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Reiner & Co. v. Harrison Board of Education

A-6025-97T2 (N.J. Super. App. Div. 1999) (Unpublished)

CONTRACTS; PUBLIC BIDDING—Where the potential savings to a municipality is great, defects in a low bidder’s surety bond and calculation of unfinished work, if subsequently corrected, are waivable.

The lowest bidder for a school renovation contract submitted a Surety Consent form for an amount equal to about $60,000 less than its bid. It also submitted a Division of Billing Construction (DBC) Certification stating that its amount of uncompleted work on contracts was $1,500,000. This board of education rejected the bid because the Consent of Surety was less than the amount of the bid. Learning of this rejection, the lowest bidder attempted to cure its defective Consent of Surety by submitting a letter from its surety indicating a willingness to execute a performance bond for $158 less than the amount of the bid. The Board of Education refused to accept the lowest bidder’s attempted cure. When the matter reached the lower court, the next qualified bidder pointed out that the lowest bidder’s uncompleted work, when added to its current bid, exceeded the lowest bidder’s DBC classification limit. The lowest bidder then attempted to cure its defective certification by recalculating the total amount of its uncompleted contracts. The lower court agreed that the lowest bidder’s bid, as originally submitted, was defective, but it held that the defects had been cured and that the $158 difference was de minimis. Because of the substantial financial savings to the Board of Education, the lower court voided the bid award that had been made to the next responsible bidder and ordered that the bid be awarded to the lower bidder. The Appellate Division agreed with the lower court’s holding. According the Court, the statutory scheme for bidding is designed to “secure competition” and guard against “favoritism, improvidence, extravagance and corruption ... the contract must be awarded not simply to the lowest bidder but rather to the lowest bidder that complies with the substantive and procedural requirements in the bid advertisement and specifications.” While minor deviations are waivable, any material deviation invalidates a non-conforming bid. The Appellate division recited the two-prong test to determine whether a specific non-compliance constitutes a substantial, and hence nonwaivable, irregularity. “First, whether the effect of a waiver would deprive a municipality of its assurance that the contract would be entered into, performed and guaranteed according to its specified requirements, and second, whether it is of such a nature that its waiver would adversely affect competitive bidding by placing a bidder in a position of advantage over other bidders or by otherwise undermining the necessary common standard of competition.” Consequently, it found that the lower court correctly concluded that the bid deficiencies were not substantial, particularly so in the absence of any proof that “waiver would adversely affect competitive bidding by placing a bidder in a position of advantage over other bidders.” Moreover, the Court found that the financial savings to the municipality was substantial and certainly a valid consideration given the de minimis nature of the defects and the lowest bidder’s expeditious attempt to immediately cure each defect.


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