Dear fellow Hanoverians:<\/p>\n
<\/p>\n
A friend sent this to me with the following simple cover
\nnote: “Hanover wins”. <\/p>\n
<\/p>\n
NOTICE:
\nThe slip opinions and orders posted on this Web site are subject to formal
\nrevision and are superseded by the advance sheets and bound volumes of the
\nOfficial Reports. This preliminary material will be removed from the Web site
\nonce the advance sheets of the Official Reports are published. If you find a typographical
\nerror or other formal error, please notify the Reporter of Decisions, Supreme
\nJudicial Court, John Adams Courthouse, 1 Pemberton Square, Suite 2500, Boston,
\nMA 02108-1750; (617) 557-1030; SJCReporter@sjc.state.ma.us<\/p>\n
Kirt FORDYCE & others [FN1] vs. TOWN OF HANOVER
\n& others. [FN2]<\/p>\n
<\/p>\n
No. SJC-10643.<\/p>\n
<\/p>\n
March 1, 2010. – July 9, 2010.<\/p>\n
Public Works, Bidding procedure, General contractor. Contract,
\nPublic works, Construction contract, Bidding for contract. Fraud. Practice,
\nCivil, Preliminary injunction, Interlocutory appeal.<\/p>\n
CIVIL ACTION commenced in the Superior Court Department on November 9, 2009.<\/p>\n
After a motion for preliminary injunction was heard by Richard J. Chin,
\nJ., a proceeding for interlocutory review was heard in the Appeals Court by David
\nA. Mills, J.<\/p>\n
The Supreme Judicial Court on its own initiative transferred the case from the
\nAppeals Court.<\/p>\n
Kevin Conroy, Assistant Attorney General, for the Commonwealth.<\/p>\n
Christopher N. Souris for the plaintiffs.<\/p>\n
James A. Toomey (Bryan R. LeBlanc with him) for town of Hanover.<\/p>\n
Paul W. Losordo for Callahan, Inc.<\/p>\n
The following submitted briefs for amici curiae:<\/p>\n
Patrick J. Sullivan & James G. Grillo for TLT Construction Corp.<\/p>\n
Donald J. Siegel & James A.W. Shaw for Foundation for Fair
\nContracting of Massachusetts & another.<\/p>\n
Joel Lewin & Robert V. Lizza for Construction Industries of
\nMassachusetts, Inc., & another.<\/p>\n
Christopher J. Petrini, Peter L. Mello, & Thomas J. Urbelis for City
\nSolicitors and Town Counsel Association.<\/p>\n
Stanley A. Martin & Edwin L. Hall for Associated General Contractors
\nof Massachusetts.<\/p>\n
Christopher A. Kenney & Michael P. Sams for Associated Builders and
\nContractors, Inc.<\/p>\n
Present: Marshall, C.J., Ireland, Spina, Cowin, Cordy, Botsford, & Gants,
\nJJ.<\/p>\n
GANTS, J.<\/p>\n
This case comes to us on appeal from an order of a single justice of the
\nAppeals Court vacating a preliminary injunction issued by a judge in the Superior Court against the town of Hanover (town) and
\nCallahan, Inc. (Callahan), a general contractor with whom the town has entered
\ninto a contract for the construction of a new high school. The injunction
\nordered the town and Callahan to cease further work on the school pending a trial
\non the merits of the plaintiffs’ claim that the contract had been entered into
\nin violation of the public bidding statutes, G.L. c. 149, =A7=A7 44A-44H, because
\nCallahan had made intentional misrepresentations to the town’s prequalification
\ncommittee regarding its experience in school building projects. We affirm the
\norder of the single justice, though on different grounds from those expressed
\nin his order. Although a contractor’s intentional misrepresentation in seeking
\nprequalification may allow an awarding authority to terminate a previously
\nawarded contract, we conclude that where, as here, there is no allegation that
\nany member of the town’s prequalification committee acted corruptly in deciding
\nto prequalify Callahan, there is unrefuted evidence that the committee did not
\nact in reliance on any of the alleged misrepresentations, and the town wishes
\nto proceed with the contract, the motion judge committed an error of law in
\nissuing a preliminary injunction requiring the town to cease further work on
\nthe school. [FN3]<\/p>\n
1. Background. Under G.L. c. 149, =A7 44A(2)(D), contracts for the
\nconstruction of public buildings that are estimated to cost more than $100,000
\nmay only be awarded to "the lowest responsible and
\neligible general bidder" on the basis of competitive bids and in
\nconformity with procedures set forth in =A7=A7 44A-44H. Where, as here, a public
\nconstruction project has an estimated cost in excess of $10 million, a general
\ncontracting firm must satisfy two requirements to be deemed a
\n"[r]esponsible" and "[e]ligible" bidder. G.L. c. 149, =A7
\n44A(1). First, the contractor must hold a certificate of eligibility, issued by
\nthe commissioner of the division of capital asset management and maintenance
\n(DCAM), showing that the firm has the expertise and financial capacity to
\nperform the work required. G.L. c. 149, =A7=A7 44A(2)(D), 44D(1)(a ).
\nSecond, the contractor must be prequalified to bid on the project by a
\nfour-member committee of the awarding authority, that is, the agency,
\nmunicipality, or other governmental authority awarding the contract, [FN4]
\nbased on the contractor’s responses to questions contained in a written request
\nfor qualifications (RFQ) issued by the committee. G.L. c. 149, =A7 44D1\/2(a
\n) & (c ).<\/p>\n
While the questions that must be asked in the RFQ and the potential points to
\nbe awarded in each category of questions are specified by statute, the relative
\nvalue assigned to each individual question and the scoring of contractor
\nresponses is committed to the discretion of the prequalifying committee. <\/p>\n
[FN5] This allows a
\n prequalification committee to evaluate a general <\/p>\n
<\/p>\n
contractor’s experience and
\n qualifications in light of the specific needs of the particular project for
\n which the awarding authority will be soliciting bids. G.L. c. 149, =A7 44D1\/2(a
\n )-(h ). Only general contractors whose responses to the RFQ receive a
\n score of seventy points or more may be prequalified by the committee, and
\n only prequalified contractors may be invited to submit bids on the project.
