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Jen Electric, Inc. v. County of Essex

401 N.J. Super. 203, 949 A.2d 861 (App. Div. 2008)

PUBLIC BIDDING — A company that furnishes products to a direct bidder on a public contract is not considered a bidder or prospective bidder and therefore has no right to challenge the bidding process.

A county publicly advertised for bids for a street renovation project that included a traffic control system and a car video detection system. A distributor that sold traffic control systems, but who was not a bidder, objected to the county’s specifications on the basis that the bid did not allow bidders to propose the use of its equipment and software even though it was equivalent to the specified brand name products. Representatives for the distributor communicated with the county a number of times, but never got it to change its bid requirements to allow equivalent products. The distributor argued that failing to do so was a violation of federal and state law. The county ultimately refused to change its bid requirements.

After failing to convince the county to change the specifications, the distributor sued the county claiming that the county had violated state public bidding statutes and federal regulations covering local highway projects. The distributor also sought an injunction to prevent the county from awarding the contract and to have the specifications declared null and void. The lower court issued a temporary restraining order enjoining the county from awarding a contract based on the disputed bid specifications. The following day, the county received eight bids for a contract that did not include any requirements for the bidders to reveal which products they intended to use. The distributor’s motion to include a contractor that was one of the eight bidders in its action was rejected by the court. The lower court subsequently dismissed the distributor’s claims on the basis that it had no standing to bring it because it was neither a bidder, prospective bidder nor a county taxpayer.

On appeal, the Appellate Division noted that public bidding statutes are for the benefit of taxpayers and the public good, and not for the benefit of the bidders. It also noted that courts do not allow challenges to bidding specifications after the bids have been opened and that bidding statutes barred prospective bidders from challenging bid specifications three days or less prior to the opening of the bids. The distributor conceded that it was not a bidder, but argued that it should be considered a prospective bidder under a broad interpretation of bidding statutes. The Court held that a company that furnishes products to a direct bidder on a public contract was not considered a bidder or a prospective bidder.

The distributor’s argument that the county had violated federal highway assistance regulations by not accepting the lowest bid on a project that involved federal funds was rejected on the basis that the distributor did not provide any basis in federal law or precedent that would have given it standing to bring such a claim. The distributor’s argument that the lower court incorrectly refused to allow the distributor to add a contractor who had bid on the project as a party challenging the bid specifications was also rejected. The Court agreed with the lower court’s finding that a communication between the contractor and the county was a request for clarification and not a challenge to the bid specifications and that even if the contractor had challenged the bid specifications, the communication occurred within three days of the bid opening and would have been barred. Additionally, the Court rejected the distributor’s argument that the contractor should have been added as a party because it was a county taxpayer and pointed out that doing so would have been tantamount to allowing county taxpayers to be immune from the statutory time constraints on challenging bid specifications. Based on the Court’s findings and conclusions, the lower court’s dismissal of the distributor’s action was affirmed.

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