AERO SNOW v. MA. PORT AUTH., No. 96-5933E (Ma.Super. Oct. 30, 1996)


AERO SNOW REMOVAL CORP. vs. MASSACHUSETTS PORT AUTHORITY

No. 96-5933ECommonwealth of Massachusetts Superior Court CIVIL ACTION SUFFOLK, ss.
October 30, 1996

[EDITOR’S NOTE: This case is unpublished as indicated by the issuing court.]

MEMORANDUM AND ORDER ON PLAINTIFF’S MOTION FOR PRELIMINARY INJUNCTION

GARSH, JUSTICE.

Plaintiff Aero Snow Removal Corp. (Aero) seeks a preliminary injunction enjoining the defendant Massachusetts Port Authority (Massport) from awarding a contract to Hudson General, L.L.C. (Hudson) or from directing Hudson to perform any services under the contract related to snow removal services at Logan International Airport (Logan). Aero contends that awarding the contract to Hudson would violate its common law procedural due process rights as well as Massport’s implied duty of good faith to treat bidders equally and fairly under the bid document specifications (counts I and II); Aero also alleges that Massport has breached an implied contract to award the contract in accordance with its bid invitation (count III) and that, under principles of promissory estoppel, it is entitled to the award of the contract (count IV). After considering the complaint, the memoranda, affidavits, and exhibits submitted by the parties, and the oral arguments of counsel, Aero’s motion for a preliminary injunction is denied.

BACKGROUND
Aero provided snow removal services to Massport for the Logan terminals for the 1992/1993 through 1994/1995 snow seasons. Its contract was extended by Massport to include the 1995/1996 snow season. Massport is not dissatisfied with the services performed by Aero. Previously, snow removal services had been provided by Hudson.

In 1996, Massport invited submissions of proposals from persons interested in entering into a three-year agreement for the provision of snow removal services at Logan. The invitation states that Massport’s staff will evaluate the competing proposals in each of the general categories and will present to the Authority the results of its evaluation with a recommendation for award. The standard on which the staff will make its evaluation is which proposal best serves the overall interest of the Authority. The invitation further states that Massport is soliciting competitive proposals because it had determined it would be in the Authority’s interests and not because of any legal requirement to do so. It goes on to state that Massport is reserving its right to accept one or more or none of the proposals by category, to reject any or all proposals, to waive any informality of the proposal form, to modify or amend with the consent of the proposer any proposal prior to acceptance, and to effect any agreement otherwise, all as the Authority in its sole judgement may deem to be in its best interest.

For the snow season November 1 to April 30 in each year of the contract, persons submitting proposals were required to indicate the annual payment for zero to 14.9 inches of snow. The proposal form also required indication of the excess snowfall charge for each year of the contract for every five inches of snow or fraction thereof from fifteen inches to sixty-five inches and the calculation of the three year average five inch incremental charge. Two options were also required to be costed. The form then asks for the following information:

Total for Basic Services (ramp, apron and outlying facilities) and Option 1.

0-14.9″ (a) Total $ __________
(6) x 5″ increment (3 year average) (b) Total $ __________
*Option 1 (blades) (c) Total $ __________
*Option 1 (melters) (d) Total $ __________

Under this request, Massport represented that Grand Total will be one of the major items which will determine who is the low and responsible bidder.

Aero and Hudson were the only persons who submitted proposals. Their proposals were opened on August 14, 1996. Aero’s three year total for zero to 14.9 inches of snow is $772,725. Its average charge for every five inches of snow or fraction thereof from fifteen inches to sixty-five inches is $163,129. By contrast Hudson’s three year total for zero to 14.9 inches of snow is $1,357,800, significantly higher than Aero’s, and its average charge for every five inches of snow or fraction thereof from fifteen inches to sixty-five inches is $92,233, significantly lower than Aero’s. Over the life of the contract, Aero’s charge for Option 1 (blades) is $221,400 compared to Hudson’s charge of $233,800, and Aero’s charge for Option 1 (melters) figures is $700,920 compared to Hudson’s charge of $862,400.