\n G.L. c. 149, =A7 44D1\/2(h ). "The prequalification committee shall
\n select a minimum of [three] qualified general contractors to submit
\n bids…." Id. Section 44D 1\/2 (h ) protects the
\n considerable discretion vested in the prequalification committee by providing
\n that all decisions of the committee "shall be final and shall not be
\n subject to appeal except on grounds of arbitrariness, capriciousness, fraud
\n or collusion" (emphasis added). Id.<\/p>\n
In conformity with these statutory requirements, in May, 2009, the town issued
\na RFQ inviting interested general contractors to submit statements of
\nqualification (SOQs) to prequalify to bid on the construction of a new high
\nschool. Eleven general contractors submitted SOQs by the June 5 deadline, and
\non July 6, the town reported the results of the committee’s evaluation in a
\npublic register. Callahan was one of nine applicants prequalified by the
\ncommittee to submit formal bids on the project. General bids were opened by the
\ntown on September 11. Callahan was the low bidder, with a base price of $37,099,999. The next low bidder was almost one million
\ndollars higher. <\/p>\n
[FN6]<\/p>\n
On September 17, 2009, N.B. Kenney Company, Inc., a heating and air
\nconditioning subcontractor whose subbid had not been adopted in Callahan’s
\nwinning general bid, filed a bid protest with the Attorney General, who is
\ncharged with enforcement of the competitive bidding statutes. See G.L. c. 149,
\n=A7 44H. The Attorney General also received bid protests from J & J
\nContractors, Inc., the second lowest bidder among the general contractors, and
\nfrom the Laborers’ New England Region Organizing Fund. The protesters alleged
\nthat the committee’s decision to prequalify Callahan was obtained through fraud
\nbecause Callahan’s SOQ contained misrepresentations of the firm’s prior
\nconstruction experience that were intended to mislead the committee.
\nConsequently, they argued, Callahan should have been disqualified as an
\neligible bidder, and the town should be prohibited from entering into a
\ncontract with Callahan. Following the filing of the protests, the town
\nrequested and received additional information from Callahan about the
\nrepresentations made in its SOQ concerning the company’s prior construction
\nexperience.<\/p>\n
In response to the bid protests, the Attorney General undertook an
\ninvestigation and asked the town to refrain from awarding the contract or commencing work on the project while her investigation was
\nongoing. On September 24, however, the town issued Callahan a notice to
\nproceed. At the bid protest hearing later that month, the Attorney General requested
\nthat the town suspend further work on the project pending her determination of
\nthe bid protests on the merits. Notwithstanding these requests, the town
\nentered into a general contract with Callahan on or about October 15 and
\nproceeded with construction. Two weeks later, on October 30, the Attorney
\nGeneral issued a decision which essentially confirmed the allegations of the
\nbid protestors.<\/p>\n
The Attorney General concluded that Callahan had committed "fraud"
\nwithin the meaning of G.L. c. 149, =A7 44D1\/2(h ), by knowingly
\nmisrepresenting material facts in its SOQ with the intention of misleading the
\nprequalifying committee. The Attorney General found that Callahan had
\nmisleadingly identified itself in its SOQ as the "successor
\ncorporation" to another general contracting company, J.T. Callahan &
\nSons, Inc. (JTC). In fact, although many of the senior managers of Callahan
\nwere former employees of JTC, Callahan had been incorporated independently, JTC
\ncontinued to survive as a corporation, and the two companies shared no
\ncorporate officers. According to the Attorney General, the effect of this
\nmisrepresentation was to permit Callahan in its SOQ to claim JTC’s experience
\nin building seventy-five schools in Massachusetts over the preceding twenty
\nyears, when Callahan itself lacked this kind of project experience.
\nMore specifically, where the SOQ required a listing of "Similar Project
\nExperience" undertaken by the firm in the last five years, defined by the
\nprequalification committee to mean construction of "phased educational
\nfacilities," the only educational facility Callahan included was North
\nAndover High School, a $42 million project completed in 2005. [FN7] In fact,
\nJTC had been the general contractor on this project and had completed nearly
\nall of the work before running into financial difficulties. In order to finish
\nthe project, the insurance company serving as JTC’s surety recommended the
\nformation of a new corporate entity, Callahan, which employed former JTC
\npersonnel and in effect acted as a subcontractor for JTC. Under this
\narrangement, Callahan completed the final $1.2 million of work on the $42
\nmillion project, comprising three per cent of the school’s total construction
\ncost. The Attorney General also found that Callahan had made selective use of JTC’s
\nprior history in its SOQ: while Callahan took credit for JTC’s work on the
\nNorth Andover High School project and its almost twenty years of public
\nconstruction experience, Callahan did not list the North Andover High School
\nproject where the SOQ required disclosure of projects the applicant had failed
\nto complete, and Callahan similarly failed to disclose pending or adversely
\nconcluded legal proceedings against JTC, although the SOQ also called for this
\ninformation.<\/p>\n
Based on these findings, the Attorney General concluded
\nthat Callahan should not have been prequalified by the committee, and as a
\nconsequence, that Callahan should not have been awarded the contract. When the
\ntown made no move to halt construction or terminate its contract with Callahan
\nfollowing the Attorney General’s announcement of her bid protest decision, the
\nplaintiffs, ten taxable inhabitants of the town, brought suit in the Superior
\nCourt under G.L. c. 40, =A7 53, seeking temporary and permanent injunctive relief
\nto restrain the town from making payments to Callahan under the contract and to
\nrequire the town to rescind the contract. [FN8], [FN9] The plaintiffs alleged
\nthat Callahan had committed fraud during the mandatory bidder prequalification
\nprocedure, that its fraud effectively voided the decision of the
\nprequalification committee under G.L. c. 149, =A7 44D1\/2(h ), and that,
\nbecause Callahan could no longer be considered a "responsible and eligible
\nbidder," the town’s award of the contract to Callahan was unlawful under
\nG.L. c. 149, =A7 44A(2).<\/p>\n
After a nonevidentiary hearing on November 16, 2009, the motion judge allowed
\nthe plaintiffs’ motion for a preliminary injunction and ordered the town and
\nCallahan to cease further construction of the school pending a trial on the
