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DeMaio Electrical Co., Inc. v. Western Monmouth Utilities Authority

MON-L-4425-11 (N.J. Super. Law Div. 2011) (Unpublished)

PUBLIC BIDDING — The clarification memo does not expressly say that it is needs to be acknowledged by a bidder as part of its bid, such as by using those words or words such as “notice,” “revision” or “addendum,” then to acknowledge the memorandum is a material bid defect, and even if it were a material item, it might not be a material defect.

A public utility authority advertised for bids for a project. It collected bids, but then voted to reject all of them and reopen the bidding. The authority claimed that the two lowest bids had fatal defects and therefore it was entitled to re-advertise the project and invite new bids. The lowest bidder for the contract sought an order granting temporary restraints and sought injunctive relief enjoining the authority from reopening the bidding and thereafter awarding a contract. The authority claimed that the complaining bidder had failed to acknowledge a clarifying memo as part of its bid. It considered this to be a fatal defect that could not be waived.

The Court granted the temporary restraints. In order to be entitled to preliminary injunctive relief, an applicant must show that the relief is necessary to prevent irreparable harm. Second, the legal right underlying the claim must be settled as a matter of law. Third, the applicant is required to make a preliminary showing of a reasonable probability of ultimate success. Finally, a court must balance the hardships to the parties in granting or denying the requested relief.

Here, the Court found that the restraining order was necessary to prevent irreparable harm because if the contract were awarded to another party, the bidder would have no other remedy. The bidder could have possibly been found to be a responsive bidder under the Local Public Contracts Law because the clarification memo might be characterized as a non-mandatory document not requiring acknowledgment as part of the bid. The bidder had included all the mandatory items. If it hadn’t, then the authority had the right to reject the bid as unresponsive. Therefore, the Court found that the bidder had shown a likelihood of success on the merits. Lastly, the bidder’s potential hardship was great because it had already invested time and money in the preparation of its bid. If rebidding were permitted, then the complaining bidder would be put at an unfair competitive advantage because its original bid had already been opened and made public. For those reasons, the Court found that the harm to the bidder, absent a temporary restraint, outweighed the harm to the authority.

On the merits, the Court found that acknowledging the clarification memo was not a mandatory item. The memo didn’t say that it was part of the contract documents. It didn’t include words such as “notice,” “revision” or “addendum,” which, under New Jersey law, denote a mandatory item. There was no evidence to indicate that the clarification memo was anything but a clarification. Even if the memo was a material item, the Court found that failure to acknowledge the memo as part of the bid was not a material defect and should have been waived. Therefore, the authority’s rejection of the bidder’s low, responsive bid was arbitrary and capricious. It awarded the contract to the complaining bidder.

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