Aero’s grand total is $2,673,819, and Hudson’s grand total is $3,007,390. That is, if there is not more than a total of thirty inches of snow in all three years combined in excess of 14.9 inches per year, Massport would pay less to Aero than to Hudson for performance of the same services. Because of the way in which the proposal information was required to be submitted, Massport easily could calculate the financial impact of each additional five inches of snowfall or fraction thereof up to sixty-five inches, and it could also calculate the cost to Massport with or without option one.

The bids were opened on August 14, 1996. A Massport official congratulated Aero; later that same day, he told Aero that Aero’s price for its five-inch increments in excess of 14.9 inches was high and that Aero’s total costs might not be lower than Hudson’s depending on the amount of snowfall.

Upon the recommendation of Massport’s staff, Massport’s Board voted on September 26, 1996 to award the contract to Hudson. It has not yet been executed. Without factoring in the options, Hudson’s proposal is less expensive to Massport at any level of snowfall of twenty-five inches or more for each year of the contract. At the forty to forty-five inch snowfall level, without factoring in the options, Hudson’s cost is almost $700,000 less during the term of the proposed contract. Should there be snowfall in excess of sixty-five inches in each of the next three years, Hudson’s cost, again without considering the options, would be lower than Aero’s by more than $1.5 million.

If the options are factored in, as in the grand total, Hudson’s proposal is lower over the life of the contract if it is assumed that in each year the snowfall over and above 14.9 inches will be greater than fifteen inches. In other words, if it snows more than ten inches above 14.9 inches, Hudson’s services would cost less than Aero’s. Aero, itself, has calculated that its costs up-to-and-including 29.9 inches is less than Hudson’s cost for that same level, but that, even including options, it is greater than Hudson’s cost over 29.9 inches. Indeed, if the (6) x 5 inch figure in the grand total is trebled, then Aero’s bid is $517,173 higher than Hudson’s. The staff required the bidders to provide the five-inch incremental charge so that it could compare the proposals at different levels of snowfall. Since 1986-1987, there has been only one year where snowfall has been below fifteen inches. During that ten year period, it has averaged 49.36 inches per year, and, during the preceding twenty-year period, it averaged 41.66 inches. In reviewing the proposals, Massport’s staff accorded great weight to the price comparison for removal of 40 to 45 inches of snow.

When Massport awarded the snow removal contract to Aero in 1992 over a competing bid from Hudson, it also considered historical snowfall averages. At that time, Hudson’s proposal was less expensive at the 0-14.9 inch snowfall level, but Aero’s incremental cost was less expensive at snowfall levels consistent with historical averages.

The proposal form also requires proposers to specify hourly and recall rates for certain equipment to be supplied by the proposer for each year of the contract. Hudson’s hourly equipment rate, used for calculating the cost to Massport of extra-contractual work which the snow removal contractor is typically asked to provide, is also lower than Aero’s by $261 per hour for 1996/1997, $459 per hour for 1997/1998, and $606 per hour for 1998/1999. After being notified of the contract award on or about September 26, 1996, Hudson spent $1,375,000 on equipment, such as snow-melting units, blades, and loaders, which it intends to use at Logan to perform the services required under the contract. Hudson has no use for such equipment in the near future other than for performance of the Massport contract.

This complaint was filed on October 24, 1996. It alleges that Aero was aware from August 14, 1996 that Massport intended to analyze the proposals in light of different snowfall projections, that Aero was told on September 5, 1996 that Massport’s staff had finalized its review of the bid and would be recommending that the contract be awarded to Hudson at a pre-board meeting scheduled for September 12, 1996, that Aero was told on September 6, 1996 that the staff’s recommendation would still favor Hudson, and that, on September 23, 1996, Massport sent Aero a letter stating that the Authority concluded that acceptance of Hudson General Corporation’s . . . proposal would be in the Authority’s best interests and that the Authority must ensure that it has a contractor mobilized by November 1, 1996. A hearing was held on October 30, 1996 on the plaintiff’s motion for a preliminary injunction.

