Agent of a Public Agency: Another Example of Private Entities Subject to Public Bidding Laws

Agent of a Public Agency: Another Example of Private Entities Subject to Public Bidding Laws

State colleges and universities in Massachusetts are authorized by law to set up foundations – private, tax-exempt entities with their own governing boards – to assist them with fundraising. Are construction projects undertaken by these foundations subject to the laws that require state contracts to undergo a competitive public bidding process? That issue recently came before the Bid Protest Unit of the Massachusetts Attorney General’s Office in a case, FFCM v. Bristol Community College Foundation, Attorney General Bid Protest Decision (May 1, 2023), involving construction of a training facility by the Bristol Community College Foundation (BCCF).

At first blush, the answer would seem to be a clear “no.” After all, the bidding laws apply only to construction undertaken “by a public agency,” and the AG held unequivocally that “BCCF is not a state actor and is legally distinct from the Commonwealth.” What’s more, the property at issue was privately owned and was leased solely to BCCF.

Nevertheless, the Bid Protest Unit found that the bidding laws applied, and that BCCF should have put the project out for a public bid. Why? Because, as the AG put it, while BCCF is not itself a public agency, on this project it was effectively acting as an agent of a public agency – that is, it was acting not for itself, but rather on behalf of the College. “[I]t is not the identity of the parties, but the nature of the contractual relationship, that determines whether the public bidding laws apply.”

In making this determination, the AG applied the Brasi test, a multi-part test used by the AG and the courts for determining when a lease between a public agency and a private entity is subject to the public bidding laws. The critical factor was that the College “retained significant control” over the project. The project was the College’s idea and served its specialized purposes, the design and permitting work was done by the College, the College signed the construction contract, and the project involved public funds. Moreover, while the lease was executed by BCCF, the parties intended for the College to enter into a long-term sublease when construction was finished.

This decision should be viewed as a warning that public colleges and universities—as well as other public owners in the Commonwealth—cannot avoid the public bidding laws by having a private foundation or other private entity nominally undertake construction work that is really public work subject to Massachusetts public bidding laws.