INDUSTRIAL PIPING INC v. COUNTY OF PASSAIC KAPPA CONSTRUCTION CORP (2013)

Plaintiff A & A Industrial Piping, Inc. appeals from a September 14, 2012 final order denying its request to restrain defendant Passaic County from awarding a contract to defendant Kappa Construction Corp. (Kappa) for upgrades to the HVAC and fire protection systems for the Passaic County Jail. Because we agree with Judge Brogan that the County properly rejected plaintiff's bid as non-conforming and the award of the contract to Kappa, the only other bidder, was in conformity with the Local Public Contracts Law, N.J.S.A. 40A:11–1 to –51, we affirm.

This is plaintiff's second bid protest in connection with this contract.   Last year, plaintiff challenged the County's decision to reject all bids and re-bid the contract when it inadvertently failed to include a Division of Property Management and Construction (DPMC) pre-qualification requirement in the bid specifications.   Plaintiff had been the second lowest bidder for that contract, and the lowest bidder had not pre-qualified its subcontractors.   Plaintiff did have the necessary pre-qualification certificates and argued, among other things, that DPMC pre-qualification was statutorily required so no re-bid was necessary or allowable.   Judge Brogan dismissed the complaint, and we affirmed.   A & A Indus.  Piping, Inc. v. Cnty. of Passaic, No. A–4902–10 (App.Div. Apr. 25, 2012).

The County revised the bid specifications to include the DPMC pre-qualification requirement and advertised for bids.   In a letter of October 19, 2011, plaintiff challenged the inclusion of the pre-qualification requirement contending that the County had not adopted regulations for the qualification of bidders in accordance with N.J.S.A. 40A:11–25, and thus inclusion of a pre-qualification requirement was illegal.

Although the County made no response to the letter, it issued a clarification to bidders advising that it intended to enforce the requirement of DPMC pre-qualification.   Shortly thereafter it postponed the bid opening and proceeded to properly adopt a resolution allowing for pre-qualification of bidders on certain public building contracts pursuant to N.J.S.A. 40A:11–25.   It then issued addendum three to the notice to bidders advising of the new bid-opening date and noting that “all other terms and conditions contained in the specifications and prior notice to bidders remain unchanged.”

When the bids were opened, plaintiff was the low bidder.   Its bid of $5,317,000 was $193,000 lower than that of Kappa's, the only other bidder.   Upon review of the bid documents, however, the County discovered that plaintiff had failed to provide DPMC certificates for its own plumbing crew and for its structural steel subcontractor.   Plaintiff subsequently supplied the certificates, but both post-dated the bid date.   The County rejected plaintiff's bid for failure to comply with the pre-qualification requirement of the bid specifications and awarded the bid to Kappa.

Plaintiff filed an order to show cause and verified complaint to restrain the award of the contract to Kappa, contending the inclusion of the DPMC pre-qualification requirement violated N.J.S.A. 40A:11–25.   Judge Brogan entered an order temporarily restraining the award of the contract and setting a briefing schedule and return date.   The County responded with a certification from the Clerk to the Board of Freeholders detailing the adoption of the resolution allowing for pre-qualification of bidders pursuant to N.J.S.A. 40A:11–25.   Plaintiff thereafter abandoned its argument that the pre-qualification requirement of the bid specifications was unlawful.   Instead, plaintiff contended that it was not afforded adequate notice of the adoption of the resolution.

Judge Brogan rejected that argument for two reasons.   First, plaintiff conceded that the County provided proper notice of the resolution under N.J.S.A. 40A:11–25, and second, the pre-qualification requirement was clearly stated in the bid specifications.   Further, the County issued a clarification underscoring its intent to enforce the requirement and subsequently advised the bidders in addendum three that all terms and conditions of the bid specifications were unchanged.   Judge Brogan also noted that neither the parties nor the court could be blind to the history of this contract, the County's decision to re-bid it to ensure DPMC pre-qualification of all bidders and plaintiff's prior argument in seeking to prevent that re-bid that DPMC pre-qualification was statutorily required and thus its inclusion in the bid specifications redundant.   Concluding that the requirement was material and plaintiff clearly advised of its existence, the judge dissolved the temporary restraints and dismissed the complaint.

