Undermining Competitive Bidding Process through Collusion Violates Massachusetts Consumer Protection Act

Prof’l Servs. Group v. Town of Rockland, 515 F. Supp. 2d 179 (D. Mass. 2007)

In this case, the Federal District Court for the District of Massachusetts issued a decision concerning the subversion of the public procurement process by a bidder.  The defendant-contractor colluded with a public official of the plaintiff-town to ensure that it would be the only bidder and would thereby receive the bid at an artificially high price.  The court held that this collusion violated the Massachusetts Consumer Protection Act (M.G.L. c. 93A), and that the town was entitled to double damages pursuant to that that statute because the contractor’s violations were knowing and willful.  The contractor attempted to escape liability by arguing that the employee who was responsible for the bidding and collusion was a rogue employee.  The court rejected this argument and found that the contractor’s employee was acting within the scope of his employment and therefore the contractor was liable by the doctrine of respondeat superior.

The court held that damages could not be measured by the difference between the low bid and the fraudulent bid accepted by the town because the low bid was non-conforming, based on a slightly different request for proposals and ultimately not submitted.  Thus the measure of damages was the cost to the town of performing a new bid process and performing a forensic audit, plus attorney’s fees and double damages as a result of the violation of M.G.L. c. 93A.