Opinion
Civil 18-566
05-11-2018
REVOLI CONSTRUCTION CO., INC., Plaintiff v. CITY OF QUINCY, Defendant
MEMORANDUM AND ORDER ON PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION
Peter B. Krupp, Justice Superior Court
Plaintiff Revoli Construction Co., Inc. ("Revoli") filed this action to challenge the award of a municipal contract in the City of Quincy ("the City") to C. Naughton Corp. ("Naughton"), which was not the lowest qualified bidder for the work. Revoli seeks to enjoin the City from signing a contract with Naughton. After hearing, and review of the relevant authorities, I find Revoli has a reasonable likelihood of succeeding on the merits and that Revoli will be irreparably harmed if a contract is signed with Naughton; and issue the appropriate injunction.
BACKGROUND
In early April 2018, the City issued an invitation to bid on a water main improvement project ("the Project") in the City in two phases-Phase A and Phase B-each covering different streets in the City. The Invitation to Bid required the work on certain streets to be substantially completed on dates during the summer and fall of 2018, with all of the work complete and ready for payment by November 16, 2018. The City’s bidding documents allowed any bidder to submit bids for Phase A, Phase B, or both, but purported to reserve discretion to the City to decide how the bids would be awarded. Specifically, the bid documents stated:
If the Contract is to be awarded:
• The City of Quincy may award the Contract to the lowest responsive and responsible Bidder. One single Contract for PHASE A and PHASE B combined may be awarded,
OR
• If it is in the best interest of the City of Quincy to do so, one Contract may be awarded for PHASE A to the lowest responsive and responsible Bidder for the PHASE A scope of work AND A SEPARATE Contract may be awarded to the lowest responsive and responsible Bidder for the PHASE B Scope of Work. In the case of the same Bidder having the lowest bid price for both PHASE A and PHASE B, a Contract may be awarded to the next lowest responsive and responsible Bidder for the PHASE B Scope of Work. (Emphasis omitted).
Revoli bid on both phases of the project. The bids were opened on April 10, 2018. Revoli was the lowest bidder on both phases of the project. On April 26, 2018, the City awarded Phase A to Revoli. On the same date, the City’s project engineer notified Revoli that Phase B would be awarded to the second lowest bidder, Naughton, as the City had determined it was in its best interest to do so. The parties agree that both Revoli and Naughton were determined by the City to be eligible and responsible bidders for Phase B.
Revoli’s bid for Phase A was $1, 974, 706.12 and for Phase B was $1, 713, 339.80. The Massachusetts Department of Transportation has qualified Revoli to perform water and sewer projects up to $18 million. On Phase B, Naughton was the second lowest bidder, with a bid approximately $41, 500 higher than Revoli.
DISCUSSION
To obtain a preliminary injunction, a plaintiff must establish (1) it is likely to succeed on the merits of its claim, (2) it will suffer irreparable harm absent the requested relief, (3) and its harm, without the injunction, outweighs the potential harm to defendant if the injunction is issued. Packaging Indus. Group, Inc. v. Cheney, 380 Mass. 609, 617 (1980). "When, as here, a party seeks to enjoin governmental action, the court also considers whether the relief sought will adversely affect the public." Tri-Nel Management, Inc. v. Bd. of Health of Barnstable, 433 Mass. 217, 219 (2001).
The parties agreed at argument that analysis of the likelihood of success on the merits is the whole ball of wax in the context of this competitive bid challenge. Because a successful challenger to a competitive bid award is generally not entitled to recover its lost profits after the awarding authority signs a contract with another contractor, the courts have recognized that irreparable harm flows from a failure to follow the competitive bidding statutes and the award of a contract in violation of those provisions. Modern Continental Const. Co., Inc. v. Lowell, 391 Mass. 829, 837 (1984); Petricca Const. Co. v. Commonwealth, 37 Mass.App.Ct. 392, 399 (1994). Moreover, the public interest is served by the enforcement of the requirements of the public bidding law.
There is an exception to this general rule. Recovery may include lost profits (i.e. recovery will not simply be limited to bid preparation costs) where the claimant is able to demonstrate "bad faith" in the awarding decision. See Bradford & Bigelow, Inc. v. Commonwealth, 24 Mass.App.Ct. 349, 359 (1987) ("Upon adequate proof that agencies or officers of the Commonwealth have set aside in bad faith an award of a contract to a qualified low bidder, the cases already mentioned should be extended appropriately to permit recovery by the bidder of its lost profits."). Initially, there was no such claim in this case. After the preliminary injunction hearing, plaintiff filed an emergency motion to supplement its supporting papers, arguing that it had uncovered evidence that the City may have acted in "bad faith." Specifically, Revoli based its argument on (and attached) news reports from 2015 and 2016 about illegal campaign contributions that Naughton’s principal made in 2015 to the reelection campaign of the City’s Mayor, Thomas Koch. See Revoli Construction Company, Inc.’s Supplemental Brief in Support of its Motion for Injunctive Relief (May 10, 2018). These news accounts are dated, but curious; but they are hardly conclusive evidence about the reasons the City awarded Phase B to Naughton. The City vigorously contests the inference of "bad faith." See City of Quincy’s Response to Supplemental Filings of Plaintiff and Revised Opposition to Motion for Preliminary Injunction (May 10, 2018). While the issue of bad faith may be a necessary area of discovery if this case proceeds, plaintiff’s supplemental filing does not rise to the level of "adequate proof" that the City acted in bad faith in awarding the contract to Naughton. On the present showing, I cannot find that absent an injunction Revoli will be reasonably likely to be able to recover its lost profits after trial if it prevails.
