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Hall Building Corp. v. Kean University

2006 WL 686562 (N.J. Super. App. Div. 2006) (Unpublished)

CONTRACTS; STATE COLLEGES—Nothing in the State College Contracts Act permits a college’s board of trustees to delegate to an administrator the authority to decide among bidders.

Pursuant to the State College Contracts Law, a university invited bids for construction of a multi-million dollar renovation project. Company A submitted the lowest bid, and Company B submitted the second lowest bid. Both companies submitted timely protests against each other’s bids. A vice president of the university issued a letter to both companies indicating the finality of the university’s decision. The vice president disagreed with Company A’s critique of Company B’s bid and rejected Company A’s bid based on what he determined to be a deficiency in its response to one specification he considered not subject to waiver.

Subsequently, Company A filed a notice of appeal and a motion for an emergent stay. Company A’s motion for a stay was denied. Company A applied to the Supreme Court, which granted the stay and directed the Appellate Division to accelerate disposition of the appeal. The Appellate Division promptly scheduled oral argument.

The university asserted that it had a two-step process, with the vice president empowered to render the final decision rejecting a bid as non-conforming, and with the board of trustees deciding whether to award the contract, and if so, to whom. However, the university did not indicate whether the board of trustees would review only the bid the vice president determined to be lowest, or all bids he determined to be conforming, or all the bids submitted.

The Court reasoned that if it accepted the two-step process as valid, two appeals might have been necessary. The first appeal would arise from the vice president’s decision. However, the Court recognized the there was no suggestion that the board of trustees was bound by the decision of the vice president. Thus, even if the Court affirmed the vice president’s decision rejecting Company A’s bid, the board of trustees could have still rejected Company B’s bid, which could give rise to a second appeal challenging the propriety of the board’s decision.

Further, the Court reasoned that the State College Contracts Law provided, in pertinent part, that “all purchases, contracts or agreements which require public advertisement for bids shall be awarded by the board of trustees to the lowest responsible bidder.” However, the Court noted that nothing elsewhere in that law permitted the board of trustees to delegate to an administrator its authority to decide among the bidders. Invoking the ruling of the Supreme Court, the Appellate Division stated that in a case concerning local public bidding, the contract must be awarded not simply to the lowest bidder, but rather to the lowest bidder that complies with the substantive and procedural requirements in the bid advertisements and specifications. The Court suggested that it would be a reasonable inference that the person or board responsible for awarding contracts should determine both which bids are conforming and which should be rejected, not merely whether a bid recommended by another should be accepted. Accordingly, the Appellate Division remanded the matter for trial, directing the university to determine whether the board of trustees wanted the opportunity to render a final decision before the Appellate Division’s further involvement in the case.

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