\nmerits. In reaching his decision, the judge held that, in contrast to
\ncommon-law fraud, there is no requirement of detrimental reliance to prove
\nfraud under G.L. c. 149, =A7 44D 1\/2 (h ). Relying
\nprincipally on the reasoning of earlier bid protest decisions issued by the Attorney
\nGeneral, the judge concluded that, to succeed on the merits in their effort to
\noverturn the decision of the prequalifying committee under =A7 44D1\/2(h ),
\nthe plaintiffs need only establish that "(1) Callahan made statements or
\nomissions relating to a material fact, (2) that had the tendency to be relied
\nupon by or to influence the average person, (3) that were knowingly false or
\nmisleading, and (4) were intended to mislead the prequalification committee or
\nawarding authority." After setting forth this standard for fraud under the
\nstatute, the judge found that the plaintiffs had shown a reasonable likelihood
\nof prevailing on the merits at trial because Callahan’s misrepresentation of
\nits prior construction experience on the North Andover High School project,
\ntogether with its failure to mention in the SOQ that JTC had failed to complete
\nthat project, were "highly suggestive" of Callahan’s intent to
\ndeceive the prequalification committee. The judge also concluded that the
\npublic interest favored the issuance of a preliminary injunction, because
\n"[t]he inconvenience and expense caused by the delay in the construction
\nof the school is of significantly less importance than ignoring this type of
\ndisregard for the competitive bidding statute." <\/p>\n
[FN10]<\/p>\n
Presumably because he deemed it irrelevant under his interpretation of the meaning of fraud under G.L. c. 149, =A7 44D1\/2(h ), the
\njudge did not address unrefuted evidence in the record that the prequalification
\ncommittee had not been misled by the misrepresentations in Callahan’s SOQ and
\nhad not relied on them to its detriment. Affidavits submitted by two members of
\nthe four-person committee stated that, before the committee prequalified Callahan
\nto bid, the committee members knew and had discussed the true nature of the
\nrelationship between Callahan and JTC, and were aware that JTC, not Callahan,
\nhad done the great majority of the work on North Andover High School. The
\ncommittee’s consideration of this information is reflected in the fact that it
\nawarded Callahan two out of a possible ten points for similar project
\nexperience.<\/p>\n
The defendants sought relief from a single justice of the Appeals Court under
\nG.L. c. 231, =A7 118, first par. In reviewing the motion judge’s grant of the
\npreliminary injunction, the single justice adopted the judge’s factual findings
\nas well as his interpretation of the meaning of fraud under G.L. c. 149, =A7
\n44D1\/2(h ). The single justice agreed that the plaintiffs had demonstrated
\na likelihood of success on the merits, but he found that the motion judge had
\n"insufficiently considered the fact that enjoining performance on the
\ncontract will shut down the project for several months (or longer) as the town
\nsorts through the bid protests and conducts the re-bidding process….
\n[S]hutting down this project will result in substantial cost for the
\ntown." He concluded that "the judge’s failure to
\nplace these factors on the scale governing preliminary injunctive relief
\nresulted in an abuse of discretion," and he vacated the preliminary
\ninjunction.<\/p>\n
The plaintiffs appealed from the single justice’s order to the full Appeals
\nCourt, Mass. R.A.P. 3(a), as amended, 378 Mass. 927 (1979), [FN11] and we
\ntransferred the case here on our own motion. [FN12]<\/p>\n
2. Standard of review. In reviewing the allowance of a preliminary
\ninjunction, whether that review is conducted by a single justice of the Appeals
\nCourt pursuant to G.L. c. 231, =A7 118, first par., or by an appellate court
\nreviewing a decision of the single justice, the standard is whether the motion
\njudge abused his discretion in issuing the preliminary injunction. See Planned
\nParenthood League of Mass., Inc. v. Operation Rescue, 406 Mass. 701,
\n709 & n. 7, 717 (1990) (vacating suspension of preliminary injunction
\nordered by single justice); Packaging Indus. Group, Inc. v. Cheney,
\n380 Mass. 609, 615 (1980) (standard of review framed in terms of abuse of
\ndiscretion). In conducting our review, we decide "whether the judge
\napplied proper legal standards and whether there was reasonable support for his
\nevaluation of factual questions." Commonwealth v. Fremont Inv. &
\nLoan, 452 Mass. 733, 741 (2008). See Packaging Indus. Group, Inc. v.
\nCheney, supra. On review, the motion judge’s
\n"conclusions of law are subject to broad review and will be reversed if
\nincorrect." Id. at 616, quoting Buchanan v. United States Postal
\nServ., 508 F.2d 259, 267 n. 24 (5th Cir.1975).<\/p>\n
3. Discussion. The motion judge did not abuse his discretion in finding
\nfrom the circumstantial evidence that Callahan knowingly made false or
\nmisleading statements of material fact in the SOQ with the intention of
\nmisleading the prequalification committee. Therefore, in determining whether
\nthe judge abused his discretion in finding that the plaintiffs were likely to
\nprevail at trial, the key issue is whether the judge was correct as a matter of
\nlaw in concluding that Callahan’s intentional misrepresentations constituted
\nfraud within the meaning of G.L. c. 149, =A7 44D1\/2(h ), even in the
\nabsence of evidence of detrimental reliance by the prequalification committee.
\nWe conclude that he erred.<\/p>\n
Fraud is not a defined term under G.L. c. 149, =A7 44D1\/2(h ), and no
\nappellate court of the Commonwealth has previously decided any claim involving
\nthis statute. Under the common law, fraud is a knowing false representation of
\na material fact intended to induce a plaintiff to act in reliance, where the
\nplaintiff did, in fact, rely on the misrepresentation to his detriment. See Masingill
\nv. EMC Corp., 449 Mass. 532, 540 (2007); Barrett Assocs. v. Aronson, 346 Mass. 150, 152 (1963). As earlier noted,
\nin bid protest decisions issued pursuant to her authority under G.L. c. 149, =A7
\n44H, to enforce compliance with the competitive bidding statutes, the Attorney
\nGeneral has asserted that proof of fraud under G.L. c. 149, =A7 44D1\/2(h
\n), does not require the element of detrimental reliance. See, e.g., Matter of
\nEverett High Sch. Elec. Subcontract, Att’y Gen. Bid Protest Decision (Nov. 2,
\n2006); Matter of Police Headquarters and East Fire Station, Att’y Gen. Bid
\nProtest Decision (Aug. 10, 2006). However, these bid protest decisions, because
\nthey arise from the Attorney General’s prosecutorial, rather than her
\nadjudicative, function, carry no precedential weight. See Brasi Dev. Corp.
