On appeal from Acting Director of the Division of Purchase and Property.
Lynch, Crane and Horn. The opinion of the court was delivered by Horn, J.A.D.
[169 NJSuper Page 3] Appellant Blondell Vending appeals from the final decision of the Special Assistant in Charge, Division
of Purchase and Property, of the Department of the Treasury, State of New Jersey, dated December 6, 1978, disallowing appellant's request for a hearing concerning the contract award for Bid X-356 and reaffirming said Special Assistant's decision dated November 24, 1978 awarding contracts to others than appellant in the zones for which appellant had submitted bids.*fn1
In June 1978 the Division of Purchase and Property solicited bids upon contracts for vending-machine services at facilities owned or maintained by the State. The bid specifications divided New Jersey into 11 geographical zones, and a bidder could bid for contracts in as few or as many zones as it pleased. The contracts awarded to the successful bidders the exclusive right to install and operate vending machines at designated locations in each geographic zone. In exchange, the State receives a percentage of net sales of the various products sold through the vending machines.
The Request for Bid Proposal (RFP) specified that the vendor must bid on all locations in the zone and on the full product line. The RFP required the vendors to make a tour "for the purpose of inspecting the service specified in the proposals to acquaint them with the services to be performed." More specifically, another portion of the RFP required that:
Contractor shall survey all locations to determine the number of machines actually needed to take care of requirements and shall obtain approval for the installation of such machines from the Director of the Division of Purchase and Property.
It also required that the vending machines be equipped with a coin-changing device. If the machines were not so equipped, the vendor was required to provide separate change-makers when necessary.
On July 17, 1978 the Division gave telephone notification of the following awards:
Servewell Vending 1, 2, 3 and 4
Canteen Corp. of Phila. 7 and 9
J.L.P. Vending 10 and 11.
That same day the Division received a letter (dated July 14, 1978) from counsel for appellant pointing out alleged deficiencies in the bid specifications. The letter claimed that more machines were required for Zones 2 through 5 than were listed, and that the listing of equipment in the RFP did not include necessary condiment stands, cooking ovens and dollar-bill changers.
An internal investigation by the Purchase Bureau of the Division was prompted by the above letter. That investigation revealed that an outdated inventory list had been used in the preparation of the RFP. On July 18, 1979 the Acting Director decided to rescind all contract awards and to reject all the bids. Contracts with incumbent vendors were extended for an additional year.
Three of the successful bidders, Canteen Corp of Nutley, Canteen Corp of Philadelphia and Servewell Vending, protested the rejection of the awards and were granted a hearing on August 8, 1978. All bidders were invited to attend, but the parties were forewarned that the hearing would be limited to the decision of the Acting Director to rebid due to specification errors.
Three officers of Canteen Corp(s). and Servewell testified that they made on-site inspections of vending-machine locals. The president of Servewell said there were some slight discrepancies in the numbers of machines on site, but he emphasized that the specifications required the contractor to put in all equipment necessary to service the locations. Said testimony made clear that the discrepancies in the specifications
were largely attributable to the noninclusion of collateral equipment such as change machines, ovens and condiment stands.
The district manager of Canteen Corp(s). said he envisioned the installation of 74 machines to service Zone 5, even though only 59 machines were listed in the bidding specifications. A witness for the incumbent bidder in Zones 10 and 11, J.L.P. Vending, testified that its bid was not based on an on-site inspection, but rather from its knowledge of the number of vending machines required in the zones it served.
In a report to the Acting Director dated August 14, 1978, the hearing officer recommended that the original awards be reinstated. The hearing officer said that the specification errors in the RFP were insignificant. He noted that the State reserved the right to add or remove machines in a particular locale. The failure to list ovens, condiment stands and change machines did not provide an advantage to any bidder, since a required on-site inspection made it clear that such machines were necessary.
By decision dated September 15, 1978 the Acting Director decided to accept the findings of the hearing officer on the specification discrepancies in the RFP. He said:
However, the Acting Director felt the contracts must still to rebid. Responding to an issue raised by Carnival Vending and Blondell Vending, the Acting Director said that the pricing structure of the bid specifications did not establish a ...