For reversal and remandment -- Chief Justice Weintraub and Justices Jacobs, Francis, Proctor, Hall, Schettino and Haneman. For affirmance -- None. The opinion of the court was delivered by Francis, J.
The primary question presented by this appeal is whether N.J.S.A. 40:50-1, which requires competitive bidding on contracts for public work where the amount involved exceeds $2500, applies to a low-rent housing project to be developed under the Federal "Turnkey" method established pursuant to 42 U.S.C.A. § 1401 et seq. (Chapter 8 -- Low-Rent Housing).
If the New Jersey statute is applicable to the construction project involved here, it would have been necessary for the defendant Authority to publicly advertise for bids on the work and to award the contract to the lowest responsible bidder. Moreover, the invitation to bid would have to relate to specifications that were as definite, precise and full as practicable in view of the character of the work. Also, the specifications would have to constitute the common standard for the bidding so as to enable all bidders to bid intelligently and to afford them a fair and reasonable opportunity for competition. Fereday & Meyer Co., Inc. v. Elizabeth Board of Public Works, 27 N.J. 218 (1958); Hillside Tp., Union County v. Sternin, 25 N.J. 317 (1957); James Petrozello Co., Inc. v. Chatham Tp., 75 N.J. Super. 173 (App. Div.
1962). Once the invitation had been extended and bids submitted, the municipal authority could not have waived any substantial variance between the specifications stated and a proposal submitted. William A. Carey & Co. v. Borough of Fair Lawn, Bergen County, 37 N.J. Super. 159 (App. Div. 1955). In the present situation, it is undisputed that no effort was made to comply with N.J.S.A. 40:50-1, as interpreted by the cases, because defendant Authority deemed the statute inapplicable.
The Housing Authority of the City of Orange is an agency created to administer the low-rent housing program of the City. N.J.S.A. 55:14A-1 et seq. In 1969, after discussion with the United States Department of Housing and Urban Development (HUD), the Authority decided to undertake a low-rent housing project for its elderly citizens. The project was to consist of 234 dwelling units and was to be developed by the Turnkey method under 42 U.S.C.A. § 1401 et seq.
The Turnkey method is a program under which a local housing authority contracts for completed housing to be produced by the developer on his own land, or on land on which he has an option, or on land which the authority may provide (obviously at a fair price) out of urban renewal property. Upon completion of construction and the "turning over of the keys" to the authority, payment for the project is made by the authority. Burstein, "New Techniques in Public Housing," 32 Law & Contemp. Prob. 528, 529-30 (1967).
The procedure for awarding federally financed Turnkey low-rent housing construction contracts has been established by HUD. It was created under broad rule-making power conferred by 42 U.S.C.A. § 1408, and has been set forth in section 221.1 of HUD's publication entitled "Low-Rent Housing Manual." The United States Supreme Court sustained the adoption of the Manual as a proper exercise of HUD's authority and indicated that the regulations contained therein are binding upon local housing authorities.
Thorpe v. Housing Authority of the City of Durham, 393 U.S. 268, 89 S. Ct. 518, 21 L. Ed. 2d 474 (1969). It is thus apparent that if such an authority (designated LHA in the Manual) intends to employ the Turnkey method, it must comply with the Manual's requirements. Competitive bidding of the type specified by N.J.S.A. 40:50-1 is neither required nor permitted by the Manual, and it seems obvious that, if the strictures of the New Jersey statute are imposed by judicial interpretation, the Turnkey program for low-rent housing will not be available for New Jersey.
In discussing the Turnkey scheme, Joseph Burstein, Esq., Associate General Counsel of HUD, one of the participants in its development, said:
"Although simple in concept, the Turnkey system completely reverses the traditional method of producing public housing-site acquisition by purchase or condemnation, preparation of competitive bidding type plans and specification by an architect retained by the LHA [Local Housing Authority], competitive bidding and award, and construction by the low bidder." Burstein, supra, 32 Law & Contemp. Prob. at 530.
See also S. Rep. No. 809, 90th Cong., 1st Sess. 1, 36 (1967); H.R. Rep. No. 1585, 90th Cong., 2d Sess. 27 (1968). The Manual, p. 1, lists 13 steps in the accomplishment of a Turnkey project. They are listed below (with emphasis added) with elaboration where appropriate.
"Except as stated in paragraph 1d below, all of the steps and related procedures set forth in this Section 221.1 shall be taken for each Turnkey project in the order stated. Briefly, these include, following the approval of the LHA's application for a low-rent housing program, the following steps:
I. " [T]he advertisement by the LHA for Turnkey proposals."
The advertisement's specification of the physical characteristics of the proposed development is to be a "general" one. The advertisement should contain:
(1) A statement as to the number of units and rooms, the allocation of them between the elderly and non-elderly, the spaces required for community, management and maintenance areas, parking, outdoor recreation facilities, and type of housing. Manual, p. 3, section 3c(1). There is no requirement for detailed plans and specifications on which bids are to be based, as is required by N.J.S.A. 40:50-1.
(2) The direction of attention to HUD requirements and the availability of detailed information at the LHA as to: Davis-Bacon prevailing wage rates, Title VI of the Civil Rights Act and other equal opportunity provisions, site approval, necessity for a Statement of Disclosure of Interest on the part of the developer or builder or both, and necessity for a statement with respect to any opportunities for training and employment to be given to lower income persons residing in the area and as to whether the developer, or any of his subcontractors, are located in or owned in substantial part by persons residing in the area of such housing. Manual, p. 3, section 3c(2)(a)-(e).
(3) A request for copies of a proposal from the developer which should include the following:
(a) rough sketches of the site layout, buildings and unit plans;
(b) a statement as to the zoning for the proposed site and whether it is permissive;
(c) a statement of the developer's or builder's qualifications to undertake the proposed project with efficiency and dispatch, including a brief statement of previous experience in developing similar projects. Section 3c(3)(a)-(e);
(d) a statement of the developer's total Turnkey price itemized as follows: site, site improvements, dwelling construction and equipment (the developer is asked to specify if ...