CFS Services, Inc. v. City of Jersey City

A-4220-97T3 (N.J. Super. App. Div. 2000) (Unpublished)
  • Opinion Date: January 21, 2000

PUBLIC BIDDING—If a municipality determines that the purpose of the bidding statute is not being achieved, it may reject all bids and, in its discretion, order a readvertising of the contract.

A security guard service filed an action alleging that a municipality had wrongly rejected its bid. Although it was the lowest bidder, the municipality found that it was not a responsible bidder. Ultimately, the Law Division remanded the matter to the municipality to reconsider its decision “or to reject all bids and to solicit new bids.” Following that remand, all bids were rejected. The disappointed low bidder returned to the courts and alleged that the rejection was arbitrary, capricious, unreasonable, and contrary to the public interest. In analyzing the responsible bidder issue, the Court employed the “abuse of discretion standard in examining a public body’s decision not to award a contract to a bidder because of ‘irresponsibility.’” The failure of a governmental authority to award a contract to the lowest bidder does not give rise to a presumption that such decision was improper. A “municipality need not be correct in its assessment of a bidder’s ‘responsibility;’ it need only have bona fide, rational, and articulable reasons for its decision.” Further, responsibility connotes “experience, financial ability and ... may also involve the moral integrity of the bidder.” Here, the lowest bidder failed to reveal that the owner’s husband had been convicted of a felony and that he had been the president of a predecessor corporation. In addition, there were several specific instances where this particular bidder had provided conflicting information in bid specifications. Finally, the record demonstrated that a number of other governmental bodies had determined this security company not to be a responsible bidder. “We have held that prior intentional noncompliance with the mandatory conditions of a public contract justifies the conclusion that granting a contractor a second opportunity to participate in public entity bidding is not in the public’s interest.” The Court also rejected the contention that the municipality had acted arbitrarily, capriciously, and unreasonably. If a municipality determines that the purpose of the bidding statute is not being achieved, “it may reject all bids submitted and in its discretion order a readvertising of the contract.” Nonetheless, the decision to reject all bids must not be “arbitrary or capricious and it must be free from fraud, collusion and bad faith.” Here, the municipality stated that it had rejected all bids and put forth a “compelling reason” in that it wanted to deal with ambiguities it thought to be present in the earlier bid specifications. The lower court acknowledged those ambiguities, and the Appellate Division was convinced of the importance of those reasons. Lastly, there would have been lack of competition if, after rejecting the disqualified bidders, the municipality relied on the initial bidding process.