Gaglioti Contracting, Inc. v. City of Hoboken

A-002589-96T2 (N.J. Super. App. Div. 1997) (Unpublished)
  • Opinion Date: November 17, 1997

MUNICIPALITIES; PUBLIC BIDDING—Courts broadly define “public bidding.” Therefore bidding for construction of a playground project meets the definition, even if a “building” is not involved. Failure to include a list of subcontractors with a bid is a fatal defect.

A public contract for construction of a playground was awarded to the second lowest bidder because the lowest bidder failed to include in its bid documents the names of the subcontractors to be used on the job, in violation of state statutory law. On the day the bids were opened, the lowest bidder was informed it would be awarded the contract. The next day, the city awarding the contract notified the lowest bidder of its rejection because of the failure to include a list of subcontractors. Half an hour later, the lowest bidder faxed a list of its subcontractors to the city, but to no avail. The lowest bidder filed suit, but the trial judge held there must be strict compliance with the statutory requirement that a list of subcontractors be submitted with the bid. On appeal, the lowest bidder claimed the statute was inapplicable to this case because it is only applicable to work on a “public building.” The lowest bidder also claimed the city was estopped from refusing its bid. Even though the instructions stated that the bidder must comply with all laws, statutes and regulations, they also incorporated by reference other instructions from form documents which required the contractor to furnish a list of subcontractors as soon as practicable after the award of the contract. Finally, the lowest bidder argued that strict compliance with the statute should be waived since a list of subcontractors had been faxed to the city within minutes after the lowest bidder had been informed of its non-compliance.

Since the relevant statute does not define “public building”, the Appellate Division looked to case law and found that prior court decisions have defined the term broadly. The Court also found that a separate statute concerning public contracts and the submission of bids includes recreational facilities in its definition of “public building.” Since the intent of the two statutes is the same, the Court held that the bid for the playground involved a “public building.” Next, the Court held that the lowest bidder mistakenly relied on the form instructions, finding them to be strictly informational and without the authority of the specific instructions provided by the city. Furthermore, the Court opined that a state statute takes precedence over a multi-state form document.

Finally, the Appellate Division held that the applicable statute required contracts to be awarded to the lowest bidder “that complies with the substantive and procedural requirements in the bid advertisements and specifications.” The state Supreme Court has even mandated strict compliance, although minor omissions can be waived upon satisfaction of a two-part test for determining whether a specific noncompliance was material. The test is whether: (1) the effect of waiver would be to deprive the municipality of its assurance that the contract will be entered into and performed according to its requirements, and (2) the noncompliance is of such a nature that its waiver would adversely affect competitive bidding by placing a bidder in a position of advantage over other bidders. In analyzing the second part of the test, the Court found that the focus was not on whether a bidder actually took advantage of non-compliance in a specific instance, but whether that particular non-compliance would, generally speaking, give a bidder an advantage over its competition. Even though the lowest bidder in this case cured the defect within half an hour, over 19 hours had passed between the time it originally submitted its bid and the time it submitted its subcontractor list. In that time, the bidder could have negotiated deals with its subcontractors or otherwise secured an unfair competitive advantage. Accordingly, the failure to include subcontractors was a material non-waivable defect, and all claims of the lowest bidder were dismissed.