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Ferreira Construction Co., Inc. v. The Board of Chosen Freeholders of the County of Somerset

A-0987-06T5 (N.J. Super. App. Div. 2007) (Unpublished)

PUBLIC BIDDING — Where a governmental entity seeking bids for a public construction job has, in place of state guidelines, established reasonable guidelines in the screening process involving the disclosure of financial information, among other requirements, it does not have to establish a prequalification systems.

A bidder and a competitor both sought a contract to construct a county bridge. As part of the bidding process, they both submitted the requisite financial information to the county. The competitor was prequalified by the state for more than the amount that it bid on for the job. The range of the other bidder’s prequalification by the state fell short of the amount that it bid on. It submitted the lowest bid, was awarded the job, and obtained financing to post a surety bond. The county chose not to use the state guidelines and substituted its own screening process that involved the disclosure of financial information among other requirements. The competitor sued the county board and sued the successful bidder seeking to have the award to the successful bidder voided and to have the contract for the bridge construction awarded to it.

The lower court found that the award to the lowest bidder was not arbitrary, capricious or unreasonable, and affirmed the decision of the county board. The lower court pointed out that a county is not required to follow the state’s prequalification standards but can set up reasonable standards of its own and found that the county acted reasonably when it did so. The lower court noted that the county’s purpose in replacing the state standards with its own was to expand the pool of eligible applicants to the bidding process, and found that the bidder met the county’s qualifications by providing documentation indicating that it had not been suspended, disbarred or disqualified from operation within the state.

The competitor appealed the lower court’s decision, arguing that the award by the county violated public policy and was arbitrary, capricious, and unreasonable. Nonetheless, the Court affirmed the lower court’s decision and pointed out that a reviewing court cannot substitute its judgment for a governing body’s decision, and that a governing body’s decision can only be overturned if there is an abuse of discretion on the governing body’s part. The Court found that the county properly established reasonable guidelines in place of the state guidelines and that it did not have to establish a prequalification system.

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