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In Re Bid Solicitation No. 08-X-39737 v. Division of Purchase and Property

A-5992-07T1 (N.J. Super. App. Div. 2009) (Unpublished)

PUBLIC BIDDING — Once a requesting agency determines that a bidder has materially deviated from the Request for Proposal, regardless of the quality of the technical portion of the bid, the agency is not obligated to negotiate with that bidder.

An entity bid to operate a municipal airport for a twenty-year term. The requesting state agency, part of the New Jersey Department of Treasury, concluded that the proposed operator’s pricing structure materially deviated from the bid specifications and rejected the bid. The agency then ordered re-bidding. The prospective bidder sued to challenge the ruling. It claimed that its pricing structure was not a material deviation. Further, it claimed that the state had accepted a similar deviation in a bid from one of its affiliates at another state-owned airport, and thus, it was required to waive such a deviation here. Lastly, it argued that the agency had acted arbitrarily by refusing to negotiate with it.

The Appellate Division affirmed, holding that the Request for Proposal (RFP) was structured as a revenue-sharing transaction. It noted that the proposed operator’s bid contained an assumption that was found by the municipal agency’s evaluation committee to be non-responsive to its bid requirements. The law also provides that any or all bids may be rejected when the State Treasurer determines that it is in the public interest to do so. Further, a court only overturns such determinations when made in an arbitrary or unreasonable manner. Here, the Court opined that the record supported the agency’s findings that the bid contained a material, non-waivable defect. It concluded that if the proposed operator were allowed to submit a pricing structure based on net fuel sales it would completely defeat the express purpose of the joint project which was to maximize revenue to the state by sharing revenues based on fuel sales. In addition, it held that the agency was not obligated to negotiate with the proposed operator once it was determined that the proposed operator materially deviated from the RFP, regardless of the quality of the technical portion of the bid. Finally, it held that a non-conforming bid is no bid at all.

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