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The First Occupational Center of New Jersey, Inc. v. The Borough of Elmwood Park

A-2756-03T5 (N.J. Super. App. Div. 2004) (Unpublished)

PUBLIC BIDDING—The omission of a consent from surety for a public bid is not a defect that can be waived and later cured.

A company sued a municipality to challenge its award of a three-year contract for recycling services to a rival company. The aggrieved company claimed that the bid had a material, non-waivable defect, specifically that its rival failed to include with its bid an unconditional consent of surety to provide a performance bond in the full amount of the contract. The aggrieved company was the next lowest bidder, and it sought injunctive relief against the municipality barring it from contracting with the rival. The rival argued that the defect was cured because it submitted its consent of surety certification later, prior to the municipality making its final decision. The lower court denied the injunction and dismissed the complaint.

The Appellate Division reversed the lower court’s dismissal. When a public contract is subject to the Local Public Contracts Law, as was the case here, the statute requires a consent of surety. The requirement itself has the potential to affect the bid calculations and even the decision to prepare and submit a bid. It provides assurance that the low bidder will be able to perform under the contract and that it would be in a position to provide the required bonds. The omission of a consent of surety from a bid is not a defect that can be waived and later cured. N.J.S.A. 40A:11-23.2 provides that the failure to submit a consent of surety shall be deemed a fatal defect that shall render the bid proposal unresponsive and cannot be cured. Furthermore, the Court stated that even if a fully executed consent of security was later submitted by the rival, the failure to submit the certification along with the bid proposal was a material defect. Therefore, the Court reversed the lower court’s decision and voided the contract between the municipality and the rival, ordering that the contract be put up for bid again.

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