prior 
decisions the statutory framework, purpose, and history of the 
Pacheco Law.  See SEIU I, 469 Mass. at 329-330; MBTA, 430 Mass. 
at785-787.  In brief, G. L. c. 7, § 52 (§ 52), sets forth the 
purpose of the law: 
"The [G]eneral [C]ourt hereby finds and declares that 
using private contractors to provide public services 
formerly provided by state employees does not always 
promote the public interest.  To ensure that citizens of 
the [C]ommonwealth receive high quality public services at 
low cost, with due regard for the taxpayers of the 
[C]ommonwealth and the needs of public and private workers, 
the [G]eneral [C]ourt finds it necessary to regulate such 
privatization contracts in accordance with [the rest of the 
law]." 
 
In addition to defining several key terms, the other three 
sections of the law, set forth both the procedures that agencies 
must follow when seeking to enter into privatization contracts 
and describe the independent review process that the Auditor is 
to conduct of a proposed privatization contract upon receiving 
from the agency specified information and a certification of 
compliance with those prerequisites. 
8 
 
 
 
Section 53 defines "privatization contract" as follows:  
 
"[A]n agreement or combination or series of agreements 
by which a non-governmental person or entity agrees with an 
agency to provide services, valued at [an amount to be 
adjusted for inflation, currently $500,000, or more] which 
are substantially similar to and in lieu of, services 
theretofore provided, in whole or in part, by regular 
employees of an agency."  
 
It excludes from the definition "[a]ny subsequent agreement, 
including any agreement resulting from a rebidding of previously 
privatized service, or any agreement renewing or extending a 
privatization contract."5  Id.  Section 54 makes plain that "[n]o 
agency shall make any privatization contract and no such 
contract shall be valid unless the agency [follows requisite 
procedures]."  This point is underscored in G. L. c. 7, § 55 
(§ 55), which sets forth the consequence of the Auditor's 
objection to a proposed contract:  "An agency shall not make any 
privatization contract [to which the auditor objects] and no 
such contract shall be valid." 
 
DMH contends that, even if the initial 2009 contracts were 
deemed invalid, the now fully performed contracts should not be 
deemed void.  It is DMH's view that the renewal contracts would 
remain unaffected even in the face of such a declaration because 
                     
 
5 In addition to renewal contracts, certain contracts for 
services such as information technology, legal services, 
consulting, engineering, or design are excluded from the 
definition of "privatization contract."  G. L. c. 7, § 53. 
 
9 
 
 
renewal contracts are not privatization contracts by definition, 
and therefore need not comply with Pacheco Law requirements.  
Accordingly, in its view, the renewal contracts cannot be set 
aside by virtue of either their own noncompliance with such 
requirements or that of the predecessor contracts.  The union 
maintains, by contrast, that the invalidity of the initial 
privatization contracts requires that they be set aside as void, 
that they could not give rise to validly exercised options to 
renew and therefore that such renewal contracts are themselves 
void.  Section 53, the union argues, does not provide a safe 
harbor immunizing such renewal contracts from the consequences 
of predecessor agreements' invalidity. 
 
Assuming, as we must at this stage, that the contracts DMH 
entered into with private vendors in 2009 were privatization 
contracts6 and that, pursuant to § 54, "no such contract shall be 
valid," the questions we must resolve are these.  Is the 
consequence of declaring a non-compliant privatization contract 
invalid to render it void and of no effect?  If the answer is in 
the affirmative, are renewal contracts that are entered into 
                     
 
6 The question whether the services provided through the 
Community Based Flexible Supports program are substantially 
similar to those provided by case managers, and therefore 
whether the contracts were, in fact, privatization contracts 
under the Pacheco Law, has not been determined, see SEIU I, 469 
Mass. at 325 n.4, and we do not reach it today. 
 
10 
 
 
pursuant to the exercise of rights in an invalid contract 
themselves thereby to be set aside?  If the answer is in the 
affirmative, does the language of § 53 nonetheless create a safe 
harbor, as it were, for these renewal contracts? 
 
