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In the Matter of Contract Systems Administrator for the Children’s System of Care Initiative

A-757-01T2 (N.J. Super. App. Div. 2003) (Unpublished)

PUBLIC BIDDING—Even if a multi-year public contract has been improperly awarded, if too much work has progressed and it would be too expensive to start again with a new award, the award will not be set aside.

A state agency offered a service contract for public bid. The three bidders were ranked on price and on technical qualifications. The lowest bidder was found to be technically unqualified. The award went to the second bidder who was found to be the most technically qualified. The lowest bidder filed a protest, requiring a “stay of further contract proceedings until its disposition.” The Director of the state agency rejected the protest and the contract was executed. By the time the matter reached the courts, the contract was half way through its three year term. The protestor did not seek a stay from the Appellate Division, and did not seek acceleration of the appeal. “In the context of public bidding, a challenge to the award of a contract is clearly moot in the sense that no judicial remedy is available once the contract has been fully performed even if the court should determine that the questions raised [were] of public importance requiring adjudication.” Here, a more difficult question was presented because the contract had only been partially performed. In such cases, “the mootness decision is informed by the substantiality of the performance and, in view of the extent of performance, the detriment the public interest would sustain by termination of the contract and award to a different bidder.” In reaching its decision, the Court thought it “plain that in a complex contract of this nature, substantiality is measured not merely by the quantum of the term that has elapsed, a considerable factor here, but also by the extent, nature and expense involved in reaching that point in the contract term.” It was clear to the Court that the contract was not divisible or severable and that a major component of the contract was the initial design of systems. It was also clear that the start-up costs were significant and that performance was not readily transferable. Consequently, if the contract were terminated in favor of an award to another bidder, there would be substantial duplicate costs as well as disruption. As a result, it was too late to order rebidding or any other relief to the protestor.

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