Case Law Summaries

A. R. James & Company, Ltd. v. Township of North Bergen

• Opinion Date: October 16, 2002
• Business Law
• E-Mail

PUBLIC BIDDING; WAIVABLE DEFECTS— Where a bidder is required by the terms of the bid request to possess a particular permit, the issuance of which is merely ministerial, failure to have that permit when the bids are opened is a waivable bid defect.

A municipality proposed to lease advertising space on its bus shelters and placed the contract out for bid. The “bidding package included a requirement that the bidder submit proof that it was licensed by the Department of Transportation to conduct outdoor advertising in New Jersey.” The highest bidder did not supply proof of licensing, but applied for its license the day after its bid was submitted. “There [were] no qualifications or requirements for issuance of the license, other than payment of a fee.” The next highest bidder protested the granting of any award to the highest bidder because the license was not presented with the bid. Thus, the municipality awarded the contract to the lower bidder. The higher bidder then appealed, arguing that “the license requirement was merely ministerial and not a material defect in its bid.” Material conditions in bidding specifications may not be waived, but minor or inconsequential discrepancies and technical omissions can be. In prior cases, the general principle for determining whether a discrepancy is major or minor, is to determine “first, whether the effect of a waiver would be to deprive the municipality of its assurance that the contract will be entered into, performed and guaranteed according to its specified requirements, and second, whether it is of such a nature that its waiver would adversely affect competitive bidding by placing a bidder in a position of advantage over other bidders or by otherwise undermining the necessary common standard of competition.” The successful bidder argued that case law made this situation analogous to one in which the otherwise successful bidder’s failure to include “consent of surety with its bid proposal, as required by the bid specifications, was found to be a material defect that could not be cured or waived.” It argued that the license requirement for this bid “was analogous to the consent of surety and failure to include it with the bid was a material defect not waivable by the municipality.” The Appellate Division disagreed, holding that “[t]here is a substantial distinction between a consent of surety and a wholly ministerial license. The consent of surety goes directly to the ability of the contractor to perform the contract. The license at issue here [was] merely a permit allowing the contractor to perform.”

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