Public Bidder’s Attempt “To Play Trump Card” Fails

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In a recent unpublished opinion, New Jersey’s Appellate Division provides another reminder to contractors bidding on municipal contracts to timely challenge any portion of the bid specifications that may be improper or problematic.  As this decision shows, if you fail to challenge a bid specification at least three days prior to the opening of the bids, and you then fail to comply with that specification, your bid may be rejected.  In that case, you will not be able to challenge the award of the contract to another bidder, even if you were the low bidder.

That is precisely what happened to the rejected low bidder for a three-year municipal landfill disposal contract in Sajo Transport, Inc. v. The Village of Ridgewood, Docket No. A-4121-11T3 (May 20, 2013).  The bid specifications called for the bidder’s site to be located within a 15 mile radius of the municipality, and the proposal form required both the address of the bidder’s site and a MapQuest mileage calculation of the distance from a specific address within the municipality to the bidder’s site.  Perhaps realizing that a MapQuest mileage calculation, which is based on driving distance, would place it beyond the 15 mile radius, Sajo Transport attached  an exhibit to its bid showing a distance of 13 miles between the town where it is located and the contracting municipality that it obtained from the website  That website, however, calculates distances ‘as the crow flies’ – rather than by driving distance.  Sajo Transport also wrote in its bid: “Map Quest Distance Map is not Available for Destination.”

New Jersey’s Local Public Contracts Law (“LPCL”) requires that any challenge to a bid specification must be made “no less than three business days prior to the opening of the bids” and that challenges made thereafter are deemed void.  Rather than challenge the specification requiring that the site be located within a 15 mile radius and the MapQuest methodology by driving distance, as the court interpreted the contract specifications to require, Sajo Transport submitted its bid based on an alternative measurement.  The municipality rejected its bid on that basis, and Sajo Transport filed suit seeking a declaration that it was the lowest responsible bidder and should be awarded the subject contract.  The trial court found the 15 mile radius requirement to be arbitrary and ordered the municipality to rebid the contract 

On appeal, however, the Appellate Division determined that the municipality properly rejected Sajo Transport’s bid and awarded the contract to the next lowest, qualified bidder.  Among other things, the Appellate Division stated that Sajo Transport’s legal theories were barred by its failure to challenge the distance specifications at least three business days before bids were to be opened as required by the LCPL.  The court noted that “[t]o allow otherwise would hand Sajo a trump card that could be played against a successful bidder if its bluff with failed.”  The court also determined that the 15 mile over-the-road distance requirement was, in fact, directly related to the “purpose, function or activity for which the contract is awarded” as required by the LCPL, and that Sajo Transport’s non-compliance with that requirement was a material, non-waivable irregularity justifying the bid’s rejection. 

This decision shows the importance of complying with the statutory requirements of the LCPL generally and of challenging any improper or questionable specification in a timely manner, sufficiently in advance of the opening of bids.

As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.

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