DISCUSSION
The issuance of a preliminary injunction generally rests within the sound discretion of a judge, after a combined evaluation of the moving party’s likelihood of success on the merits, its claim of injury, and a balancing of the competing harms to each party. General Accident Insurance Co. of America v. Bank of New England-West, N.A., 403 Mass. 473, 475 (1988), citing Packaging Industries Group, Inc. v. Cheney, 380 Mass. 609, 615 (1980). When, as here, the dispute is between a private party and a public agency, the court also considers the risk of harm to the public interest. Commonwealth v. Mass. CRINC, 392 Mass. 79, 88-89 (1984).

I. Irreparable Harm to Aero
[I]n the absence of bad faith, a bidder wrongfully deprived of a contract may recover only its bid preparation costs. Peabody Construction Co. v. Boston, 28 Mass. App. Ct. 100, 105
(1989), citing Paul Sardella Construction Co. v. Braintree Housing Authority, 371 Mass. 235, 243 (1976). The damages Aero has incurred in preparing its bid presumably fall far short of the profits it would obtain from performance of the contract. Cf. Modern Continental Construction Co. v. Lowell, 391 Mass. 829, 837
(1984). Thus, despite some delay in bringing this action, the court accepts Aero’s contention that it would suffer irreparable harm if the injunction it seeks is not granted.

II. Substantial Possibility of Success on the Merits
Aero has not carried its burden of demonstrating a substantial possibility of success on the merits. Massport was not legally required to solicit competitive proposals, and Aero does not claim that Massport violated any statute. In cases where a public contract is not governed by a particular statute, awarding that contract is “left to the reasonable judgment of the municipal officers charged with the responsibility therefor.” Andover Consultants, Inc. v. Lawrence, 10 Mass. App. Ct. 156, 161
(1980). Nevertheless, it appears that an invitation to bid may create an implied contract obligating the bid solicitor to those conditions and obligating the public authority to give fair consideration to all bidders and to apply honest and open procedures. New England Insulation Co. v. General Dynamics Corp., 26 Mass. App. Ct. 28, 30-31 (1988) (dicta), citing, with approval, Armstrong Armstrong, Inc. v. United States, 514 F.2d 402, 403 (9th Cir. 1975) (public authority required to “consider the bid fairly and honestly.”); Merriam v. Kunzig, 476 F.2d 1233, 1242 n. 7 (3d. Cir. 1973) (government has “obligation of fair dealing within the terms of the solicitation” toward a person who has submitted a bid, even if the bidder did not fall within statutorily protected zone of interest).

The proposal form requires each person submitting a proposal to state, for each year of the contract, its charges for zero to 14.9 inches of snow and its excess snowfall charge for every five inches of snow or fraction thereof from 15 inches to 65 inches. A person submitting a proposal can hardly claim surprise, therefore, that the awarding authority would pay significant attention to the incremental charges, particularly to what it would cost the agency at levels of snowfall consistent with historical averages. The proposal form also asks bidders to prepare a grand total for the life of the contract consisting of figures for zero to 14.9 inches, six 5″ increments (3 year average), and two options. Massport represented that this grand total will be one of the major items which will determine who is the low and responsible bidder. Those words can only mean that there were other major items which Massport would consider. Massport did not state that the grand total is the only item or even the only major item or, as Aero contends, the singularly most important specification.

Aero’s characterization of Massport’s language as expressly providing for Grand Total lowest bidder is wrong. Furthermore, although Aero references the request to provide a separate charge for zero to 14.9 inches of snowfall as the invitation’s primary snowfall specification, or primary cost specification, those terms do not appear in the invitation proposal itself. Nothing in that document suggests that the zero to 14.9 inch request is primary in the sense of being first in importance or principal; it is primary only in the sense that it is the first number to be specified. The proposal does not guarantee that Massport would select the bidder with the lowest grand total, and Aero does not so contend.

