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In Re Jasper Seating Company, Inc.

406 N.J. Super. 213, 967 A.2d 350 (App. Div. 2009)

PUBLIC BIDDING — It is a non-wavierable deviation in a public bid when the bid allows for two alternative interpretations, thereby giving a particular bidder an unfair advantage over its competition.

A state agency issued a Request for Proposals (RFP) for office furniture. During the question-and-answer period prior to the bid submission, bidders were advised that their preprinted bid catalogs must contain all price increases during the contract term and that they could not use price increase sticker labels to indicate future price increases during the term of the contract. A bidder submitted a proposal containing price increase sticker labels and its bid was rejected. The state agency determined that the inclusion of the price increase labels was a material, non-waivable deviation from the RFP and therefore the agency was required to reject the bid. The bidder, in an attempt to have the rejection overturned, argued that its bid should be considered because it believed that the stickers would be disregarded and the preprinted prices would be the prices offered for bidding since the RFP prohibited sticker labels. The agency rejected the bidder’s argument and the bidder sued, arguing that the agency’s determination that bid was non-conforming was arbitrary and capricious. The agency argued that the bidder submitted a bid that materially deviated from the RFP requirements relating to the submission of price catalogs without price escalation stickers.

In reviewing an agency’s determination as to whether or not a bid conforms to the bid proposal request, a court must use ordinary standards governing administrative actions. An agency determination on bid conformity will be struck down if its decision violates the state or federal constitution, violates legislative policies, is not based on sufficient findings, or if the agency reached a conclusion that could not have been reasonably made based on a showing of the relevant factors. The key determination in deciding whether or not an agency decision passes muster is the determination that a bid does or does not deviate from the RFP. If the bid does not conform to the RFP, then a court must decide whether the deviation was material or immaterial. Immaterial deviations can be waived. If a government agency does not waive the deviation, then a court needs to rule whether the decision not to waive was arbitrary or capricious. If, however, there was a material deviation, then the deviation cannot be waived because it would undermine the integrity of the bidding process. A deviation is considered material if it would deprive the agency of assurance that the contract would be performed according to the specified requirements. In addition, it would be a material deviation if it would adversely effect competitive bidding by giving one bidder a competitive advantage or by undermining the competition. In this case, the RFP clearly stated that the price catalogs could not contain any sticker price increase labels. The inclusion of sticker price labels on a bid allowed for two alternative interpretations as to the bid being offered with the sticker label being part of, or not part of, the bid price. According to the Court, this would give the bidder an unfair advantage over the competition. Therefore, this kind of deviation from the bid requirements was material and could not be waived. Once a bid is held to include a material deviation, it is treated as if there were no bid.

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