28 Mass. App. Ct. 707 | Mass. App. Ct. | 1990
Upon report by a single justice of this court we are to consider two questions: (1) whether in connection with public construction under G. L. c. 149, §§ 44A-44H, an awarding authority is bound by the substitution procedure described in G. L. c. 149, § 44F(4)(c), if a low sub-bidder withdraws its sub-bid after execution of the general contract;
We add such details of the history of the controversy as are necessary to consider the questions presented. Callahan was the low bidder with a bid of $2,190,000 to build a police station for the town. Filed sub-bids were opened June 26, 1989. Rascicot’s low bid on the masonry component of the job was $595,000.
Empire insisted that it was thereupon entitled to the masonry subcontract. Callahan was entirely willing to have Empire do the work, provided that the town adjusted the con
We conclude that the substitution procedure prescribed by § 44F(4)(c) may apply after execution of a general contract for a public construction job and that it applied in this case.
To set the context we summarize how the public bidding system prescribed by G. L. c. 149, §§ 44A-44H, works. All citations to statutory provisions are to sections found in G. L. c. 149 (1988 ed.). The public agency undertaking the construction project, the awarding authority, provides each general contractor and subcontractor who so requests a set of plans and specifications for the project. § 44B(1). At least four days
Within two days, after weeding out all the formally defective bids, the awarding authority sends out a list of the eligible sub-bidders (and their sub-bids) to every person who had requested a set of plans and specifications. § 44F(3). General bidders must choose from among these listed sub-bidders in preparing their bids, ibid., and, like the sub-bidders, they must include a five percent bid deposit with their bid forms. § 44B(2).
Within five days of the opening of the general bids, the awarding authority rejects nonconforming bids (§ 44E[3]) and returns all the general bid deposits, except those of the three lowest responsible and eligible general bidders. § 44B(3). Likewise, the bid deposits of all sub-bidders except those of sub-bidders named by the three lowest responsible and eligible general bids and those of the three lowest responsible and eligible sub-bidders for each trade must be returned within five days of the opening of general bids. § 44B(4). If Federal approval of the contract is not involved, the awarding authority is to award the general contract to the lowest eligible and responsible general bidder within thirty days of the opening of the general bids. § 44A(3).
The selected general bidder then has five days in which to execute a contract with the awarding authority in accordance with the general bid and to furnish performance, labor and materials bonds in the sum of the contract price. § 44E(2). The bid deposits of the three lowest general bidders are returned upon execution and delivery of the general contract. § 44B(3). If the selected general bidder fails to execute the contract and furnish the bonds, the awarding authority keeps the bid deposit as liquidated damages (§ 44B[3]) and awards the contract to the next lowest responsible and eligible general bidder. § 44A(3).
Once selected, the general bidder must “promptly” confer with the awarding authority on the question of sub-bidders. § 44E(2). The awarding authority is entitled to replace any
That brings us to the substitution procedure contained in § 44F(4)(c) which this case requires us to construe and apply. Section 44F(4)(c) provides that, if the selected sub-bidder fails to execute the subcontract, “contingent upon the execution of the general contract,” and to post the appropriate bonds, within five days after presentation of the subcontract, the general bidder and the awarding authority must award the subcontract to the next lowest responsible and eligible sub-bidder on the list to whose standing and ability the contractor has no objection. The general contract price is “adjusted,” i.e., increased, by the difference between the second lowest and the lowest sub-bid. The subcontractor who has declined to sign up forfeits his or her bid deposit to the awarding authority. § 44B(4).
An illustration under this labyrinthine (and mind-numbing) statute may help to demonstrate that substitution of a sub-bidder may occur before or after execution of the general contract. Consider the following scenario. The general con
We are of opinion that the statute raised no bar to the application of § 44F(4)(c) at that point, because of the prior execution of the general contract. Section 44F(4)(c) “specifically provides the proper route to follow where, as here, there is a failure by the selected sub-bidder to execute a subcontract.” Paul Sardella Constr. Co. v. Braintree Hous. Authy., 371 Mass. 235, 241 (1976). See also Paul Sardella Constr. Co. v. Braintree Hous. Authy., 3 Mass. App. Ct. 326, 330 (1975).
