New Jersey Appellate Division Again Upholds Local Government’s Rejection of Lowest Bid

In our June 3, 2013 blog post, we discussed a decision of the New Jersey Appellate Division upholding a municipality’s rejection of the lowest bid for a waste hauling contract because it was determined to be a material, non-conforming bid.  (Click here for our discussion.)

Last week, the Appellate Division again upheld a local government’s rejection of a non-conforming low bid and its award of the subject contract to the second-lowest bidder under the Local Public Contracts Law, N.J.S.A. 40A:11-1, et seq.  In A&A Industrial Piping, Inc. v. County of Passaic, A-0978-12T2 (N.J. App. Div. July 16, 2013), the Appellate Division affirmed the determination of Passaic County that the bid of A&A Industrial Piping, Inc. (“A&A”) for a contract to upgrade the County jail’s HVAC and fire protection systems was non-conforming and, therefore, subject to rejection.  A&A, despite being low bidder, had failed to include with its bid Department of Property Management and Construction (“DPMC”) pre-qualification certificates for its plumbing crew and structural steel subcontractor, as required by the bid specifications.  While A&A attempted to cure this failure after the bid opening, the County rejected the bid and any attempt to cure the non-conformity, and awarded the contract to the only other bidder. 

 The Appellate Division found that the bid specification’s requirement to include DPMC certifications was not simply a minor, technical requirement for which the County should have waived compliance.  Rather, the requirement was properly deemed “substantial” and non-compliance therewith could not be waived by the County.  As the court had found in a prior challenge to the same DPMC pre-qualification requirements, they are substantial and non-waivable, because they “could affect a bidder’s overall bid price” and provide the County “a guarantee the work will be performed by pre-qualified prime and subcontractors.” 

 As evident in these recent Appellate Division decisions, a contractor has a heavy burden when challenging the decision of a local government to reject its bid as non-conforming.  A court may not overturn such a decision unless it finds that the local government, in arriving at its decision, did so in an arbitrary, capricious and unreasonable manner.  Where, however, a local contracting entity has clearly abused its discretion and overstepped its bounds in rejecting or awarding a contract, a challenge to such a decision may be successful.  In such circumstances, the contractor whose bid has been rejected should consult experienced construction counsel immediately.

 The A&A case, as well as the recent In the Matter of Protest Scheduled Award of Term Contract T2813 RFP 12-X-22361 Laboratory Testing Service, Equine Drug Testing, Docket No. A-1336-12T1 (N.J. App. Div. July 10, 2013), emphasize that bidding contractors must ensure that they accurately and completely provide the contracting entity with all of the information required by the bid specifications.  Even if a contractor is ready, willing and able to meet all of the bid requirements, but fails to provide all information required to reflect such qualification, its non-conforming bid may be deemed uncurable by post-bid submission.