\nv. Attorney Gen., 456 Mass. 684, 694 (2010); Annese Elec. Servs, Inc.
\nv. Newton, 431 Mass. 763, 771 (2000). See also E. Amanti & Sons
\nv. R.C. Griffin, Inc., 53 Mass.App.Ct. 245, 253 (2001); Department of
\nLabor & Indus. v. Boston Water & Sewer Comm’n, 18 Mass.App.Ct.
\n621, 623-624 n. 7 (1984).<\/p>\n
To determine the meaning of "fraud" as used in G.L. c. 149, =A7 44D1\/2(h
\n), we look to the intent of the Legislature "ascertained from all its
\nwords construed by the ordinary and approved usage of the language, considered
\nin connection with the cause of its enactment, the mischief or imperfection to
\nbe remedied and the main object to be accomplished, to the end that the purpose
\nof its framers may be effectuated." Industrial Fin. Corp. v. State
\nTax Comm’n, 367 Mass. 360, 364 (1975), quoting Hanlon
\nv. Rollins, 286 Mass. 444, 447 (1934). We do not read statutory language in
\nisolation. LeClair v. Norwell, 430 Mass. 328, 333 (1999). "Where
\npossible, we construe the various provisions of a statute in harmony with one
\nanother, recognizing that the Legislature did not intend internal
\ncontradiction." DiFiore v. American Airlines, Inc., 454 Mass. 486,
\n491 (2009). In a case such as this, where the meaning of a single word in a
\nstatute is at issue, we generally infer that the Legislature intended the word
\nbe interpreted in accordance with its "ordinary and approved usage." Suffolk
\nConstr. Co. v. Division of Capital Asset Mgt., 449 Mass. 444, 454
\n(2007). Where a statute employs a word with an established meaning in the
\ncommon law, we consider the statute in light of that meaning, and we do not
\nconstrue the statute as "effecting a material change in or repeal of the
\ncommon law unless the intent to do so is clearly expressed." Id.,
\nquoting Riley v. Davison Constr. Co., 381 Mass. 432, 438 (1980). See Busalacchi
\nv. McCabe, 71 Mass.App.Ct. 493, 497 (2008) ("Without a clear
\nexpression from the Legislature breaking with the common law, the common law
\nwill apply"). Nowhere in G.L. c. 149, =A7=A7 44A-44H, does the Legislature
\ndirect us to disregard the well-settled common-law meaning of fraud in
\ninterpreting and applying =A7 44D1\/2(h ) which, in the context of an
\nintentional misrepresentation, requires detrimental reliance.<\/p>\n
Notwithstanding these familiar principles of statutory
\nconstruction, the plaintiffs, the Attorney General, and the two judges who
\nruled on the injunction concluded that the Legislature intended that a
\ncontractor’s intentional misrepresentation would constitute the fraud necessary
\nto vacate a decision of a prequalifying committee under =A7 44D1\/2(h ),
\neven where the contractor’s deception falls short of common-law fraud. The
\nplaintiffs contend that this conclusion is compelled by the objectives of the
\ncompetitive bidding statutes, G.L. c. 149, =A7=A7 44A-44H. A careful examination of
\nthe evolution of these statutes, however, reveals that, in the context of a
\nclaim of intentional misrepresentation, defining fraud under =A7 44D1\/2 to mean
\ncommon-law fraud, as the defendants contend, respects the Legislature’s purpose
\nin enacting =A7 44D1\/2 and is consistent with the over-all objectives of the
\ncompetitive bidding statutes.<\/p>\n
The basic framework of the Commonwealth’s contemporary competitive bidding
\nstatutes was created thirty years ago when the Legislature repealed the
\npreviously enacted public construction statute and adopted a series of
\namendments that extensively revised the Commonwealth’s system of public
\nconstruction. See St.1980, c. 579, =A7 55. See also St.1984, c. 484, =A7 46. These
\nrevisions were undertaken in response to a report issued by the Special
\nCommission Concerning State and County Buildings chaired by Amherst College President John William Ward (Ward Commission), which
\ndocumented extensive corruption in the awarding of public construction
\ncontracts and proposed comprehensive remedial legislation. See LeClair v.
\nNorwell, supra at 332; Modern Cont. Constr. Co. v. Lowell,
\n391 Mass. 829, 832 n. 5 (1984). Accordingly, the statute enacted in 1980 states
\nas its purpose the creation of a system of public construction which will
\nprovide fair costs, professionalism, and accountability, and which will
\n"reduce[ ] opportunities for corruption, favoritism, and political
\ninfluence in the award and administration of public contracts." St.1980,
\nc. 579, Preamble. The statute is intended "not only to ensure that the
\nawarding authority obtain the lowest price among responsible contractors, but
\nalso to establish an open and honest procedure for competition for public
\ncontracts." Modern Cont. Constr. Co. v. Lowell, supra at
\n840.<\/p>\n
The competitive bidding statutes in effect before 1980, as they do today,
\nrequired that public construction contracts be awarded to the "lowest
\nresponsible and eligible bidder," [FN13] but prior to the reform
\nundertaken following the Ward Commission report, there were no useful statutory
\nor regulatory criteria for what constituted a responsible and eligible bidder
\nand no centralized system to monitor and document the competency and integrity
\nof contractors undertaking public construction projects. [FN14] See 8 Ward
\nCommission Report at 343-346 (Final Report 1980); Note, Prescribing Preventive Remedies for an Ailing Public Construction Industry: Reforms
\nUnder the New Massachusetts Competitive Bidding Statute, 23 B.C. L.Rev. 1357,
\n1359-1364 (1982) (Note). It was instead left to each awarding authority, at its
\noption and without the benefit of guidelines issued by an expert authority, to
\nsolicit information from prospective contractors that might allow it to
\ndetermine whether a bidder firm was competent to perform the work under
\nconsideration in an honest and professional manner. See G.L. c. 149, =A7 44A, as
\nappearing in St.1956, c. 679, =A7 1 ("Essential information in regard to
\nsuch qualifications shall be submitted in such form as the awarding authority
\nmay require"); 8 Ward Commission Report, supra; Note, supra.