We address each question in turn, interpreting the statute 
"according to the intent of the Legislature, ascertained from 
all its words construed by the ordinary and approved usage of 
the language, considered in connection with the cause of its 
enactment, the mischief or imperfection to be remedied and the 
main object to be accomplished, to the end that the purpose of 
its framers may be effectuated."  Commonwealth v. Mogelinski, 
473 Mass. 164, 169 (2015) (Mogelinski II), quoting Commonwealth 
v. Clark, 472 Mass. 120, 129 (2015).  We construe the Pacheco 
Law in order to render it "an effectual piece of legislation," 
able to accomplish legislative aims (citation omitted).  Sun Oil 
Co. v. Director of Div. on the Necessaries of Life, 340 Mass. 
235, 238 (1960). 
 
a.  The invalid 2009 contracts and voidness.  Under the 
plain language of § 54, no privatization contract made by an 
agency "shall be valid" unless it is compliant with the 
requirements of the statute.7  Given that the 2009 contracts are 
                     
 
7 Even where, unlike here, an agency acknowledges a contract 
as a privatization contract and unsuccessfully attempts to 
comply with those requirements by, inter alia, submitting it to 
 
11 
 
 
assumed for these purposes to be non-compliant privatization 
contracts, they must be considered invalid.  
 
Generally speaking, whether a contract made in violation of 
a statute is rendered void ab initio, i.e., treated as having no 
force or effect, depends upon the language of the statute and 
the nature of the violation.  See Baltazar Contractors, Inc., v. 
Lunenburg, 65 Mass. App. Ct. 718, 720-721 (2006) (contract void 
where statute declares it so or where voiding contract necessary 
to accomplish statutory purpose).  See also Massachusetts Mun. 
Wholesale Elec. Co. v. Danvers, 411 Mass. 39, 55 (1991) (absent 
statutory declaration or binding precedent "voiding ab initio . 
. . applied . . . with the view of . . . effectuating public 
policy").8  The language that the Legislature chose to use in 
both § 54 and § 55 (that "no agency shall make any privatization 
contract and no such contract shall be valid" [emphasis 
                                                                  
the Auditor for review, the result of the Auditor's objection is 
the same:  "no such contract shall be valid."  See G. L. c. 7, 
§ 54. 
 
 
8 DMH and the service providers rely on Massachusetts Mun. 
Wholesale Elec. Co. v. Danvers, 411 Mass. 39, 56 (1991) to argue 
against the "legal fiction" of retrospectively declaring 
contracts void ab initio.  While the court did caution in that 
case against "unthinkingly" voiding contracts, that discussion 
was with respect to the effect of an invalid contract on a third 
party (citation omitted).  Id. at 55.  The court explained that 
"limits [to retroactive voiding] . . . have their typical 
application to the rights and duties of" third parties.  Id. at 
56, quoting Sleicher v. Sleicher, 251 N.Y. 366, 369-370 (1929). 
 
12 
 
 
supplied]) makes it unmistakably clear that the statute was 
intended to be "prohibitory," so as to render any contract in 
violation of it absolutely void, rather than simply "directory."  
See Baltazar, 65 Mass. App. Ct. at 721.   
 
This is especially so when viewed in light of the 
Legislature's stated purpose in § 52 that, in order to protect 
taxpayers, recipients of services, and workers, "it is necessary 
to regulate such privatization contracts" by means of the 
provisions set forth in the remainder of the statute.  Were non-
compliant privatization contracts to be afforded continuing 
force and effect, the result would thwart the express statutory 
purpose, allowing agencies to "evade the requirements of the 
Pacheco Law with impunity."  SEIU I, 469 Mass. at 336.  Deeming 
such contracts to be void ab initio is therefore necessary to 
accomplish the statute's purposes.  Cf. Phipps Prods. Corp. v. 
Massachusetts Bay Transp. Auth., 387 Mass. 687, 691-692 (1982) 
(voiding public contracts that did not meet statutory bidding 
requirements [which serve similar purpose as Pacheco Law], even 
where no harm shown).    
 
