It is the golden rule of public bidding in New Jersey; if the bid documents direct the bidders to list a subcontractor, you had better list one, because failure to do so is a material defect that cannot be waived or cured.  However, there is a “loop hole.”   In the case Rencor Inc. v. N. Hudson Sewerage Auth., No. A-1425-06T5,2007 WL 1412090 (App. Div. May 15, 2007), the Court held that a bidder is not required to list a certain trade of subcontractor if it can articulate a strategy, which is acceptable to the Owner, to avoid the need.

In the Rencor case, the construction project required the “removal and relocation of light poles over the proposed pipeline including electrical conduit.” Id at 1.  Obviously, one would need an electrical subcontractor to do this work and the requirement to list such was included in the bid documents.  The apparent low bidder did not list an electrical subcontractor.  The public body awarded the contract to the apparent low bidder.  The second low bidder challenged.

The public body awarded the project to the low bidder, notwithstanding its failure to list an electrical subcontractor, because the low bidder approached the public body with a plan to perform the piping work underneath the light poles without removing them and relocating.  Hence the low bidder did not have the need for an electrician.  The low bidder’s plan was to accomplish the job without removing or relocating the “four light poles owned by somebody other th[a]n the [public body,] that will be held stationary while the pipe is installed underneath them.”  Id. at *1.

Since the public body accepted the low bidder’s plan, the low bidder was not required to list an electrical subcontractor.  The unpublished case is notable for two reasons: first, it permits the low bidder to avoid listing a subcontractor that was required to be listed under well established law, and second, the contractor was permitted to submit a bid that was estimated based on a plan that was admittedly different than that which was described in the bid documents.

In commenting on the trial court’s denial of the option to reject all bids and rebid, the Appellate Division thoughtfully stated “A contrary ruling by us would discourage all bidders from developing fair and reasonably creative and constructive ways of accomplishing the goal established in any public project subject to the requirements of the Local Public Contracts Law.”  Id. at 4.

“A creative approach to completion of the project, as occurred here, cannot be considered a material deviation from contract requirements, in the same category as a bidder’s omission to supply, in a timely fashion, documents and descriptions that are designed to assure the project’s completion by qualified contractors and subcontractors within the parameters of the bid. Citations omitted. The standard of ‘strict compliance with public bidding guidelines,’ does not mean literal compliance to the point of unreason.” Id.

PRACTICE POINT:  It is not enough to figure out a better way to perform a project, one must also get the public body to buy into the new plan.  Saving money is a great way to get their interest.

About the Author:

Steve Berkowitz has been involved in bidding related to public contracts for more than 30 years.  First as an engineer for a fortune 200 company, designing, estimating and bidding projects, and then as an attorney.  His experience advocating for bidders started in the late 1980s and continues today.  Mr. Berkowitz has successfully argued cases in Superior Court, the Appellate Division and the New Jersey Supreme Court.  He has been admitted Pro Hac Vices in Federal courts in New York, New Hampshire, Louisiana, Missouri, Florida, Illinois, Pennsylvania and Massachusetts.

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