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CETCO Contracting Services Company v. Cumberland County Improvement Authority

A-6116-09T1 (N.J. Super. App. Div. 2011) (Unpublished)

PUBLIC BIDDING — New Jersey law permits a local contracting unit to reject any and all bids if, among other reasons, the governing party wants to abandon the project or substantially revise the bid specifications.

A County Improvement Authority issued a public advertisement for bids for the expansion of its solid waste complex. In its instructions to bidders, the authority wrote that all general contractors and each subcontractor hired by a general contractor would be required to complete a Contractor Responsibility Certification (CRC). In the CRC, each contractor would be required to verify, among other things, that it had a satisfactory record of past contract performance and compliance with laws that demonstrated a solid history of both technical competency and business integrity sufficient to justify receiving the contract. The bidding instructions indicated that a contractor’s failure to submit or complete the CRC would render it ineligible. Further, a contractor’s submission of false or misleading information in the CRC would render the firm ineligible to perform work and would be considered a material breach of the contract.

The authority awarded the contract to the lowest bidder. The second-lowest bidder wrote the authority asking if the lowest bidder had identified a certain subcontractor in its bid and, if so, whether a CRC had been submitted for that subcontractor. The second-lowest bidder informed the authority that the subcontractor’s owner had previously pled guilty to federal tax fraud charges. The lowest bidder later filed a CRC for the subcontractor. On the same date, the second-lowest bidder filed a verified complaint seeking an order to show cause with temporary restraints enjoining the authority from proceeding with the contract. The lower court entered an order temporarily enjoining the authority’s award of the contract pending further order of the court. The order also required the authority and lowest bidder to show cause why a preliminary injunction should not be entered to restrain the authority from proceeding with the contract or, alternatively, enjoining the lowest bidder from using the subcontractor on the project.

The authority then adopted a resolution rejecting all bids. The project was to be re-evaluated, and new bids would be sought. The authority noted that it had reconsidered its financial integrity and the revenues it anticipated receiving in the foreseeable future before the lawsuit. The authority stated that, as a result of the review, it had reassessed the need for the major expansion and that it intended to re-bid the contract after a more thorough re-evaluation of both the projected need and projected revenues available for financing. Then, the subcontractor moved to intervene; the lowest bidder filed a motion for summary judgment; and the authority filed a motion seeking an order affirming its decision to reject all bids and re-bid the contract. The lower court entered an order granting the subcontractor’s motion to intervene; denying the lowest bidder’s application to enjoin the authority from rejecting all bids; denying the lowest bidder’s application for a restraining order; and denying the authority’s motion to affirm its decision to reject all bids and re-bid the contract. The lowest bidder then filed another motion for summary judgment, and the authority filed a cross-motion, again seeking an order affirming its decision to re-bid the project. The lower court denied the lowest bidder’s motion and granted the authority’s motion. In addition, it found that the authority could properly reject the lowest bid because the bid was invalid. In addition, the court found that the authority had validly rejected all bids because it had determined in good faith to scale back and re-bid the project.

On appeal, the lowest bidder argued that the lower court had erred by denying its motion for summary judgment, contending that the authority had accepted its bid and could not thereafter reject and re-bid the contract. The Appellate Division disagreed. According to the Court, the bid was fatally flawed because it failed to comply with the bid specifications, which required a valid CRC for each subcontractor. It found the later-submitted CRC to be both false and misleading because it did not disclose the relevant felony. Because a bid is not complete until it satisfies all of the requirements, the authority had the right to adopt the resolution rejecting the incomplete bid.

The Court observed that New Jersey law permits a local contracting unit to reject any and all bids if, among other reasons, the governing body wants to abandon the project or substantially revise the bid specifications. According to the Court, the lower court properly found that the authority had elected to reject all bids because it had chosen to reconsider the scope of the project and seek new bids. There was sufficient credible evidence in the record to support the lower court’s determination that the authority had acted in good faith when deciding to reconsider the scale of the project in light of the authority’s changing financial situation. The authority submitted an affidavit from a management consultant. It testified to the change in revenues and costs. Further, the authority’s rejection of all bids was within the law’s sixty-day timeframe because a bid is not complete until it contains all of the information required by the bidding instructions.


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