Hall Construction Co., Inc. v. Daniel J. Keating Company

Background

Respondent Daniel J. Keating Company, the lowest bidder at $199,498,000, was awarded a contract for the Comprehensive Renovation and Restoration of the New Jersey State House by the New Jersey Division of Property Management and Construction (DPMC) in November 2019. Hall Construction Co., Inc. was the second lowest bidder at $205,777,000.

Objecting to Keating’s bid, Hall alleged that Keating violated the requirements for disclosing the identity of its subcontractors and that they did not have adequate licensing and classification. As such, Hall filed for its bid protest in September 2019. The DPMC rejected Halls protest in October 2019 and announced its plan to award the contract to Keating. Hall filed for a second protest on different grounds, claiming the bid was deficient due to Keating’s failure to name the subcontractor the company intended to use for the building control systems work, which is required to be performed by a DPMC classified C043, Control Systems contractor. The DPMC rejected Hall’s second protest, leading Hall to request for a hearing. The hearing, held in October 2019, led the hearing officer to issue a proposed written decision in November 2019 to reject Hall’s protest upon recommending that the DPMC grant Keating the contract. The DPMC accepted the proposal and awarded the project to Keating.

The day after Hall’s second protest was rejected, it filed a motion for leave to appeal the decision through the Appellate Division for an expedited appeal and an emergency stay of the contract. The Appellate Division granted Hall’s motion and entered a temporary stay of the contract. One month later in December 2019, the Appellate Division denied the motion for an expedited appeal, reversed its decision, and vacated its stay. Once the stay was removed, Keating begun work on the project and continued to do so thirteen months after the Appellate Division rendered its decision on Hall’s appeal.

Court’s Ruling

The Appellate Division rejected Hall’s arguments, denying its appeal on the grounds that it ruled the appeal moot. While the case was pending, Keating “spent millions on the Project in preparation, demolition, renovation, and construction,” according to Maurice W. McLaughlin. Obligated to continue its efforts, Keating “issued at least thirty-six subcontracts at an approximate total value of $161,000,000 for various trade works and nine change orders through May 2020,” having completed approximately $10,245,000 of work on the Project by May 2020. As such, terminating Keating’s project would’ve subjected “the Executive State House to risk of damage and generate significant additional costs to mitigate those risks.” Therefore, the Appellate Division found that voiding Keating’s awarded contract would be a disservice to public interests by severely impacting the Executive State House, would “jeopardize the work already completed…and risk damage to this historical structure.”

Take Away: 

While the court agreed with the Division’s decision to reject Hall’s protests, they also stated that it would not have mattered given that the Project’s development had continued too far to stop it. The case’s ruling has now set a precedent for courts to deny contractors like Hall, who has done everything correctly, on the basis of the opposing party having developed their project too far to stop. However, had Hall not continued its persistence, the contractor would have never been considered for appeal. As such, contractors should continue to pursue their rights as quickly as possible to ensure consideration, but aware that their efforts may be rendered moot.