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Bender Contracting, Inc. v. Lodi Board of Education

A-3083-03T3F (N.J. Super. App. Div. 2004) (Unpublished)

PUBLIC BIDDING; DEFECTS; WAIVER—Failure to bid on required alternatives is a material, non-waivable bid defect even if the final contract, when awarded, does not include the alternates; similarly, furnishing a completion date dependent on satisfaction of a pre-condition is not responsive to a requirement that a completion date be furnished with the bid.

A board of education advertised for contract bids to upgrade a school’s heating and ventilation system. The company with the second lowest bid objected to the award, asserting that the lowest bid had numerous material defects. It requested that the lowest bid be rejected and the contract be awarded to it, as the lowest responsive bidder. It argued that the lowest bidder’s failure to bid on alternates or to indicate the number of days in which it would complete the work constituted non-waivable material defects.

There is a two-part test to determine if a bidding defect is material. First, a court must decide whether the effect of a waiver would be to deprive the contracting authority of its assurance that the contract will be signed by the bidder. Second, it must decide if the defect is of such a nature that its waiver would adversely affect competitive bidding and place one bidder in an advantageous position over the others. Here, the lower court held that the lowest bidder’s failure to enter a bid for alternate work did not render the bid incomplete or constitute as a material defect, because the bid proposal did not specifically call for bid rejection if the bid did not include the requested alternates. Further, the lowest bidder’s failure to state how many days it would take to complete the work was not a material defect because the bidder followed up with a letter to the board stating that the project would be completed by the designated time.

The Appellate Division disagreed. The bid proposal required that quotations for each alternate “[were] to be submitted as part of the complete proposal.” Accordingly, submitting alternates was a mandatory requirement. The Court held that the lowest bidder’s failure to include the alternate proposals gave it a competitive advantage over the other bidders and undermined the bidding process, even though the omitted alternate was not included in the contract as awarded. The bid specifications also required that the contractor complete the work by a certain date. Therefore, time was of the essence. Instead of stating how many days it would take to complete the work, the lowest bidder made its bid conditional by responding “Completion contingent upon equipment delivery.” This condition deprived the board of any assurance that the project would be completed by its specified date, thereby potentially jeopardizing the students’ timely return to school and the availability of State grant funds. By placing a condition on its bid, the lowest bidder assumed less risk than other bidders had assumed, and gained an advantage over the others by removing the requirement that it complete the project by a certain date, even though time was of the essence in the contract. It was possible that other contractors, by not conditioning their bids on the delivery of equipment, had to factor additional costs into their bid amounts to account for the possibility the equipment would not be delivered on time and they would have had to pay overtime to their workers to timely complete the project.

In addition, the Court held that the lowest bidder’s letter, confirming that the project would be completed by the specified date, was insufficient to cure the non-waivable defect. The letter was submitted after the sealed bids had been opened and after the second lowest bidder had protested the lowest bidder’s unresponsive conditional bid. All bidders must be on equal footing at the time of a bid opening so as to protect the integrity of the competition. As a result, the Appellate Division reversed the lower court’s decision and held that the lowest bidder’s failure to bid on alternatives and its conditional bid constituted material defects and rendered its bid unresponsive.

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