b.  Status of renewal contracts.  It is undisputed that the 
renewal contracts were made by DMH's exercise of rights under 
the 2009 contracts, which for purposes here are deemed invalid 
and void.  Were such invalidation to have been the result of a 
declaratory judgment entered during the term of the 2009 
13 
 
 
contracts, we have little doubt but that such void contracts 
would be deemed without force or effect, and that they would no 
longer give rise to rights to renew.  See, e.g., Winslow v. 
Baltimore & Ohio R.R. Co. 188 U.S. 646, 657-659 (1903).  The 
inquiry then is whether the same result should obtain where, as 
here, the options to renew were exercised before the already-
challenged 2009 contracts were declared to be invalid.  We 
conclude that it should. 
 
The fact that we confront this issue at a time when the 
2009 contracts have expired only underscores the highly unusual 
circumstances here.  As we noted in SEIU I, "the Pacheco 
Law . . . provides a streamlined and time-sensitive 
process . . . .  [T]he . . . need for expedition in settling 
questions . . . is evident."  SEIU I, 469 Mass. at 337 n.12.  
The statutory framework contemplates that an agency seeking to 
privatize functions will follow the procedures outlined and, if 
there is a challenge to the Auditor's independent review of the 
proposed contract, that an action in the nature of certiorari 
will be filed and adjudicated promptly, protecting the many 
interests at stake.  See MBTA, 430 Mass. at 786-787, 790-791.  
On the other hand, "it seems plain that the Pacheco Law as 
written does not contemplate the situation presented here."  
SEIU I, 469 Mass. at 327. 
14 
 
 
 
In light of the fact that the parties find themselves in a 
situation not expressly addressed in the statute, it is hardly 
surprising that the union's challenges to DMH's unilateral 
decision to forego the Pacheco procedures began by raising the 
issue first with DMH and the Auditor and, thereafter, by 
awaiting enforcement action from the Attorney General.  
Cf. MBTA, 430 Mass. at 791 (law entrusts Auditor with "broad 
grant of power").  The union brought suit in 2012 only when 
those efforts proved fruitless.  The union's standing to bring 
the action was then litigated, and it was only in 2014, after 
the 2009 contracts already had expired and DMH had exercised its 
contractual options, that we clarified the procedure to be 
followed in these circumstances.  See SEIU I, 469 Mass. at 335-
336.  We would not expect to confront such a situation again, 
given that in the future the agency's determination that a 
contract is not a privatization contract may be challenged 
forthwith in a declaratory judgment action with injunctive 
relief available.  Parties entering into any such contracts, let 
alone exercising rights of renewal, prior to adjudication of the 
challenge, would do so at their peril. 
 
That being said, this is not a case where the litigation 
was brought to challenge renewal contracts in the first instance 
on the basis that the predecessor contracts were invalid. To the 
contrary, the union challenged the predecessor 2009 contracts 
15 
 
 
well before their expiration and now, only due to delays in 
adjudication, challenges the vitality of the extant renewal 
contracts.  DMH and the vendors entered into those renewal 
contracts fully aware of the challenges lodged to the validity 
of the contracts pursuant to which the options to renew were 
exercised.  In essence, DMH would have the result turn on the 
fortuity of the clock running out on the 2009 contracts before 
the litigation concluded.  We fail to see how it serves the 
purpose of the Pacheco Law to permit the passage of time to be 
dispositive in such circumstances.  See Mogelinski II, 473 Mass. 
at 169 (looking to statutory purpose).  Cf. Commonwealth v. 
Vega, 449 Mass. 227, 233 (2007) (courts do not interpret statute 
to produce an illogical result); 2A N.J. Singer & J.D. Shambie 
Singer, Statutes and Statutory Construction § 45:12 (7th ed. 
rev. 2014). 
 
