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Suburban Disposal, Inc. v. Borough of Chatham

A-1482-10T4 (N.J. Super. App. Div. 2011) (Unpublished)

PUBLIC BIDDING — Even where a public entity wrongly opens and tabulates a late bid and then finds the late bid to be lower than all of the timely submitted bids, it can dispose of the unfair advantage given to the late bidder by ordering a rebidding whereupon the candidates will be free to raise or lower their original bids to more closely correspond to the prior bids of competitors.

A municipality issued a request for bids with bid submission requirements, work specifications, and other matters relevant to the bidding process. The document specified a place and a time when sealed proposals would be publicly opened and read aloud. Changes to the bid specifications were to be made by publication no later than five days prior to the scheduled bid opening, excepting Saturdays, Sundays, and holidays.

In order to accommodate the municipality’s expert, the time for opening of bids was changed. Notice of the change was published. Additional notice of the change was faxed to all bidders for whom the expert had a legible address. No notice was sent to three particular bidders, including the bidder that had been providing the service being advertised.

A bidder submitted a bid on the day of the opening, after the advertised time. It was for substantially less than that of the lowest bidder who met the extended deadline. The late bidder protested the notice procedures undertaken by the municipality’s behalf, and sought to be informed whether, as a result, the bids would be rejected. The municipality notified all bidders that the municipality would be considering a resolution rejecting all bids and authorizing re-advertising for another bid. Counsel for the timely bidder argued there was no basis for rejecting all bids because proper notice of the extension was given by publication. The municipality held a meeting and voted to reject all bids and to solicit bids anew.

The on-time bidder sued to challenge the municipality’s resolution and claimed that notice by publication of the time change in the time for bid submission was properly done, and that the rejection of all bids was improper because neither the letter nor the purpose of the Local Public Contracts Law had been violated. In its brief opposing a preliminary injunction, the municipality disclosed that its actions were motivated, at least in part, by the existence of the lower, late bid. The lower court denied relief and dismissed the action, finding that New Jersey law permits a governing body to reject all bids if it determines that either or both of the purposes or provisions of the local public contracts law had been violated. Here, the municipality found a violation in the selective delivery of faxes notifying bidders of a change. The lower court determined that such a finding was not arbitrary or capricious.

On appeal, the Appellate Division was concerned that the municipality had opened and tabulated a late bid, in part premising its rejection of all bids upon the fact that the late bid was lower than any of those that were timely submitted. The Court noted that acceptance of a late bid places the late bidder at a competitive advantage as the result of its ability to learn the terms of timely bids before submitting its own, and found that the municipality violated its own bid specifications when it opened the nonconforming bid.

Here, however, the municipality disposed of any unfair advantage by ordering a rebidding. On rebid, the candidates would be free to raise or lower their bids to more closely correspond to the prior bids of competitors. The Court expressed strong disapproval of the municipality’s opening of a nonconforming bid instead of returning it. However, it ruled it was reasonable and appropriate for the first bids to have been rejected and for the second round of bidding to have taken place.


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