Step-by-step application of the language of § 44F(4)(c) points to invocation of the substitution procedure before or after execution of the general contract. Statutory construc
What are we to make, then, of the phrase “contingent upon execution of the general contract” which appears in § 44F(4)(c)? Considering the position of the phrase in a fifteen-line sentence and the language we have mentioned in the statute which contemplates postexecution substitution of sub-bids, we take the phrase to authorize the execution of subcontracts contingent upon the contractor executing the general contract. Enabling general bidders and sub-bidders to do so has considerable utility. It binds the subcontractor and the subcontractor’s bonding company when the general contract comes into legal existence, and it may avoid just the sort of shortfall which developed when, as here, the lowest subcontractor in a particular trade fell away.
Read in this manner, the statute effectuates its apparent design of substituting for a lapsed lowest bidder the next-to-the-lowest bidder and of confining the subcontractors to those who have participated in the public sub-bidding procedure. See Interstate Engr. Corp. v. Fitchburg, 367 Mass. 751, 757-
We are not persuaded by the town’s argument that application of the substitution procedure unreasonably exposes awarding authorities to unexpected increases in the cost of the project. As we observed in note 8, supra, one way in which an awarding authority can avoid that risk is to require the successful bidder to execute subcontracts (for trades as to which sub-bids were filed) before execution of the general contract. An awarding authority may also diminish its exposure by retaining bid deposits as long as § 44B(4) permits. Had the town done so in this case it would have had Ras-cicot’s $29,750 bid deposit to set against the $66,000 by which Empire’s bid exceeded Rascicot’s. Finally, we do not think the town’s reliance on JJ Assocs. v. Fall River Hous. Authy., 19 Mass. App. Ct. 45, 48-51 (1984), is at all cogent. That case dealt with the right of the public authority to require substitution of a lower sub-bid at a time when the general contract itself was still contingent because it was subject to approval by the United States Department of Housing and Urban Development.
Returning to the questions posed by the single justice, we answer that: (1) the general contractor and the town are bound to apply the substitution procedure prescribed in § 44F(4)(c), notwithstanding the prior execution of the general contract; and (2) a general contractor is not required by
The town and Callahan shall execute a change order increasing the general contract price by $66,000, and the escrow funds shall be disbursed in accordance with the order of the single justice and the stipulation of the parties dated November 14, 1989.
So ordered.
Rascicot’s sub-bid was restricted to Callahan. Empire’s sub-bid was unrestricted. Nothing turns on this.
As required by G. L. c. 149, § 44B(2), Rascicot accompanied its sub-bid with a bid deposit of five percent of its bid, $29,750.
The record is a bit obscure on precisely when Callahan submitted contracts to its prospective subcontractors but during argument counsel agreed that at least Rascicot received a contract to sign on September 5.
Saturdays, Sundays and legal holidays excluded. That qualification is added to every time limitation which appears in the statutory scheme.
nection 44B(4) provides that the awarding authority must return the sub-bid deposits still in its possession — i.e., those of the three lowest sub-bidders and of the sub-bidders named by the three lowest general bidders — within five days of the execution of the general contract. This means that sub-bid deposits will be available to the awarding authority to soften the financial blow of substitution only for five days after the execution of the general contract.
The award of the contract should occur within thirty days of the bid opening. § 44A(3). That period was exceeded in this case, but the general contractor seems to have acquiesced in that, and no party complains of that particular irregularity in the bidding process.
It is possible under the statute for the general contract to be awarded on day one and executed on day six, and for the general contractor not to award the subcontract to sub-bidder A until two weeks later, on day twenty. In this case, substitution could properly occur any time before day twenty-five, even though all the sub-bid deposits would have been returned by day eleven. (The bid deposits of the three lowest sub-bidders are to be returned within five days after execution of the general contract. Thus, if the general contract is not executed until day six, the date to return these bid deposits falls on day eleven. See § 44B[4].) A cautious awarding authority might protect itself by requiring the selected general bidder to pre
The Sardella cases were decided under G. L. c. 149, § 441(3), which contained text identical to that which now appears in G. L. c. 149, § 44F(4)(c).