An awarding authority must reject a bidder who is deemed not "responsible." Section 2 of M.G.L. c. 30B defines a responsible bidder as "a person who has the capability to perform fully the contract requirements, and the integrity and reliability which assures good faith performance." Awarding authorities are given a great deal of discretion in determining a bidder's responsibility. The general rule is that the determination of a bidder's competence is left to the discretion of the awarding authority, absent a showing that the awarding authority acted illegally, arbitrarily, or in bad faith. See Catamount Construction, Inc. v. Town of Pepperell, 7 Mass. App. Ct. 911 (1979).
In Michael J. Connolly & Sons, Inc. v. Town of Bellingham, Civil Action No. 95-1311 (August 25, 1995), the trial court addressed the issue of an awarding authority's discretion to determine a bidder's responsibility. In that case, the Town of Bellingham solicited bids on a school bus transportation services contract. The lowest bidder was rejected on the basis of poor references and then sued to enjoin the Town from awarding the contract to another bus company. The court found that the awarding authority's review of the lowest bidder's references was "businesslike, thorough, fair, and consistent with the advertisement for bid."
Id. at 8. On these facts, the court applied the rule that "[w]hether a low bidder is 'responsible' is virtually always left to the discretion of the awarding authority ... [t]he court will only intervene if the action of the awarding authority is shown to be illegal, arbitrary, or in bad faith." Id. at 7.
While the awarding authority enjoys considerable discretion to set reasonable standards for a bidder's responsibility, the standards must be applied fairly and a decision to reject a bidder for failing to meet the standards must be supported by facts. Bradford & Bigelow, Inc. v. Commonwealth, 24 Mass. App. Ct. 349 (1987) describes a set of circumstances in which an awarding authority was found to have acted arbitrarily, capriciously, and in bad faith in disqualifying a bidder as not responsible. In that case, Bradford & Bigelow (B & B), the lowest bidder for a state printing contract, was disqualified based on a determination by the Department of Labor and Industries that the firm did not pay its workers the legally required prevailing wages. The State Purchasing Agent rejected B & B's bid based on the prevailing wage issue and rejected the only other bid received on other grounds. B & B was subsequently determined to be in compliance with the prevailing wage law and reinstated as an eligible bidder.
The State Purchasing Agent then solicited a second round of bids. This time B & B's competitor submitted a lower bid and won the contract award. B & B sued, claiming that its rejection during the first round of bidding was without rational basis. The evidence presented at trial showed that B & B had been disqualified shortly after submitting the lowest bid despite having been certified as paying prevailing wages for the previous ten years. The evidence also showed that the disqualification was based on a determination that B & B, located in Danvers, was required to pay Boston wage rates, despite evidence that prevailing wage rates were based on local conditions and wages. In light of this evidence, the standards appeared to have been applied unfairly.
After concluding that state officials acted arbitrarily, capriciously, and in bad faith, a jury awarded B & B damages in the amount of the profits the firm lost when it was deprived of the contract. On appeal, the court upheld the damage award, ruling that the failure of public officials to consider bids fairly and in good faith will subject the awarding authority to liability for profits lost by the bidder.