Inadvertent Contractor Prequalification Can Be Overridden by Public Authority

A Massachusetts trial court has held that a public authority, which inadvertently prequalified an electrical contractor who did not have the proper license, can override its own prequalification decision and reject a bid from the contractor. The contractor was tripped up by a contract requirement that a corporate applicant must have a board member with the requisite license. In this instance, the contractor had one or more employees with a master electrician’s license, but did not have a board member with such a license, at least in Massachusetts.

There were two challenges by the bidder. First, that MassDOT, the public authority, improperly issued its license requirement. And second, that MassDOT’s application of its own requirement was arbitrary and capricious.

The court found that the enabling legislation required bidders to submit information and qualifications “as [MassDOT] may prescribe”. Here, MassDOT was entitled to determine that a license held by a board member was an appropriate criteria for eligibility. Thus, MassDOT acted within its statutory authority when it ultimately rejected the bid for failure to meet this requirement.

As to MassDOT’s application of its own requirement, the court noted the “presumption in favor of validity of an administrative action.” Thus, the license requirement was not arbitrary on its face. And MassDOT also acted within its discretion to reject the contractor’s bid for failing to comply with what was a non-statutory requirement. “That [the bidder] is severely disappointed with MassDOT’s refusal to exercise its discretion in its favor does not, without more, render that refusal arbitrary.”

There is an undertone in the decision, that the judge would have willingly upheld an exercise of discretion to accept, instead of reject, the bid. But the judge also believed that MassDOT could appropriately come out the other way and not be in violation of the procurement laws.

The case is Net Techs., Inc. v. Mass. DOT, 2016 Mass. Super. LEXIS 45 (May 9, 2016), available here (LEXIS subscription required).