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Kappa Construction Corp. v. Housing Authority of Bergen County

A-1961-04T2 (N.J. Super. App. Div. 2005) (Unpublished)

PUBLIC BIDDING — Under the Local Public Contracts Law, public contracts must be awarded to the lowest bidder in accordance with the specifications set forth in the solicitation to bids, which must be definite and precise with regard to the work to be performed and the materials to be furnished.

A housing authority wanted to replace the heating systems in its senior citizens housing complex. It solicited bids for the work. All of the bids contained a set fee for the project along with specific fees for some of the work. For example, the bids set forth fees for weather delays, seasonal delays, and replacement costs for thermostats. Although not specified in the solicitation to bid, the housing authority wanted to replace fifty of the thermostats in the complex. Therefore, the housing authority placed a large emphasis on the amount that each contractor bid to replace the thermostats when evaluating each bid, but didn’t specify how many thermostats would be needed. Based on these amounts, the housing authority awarded the contract to a contractor who provided a low thermostat replacement offer, but did not submit the lowest overall bid for the project. The contractor that submitted the lowest bid filed a complaint in lieu of prerogative writs against the housing authority based on the New Jersey Local Public Contracts Law (LPCL). Under this statute, a housing authority is required to solicit bids for contracts and award the contract to the lowest bidder. The contractor asserted that the housing authority violated the statute by not awarding the contract to it as the lowest bidder. In response, the housing authority asserted that it did not violate the statute because it awarded the contract to the bidder with the lowest price for the thermostat replacement work, as opposed to the lowest bidder for the overall contract amount. Both parties moved for summary judgment. The lower court granted summary judgment in favor of the housing authority on the basis that it was not unreasonable for the housing authority to take into account the thermostat replacement costs when evaluating the bids. The contractor appealed.

The Appellate Division reversed the lower court’s ruling. In reaching its decision, it discussed the requirements of the LPCL. Under the LPCL, contracts must be awarded to the lowest bidder in accordance with the specifications set forth in the solicitation to bids. The specifications must be definite and precise with regard to the work to be performed and the materials to be furnished. Whenever possible, fair estimates of the quantities of materials to be ordered for the project should be provided in the solicitation. This way a uniform comparison of bids may be made. In the present case, the Court found that the housing authority had knowledge that fifty thermostats had to be replaced and should have provided this information in its solicitation for bids. This information would have had a large impact on the manner in which the contractors valued the work to be performed. The Court held that the housing authority violated the LPCL by basing its decision solely on the thermostat replacement costs because it did not allow fair and competitive bidding for the project. It rejected the contractor’s assertion that rebidding was not required and that the contract should be awarded to it. It instead held that, under the LPCL, the appropriate remedy was to have the housing authority resolicit bids for the project.


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