Plaintiff moved for reconsideration contending that the County had failed in its duty of candor to the court by not advising of the resolution it had adopted in 2000 requiring bidders to include proof of the existence of a health and hospital plan, approved pension plan, and apprenticeship training program for all labor as a part of their bids.   Asserting “on information and belief” that Kappa had not met that requirement, plaintiff argued that Kappa was not entitled to the contract award.   The County filed opposition noting that it had specifically determined to remove the requirement from the bid specification on the re-bid because similar requirements in other counties had been struck down.   Believing that its own resolution might be likewise unenforceable and desiring not to risk a challenge to the specifications on that point, the County determined not to include the requirement on the re-bid.   Kappa contended plaintiff's new argument was a thinly-veiled challenge to the bid specifications and time-barred.

Judge Brogan heard argument on the motion and denied it.   He reasoned that as the requirement was not made part of the bid specification, bidders did not prepare their bids in reliance on it, and thus none could have been in any manner disadvantaged.

Plaintiff renews these arguments on appeal.

We start with familiar principles.   A reviewing court may not overturn a governmental entity's decision to accept or reject a bid unless it finds the decision arbitrary, capricious and unreasonable.  PENPAC, Inc. v. Morris Cnty. Mun. Utils.   Auth., 299 N.J.Super. 288, 297 (App.Div.), certif. denied, 150 N.J. 28 (1997);  Palamar Constr., Inc. v. Twp. of Pennsauken, 196 N.J.Super. 241, 250 (App.Div.1983).  “ ‘Even when doubt is entertained as to the wisdom of the action, or as to some part of it, there can be no judicial declaration of invalidity in the absence of clear abuse of discretion by the public agencies involved.’ ”  Palamar, supra, 196 N.J.Super. at 250 (quoting Kramer v. Bd. of Adjustment, Sea Girt, 45 N.J. 268, 296–97 (1965)).

We see no such abuse of discretion in the County's actions on this record.

The policy underpinning our competitive bidding statutes is to assure against favoritism, improvidence, extravagance, and corruption in the bidding process.  Terminal Constr.   Corp. v. Atl. Cnty. Sewerage Auth., 67 N.J. 403, 410 (1975).   Because fair competition requires that bid conditions and specifications apply equally to all prospective bidders, Township of Hillside v. Sternin, 25 N.J. 317, 322 (1957), our courts have long held that a public contract cannot be awarded upon terms different from those contained in the invitation to bid.  Palamar, supra, 196 N.J.Super. at 250–51.  “Strict compliance is required, and a municipality generally is without discretion to accept a defective bid.”  Meadowbrook Carting Co. v. Borough of Island Heights, 138 N.J. 307, 314 (1994).

There is no dispute on this record that the DPMC pre-qualification requirement was properly adopted by the County and was clearly set out in the specifications.   There is also no dispute that plaintiff did not comply with the requirement as it related to its own plumbing crew and its structural steel subcontractor.   Plaintiff argues that its failure to assure the County at the bid opening that plaintiff and all of its subcontractors were DPMC pre-qualified was a minor, technical issue that should have been waived by the County.   We disagree.

We decided last year that the County's decision to require DPMC pre-qualification for this contract constituted a substantial revision of the specifications under N.J.S.A. 40A:11–13.2(d), entitling it to reject all bids in the last round.   A & A Indus.  Piping, Inc., supra, No. A–4902–10 (slip op. at 10–11).   We reasoned that a pre-qualification requirement could affect a bidder's overall bid price, and that inclusion of the requirement affords the County a guarantee the work will be performed by pre-qualified prime and subcontractors.  Id. at 10.   Accordingly, the requirement is obviously a substantial one and non-compliance cannot be considered a waivable irregularity.   See Twp. of River Vale v. R.J. Longo Constr.   Co., 127 N.J.Super. 207, 215–16 (Law Div.1974).   We agree with Judge Brogan that to permit waiver of the DPMC pre-qualification requirement, especially in light of the history of this contract, would undermine the bidding process.

Plaintiff's argument that the bids should be set aside for the County's failure to include a resolution from 2000 among the bid specifications lacks sufficient merit to warrant discussion in a written opinion.  R. 2:11–3(e)(1)(E).

Affirmed.

PER CURIAM