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A & S Transportation Co. v. Bergen County Sewer Authority

February 24, 1975


Pressler, J.c.c., Temporarily Assigned.


[133 NJSuper Page 268] This opinion is filed pursuant to R. 2:5-1(b) and because of the novelty of the public bidding question involved. This action came before the court by way of plaintiffs' verified complaint and order to show cause, seeking to invalidate the award of the Bergen County Sewer Authority of a sludge removal contract to defendant General Marine Transport Corp. On the return day of the order all counsel stipulated that there was no genuine dispute of material fact and the matter was, therefore, by stipulation treated as a motion and cross motions for summary judgment.

The operative factual background of this controversy may be simply stated.

The Bergen County Sewer Authority (Authority), an agency organized pursuant to N.J.S.A. 40:36A-1 et seq., requires as part of its utility operation the removal from its sewage treatment plant in Little Ferry of the sludge by-product of the treatment process. The sludge, amounting to approximately one-quarter million wet tons annually, is removed by barge and deposited in the Atlantic Ocean 4 1/2 miles west of Ambrose Horn, a site designated and approved by the Federal Environmental Protection Agency (E.P.A.) The sludge removal is now being conducted by A & S Transportation Company pursuant to a seven-year contract with the Authority which terminates on April 5, 1975.

Some months prior to the contract termination date the Authority advertised for bids for a new sludge removal contract. In response thereto two bids were received: one from a joint venture consisting of the present contractor and Ocean Disposal, Inc., both New Jersey corporations (joint venture), and the other from General Marine Transport Corp., also a New Jersey corporation (General Marine). The contract was awarded by the Authority to General Marine and, on suit brought by the joint venture and a taxpayer, this court invalidated that award and directed that new bidding take place. No appeal was taken from that judgment by either the Authority or General Marine and consequently new bids upon a new notice to bidders and new specifications were sought. The same two bidders were again the sole bidders and the Authority, by resolution adopted on December 19, 1974, again awarded the contract to General Marine as the low bidder. Again the joint venture and a taxpayer, in this case one Ronald T. Kiley, challenged the award and again this court sustained the challenge.

The ground of the court's invalidation on this second challenge was based upon the absence in the bid documents of a stated standard for comparing the bids which, in accordance with the specifications, contained a number of variables.

The court did not make a finding that there had in fact been favoritism in the Authority's award to General Marine, or that any improper motive governed its analysis of the bids. It held only that in view of the number and nature of the variables contained in the specifications, the lack of a predetermined standard for comparing the bids created the opportunity for favoritism and that such an opportunity constituted a violation of the purpose and policy of the competitive bidding requirements of the Local Public Contracts Law, N.J.S.A. 40A:11-1 et seq.

The basis for the court's conclusion is readily apparent from an analysis both of the bid specifications and the bids as received. The basic design of the bid specifications was the seeking of a three-year sludge removal contract with four annual renewals thereafter at the sole option of the Authority. Bidders were asked, therefore, to bid for each of the seven consecutive years, commencing with the year beginning April 5, 1975. The first of two basic variables was the requirement of the specifications that each bidder submit two sets of unit price bids -- one consisting of a fixed unit price per wet ton of sludge for each of the seven contract years, and the second consisting of a single unit price for the entire contract period based on 1974 cost levels, which would then be adjusted annually by the actual increase or decrease in the Wholesale Price Index of Industrial Commodities (WPI) published by the United States Department of Labor. The adjustment in the unit price bid would be made by applying the percentage difference between the WPI on July 1974 and the WPI at the start of each contract year.

The second basic variable resulted from the fact that the E.P.A. had advised the Authority that it would, sometime in 1976, designate a new dump site in the Atlantic Ocean beyond the present dump site. The only clear indication which the Authority had from the E.P.A. as to the location of the new dump site at the time it advertised for bids was the unlikelihood of its designation further than 75 miles from Ambrose Horn. This information it communicated

to bidders in the specifications. The specifications thus referred to the present dump site as site "A" and to the future, but still undetermined, dump site as site "B". Each bidder, therefore, was required, both with respect to the fixed price alternative and the WPI alternative, to bid a unit price for both dump sites for each of the seven years. Since the location of dump site "A" is known, the unit price included the transportation cost thereto. Since the location of the new site is not yet known, the unit price was required to contain two elements: the unit price per wet ton (including transportation to the present dump site) plus a per mileage per wet ton transportation cost from the present dump site to wherever the new dump site would be. In effect, then, each bidder was required to submit four bids for each of the seven years: a fixed price bid to dump site "A"; a WPI bid to dump site "A"; a fixed price bid to dump site "B", and a WPI bid to dump site "B", the dump site "B" bids having the additional element of the mileage transportation costs. There was, of course, also the uncertainty as to when commencement of the use of dump site "B" would be required, but the parties apparently agree that commencement in the second contract year was most probable.

To compound the complications imposed by these variables and uncertainties, it appeared when the bids were opened and compared that the joint venture had bid higher than the General Marine on the per wet ton element but lower than General Marine on the mileage cost to site "B". Therefore, the ultimate determination of the low bidder required, in addition to the other comparison standards and for comparison purposes only, a determination of where site "B" actually was going to be located, since the further away it was, the more favorable would be the ...

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