\nBecause the law required that contracts be awarded to the lowest bid received
\nfrom a "responsible and eligible bidder," but provided minimal
\nguidance for determining whether a bidder was "responsible and
\neligible," the result too often was that all bidders were deemed
\n"responsible and eligible," regardless of their competency or
\nexperience, and the selection of a contractor was based solely on price. This
\nresulted in a widespread problem of defective construction work requiring
\nextensive repair. See Note, supra at 1365.<\/p>\n
Beginning with the Ward Commission legislation enacted in 1980, the Legislature
\nrequired bidders to provide specified information regarding their competence
\nand experience to the awarding authority, which the awarding authority was required to evaluate "according to procedures and
\ncriteria which the deputy commissioner [of DCAM [FN15]] shall prescribe by
\nregulations or guidelines." [FN16] G.L. c. 149, =A7 44D(3), as appearing in
\nSt.1980, c. 579, =A7 55. In 1984, the Legislature transferred responsibility for
\ndetermining whether a bidder was "responsible and eligible" to DCAM.
\nG.L. c. 149, =A7 44D(3), as appearing in St.1984, c. 484, =A7 46. Any bidder for a
\npublic construction contract now must submit as part of the bid process a certificate
\nof eligibility from the commissioner of DCAM showing that the bidder has the
\nclassification and capacity rating to complete the project on which it is
\nbidding. G.L. c. 149, =A7 44D(1)(a ). Certificates of eligibility, which
\nmust be renewed annually, are issued only after DCAM’s review of the
\ncontractor’s prior construction experience, professional references, financial
\ncondition, and organizational capacity. [FN17] See G.L. c. 149, =A7 44D(1)-(3).
\nDCAM may "decertify a contractor or reduce the classes of work and amount
\nof work on which the contractor is eligible to bid," if DCAM learns of a
\ncontractor’s incompetence, poor performance, or misconduct. See G.L. c. 149, =A7
\n44D(5). A contractor who is debarred or whose certification is suspended,
\nrevoked, or not renewed by DCAM, loses the ability to contract for construction
\nwork from any public authority in the Commonwealth. See G.L. c. 29, =A7 29F; G.L.
\nc. 149, =A7 44E.<\/p>\n
It was not until 2004, with the enactment of G.L. c. 149,
\n=A7 44D1\/2, inserted by St.2004, c. 193, =A7 19, that awarding authorities were
\nrequired to prequalify general contractors for individual projects; the
\nstatutory requirement, however, applies only to projects estimated to cost at
\nleast $10 million. <\/p>\n
[FN18] G.L. c. 149, =A7 44D1\/2(a
\n ). Section 44D1\/2 was one of several amendments proposed by a special
\n commission, see St.2003, c. 46, =A7 138, charged with recommending legislation
\n to improve the "adequacy and efficiency" of the public construction
\n laws. While the 1980 and 1984 legislation had standardized the review and
\n monitoring of contractors under the centralized administration of DCAM, many
\n of the 2004 amendments enhanced the flexibility and discretion of
\n municipalities, State agencies, and other governmental authorities in
\n managing their own construction projects. [FN19] See St.2004, c. 193, =A7=A7 13,
\n 19, 27.<\/p>\n
As a result of the 2004 legislation, a general contractor who submits a bid for
\na project costing at least $10 million has been twice qualified for the work,
\ninitially through the DCAM certification procedure, and then again by the
\nprequalification committee’s approval of the applicants’ specific responses to
\nits RFQ. [FN20] The prequalification process serves to ensure that parties who
\nmay be "responsible and eligible bidders" in a general sense also
\nhave the particular skills and experience most relevant to the project at
\nissue. It also requires the awarding authority to invest substantial time and
\neffort, and exercise its sound discretion, in determining
\nthe considerations critical to the project and assigning points within the
\nstatutory categories accordingly, and then, after submission of the SOQs, in
\nscoring the responses of potential bidders according to the weighted criteria.<\/p>\n
The 2004 legislation narrowly limited the grounds for appealing from the
\ncommittee’s prequalification decision: "A general contractor’s score shall
\nbe made available to the general contractor upon request. The decision of the
\nprequalification committee shall be final and shall not be subject to appeal
\nexcept on grounds of fraud or collusion." G.L. c. 149, =A7 44D1\/2(h
\n). [FN21]<\/p>\n
In determining the meaning of "fraud" as it appears in =A7 44D1\/2(h
\n), we note that the logical implication of the sequence of these two sentences–with
\nthe sentence governing an appeal from a decision of the prequalification
\ncommittee following immediately after the sentence declaring that a general
\ncontractor is entitled to learn the score given to its SOQ by the
\nprequalification committee–is that the Legislature anticipated that a general
\ncontractor denied prequalification might seek to challenge the committee’s
\nscoring of the contractor’s SOQ. In such an appeal, "fraud" could not
\nmean an intentional misrepresentation in the SOQ itself, because a general
\ncontractor challenging an unfavorable decision of the committee would not
\nallege that it was entitled to relief because it had
\nintentionally misrepresented material information in its own SOQ. Rather, in
\nthe context of a general contractor challenging the denial of its own
\nprequalification, "fraud" must mean corrupt conduct by one or more
\nmembers of the committee designed unfairly to prevent the general
\ncontractor from being prequalified to bid. Pragmatically, in this context,
\n"fraud" would surely involve "collusion," G.L. c. 149, =A7
\n44D1\/2(h ), a corrupt agreement between at least one member of the
\ncommittee and another person, most likely a competing general contractor
\nseeking to fix its competitor’s score below the minimum threshold for
\nprequalification to prevent that competitor from bidding. See Dickerman v.
