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Blue Diamond Disposal, Inc. v. City of Vineland

A-1827-09T1 (N.J. Super. App. Div. 2010) (Unpublished)

PUBLIC BIDDING; SURETIES — It is not a material defect in a public bid to submit an otherwise satisfactory commitment from a surety company even though not on the form supplied with the bidding package.

A municipality publicly solicited bids for a two-year trash collection services. Each bidder received materials and technical specifications, stating in relevant part, that each bid had to be accompanied by a surety company’s assurance that it would provide the contractor with a bond in the amount of 100% of the contract amount. Four bids were submitted. As part of its bid package, the lowest bidder submitted, a consent of surety form. It stated the surety company agreed to execute the required performance bond, or become co-surety with others, in the full amount of the contact price. This consent of surety, however, was not issued on the form required by the municipality’s bid specifications. When the bids were opened, the municipality announced that this lowest bidder was also the lowest responsible bidder and would receive the contract at the next meeting of the governing body. A competing bidder protested, complaining the low bidder’s consent of surety did not unconditionally obligate the surety to the faithful performance of the contract, and, consequently, the low bidder had not complied with the municipality’s bid specifications. The competing bidder then sued to prevent the municipality from awarding the contract.

The lower court concluded that the defects in the bid were not material and therefore the municipality could waive this type of defect. The competing bidder appealed, arguing the consent of surety was not unconditional, and such defect could not be waived or cured. Additionally, it argued the consent of surety form was improper because it was not the municipality’s form.

The Appellate Division affirmed, holding that the consent of surety was proper on its face, and was presented on a form substantially similar to the municipality’s form. The Court held the consent of surety form as submitted was not fatally defective to the bid application. It found the surety was expressly and unconditionally agreeing to execute the final bid bond either individually, or as a co-surety. Even though the surety company reserved the option to seek a co-surety, the Court said this did not weaken, lessen or undermine the unconditional nature of the surety company’s agreement to provide the required performance bonds. The Court held that the municipality’s determination that the lowest bidder was fully conforming, and therefore had submitted the lowest responsible bid, was not arbitrary, unreasonable or capricious.

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