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Delta Chemical Corp. v. Ocean County Utilities Authority

Decided: December 22, 1988.

DELTA CHEMICAL CORPORATION, PLAINTIFF,
v.
OCEAN COUNTY UTILITIES AUTHORITY AND ALLIED COLLOIDS, INC., DEFENDANTS



Serpentelli, A.j.s.c.

Serpentelli

More than a half century after the enactment of the so-called "Buy American" requirement now contained in the Local Public Contracts Law [ N.J.S.A. 40A:11-18], the court is asked to determine the constitutionality of that provision. It is a case of first impression since the only other definitive challenge to the Buy American concept in New Jersey was within the context of state purchases made pursuant to N.J.S.A. 52:33-2 and 3. As will be discussed, those statutes have language distinguishing them from N.J.S.A. 40A:11-18.

The Ocean County Utilities Authority (hereinafter OCUA) solicited bids for the acquisition of polymers to be utilized in its three pollution control facilities. Separate bids were sought for the northern, central and southern water pollution control plants. The instructions to bidders for all three contracts contained the following language:

Preference for Domestic Products

Only manufactured products of the United States, wherever available, shall be used in connection with this contract, pursuant to 40A:11-18 of the Revised Statutes of the State of New Jersey.

Six bids were received. Pursuant to the specifications, tests were performed on the polymers to evaluate their efficiency. The lowest responsible bidder was to be determined not only by

price per pound, but also by treatment efficiency. The ultimate determinant of the lowest responsible bidder was the cost of the polymer per dry ton. A summary of the bids of plaintiff, Delta, and defendant, Allied, for the three facilities follows:

1) NORTHERN PLANT:

ALLIED: $20.43

DELTA: 23.05

2) CENTRAL PLANT:

ALLIED: $22.95

DELTA: 38.91

3) SOUTHERN PLANT:

ALLIED: $16.37

DELTA: 40.40

Allied was the lowest bidder at all three plants. Delta was the third lowest bidder at the northern and central plants and the highest bidder at the southern plant. Based on estimated usage, the OCUA calculated Delta's total bids at almost $238,000 and Allied's total bid at $157,000. A gross savings of approximately $81,000 would be realized by awarding all three contracts to Allied. The OCUA adopted a resolution awarding the contract for all three facilities to Allied. It is stipulated that Delta intended to provide products manufactured in the United States. Allied and other bidders intended to supply products manufactured outside of the United States.

Delta contends that it is entitled to an award of the contract for all three facilities because it was the only bidder providing an American made product. Alternatively it asserts that it is entitled to an award of a contract for the facilities for which its bid was reasonably competitive with Allied, even if its bid was somewhat higher.

The statute implicated in this case was one of a trilogy of Buy American restrictions adopted in New Jersey during the Depression. A full understanding of the issues in dispute requires a careful reading of each of the statutes. The first two statutes were contained in chapter 174 of the Laws of 1932.

The portion relevant to counties and municipalities, originally designated as N.J.S.A. 40:15-1, provided:

American goods and produce to be used where possible

All counties and municipalities shall provide in the specifications for all contracts for county and municipal work and in the specifications for all contracts for work for which they pay any part of the cost, that only manufactured and farm products of the United States, wherever available, be used in such work.

That portion of chapter 174 of the Laws of 1932, relative to state work is designated as N.J.S.A. 52:32-1. It provides:

American goods and products to be used in state work

The state shall make provisions in the specifications for all contracts for state work and for work for which the state pays any part of the cost, that only such manufactured and farm products of the United States, whenever available, be used in such work.

In 1934 a provision was adopted relative to the use of domestic materials on state public work projects. It was very similar to a statute adopted by the federal government in 1933 designated as the Buy American Act. 41 U.S.C.A. ยงยง 10a-d. The state ...


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