Under G.L. c. 30, § 39M(a), para. 4, "[e]very contract for the construction, reconstruction, alteration, remodeling or repair of any public work ... shall be awarded to the lowest eligible responsible bidder on the basis of competitive bids publicly opened ..., provided, however, that such awarding authority may reject any and all bids, if it is in the public interest to do so." The "public interest" exception does not authorize the awarding authority to reject the "lowest eligible responsible bidder" for any reason. To the contrary, the public bidding statutes are designed "to ensure that the awarding authority obtain the lowest price among responsible contractors" and "to establish an open and honest procedure for competition for public contracts," Modern Continental, 391 Mass. at 840, facilitating "the elimination of favoritism and corruption as factors in awarding of public contracts." John T. Callahan & Sons, Inc. v. Malden, 430 Mass. 124, 128 (1999), quoting Interstate Engineering Corp. v. Fitchburg, 367 Mass. 751, 758 (1975).
In J. F. White Contracting Co. v. Massachusetts Port Auth., 51 Mass.App.Ct. 811 (2001), for example, the court upheld a bid process, which asked for bids for work using one of two alternative materials, reserving to itself the right to choose which of the two materials would ultimately be in its best interest. After the bids were received, the public authority selected the material it decided to use and was then obligated to select the lowest responsible bidder for that particular material. 51 Mass.App.Ct. at 814-816.
This case is very different. Here, the City sought to reserve to itself the right to award Phase B to the second lowest eligible bidder if the lowest eligible bidder had been awarded the contract on Phase A. The fact that this was disclosed by the City up-front in its bid package does not make it legal. The issue the City was concerned with-could one contractor perform the work within the allotted time-was a question of the bidder’s capability. There was no question raised about Revoli’s ability or responsibility to do the work. Indeed, the City’s engineering firm specifically found Revoli to have submitted "[t]he lowest eligible and responsible bid for Phase B." See Letter from Woodard & Curran at 4 (Apr. 17, 2018), attached as Exhibit J to Revoli Construction Company, Inc.’s Reply Brief in Support of its Motion for Injunctive Relief. Where the City found Revoli to be the lowest eligible responsible bidder for Phase B, G.L. c. 30, § 39M(a), para. 4, required the City to award the Phase B contract to Revoli.
In its opposition to the motion for a preliminary injunction, the City submits an affidavit from Joseph D. Shea, P.E. that suggests that the absence of a work schedule submitted by Revoli was the reason the City awarded Phase B to Naughton. This argument does not pass muster and does not appear to satisfy the "public interest" exception to awarding the contract to the lowest responsible bidder. Mr. Shea indicates that it was reasonable for Revoli not to have submitted a work schedule and that, despite the omission of a work schedule, Revoli was still an eligible and responsible bidder. The fact that Revoli did not provide a schedule did not prevent the City from evaluating Revoli’s capability; the absence of a work schedule appears to be an after-the-fact justification for the award to Naughton. The Affidavit of Shawqi Alsarabi is persuasive as to the timing of the City’s request to provide a schedule.
Moreover, the schedule provided by Naughton hardly distinguishes it from Revoli. Revoli submitted its bid, necessarily representing that it could meet the Project schedule. The Project requires significant liquidated damages for each day the Project is delayed. Naughton’s Project schedule merely provided that it "will begin work on or before May 01 2018 and provide multiple crews to work day shifts and night shifts to successfully complete the project before November 16, 2018." This schedule was nothing more than a statement that Naughton would perform the work on time. It hardly justifies setting aside the lowest responsible bid in the "public interest." Revoli has a reasonable likelihood of success on the merits.
The bar chart provided by Naughton reflecting a possible work schedule, did not show Naughton starting any work on Phase B until the fourth week of July 2018.
ORDER
The City is hereby enjoined from executing or entering into a contract for any work on Phase B of the Project other than with Revoli until a hearing on the merits.
Because time is of the essence in this dispute, the Court shall conduct a hearing on May 15, 2018 at 2 p.m. to set a schedule for the prompt resolution of this case on the merits.