The union's claim that the 2009 contracts are invalid and 
that they and the resulting renewal contracts are thereby void,  
gives rise to a live controversy.  SEIU has a legally cognizable 
interest in the outcome of a declaration as to the validity and 
voidness of the 2009 contracts.  Such a declaration implicates 
the consequent inability of DMH effectively to have exercised 
rights of renewal pursuant to such contracts and, insofar as 
such a declaration would permit any such ongoing renewal 
contracts to be set aside, would itself provide a remedy.  In 
16 
 
 
these circumstances, declaratory relief is not merely advisory 
and the union's claim is not moot. 
 
c.  The impact of Section 53.  DMH maintains, however, that 
because all subsequent agreements, including the renewal 
contracts here, are not "privatization agreements," and thus are 
not required to comply with §§ 54-55, they therefore are immune 
from the effects of a declaration as to the invalidity and 
voidness of the initial agreements pursuant to which they were 
made.  This reading is not supported by the plain language of 
§ 53 itself, by the statute read as an harmonious whole, or by 
legislative history. 
 
We have no quarrel with the view urged by DMH that the 
language of § 53 is fairly read as subjecting to statutory 
requirements and review processes only new privatization 
agreements, entered into after the statute became effective, 
that privatize for the first time services that were until then 
provided by government employees.  "Any subsequent agreement" 
continuing those privatized services is "not a privatization 
contract."  G. L. c. 7, § 53.  By statutory definition, certain 
new agreements, such as those involving information technology, 
legal, or consulting services, also are not privatization 
17 
 
 
contracts.9  See id.  As to subsequent agreements, of which 
renewal agreements are a subset, the use of the word "any" as a 
modifier is certainly consistent with the reading that all such 
agreements are exempt.  See Hollum v. Contrib. Retirement Appeal 
Bd., 53 Mass App. Ct. 220, 223 (2001).  Contrary to the 
defendants' view, however, subsequent agreements are not exempt 
from all challenges.  By contrast, because they are not required 
to comply with the rigorous strictures and review processes of 
the Pacheco Law, they are exempt only from challenges based on 
their own noncompliance with that law.   
 
There is nothing in the language of § 53 that renders the 
exempt categories bullet proof from challenges that may be made 
to contracts as such.  The exempt agreements, as any contracts, 
are subject to all manner of common law contract claims, ranging 
from simple breaches to issues such as fraud, unconscionability, 
or the ultra vires doctrine, some of which could, if proven, 
result in an agreement being rendered void.  See, e.g., 
Massachusetts Mun. Wholesale Elec. Co. v. Danvers, 411 Mass. at 
                     
 
9 "A contract for information technology services shall not 
be considered a privatization contract if an employee 
organization recognized under [G. L. c. ] 150E, as the exclusive 
representative of an affected employee . . . agrees to the terms 
of the contract in writing.  An agreement solely to provide 
legal, management consulting, planning, engineering or design 
services shall not be considered a privatization contract."  
G. L. c. 7, § 53. 
 
18 
 
 
54 (contract void ab initio as ultra vires); Restatement 2d of 
Contracts, § 7, comment b (1981) (circumstances such as fraud or 
duress allow aggrieved party to void contract).  Such 
challenges -- not based on the renewal agreements' noncompliance 
with Pacheco Law requirements -- may seek directly to set aside 
an exempt contract because it is, for example, beyond the 
department's authority and therefore ultra vires or the product 
of fraud.   
 
