Suffolk. Civil action commenced in the Superior Court on April 11, 1975. The case was heard by Hallisey, J., on a master's report.
Keville, Grant, & Brown, JJ.
Public Works. Contract, Public works, Bidding for contract, Subcontract. Damages, Failure to award public works contract.
The opinion of the court was delivered by: Brown
A general contractor did not have the right under G. L. c. 149, § 44F, to reject a substitute subbidder proposed by the awarding authority by merely objecting to the subbidder's "standing and ability" without giving any reasons therefor. [485-489]
Where a general contractor acted wrongfully and in bad faith in rejecting a substitute subbidder proposed by the awarding authority under the provisions of G. L. c. 149, § 44F, the subbidder was entitled to damages in the amount of its anticipated profits. [489-491]
Roblin Hope Industries, Inc. (Hope), brought an action against the Bureau of Building Construction (BBC), The William Bayley Company (Bayley), and J. A. Sullivan Corporation (Sullivan), the general contractor for construction of a classroom building at Southeastern Massachusetts University, claiming that Sullivan's rejection of it as subcontractor for metal windows in favor of Bayley was in violation of G. L. c. 149, §§ 44A-44L.
Under G. L. c. 149, §§ 44C and 44F, each general bid must contain a list of subbids for specified types of work. Sullivan in its general bid listed itself as subbidder for the metal window work. Bayley, on February 3, 1975, protested to the BBC that Sullivan did not customarily install metal windows with its own personnel. BBC pursuant to G. L. c. 149, § 44F, as amended by St. 1961, c. 604, § 5, under which "the awarding authority may substitute for any sub-bid listed . . . a sub-bid duly filed with the awarding authority by another subbidder . . . against whose standing and ability the makes no objection" then wrote Sullivan, requesting that it substitute Hope, the lowest subbidder, as subcontractor. Sullivan replied that because it wished to use its own labor force to install the windows to permit "stringent control and supervision" and greater efficiency, it therefore objected to the "standing and ability" of Hope.
After a hearing, BBC rejected Sullivan's subbid for the metal window work under G. L. c. 149, § 44J, as appearing in St. 1956, c. 679, § 1, *fn1 because Sullivan failed to demonstrate to the satisfaction of BBC that it customarily performed such work. BBC again requested Sullivan to substitute the lowest subbidder, pursuant to G. L. c. 149, §§ 44F and 44I(2), the latter as amended through St. 1967, c. 884. *fn2 Sullivan again refused to accept either Hope or the second lowest subbidder, Boston Screen and Sash Company, asserting that it is "the inherent right under the Mass. Public Bidding Law for a General Contractor to form his own team" and that "as the General Contractor we are responsible for the complete work as specified." Sullivan selected Bayley, whose bid was some $31,000 higher than the lowest subbid. *fn3
At trial a Superior Court Judge found that the objections which were offered by Sullivan to Hope were "specious" and "first seized on by Sullivan after institution of this suit in an attempt to justify its refusal of plaintiff." Rejecting Sullivan's argument that the statute permits a general contractor to reject a subbidder to whom it objects without giving any reason, the Judge then held that "an objection to standing and ability which is in reality no more than a recitation of the words of the statute" is not sufficient under §§ 44F and 44I(2) to justify the exclusion of a lower subbidder from the general contract. The Judge awarded Hope damages in the amount of the cost of preparing the bid and dismissed the action as against BBC and Bayley. Both Sullivan and Hope appealed from the ensuing judgment.
Sullivan contends that under the decisions in East Side Constr. Co. v. Adams, 329 Mass. 347, 354 (1952), Rudolph v. City Manager of Cambridge, 341 Mass. 31, 39 (1960), and Interstate Engr. Corp. v. Fitchburg, 367 Mass. 751, 762 (1975), a selected general bidder has the right to reject a subbidder merely on the basis that the subbidder is "unacceptable" to it, without ascribing any reasons. Sullivan further argues in support of this position that § 44I(2) provides that the awarding authority and the general bidder selected shall "jointly consider" filed subbids and refers to "ny agreement to substitute a subbid." *fn4
In East Side Constr. Co. v. Adams, supra, the Supreme Judicial Court held that the award of a contract to a general bidder was in violation of the bidding statute because the general bidder had failed to submit a subbid for demolition work as required by the statute. One of the plaintiffs, East Side Construction Company, Inc., the lowest qualified subbidder for the demolition work, argued that its bid should have been accepted. The court rejected this claim for the reason that "there is no statutory requirement that in every case the lowest subbid must be accepted" and further that "hen accepted, a subbidder enters into no contractual relation with the town, but becomes bound to the general contractor." 329 Mass. at 353. In contrast to that case, in the case at bar the awarding authority had asked the selected general bidder to accept the plaintiff's bid, in accordance with the statutory procedure set out in §§ 44F and 44I(2). The question here, unlike that in East Side Constr. Co., is whether the selected general bidder had grounds under the statute to refuse to accept the subbidder proposed by the awarding authority.
Similarly, in Interstate Engr. Corp. v. Fitchburg, supra, the Supreme Judicial Court refused to order a contract awarded to a subbidder because the statutory procedure had not yet been followed and the selected general bidder had not had an opportunity to object to the subbidder.
In the other case relied on by Sullivan, Rudolph v. City Manager of Cambridge, supra, the Supreme Judicial Court, in describing the procedure followed in substituting subbidders, stated that "substitution of a subbidder . . . can occur only after the acceptability of another subbidder to the general bidder has been ascertained. See Poorvu Constr. Co. v. Nelson Elec. Co., 335 Mass. 545, 548 ." 341 Mass. at 37. The case cited states in pertinent part that "the general contractor is not to be required to employ . . . any subcontractor . . . against whose standing and ability the general contractor makes objection." 335 Mass. at 548. Thus, the language in the Rudolph ...