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Joseph Hamilton Construction, Inc. v. Middlesex County Utilities Authority

A-2078-04T2 (N.J. Super. App. Div. 2005) (Unpublished)

PUBLIC BIDDING—When a public agency’s request for bids requires bidders to submit a structural steel subcontractor’s certificate of business registration with their bids, failure to do so is a non-waivable defect.

A contract for the construction of a welding shop and storage building at a landfill was competitively bid pursuant to the Local Public Contracts Law. After the best bid was withdrawn, there were two remaining bidders. The bid of the lower of the two was deemed defective by the public agency “because it failed to include the Certificate of New Jersey Business Registration of its structural steel subcontractor.” When the public authority accepted the higher bid, the bidder whose bid had been rejected obtained a preliminary injunction to bar the award of the contract and got the lower court to declare it to be the lowest responsible bidder. The lower court stayed its order and an expedited appeal took place.

Under the law, “[w]hen required by the bid plans and specifications,” a copy of a listed steel subcontractor’s business registration must be submitted at the time of bids as a mandatory item. Under case law, failure to submit a mandatory item is a material defect that requires rejection of a bid. Notwithstanding the foregoing, the disappointed bidder argued that another New Jersey statute “authorizes a bidder to submit the business registration statements of subcontractors after bid submission.” That statute reads, in part, “[n]o contract with a subcontractor shall be entered into by any contractor under any contract with a contracting agency unless the subcontractor first provides proof of valid business registration.” Unfortunately, for the disappointed bidder, the statute it pointed to did not override the express requirement of the Local Public Contracts Law that the business registration of a steel subcontractor “must be submitted with the bid if ‘required by the bid plans and specifications.’” According to the Court, the statute cited by the disappointed bidder only requires that the business registration statements that are not required at the time of bidding must be submitted after award of the contract. Unlike for some subcontractors, the business registration statements of steel subcontractors are required to be submitted with the bid.

With that as background, the Court needed to look at the specific bidding documents and easily found that one of the items required to be submitted at the time of bid was the business certificate of the steel subcontractor. The disappointed bidder tried pointing to a section of the bid specifications that required the submission of business registration certificates for each subcontractor before final payment could be made. This language overrode any obligation to submit one or more of the business registration certificates with its bid. The Court rejected this logic, pointing out that the requirement only created a pre-condition for final payment, recognizing that between the time of a bid and the time of final payment, some subcontractors may need to renew their business registrations.

Lastly, the disappointed bidder argued that the contracting agency had the authority to waive its failure to submit the business registration certificate and pointed to a statute upon which it based its argument. The Court rejected that argument pointing out that the cited statute “only applie[d] to a contractor’s submission of its own business registration statement and consequently [did] not provide any authorization for waiver of submission of a subcontractor’s statement. The authorization for a waiver of submission of business registration statements [did] not apply to public contracts entered into ‘[i]n response to a request for bids.’” As a result, the Appellate Division lifted the restraining order and the higher bidder was to be awarded the contract.

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