Challenges also can seek indirectly the same result as to 
agreements ancillary to a void contract, because that contract 
is thereby rendered incapable of giving rise to any rights or 
duties.  See 17A C.J.S. Contracts § 374 (2011) ("When parties to 
an illegal contract attempt to extend or renew it by entering 
into a new agreement, the new contract . . . is illegal and 
unenforceable").  Similarly, the latter type of challenge may 
affect "subsequent agreements" as the byproduct of a timely 
challenge to the validity of earlier contracts under the Pacheco 
Law, whether by virtue of the Auditor's objection pursuant to 
§ 55, an action in the nature of certiorari challenging the 
Auditor's decision, or a declaratory judgment action challenging 
the agency's non-compliance with §§ 54 and 55.  Nothing in the 
express language of § 53 shields exempt agreements from such 
claims.  
19 
 
 
 
The silence of § 53 as to whether exempt agreements are 
immunized from all claims must be viewed in light of the 
statutory scheme as a whole.  See Pentucket Manor Chronic Hosp., 
Inc. v. Rate Setting Comm'n, 394 Mass. 233, 240 (1985) (statutes 
must be construed "as a harmonious whole").  Sections 54 and 55 
plainly contemplate that privatization agreements, as defined in 
§ 53, that are entered into absent compliance with the 
requirements set forth in those sections, will be deemed void.  
To imply that § 53 draws a cloak of immunity over renewal 
contracts made pursuant to a contract voided by virtue of §§ 54 
and 55 would countermand the clear mandate of those sections, 
i.e., that agencies must comply with the Pacheco Law when 
entering into agreements to privatize services. 
 
Nor does the legislative history support the view that the 
exemption of "subsequent agreements" from the definition of 
"privatization contracts" was intended to render such agreements 
wholly unreviewable.  We look to legislative history because 
"statutes are to be interpreted, not alone according to their 
simple, literal, or strict verbal meaning" (citation omitted), 
Sullivan v. Chief Justice for Admin. & Mgt. of the Trial Court, 
448 Mass. 15, 24 (2006), and "[u]nderstanding the intent of the 
Legislature" can be "far more important than a literal 
dictionary meaning."  Quincy City Hosp. v. Rate Setting Comm'n, 
406 Mass. 431, 449 (1990).  
20 
 
 
 
While the language of the exemption makes one purpose self-
evident -- it prevents duplicative review of already-approved 
contracts -- the legislative history of the Pacheco Law suggests 
one further goal.  The provision was a means of dealing with 
contracts that had already privatized state services prior to 
the effective date of the statute.  It was added as an amendment 
to ensure that agreements continuing those contracts in place 
after the statute became effective were not to be upended by 
virtue of not having been or thereafter being in compliance with 
the statutory vetting process.  See Anti-Privatization Bill 
Would Stall Weld Push, The Boston Globe, March 3, 1993 at 22  
Senator Marc Pacheco, the bill's sponsor, explained that as to 
"private services that are out there right now . . . [their] 
renewal is exempt from the bill."  State House News Serv. (June 
16, 1993).  On the other hand, nothing in the law's history 
suggests that the Legislature intended to protect the renewal of 
invalid contracts. 
 
DMH contends, however, that the Legislature intended the 
statute to provide a safe harbor for subsequent agreements, 
including renewal contracts, in order to ensure finality and 
attendant certainty for the parties to the contracts and those 
they serve.  On this view, § 53 functions as an implicit statute 
of repose.  Challenges belatedly invalidating renewal contracts 
as the result of statutory noncompliance in connection with the 
21 
 
 
predecessor privatization contract would interfere with this 
salutary goal.  There is merit to this point, but it does not 
justify the immunity that DMH seeks for renewal contracts.  It 
goes instead to the timing of such challenges. 
 
We are mindful that the statutory scheme recognizes the 
need for expedition in the review of privatization contracts. 
That is apparent in the short timelines set forth in § 55 for 
agency initiated review by the Auditor, and the fact that, if 
challenged thereafter in an action in the nature of certiorari, 
that action should be brought and adjudicated promptly.  Given 
this, we have indicated the need for similar dispatch in the 
one-off situations, as here, prompting declaratory judgment 
actions.  See SEIU I, 469 Mass. at 337 n.12. 
 
