PUBLIC CONTRACTING ISSUES

2009 found the Courts continuing to refine the parameters of public bidding requirements. Of significant note, they potentially expanded areas of protests to allow attacks by non-bidders in the form of prospective suppliers who could challenge the propriety of specification, rejected SDA determinations on the weighting on “factors” and added mandatory equipment disclosure lists to the category of non-waivable material defects.  In what could be considered a significant approving comment, or alternatively as an inconsequential “aside” the Appellate Division gave potential credence to a school board defense to a claim for extras based on the regulatory provisions limiting claims for extras to work incorporated within change orders.

NONBIDDING SUPPLIER CAN CHALLENGE SPECIFICATIONS

Jen Electric, Inc. v. County of Essex (197NJ 627, NJ Supreme Court, 2009)

            In a decision that could greatly expand the scope of bid protests, the Court found that a material supplier, who was not in the position of a bidding or potential bidding contractor, had standing to file suit to challenge the propriety of bid specifications under NJSA 40A:11-13(e).  The Court found that the statutory provision’s focus was on timing for the challenge, not on who had standing to challenge.  The Court found that plaintiff’s role as a prospective supplier of “equal, alternative equipment” had sufficient stake to challenge the specifications.  The Court limited its holding to a specification challenge, finding that a post-bid protest on the award of a contract remained limited to bidders, prospective bidders and taxpayers.

SDA MUST ANNOUNCE WEIGHT GIVEN TO DECIDING FACTORS

Van Note-Harvey Associates, P.C. v. New Jersey Schools Development Authority (407 NJ Super. 643, App. Div. 2009)

            On an appeal by Plaintiff of the Defendants determination to exclude Plaintiff from the list of approved soils consultants eligible to provide site studies, the court modified the decision of the Authority.  The selections had been made on a “points” basis created from both written submissions and technical proposals and then an interview (on which the Plaintiff apparently fared poorly).  The Court found that the regulations pertaining to the selection process did not identify the weight, if any, to be given to personal interviews and therefore the SDA acted improperly in developing their final selections.  Faced with a need to fashion a remedy, the court was concerned over how to avoid the time, cost, delays and other problems that would be associated with re-doing the entire selection process or compelling an “award” to the Plaintiff (since being on the approved list does not guarantee any specific projects).  The court went with the “practical” solution of expanding the approved list from 7 to 8 with would then include the Plaintiff (the court does not say what this does for those in positions 9 and 10 who also may have been affected by the interview factor).

ANNOUNCED MANDATORY BID REQUIREMENTS ARE NON-WAIVABLE

Falasca Mechanical, Inc. v. Gloucester County Improvement Authority, et. al. (App. Div. June 2009)

            In this public bidding dispute, the Court upheld the lower court rejection of two bid challenges.  On a multiple prime contractor project, the low bidders’ bids for plumbing and mechanical were each rejected by the owner for claimed non-waivable defects in the bids.  In one instance, not all subcontractors were listed, nor were business registration certificates attached for all subcontractors and in the second, business registration certificates were missing.  The court determined that even though not statutorily required, where these were included as mandatory bid requirements the owner was entitled to reject bids that lacked the certificates.  The court found no abuse of discretion in either mandating the inclusion or in rejecting the bids.  The court also rejected the argument that the specifications were confusing and vague, as there had been no pre-bid protest under the Local Public Contract Law.

$1.45 JUDGMENT AGAINST BOARD UPHELD – REGULATORY LIMITATION ON CHANGED WORK ENTITLEMENT RAISED AS DEFENSE

APS Contractors Inc v. School District of the Chathams (App. Div. April 2009 Unpublished)

            In this appeal from a $1.45 million verdict in favor of the contractor against the school district on claims for changed and extra work, the Court was faced primarily with issues dealing with the expert report submitted by the Defendant School District.  One of the collateral issues dealt with the District’s claim that the trial court and jury should not have considered claims for extra work by the contractor that were not identified within approved change orders.  The District argued that by statute and regulation, the contractor could ONLY proceed with changed or extra work following issuance of a change order ((NJSA 52:27BB-32; NJAC 6A:23-7.1: and NJAC 5:30-11.2 et. seq).  While not deciding the substance of this position, the court gave this defense a level of credence by observing it was being rejected since it had not been raised in pleadings or at trial.  The court found that where the District tried “its case without pleading a statutory defense that may have been available to it as a public school district, a post-trial motion is too late to raise that defense for the first time.”

 OWNER EQUIPMENT LIST DEEMED MANDATORY AND NON-WAIVABLE

 Cioffi”s Towing Service, Inc. v. Borough of Collingswood, et. al. (App. Div. October 2009 Unpublished)

             Although not a construction case, this bid protest decision adds a new bid requirement into the “material, non-waivable” category of bid defects.  Where the municipality had included certain equipment requirements in the bid and the bidder’s list of equipment owned fell short of the required items, the Court found that the bid would be disqualified.  The court determined that the bid failed both “prongs” of the required analysis.  First, the municipality would lose the assurance that the required equipment would be available.  Secondly, the bidder would have a competitive advantage over other potential bidders – some of whom may have declined to bid due to the lack of the needed equipment – since its financial outlay/capital investment would be less than others.  The court noted that the bid solicitation included the mandatory language of “shall meet the minimum requirement…”.  The Court found that neither the municipality nor it could later “transform the mandatory requirement in [the] specifications into a polite request”.

                                                                                  CURETON CLARK, P.C.                                                                                   James H. Landgraf, Esq.