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In re Bid Protest Nos. 99-X-28550 and 99-X-26998

A-5476-98T3 (N.J. Super. App. Div. 2000) (Unpublished)

PUBLIC BIDDING—A governmental authority may reject any and all bids on the determination that it is in the public interest to do so, so long as it does not act arbitrarily, unreasonably, capriciously or in bad faith.

A request for bid was issued for parking garage management services at two state-owned garages. There were four bidders and the lowest two bidders each challenged the other’s bid. The bids were initially reviewed by a supervisor of the governmental authority and it was recommended that “all bids received in this procurement be rejected and that the contract be rebid, after the specification has undergone major revision.” The reason given for this recommendation was the examiner’s inability, “resulting from ambiguous specifications respecting ‘estimated usage of lighting,’ to ‘evaluate the bids on equal footing.’” The examiner’s recommendation was accepted, all bids were rejected, and the project was placed for rebid. One of the bidders protested that decision and the governmental agency responded that a hearing was necessary and explained the rejection of all bids was “based on the State’s realization that its bid solicitation did not establish a comprehensive evaluation strategy and did not adequately and properly address and convey all contract performance requirements, which are conditions that could have resulted in a deficient and disputable award and contract.” On appeal, the Appellate Division agreed with the state’s contention that state law authorized the agency to reject “any and all bids” on the determination “that it is in the public interest to do so.” Although such a decision “must not be arbitrary, unreasonable, capricious or in bad faith,” the Court was satisfied that the agency was properly concerned about the ambiguity of the specification respecting lighting. It further agreed that because the contract specifications were subject to varying interpretations, it was impossible to evaluate the bids on equal footing and that rejection of all bids constituted an appropriate exercise of discretion under the circumstances.

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