For modification -- Chief Justice Weintraub and Justices Jacobs, Francis, Proctor, Goldmann, Schettino and Haneman. Opposed -- None.
This case involves an attack upon the validity of the award by Rutgers, The State University, of a contract to the defendant Edwin J. Dobson, Jr., Inc. for part of the work involved in the construction of a medical school building. The trial court sustained the award, and we certified the ensuing appeal before it was argued in the Appellate Division.
Early in 1962, Rutgers, The State University, decided to construct a new medical school building. Plans were drawn, and in June 1962 bids for the work were solicited publicly. Litigation followed receipt of the bids. It became moot, however, because the total of the lowest bids exceeded the budget for the project, and therefore no contracts were awarded. Instead all bids were rejected, and it was decided to redesign the project and readvertise for bids.
Rutgers readvertised in September 1966. Bids were sought in seven separate categories of work: (1) general construction; (2) structural steel; (3) plumbing and fire protection; (4) heating, ventilating and air conditioning; (5) electrical; (6) laboratory furniture; and (7) independent inspection and testing. The public notice advised contractors that instructions to bidders, bid forms, contract forms, plans and specifications were available at a designated place.
The notice and the instructions to bidders specified that each bidder should be qualified with the Bureau of Construction, Division of Purchase and Property, Department of the Treasury, State of New Jersey, pursuant to N.J.S.A. 52:35-1 et seq. Both documents said also that Rutgers reserved the right to waive any informalities in or to reject any and all bids.
Section 2 of that statute provides:
"Officials of the state shall require of all persons proposing to submit bids on public work to be furnished for or on behalf of the state or any officer, board, commission, committee, department or other branch of the state government, a statement under oath in response to a questionnaire, standardized for like classes of work, to be submitted to such persons by such state official. The statement shall develop fully the financial ability, adequacy of plant and equipment, organization and prior experience of the prospective bidder, and also such other pertinent and material facts as may seem desirable." N.J.S.A. 52:35-2.
"The state officials shall classify all such prospective bidders as to the character and amount of public work on which they shall be qualified to submit bids, and bids shall be accepted only from persons qualified in accordance with such classification. * * *" N.J.S.A. 52:35-3.
In due course bids were received on all phases of the work. They were opened on October 5, 1966, and the low bidder ascertained in each of the seven categories listed above. Defendant Dobson's bid of $998,413 was the lowest bid in the plumbing and fire protection category. It was $88,308 lower than that of plaintiff Richardson Engineering Co., the next lowest bidder. On October 31, 1966, Rutgers signed contracts with the several successful bidders, and on the same day gave each of them written notice to proceed with the work. Construction began in early November 1966.
Upon the opening of the bids on October 5, Richardson Engineering Co. objected to acceptance of the Dobson bid primarily because Dobson was not adequately prequalified
by the Department of the Treasury under N.J.S.A. 52:35-3. Admittedly, as of October 13, 1966 Dobson's prequalification was for $396,365. Thereafter, conferences were held by representatives of Rutgers, Richardson and Dobson. At these conferences Rutgers took the position that it was not an "officer, board, commission, committee, department or other branch of the state government" within the meaning of N.J.S.A. 52:35-2. Therefore, it was not obliged to require prequalification of bidders under that statute, and, as indicated in A. C. Schultes & Sons v. Township of Haddon, 8 N.J. 103 (1951), could disregard Dobson's lack of full qualification thereunder. Thus, so long as Dobson appeared to be responsible, financially and otherwise, Rutgers felt legally justified in awarding the contract to that company.
Since, accordingly to Rutgers' Vice-President and Treasurer, the specifications required each bidder to "present such evidence of the bidder's experience, management, organization, qualifications and financial ability, as will establish his capacity to carry out the terms of the contract," Rutgers' representatives investigated Dobson's financial capacity. Once satisfied that it was the lowest responsible bidder, and after receiving a proper performance and payment surety bond, Dobson was ...