Ordinarily, we would expect that a union challenging an 
agency's decision to forego Pacheco Law review for alleged 
privatization contracts would bring a declaratory judgment 
action promptly after the agency's decision becomes public 
information.10  Ascertaining whether the agency's assessment of 
the nature of the contract is correct, and therefore does not 
require Pacheco Law review, is the pivotal issue requiring 
                     
 
10 Given the importance of speedy resolution, in many cases 
even limited delay might allow the defendant agency to raise the 
defense of laches.  See SEIU I, 469 Mass. at 337 n.12.  See also 
Mosley v. Briggs Realty Co., 320 Mass 278, 283 (1946) (laches 
requires delay and prejudice). 
 
22 
 
 
resolution.  Ideally, suit could be brought before the contract 
is made or as soon thereafter as feasible and, in most 
circumstances, well before any renewal or other subsequent 
agreements would be in place, with injunctive relief sought as 
appropriate.  The matter should be litigated and adjudicated on 
an expedited basis.  
 
To the extent that suit cannot reasonably be brought until 
the contract is already in place, and in the presumably rare 
instances where the initial privatization contract is of such 
short duration that its renewal may take effect before the case 
is adjudicated, the result of a determination that the initial 
agreement is in fact a privatization agreement will be to 
declare such a contract invalid and thereby void and to set 
aside any renewal contracts made pursuant to it.  Timeliness 
issues for laches purposes are, of necessity, to be decided on a 
case-by-case basis, with the guiding principle being fairness; 
parties must not sit on their hands.  See, e.g., West Broadway 
Task Force v. Boston Hous. Auth., 414 Mass 394, 400 (1993) 
(laches operates where there is "unreasonable delay").   
 
As discussed, the case before us is sui generis in this 
regard.  The union brought this suit in the absence of an 
express statutory remedy and after having made reasonable, if 
ultimately fruitless and time consuming, administrative efforts 
to challenge the initial contracts.  In the face of this 
23 
 
 
challenge to the validity of the agreements, the agency 
exercised its rights under them to renew.  In these unusual 
circumstances, it appears that the union did not sit on its 
hands. 
 
To construe § 53 as barring the union from seeking to set 
aside the extant renewal contracts as the byproduct of a 
declaration as to the invalidity of the initial contracts would 
contravene the statutory mandate that noncompliance with its 
requirements has significant repercussions.  It would also, in 
these circumstances, render meaningless the timely challenge 
brought to the agency's decision not to submit the 2009 contract 
to the Auditor, in essence inoculating the agency from review 
and allowing it to evade the Pacheco Law with impunity by virtue 
of the passage of time.  As we stated in SEIU I, 469 Mass. 
at 336,  
"In short, it cannot be that there is no recourse 
where an agency, believing the Pacheco Law is inapplicable 
in a particular situation, simply opts not to comply with 
its terms.  The Pacheco Law could not function as the 
Legislature intended if an agency could decide, 
unilaterally and without input from the Auditor or the 
union, that its proposed contracts did not fall within the 
provisions of G. L. c. 7, § 53.  Indeed, a public agency 
would have little incentive to adhere to the Pacheco Law's 
requirements were its decision to evade those requirements 
immune from any review.  DMH's belief that the Pacheco Law 
does not apply to its proposed contracts cannot be 
understood to inoculate it against efforts to demonstrate 
otherwise.  Such an approach would render the statute 
toothless, confounding the Legislature's efforts to ensure 
that privatization does not occur at the expense of public 
welfare."   
24 
 
 
 
 
Here, as in SEIU I, DMH urges an interpretation of the 
Pacheco Law which would insulate potential privatization 
contracts from the very review that the law mandates.  We do not 
believe the Legislature contemplated such a result. 
 
3.  Conclusion.  The judgment dismissing the amended 
complaint is vacated, and the matter is remanded for further 
proceedings consistent with this opinion.  Given the many delays 
that already have occurred, and the 2017 expiration of the 
extant renewal contracts, such further proceedings are to take 
place forthwith on an expedited basis. 
So ordered.