\nNorthern Trust Co., 176 U.S. 181, 190 (1900); Black’s Law Dictionary 300
\n(9th ed.2009) (collusion is "[a]n agreement to defraud another or to do or
\nobtain something forbidden by law"). [FN22]<\/p>\n
The Legislature, however, did not foreclose an appeal from a decision of a
\nprequalification committee from third parties. Because G.L. c. 149, =A7 44D1\/2(g
\n), provides that the "register of responders shall be open for public
\ninspection," and, on completion of the evaluations by the prequalification
\ncommittee, the "contents of the [SOQs] shall be open to the public,"
\nwe infer that the Legislature also recognized the possibility of an appeal from
\nan allowance of prequalification by a fellow bidder or a member of the general
\npublic based, at least in part, on the contents of the SOQ. In this context, "fraud" could still mean corrupt conduct by one or
\nmore members of the committee, alone or in collusion with another, but we do
\nnot so limit its meaning. We conclude that, consistent with its common-law
\nmeaning, "fraud" in this context means a fraudulent misrepresentation
\nby a general contractor applying for prequalification that the committee relied
\non to its detriment in qualifying the general contractor to bid. In the absence
\nof detrimental reliance by the committee, a general contractor’s intentional
\nmisrepresentation, even if intended to deceive the committee, does not
\nconstitute "fraud" within the meaning of G.L. c. 149, =A7 44D1\/2(h
\n), and therefore does not require that the committee’s prequalification of the
\ncontractor be vacated.<\/p>\n
We believe that this conclusion is consistent with the comprehensive
\nlegislative scheme embodied in the public construction statute for two reasons.
\nFirst, we do not believe the Legislature, by allowing a prequalification
\ndecision to be appealed from on grounds of "fraud," intended to
\nrequire an awarding authority to disqualify a general contractor or terminate a
\nconstruction contract because of an intentional misrepresentation in a SOQ
\nwhere the committee did not act corruptly or in reliance on the
\nmisrepresentation and where, in its discretion, the awarding authority does not
\nwish to disqualify the contractor or terminate the contract. Under G.L. c. 149, =A7 44D(2), "[a]ny materially false statement"
\nmade by a general contractor in its application for DCAM certification or its
\nupdate statement "may, in the discretion of the awarding authority, result
\nin termination of any contract awarded the applicant by the awarding authority."
\nAs a result, where an awarding authority learns that a general contractor with
\nwhom it has contracted has made an intentional misrepresentation in either of
\nthese two filings, the awarding authority may terminate the contract, but is
\nnot required to do so. The awarding authority retains this discretion even
\nthough a certificate of eligibility from DCAM and an update statement are both
\nmandatory elements of a general contractor’s SOQ. G.L. c. 149, =A7 44D1\/2(e
\n)(4). [FN23] Under the interpretation of "fraud" proffered by the
\nplaintiffs and the Attorney General, if an intentional misrepresentation were
\nmade in a SOQ or an incorporated update statement rather than an application
\nfor DCAM certification, an awarding authority would lose this discretion
\nbecause a court, as the motion judge did here, could enjoin the awarding
\nauthority from continuing with the contract. We see nothing in G.L. c. 149, =A7
\n44D1\/2(h ), to suggest that the Legislature intended to deny an awarding
\nauthority the discretion it has under G.L. c. 149, =A7 44D(2), simply because the
\nmaterially false statement appears in a committee-scored portion of a SOQ
\nrather than in an application for DCAM certification or update statement. In
\naddition, we note that, even where a general contractor’s misconduct results in
\ndebarment or suspension by DCAM, the Legislature did not require
\ntermination of the contractor’s existing public construction contracts. Rather,
\npursuant to G.L. c. 29, =A7 29F(h ), a public agency may not
\n"execute, renew, or extend any contract with, a debarred or suspended
\ncontractor," but it need not rescind or terminate a contract. [FN24]<\/p>\n
Second, giving the word "fraud" its common-law meaning under =A7
\n44D1\/2(h ) does not conflict with the "transparent"
\nlegislative intent that the competitive bidding statutes "establish an
\nopen and honest procedure for competition for public contracts." John
\nT. Callahan & Sons v. Malden, 430 Mass. 124, 128 (1999), quoting Modern
\nCont. Constr. Co. v. Lowell, 391 Mass. 829, 840 (1984). In
\nformulating the provisions of =A7 44D1\/2 in 2004, the Legislature had no need to,
\nand did not, concern itself with remedying intentional misrepresentations that
\ndo not infect a prequalification committee’s decision-making process because
\nsufficient means to remedy this kind of misconduct–and thereby to ensure the
\nintegrity of the public bidding process–were already provided by statute. A
\ngeneral contractor who makes an intentional misrepresentation in a SOQ with the
\nintention of deceiving the prequalification committee risks grave sanctions,
\nregardless of whether the committee acted in reliance on the misrepresentation.
\nThe commissioner of DCAM has broad statutory authority to debar a contractor
\nfrom public contracting based on "substantial evidence" that the
\ncontractor has "willfully suppli[ed] materially false
\ninformation incident to obtaining or attempting to obtain or performing any
\npublic contract or subcontract." G.L. c. 29, =A7 29F(c )(2)(i). See
\nG.L. c. 149, =A7 44C. Under regulations promulgated by the commissioner, wilfully
\nsupplying false material information in obtaining or attempting to obtain any
\npublic contract or subcontract within the last five years "shall
\nconstitute cause for decertification or denial of certification." 810 Code
\nMass. Regs. =A7 4.04(8)(e) (2005). The "[f]ailure to provide accurate
\ninformation" to any party with whom a contractor does business may also be
\ngrounds for denial of certification or debarment. 810 Code Mass. Regs. =A7
\n4.04(6) (2005). Finally, a contractor making an intentionally false statement
\nin a SOQ risks criminal conviction and its consequent penalties. An applicant
\nmust sign the SOQ "under pains and penalties of perjury," G.L. c.