In preparing its specifications, Aero, in its words, front ended its lowest cost calculations for the 0 to 14.9″ snowfall request. Hudson took the opposite tack. Both companies clearly made calculated business judgments. Nothing in the bid specification itself committed Massport to treating any figure as a break point. The proposal invitation states that the standard on which the staff will make its evaluation is which proposal best serves the overall interest of the Authority. Aero has not shown that it is likely to demonstrate that, in evaluating the overall interest of Massport, it was improper to take into consideration the amount of snowfall this region has received in the past and to figure out what the cost to Massport would be at different snow accumulations.

Language in a proposal to the effect that the awarding authority reserves the right to reject any or all proposals does not permit that authority to enter into a contract different from that submitted to competitive bidding. Grande Son, Inc. v. School Housing Committee, 334 Mass. 252, 258 (1956). But Aero has not demonstrated a likelihood of proving that Massport engaged or is about to engage in such conduct. This is not a situation in which the awarding authority changed the scope of the work after the completion of the competitive bids or otherwise took some action which has the effect of undermining open and honest bidding procedures. Aero has not demonstrated that Massport retroactively changed the specifications. Both Aero and Hudson had the same opportunity to bid on the same information and both bore the very same risk of rejection. So long as bidders have the opportunity to bid in the same way, on the same information, and to bear the same risk of rejection, fairness and equality are preserved. Department of Labor Industries v. Boston Water and Sewer Com’n, 18 Mass. App. Ct. 621, 626 (1984). Aero has not demonstrated that it likely will be able to show that Aero did not receive fair and impartial consideration.

Aero also has not demonstrated a strong possibility that it will be able to establish that it is correct in its opinion that Massport acted for the specific purpose of favoring Hudson. Massport established a committee consisting of personnel from a wide spectrum of departments at Massport. Hudson’s bid is superior in terms of price at the most likely snowfall levels, as well as prices for extra services.

In sum, whether Massport would end up paying more for snow removal to Aero or to Hudson depends entirely on the amount of snowfall during the next three years. Should the average annual snowfall in any year be greater than 29.9 inches, Hudson would be the less costly contractor. Aero has not demonstrated that it is likely to prove that Massport acted wrongly by making the judgment that, at, in light of the average annual snowfall in Boston, the contract should be awarded to Hudson.

III. Risk of Harm to the Public Interest
Aero asserts that the public would be benefitted if it were awarded the contract because it will charge Massport so much less than Hudson if it never snows or if the snowfall is less than 14.9 inches. Of course, if snowfall is at the average level or greater, Massport would be paying Hudson less than Aero and, accordingly, Aero has not demonstrated that the public will be financially harmed in the absence of preliminary injunctive relief. In addition, Massport has made arrangements with Hudson to have the necessary equipment, including blades and melters, in place at the airport by November 1, 1996, at which time the contract is scheduled to become effective. If Massport were prevented from executing the contract, there would be no contract in place for snow removal services unrelated to the airport runways. The public would not be well served by an injunction that may adversely impact upon snow removal capabilities at the airport because snowfall in November is not unusual. All parties knew or should have known that Massport reserved the right to select a contractor which it deemed to serve its best interests and in determining those best interests it was likely to compare the cost to Massport depending upon the level of snow that might fall, paying attention to the actual annual snowfall rate over the last several years. Considering plaintiff’s weak showing of probability of success on the merits, the granting of a preliminary injunction in this case would appear to be an unwise use of the court’s equity powers.

ORDER
The plaintiff’s motion for a preliminary injunction is DENIED.

E. Susan Garsh Justice of the Superior Court

Dated: October 30, 1996