Public contracting assumes that open competitive bidding for fixed price construction contracts ensures fairness and maximizes the return on the taxpayer's dollar. To promote competitive bidding, states have adopted extensive statutory and regulatory schemes designed to ensure that public construction contracts are awarded to the lowest eligible and responsible bidder.
While this article focuses on Massachusetts' competitive bidding laws, it is equally useful as a primer for public bidding issues that arise on all public contracts.
Different Projects/Different Statutes
In Massachusetts, there are two statutory schemes governing competitive bidding for public construction contracts. One scheme governs bidding for "public building" ("vertical") contracts; the other scheme, governs bidding for "public works" ("horizontal"-roads, bridges, water, sewer) contracts. Each statute defines what type of work it is applicable to. For instance, the public building statute provides that it is applicable to "[e]very contract for construction, reconstruction, installation, demolition, maintenance or repair of any building by a public agency . . . . " It goes on to define the term "public agency" as "a department, agency, board, commission, authority, or other instrumentality of the Commonwealth or political subdivision of the Commonwealth, or two or more subdivisions thereof, but not including the Massachusetts Bay Transportation Authority."Public works projects are governed by a separate statute which is applicable to "[e]very contract for the construction, reconstruction, alteration, remodeling or repair of any public work, or for the purchase of any material . . . by the Commonwealth, or political subdivision thereof, or by any county, city, town, district, or housing authority . . . . " The statute defines "material" as "any article, assembly, system, or any component part" of a public work.
Dollar Thresholds/Emergency Awards
Each bidding statute also has a dollar threshold which must be met before its requirements are applicable. For instance, a public building project must be "estimated to cost more than $25, 000," while a public works project must be "estimated by the awarding authority to cost more than $5,000." Both statutes also contain exceptions/waiver provisions from bidding in the case of "extreme emergency." The public works statute defines "extreme emergency" as conditions "caused by enemy attack, sabotage or other such hostile actions or resulting from explosion, fire, flood, earthquake, hurricane, tornado, or other such catastrophe." The statute permits the awarding authority to "award contracts" otherwise subject to the statute and to "purchase or rent materials and equipment" without competitive bidding. However, such contracts are limited to "temporary repair and restoration to service of any and all public work" and must be necessary "to preserve the health and safety of persons or property." The public building statute does not detail the causes of an "extreme emergency," but instead provides that in cases of "extreme emergency," the awarding authority is permitted to "award a contract . . . without public opening of bids or proposals."
Both Massachusetts public bidding statutes also require each bidder, at the time of bidding, certify under penalty of perjury that his bid is "in all respects bona fide, fair and made without collusion or fraud with any person." The statute defines "person" as "any natural person, joint venture, partnership, corporation or other business entity."
Proprietary Specifications/"Or Equals"
Any public contract awarded in Massachusetts must provide that "an item equal to that named or described in [the] specifications may be furnished" and provide three brand names for each item specified. An item may be considered an "equal" to a named or described item if:
- It is at least equal in quality, durability, appearance, strength and design.
- It will perform at least equally the function imposed by the general design for the public work.
- It conforms substantially, even with deviations, to the detailed requirements for the item in the specifications.
Lowest Responsible and Eligible Bidder
Both public bidding statutes require the awarding authority to award on the basis of competitive bids to the "lowest responsible and eligible bidder." Both the horizontal and vertical building statutes define the meaning of these terms. The public building statute defines "lowest responsible and eligible bidder" as: "the bidder (1) whose bid is the lowest of those bidders possessing the skill, ability and integrity necessary for the faithful performance of the work; (2) who shall certify that he is able to furnish labor that can work in harmony with all other elements of labor employed or to be employed in the work; (3) who, where the provisions of section eight B of chapter twenty-nine apply, shall have been determined to be qualified thereunder; and (4) who obtains within ten days of the notification of contract award the security by bond required under section twenty-nine; provided that for the purposes of this section the term "security by bond" shall mean the bond of a surety company qualified to do business under the laws of the Commonwealth and satisfactory to the awarding authority."
Bid Deposits/Time Limits on Awards
Both public bidding statutes require that each bid must be accompanied by a "bid deposit." The purpose of the bid deposit is to provide security to the awarding authority in the event that the bidder fails to perform his obligation to execute a contract and furnish performance and payment bonds. In Massachusetts, a failure to make a correct bid deposit is ground for rejection of a bid by the awarding authority. Bid deposits may be in the form of a bid bond, cash, certified check or treasurer's or cashier's check payable to the awarding authority. Both public bidding statutes place time limits on the making of awards: Thirty days for building projects and "forthwith" after bid opening for public works contracts.
Bid Protests/Choice of Forum/Grounds
The Massachusetts public building and public works statutes also dictate where a disgruntled bidder may "protest" the award of a contract. The public bidding laws in Massachusetts provide that a protest may be brought either to the Attorney General's office or to the Superior Court. Tactical considerations govern this "choice of forum" decision. However, in either circumstance the burden of proof is on the protestor, to demonstrate that a violation of the public bidding procedures/statutes occurred.
Example(s) of statutory violations that require an awarding authority to reject a bid follow:
- Bidder fails to submit a Certificate of Eligibility and update statement regarding his prequalification with his bid.
- Bidder fails to submit a bid bond.
- Bidder fails to sign the bid form.
- Bidder fails to timely submit his bid.
- Bidder fails to bid on materials specified in the contract documents.
- Bidder attempts to add language which puts "conditions" on his bid.
Examples of items which represent bid errors that can be "waived" by the awarding authority in its discretion follow:
- Failure to submit non-statutorily required items where the bid documents themselves don't make their submission mandatory (i.e., a project schedule)
- Minor clerical errors where it is clear as to what the bidder intended on the four corners of the bid document
- Failure to name the proper payee on the bid security, such as naming the awarding authority "Hingham High School" instead of "Hingham School Building Committee"
- Submission of a nominal ( "penny bid") for an item of work which does not act to make the bid "unbalanced" or otherwise skew/manipulate the bid process
- Non-compliance with minority set-aside requirements where bid documents make such compliance discretionary instead of mandatory
Whether you are a Massachusetts contractor or not, the state where you operate has public bidding statutes which apply and govern the public construction contracts you seek to obtain. In order to successfully compete for, and win public construction work, it is critical that you be familiar with the competitive bidding requirements of each state and that you comply with the rules and regulations of that locale.
Construction Business Owner, February 2007