\n149, =A7 44D1\/2(e )(ii), so a wilful false statement in the SOQ may
\nsubject the applicant to a perjury charge. G.L. c. 268, =A7=A7 1, 1A. Moreover, any
\nperson who intentionally makes a material false statement, or omits or conceals
\na material fact in a written statement, in attempting to procure a construction
\ncontract from any department, agency, or municipality of the Commonwealth, may
\nbe charged criminally under G.L. c. 266, =A7 67A.<\/p>\n
4. Conclusion. In view of our interpretation of the meaning of fraud
\nunder G.L. c. 149, =A7 44D1\/2(h ), we conclude that the motion judge
\ncommitted an error of law in determining that the
\nplaintiffs would not need to prove detrimental reliance by the prequalification
\ncommittee to prevail on their claim for injunctive relief. As a result of this
\nerror, because there is no allegation that any member of the prequalification
\ncommittee acted corruptly in deciding to prequalify Callahan, and because there
\nis unrefuted evidence that the committee did not act in reliance on any of the
\nalleged misrepresentations, the motion judge abused his discretion in
\nconcluding that the plaintiffs were likely to succeed on the merits at trial.
\nHaving so found, we need not reach the issue whether a preliminary injunction
\nwould promote or adversely affect the public interest, because the preliminary
\ninjunction cannot survive if the plaintiffs are unlikely to succeed on the merits.<\/p>\n
We affirm the single justice’s order vacating the allowance of the plaintiff’s
\nmotion for a preliminary injunction.<\/p>\n
So ordered.<\/p>\n
FN1. John Robison, Brian
\n Feinstein, Stephen O’Brien, David Kleimola, William Bzdula, David Ferris,
\n Sean Freel, Peter Serighelli, and Gerard McCann.<\/p>\n
<\/p>\n
FN2. Callahan, Inc. (Callahan),
\n whose motion to intervene was allowed in the <\/p>\n
<\/p>\n
Superior Court; and the
\n Commonwealth, whose motion to intervene was allowed in this court.<\/p>\n
<\/p>\n
FN3. We acknowledge amicus briefs
\n filed by the Attorney General; Associated Builders and Contractors, Inc.; the
\n Associated General Contractors of Massachusetts; the City Solicitors and Town
\n Counsel Association; Construction Industries of Massachusetts, Inc., and
\n Utility Contractors Association of New England, Inc.; Foundation for Fair
\n Contracting of Massachusetts and Brockton & Vicinity Building Trades
\n Council; and TLT Construction Corp.<\/p>\n
<\/p>\n
FN4. "The prequalification committee
\n shall be comprised of 1 representative of the designer and 3 representatives
\n of the awarding authority." G.L. c. 149, =A7 44D 1\/2 (c ).<\/p>\n
<\/p>\n
FN5. The statute instructs each
\n awarding authority issuing a request for qualifications (RFQ) to solicit information
\n in four specified categories and to assign points among the first three
\n categories according to a fixed formula: (1) management experience (fifty
\n points); (2) references (thirty points); (3) capacity to complete projects
\n (twenty points). G.L. c. 149, =A7 44D1\/2(e ). The awarding authority is
\n instructed to use its own discretion in allocating points within each of
\n these categories and in evaluating and scoring contractor <\/p>\n
<\/p>\n
responses. G.L. c.
\n 149, =A7 44D1\/2(e ), (h ). The fourth
\n category, for which no points are awarded, requires applicants to submit: (1)
\n a commitment letter for payment, and performance bonds in the full estimated
\n value of the contract from a surety company licensed to do business in the
\n Commonwealth and approved by the United States Treasury Department; and (2) a
\n certificate of eligibility from the division of capital asset management and
\n maintenance (DCAM) demonstrating that the contractor has a capacity rating
\n commensurate with the size and scope of the project, as well as an update
\n statement with the information required under G.L. c. 149, =A7 44D(1)(a
\n ). G.L. c. 149, =A7 44D1\/2(e ).<\/p>\n
<\/p>\n
FN6. The project specifications
\n allowed for certain alternate design elements above the base plan. Callahan was
\n also the winning bidder when estimates were considered with the alternate
\n design elements included.<\/p>\n
<\/p>\n
FN7. Callahan also included five
\n residential projects and one project on a university campus, none of which
\n fell within the definition of "Similar Project Experience"
\n specified by the statement of qualification (SOQ).<\/p>\n
<\/p>\n
FN8. General Laws c. 40, =A7 53,
\n provides that ten taxable inhabitants of a municipality may bring suit to
\n enforce laws relating to the expenditure of <\/p>\n
<\/p>\n
public funds by local officials.
\n See Edwards v. Boston, 408 Mass. 643, 646 (1990), and cases cited.<\/p>\n
<\/p>\n
FN9. N.B. Kenney Company, Inc.
\n (Kenney), one of the parties who had filed a bid protest with the Attorney General
\n following Callahan’s selection as the winning bidder, filed a separate suit
\n and was a party to the proceedings in the Superior Court and before the
\n single justice.<\/p>\n
<\/p>\n
FN10. Where, as here, a suit is
\n brought by citizens acting as private attorneys general to enforce a statute
\n or a declared policy of the Legislature, a showing of irreparable harm is not
\n required for the issuance of a preliminary injunction. LeClair v. Norwell,
\n 430 Mass. 328, 331-332 (1999). In these circumstances, a judge instead must
\n first determine whether the plaintiffs have shown a likelihood of success on
\n the merits of the asserted claim and then determine whether "the
\n requested order promotes the public interest, or, alternatively, that the
\n equitable relief will not adversely affect the public." Id.,
\n quoting Commonwealth v. Mass. CRINC, 392 Mass. 79, 89 (1984).<\/p>\n
<\/p>\n
FN11. The defendants each filed
\n cross appeals as to specific conclusions reached by the single justice but
\n not as to his decision that the preliminary <\/p>\n
<\/p>\n
injunction should be vacated.<\/p>\n
<\/p>\n
FN12. Kenney also appealed from
\n the order of the single justice to the full Appeals Court but withdrew its
\n appeal prior to oral argument before this court.<\/p>\n
<\/p>\n
FN13. Compare G.L. c. 149, =A7
\n 44A, as amended through St.1977, c. 968, with G.L. c. 149, =A7 44A, as
\n appearing in St.1980, c. 579, =A7 55.<\/p>\n
<\/p>\n
FN14. The only guidance given in
\n the earlier statute was that a "responsible and eligible bidder"
\n was a bidder "possessing the skill, ability and integrity necessary to the
\n faithful performance of the work and who shall certify that he is able to
\n furnish labor that can work in harmony with all other elements of labor
\n employed or to be employed on the work." G.L. c. 149, =A7 44A, as
\n appearing in St.1956, c. 679, =A7 1. (See G.L. c. 30, =A7 39M.)<\/p>\n
<\/p>\n
FN15. At the time of the 1980
\n and 1984 legislation, the agency was known as the division of capital
\n planning and operations. In 1990, it was changed to the division of capital
\n asset management and maintenance (DCAM). St.1998, c. 194, =A7=A7 182-185. For
\n purposes of simplicity, we refer to it as DCAM.<\/p>\n
<\/p>\n
FN16. Pursuant to St.1980, c.
