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Airport Fuel Services, Inc. v. Martha's Vineyard Airport Commission

Superior Court of Massachusetts, Dukes

April 19, 2017

Airport Fuel Services, Inc.
Martha's Vineyard Airport Commission et al No. 136983


          Mitchell H. Kaplan, Justice

         This action arises out of the defendant, Martha's Vineyard Airport Commission's (the Commission) decision to award a lease of Lot #33 in the Airport Business Park (the Property) to the defendant, Depot Corner, Inc. (Depot), following a public bidding procedure. The Plaintiff, Airport Fuel Services, Inc. (AFS), has been the lessee of the Property pursuant to a 20-year lease that expired on March 9, 2017 (the Lease). It constructed a gas station, convenience store, and car wash on the Property and operated them over the term of its lease. In its complaint, AFS alleges that " the 2017 RFP issued by [the Commission] was misleading and an inherently unfair proposal" and seeks an order requiring the Commission to lease the Property to it, according to its bid proposal. The case is before the court on AFS's motion for a preliminary injunction enjoining the Commission from leasing the Property to Depot.


         The following facts are taken from the affidavits and documents submitted in support of and opposition to the motion for preliminary relief.

         Under the terms of the Lease, AFS was permitted to construct the gas station, convenience store, and car wash which it operated over the Lease term. However, Section Eleven of the Lease provided that: " Lessee shall, on the last day of the term, or on earlier termination and forfeiture of the lease, peaceably and quietly surrender and deliver the Premises to Lessor at Lessor's option free of subtenants, buildings, additions, and improvements constructed or placed thereon by Lessee." [1]

         In 2014, the Commission issued a Request for Proposal (RFP) for a lease for the Premises to commence after the expiry of the AFS Lease, but RFP was withdrawn for reasons that do not affect the court's ruling on the issues raised by the pending motion.

         On December 30, 2016, the Commission issued the RFP (which it titled: Request for Qualifications) for a new lease of the Property which is the subject of the present action. In the first section of the RFP, entitled General Information to Proposers, the Commission explained that it " may waive its rights under Section Eleven" (quoted above) to require the present lessee, AFS, to remove the buildings that it constructed on the Property. The RFP went on to state, [t]he successful Proposer will have the opportunity to either negotiate a separate agreement for the purchase of the existing facilities with the current tenant/master lease holder or have the [Commission] exercise its rights to have the facilities removed prior to the assumption of the Premises. The successful Proper shall have no obligation to purchase the existing facilities."

         The RFP stated that the minimum rental that it would accept was $1.55 a square foot (resulting in an annual initial rent of $56, 119.30). According to the form of lease attached to the RFP, this amount would adjust annually according to the CPI.

         As is typical, the RFP set out the materials that a bidder had to include with its proposal for that proposal to be considered. It then went on to explain how proposals meeting the minimum standards would be evaluated: " The evaluation process will include each proposal being reviewed by the evaluation committee designated by the [Commission] . . . The [Commission] will use the comparative criterion for each separate rating area, and based upon these criteria, will assign an overall rating to each proposal. Each of the criteria may contain ratings of: Not Advantageous, Acceptable, Advantageous or Highly Advantageous." Five " comparative criteria" were then set out in the RFP: " Description of Operation and Statement of Experience, Responses detailing Financial Data and Business References; Response to Additional Narrative Information; General Impression of Proposal; and Proposed Lease Rental amount."

         The RFP included an Attachment 16 entitled " Sample Evaluation Form" (the Sample Form). This Attachment is somewhat confusing. It is not clear that it is a " sample, " but rather as to each " comparative criteria" the form sets out specific responses that might, at least for some categories, suggest to a reader that proposals with certain characteristics will automatically be rated as Not Advantageous, Acceptable, Advantageous, or Highly Advantageous, although it seems doubtful that this is what the Commission intended. Stated differently, the Sample Form might be read to suggest that the Committee's evaluation of at least some of these criteria was not subjective, but rather certain bid responses would necessarily be scored in a certain way--in other words a check the box evaluation.

         For example, with respect to the criterion entitled " Description of Operation and Statement of Experience, " the Sample Form states that a proposal that demonstrates " provision of specified services for 5 to 7 years" receives an evaluation of " Advantageous, " while a response of " provision of specified services for over 7 years" automatically receives the evaluation--" Highly Advantageous." Does this mean that the Committee was not to consider how well the bidder performed the specified services in the past? In addition, was the Committee to disregard that part of the criterion that called for a " Description of Operation?"

         The most confusing aspect of the Sample Evaluation Form involves criterion 6--" Proposed Rental Lease Amount." There the Form reads, in part: " Highly Advantageous--The financial offering is one of the three highest Minimum Annual Guarantee amounts proposed." This might suggest that if only three bids were submitted, they each exceeded the minimum bid, and the amount of rent proposed varied dramatically, they would all nonetheless be rated as Highly Advantageous; a nonsensical outcome. Among relatively, equally competent bidders, the most important distinguishing factor would appear to be the amount that the bidder was offering to pay to rent the Property.

         Criteria 3 and 4, entitled " Response to Additional Narrative Information" and " General impression of proposal, " respectively clearly call for subjective evaluations. The Sample Form offers general and non-specific sample evaluations for each possible rating.

         The Commission selected three individuals to constitute the evaluation committee (the Committee): Ann Crook, the Airport manager; Commission Chairman Myron Garfinkle; and Commissioner Richard Michelson. The RFP, however, made clear that the ultimate decision of whether a proposal " will prove to be advantageous to the [Commission]" was left to the Commission: " The [Commission] in its sole discretion, may select one respondent, establish of [sic] list of successful respondents, or select no respondents and deem the RFP cancelled or not awarded for any reason or for no reason."

         Four " proposers" responded to the RFP: G.J. Smith, Inc. (Smith); MVYABP Lot 34, LLC (Lot 34), Depot and AFS. Each met the minimum requirements of the RFP and were evaluated by the Committee at a meeting on March 1, 2017.[2] The Smith proposal offered $2.21 a square foot, by far the lowest amount of the four bidders, and its other submissions were judged weak. The Lot 134 proposal offered the highest rent, $5.00 a square foot. Lot 134, however, wanted to develop the Property together with an adjoining lot that it was already leasing from the Commission, an approach that the Commission did not favor. According to the Committee, ...

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