SJC ruling gives municipalities discretion in bidding process

The unanimous ruling by the Supreme Judicial Court clears the way for the town of Hanover to finish its $50 million new high school. Supporters of the decision said it will help taxpayers save millions of dollars in years to come.

The decision gives “discretion to procurement officers at the local level to really go for the lowest reliable and qualified bidder,’’ said Christopher Petrini, a Framingham attorney who represented municipal lawyers before the SJC. “The [Hanover] taxpayers got a project for $1 million less.’’’

But critics in the construction industry said the ruling undermines the spirit of the open, honest, public bidding process created by the Ward Commission after bid-rigging scandals in the 1970s.

“I think the likely result will be a compromising of the integrity of the competitive process,’’ said Donald J. Siegel, a Boston attorney who represented the Foundation for Fair Contracting before the SJC.

Attorney General Martha Coakley, whose office tried to halt the Hanover project after misrepresentations were discovered in the winning bidder’s paperwork, said accuracy is crucial.

“We believe all contractors who bid on public construction projects should accurately and fully describe their qualifications.’’ she said in a statement. “We respect the court’s decision and will also continue our efforts to ensure an open and fair bidding process for projects in Massachusetts.’’

At issue was the decision by Hanover officials to hire Callahan Inc., a Bridgewater-based firm, for the high school project even though it was discovered that the firm had provided fraudulent information to qualify for bidding. The company took credit for a North Andover high school building project, even though another corporation held the lead role, according to the court.

Losing bidders said Callahan should be disqualified from bidding for violating ethical rules. Coakley recommended that Hanover end its contract with Callahan and accept the next qualified bidder. Town officials refused, saying they took Callahan’s misdeeds into account.

“We’re pretty happy that the outcome shows we followed the process,’’ Chris Martin, chairman of the High School Building Committee, said yesterday.

Writing for the court, Justice Ralph W. Gants said Hanover’s actions were reasonable and not the result of official corruption or fraud. The SJC threw out an injunction issued by a lower court judge.

“We conclude that where, as here, there is no allegation that any member of the town’s prequalification committee acted corruptly in deciding to prequalify Callahan, there is unrefuted evidence that the committee did not act in reliance on any of the alleged misrepresentations, and the town wishes to proceed with the contract’’ the injunction must be dismissed.

Martin said that other than a five-week hiatus last November when the injunction stopped construction, the project has been moving along. The injunction was lifted by an Appeals Court judge in December.

The SJC took up the case after 10 taxpayers from Hanover, most of them members of the carpenters’ union, sought to have the injunction reinstated.

Yesterday, Martin said the project was on time and on budget. The school is expected to open in fall 2011.

The state School Building Authority provides monthly reimbursements for 48 percent of project cost. To date, the state has pitched in about $7 million of the $15 million spent so far.

Dennis Sheehan, vice president of Callahan Inc., said company officials are relieved.

“We’re certainly very pleased,’’ he said, adding “there was no intent to mislead anybody.’’

Union member Kirt Fordyce, who was one of the town residents who sued Hanover, said he was reviewing the SJC decision.

John Ellement can be reached at ellement@globe.com.