\n 579, =A7 55, the burden of making this <\/p>\n
<\/p>\n
determination remained with the
\n awarding authority, although the statute permitted an awarding authority to request
\n that DCAM perform such an evaluation on its behalf.<\/p>\n
<\/p>\n
FN17. Every bid made to an
\n awarding authority for a contract of general construction must also include
\n an "update statement" reflecting changes in the bidder’s financial
\n position or business organization since the date of certification of
\n eligibility. G.L. c. 149, =A7 44D(1)(a ).<\/p>\n
<\/p>\n
FN18. For contracts estimated to
\n cost at least $100,000 but not more than $10,000,000, G.L. c. 149, =A7 44D1\/2(a
\n ), permits, but does not require, an awarding authority to prequalify general
\n contractors. Therefore, an awarding authority issuing a public contract
\n costing less than $10,000,000 is free to rely on DCAM’s certification alone
\n as a guarantee of a bidder’s capacity and expertise. See id.<\/p>\n
<\/p>\n
FN19. The 2004 amendments
\n expanded the range of construction options available to awarding authorities
\n by allowing for the election of "at risk" and "[d]esign
\n build" approaches for projects estimated to cost $5 million or more
\n (G.L. c. 149A, =A7=A7 1, 14), and required awarding authorities to retain an
\n "owner’s project manager" for any project estimated to cost $1.5
\n million or <\/p>\n
<\/p>\n
more to ensure hands-on project
\n oversight (G.L. c. 149, =A7 44A1\/2[a ] ). See St.2004, c. 193, =A7=A7 13,
\n 19, 27.<\/p>\n
<\/p>\n
FN20. An awarding authority must
\n select its prequalified bidders before soliciting general bids. By
\n regulation, the deadline for submission of general bids from prequalified
\n general contractors must be at least fourteen days after the awarding
\n authority’s issuance of invitations to bid. 810 Code Mass. Regs. =A7 9.10
\n (2005).<\/p>\n
<\/p>\n
FN21. In 2008, G.L. c. 149, =A7
\n 44D1\/2(h ), was amended to include "arbitrariness" and
\n "capriciousness" as additional grounds for appeal. St.2008, c. 303,
\n =A7 23. Because the plaintiffs here allege only fraud, the addition of these
\n grounds for appeal do not affect our analysis.<\/p>\n
<\/p>\n
FN22. The inclusion in 2008 of
\n "arbitrariness" and "capriciousness" as additional
\n grounds for appeal allows a disqualified contractor to challenge the denial
\n of his prequalification without needing to make the difficult showing of
\n collusion. St.2008, c. 303, =A7 23. Before this amendment, a contractor without
\n direct evidence of collusion had only the argument that collusion should be
\n inferred from the arbitrariness and capriciousness of the committee’s
\n decision.<\/p>\n
<\/p>\n
FN23. Because the application
\n for DCAM certification, the update statement, and the SOQ are so interwoven
\n in the statutory scheme to ensure that bidders are qualified, we understand
\n that the awarding authority would have the same discretion to terminate a
\n construction contract based on a materially false statement in a SOQ.<\/p>\n
<\/p>\n
FN24. For this reason, we are
\n not persuaded by the plaintiffs’ argument that fraud under G.L. c. 149, =A7
\n 44D1\/2(h ), does not require detrimental reliance because a DCAM
\n regulation provides, "Any General Contractor who fails to respond to the
\n RFQ in accordance with the instructions provided in the RFQ in any material
\n way shall be deemed to be disqualified from consideration for
\n prequalification." 810 Code Mass. Regs. =A7 9.06(5) (2005). This
\n regulation disqualifies a general contractor from prequalification who has
\n failed to abide by the procedural requirements in the RFQ, such as the
\n deadline for submission, the obligation to sign the SOQ under the pains and
\n penalties of perjury, and the need to include the required commitment letter,
\n performance bonds, and DCAM’s certificate of eligibility. Id. It
\n cannot reasonably be understood to require an awarding authority to
\n disqualify a general contractor and terminate a contract based on an
\n intentional misrepresentation that the authority did not rely on in its
\n prequalification decision, where the statutes cited above do not require an
\n awarding authority to terminate a contract after <\/p>\n
<\/p>\n
debarment, or after learning of
\n an intentional misrepresentation in the contractor’s application for DCAM
\n certification or in the update statement submitted with its SOQ. See G.L. c.
\n 29, =A7 29F(h ); G.L. c. 149, =A7 44D(2).<\/p>\n
END OF DOCUMENT <\/p>\n
<\/p>\n
<\/p>\n
For "Around Town on the Web",<\/p>\n
Cathy H-B<\/p>\n
<\/p>\n
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<\/p>\n","protected":false},"excerpt":{"rendered":"
Dear fellow Hanoverians: A friend sent this to me with the following simple cover note: “Hanover wins”. NOTICE: The slip opinions and orders posted on this Web site are subject to formal revision and are superseded by the … Continue reading