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In re Bid Of Agate Construction Co.

November 20, 2000

IN THE MATTER OF THE BID OF AGATE CONSTRUCTION CO., INC., A CORPORATION OF THE STATE OF NEW JERSEY, ON NEW JERSEY DEPARTMENT OF ENVIRONMENTAL PROTECTION PROJECT NO. 2125


Before Judges D'Annunzio, Keefe, and Eichen.

The opinion of the court was delivered by: D'annunzio, P.J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued October 12, 2000,

On appeal from the Department of Environmental Protection.

Agate Construction Co., Inc. (Agate) appeals from a determination of the Department of Environmental Protection (DEP) that Agate was not the low bidder on a project. The DEP awarded the contract to Albrecht & Heun, Inc. (Albrecht). We affirm.

The DEP solicited bids for the dredging of a navigation channel in Cape May County known as the Middle Thorofare. The DEP received five bids, which were opened on April 19, 2000. Albrecht's bid was the lowest at $627,666. Agate bid $628,296, or $630 more than Albrecht.

The dredging project included placing some of the dredge material on a 7.1-acre site described as the North Remedial Area #1. This material had to be "deposited, graded, stabilized, seeded and fertilized." Sub-item 4.6 required the contractor to supply and spread 3,000 pounds of fertilizer, "broadcast at a rate of 400 lbs/ac . . . ." The Project Description told bidders that Sub-item 4.6 "shall be paid for on a unit price per acre for the spreading of fertilizer, complete and in place, over the North Remedial Area #1."

The Bid Sheet appeared as follows:

SUB-ITEM 4.6 SPREAD FERTILIZER

The spreading of 3,000 pounds of fertilizer, complete and in place, over 7.1 acres at a unit price of per acre or . . . . . . $Agate bid a "unit price" of $2.00, but its extended total was $6,000. After the bids were opened, the DEP contacted Agate regarding its bid on this Sub-item. By letter dated April 26, 2000, Agate stated that its bid contained a mathematical error in Sub-item 4.6. Agate claimed that its bid for this item should have been $14.20 instead of $6,000, a difference of $5,985.80. Thus, contended Agate, its total bid should have been $622,310.20, or $5,355.80 less than Albrecht's bid. The DEP rejected Agate's position, concluding that Agate had intended to bid $6,000 for that item of work, and had arrived at the $6,000 figure by multiplying $2 times 3,000 pounds of fertilizer.

Agate protested, arguing that the specifications require the DEP to change the $6,000 to $14.20 by virtue of the language in Section 1:06, which states that "[i]n the event of a discrepancy between a unit price bid and an extended total in the bid proposal, the unit price shall govern." Because the "unit" in question was 7.1 acres, Agate argued that its "unit price" must be multiplied by the number of acres to adhere to the specifications.

The DEP again rejected Agate's contention, citing the bids of other contractors for that item of work. The other contractors' "unit prices" for this item were between $200 and $1,756, and the average "extended price," not including Agate's bid, was $4,859. The DEP concluded that $14.20 bid for work others were bidding between $1,400.00 and $12,467.60 was "unreasonable." The DEP concluded "[i]n these circumstances, we believe that it would be inappropriate to use the unit price language of the RFP to allow [Agate] to change the amount . . . bid for Sub-item 4.6 and thereby change [their] bid total, thus becoming the low bidder."

Bids for public contracts frequently involve discrepancies, ambiguities, and internal conflicts. The New Jersey Supreme Court summarized general principles applicable to bidding disputes in Meadowbrook Carting Co. v. Borough of Island Heights, 138 N.J. 307 (1994). The Court stated that strict compliance with bid specifications and bid statutes is required, and local governments are without discretion to accept defective bids. Id. at 314. A "contract must be awarded not simply to the lowest bidder, but rather to the lowest bidder that complies with the substantive and procedural requirements in the bid advertisements and specifica- tions." Id. at 313 (citing Township of Hillside v. Sternin, 25 N.J. 317, 324 (1957)). The Supreme Court reiterated the firmly established general rule that material conditions contained in bidding specifications may not be waived. Meadowbrook, supra, 138 N.J. at 314. However, "minor or inconsequential discrepancies and technical omissions can be the subject of waiver." Ibid.

Judge Pressler in Township of River Vale v. R.J. Longo Constr. Co., 127 N.J. Super. 207 (Law Div. 1974), described a two-part test for determining whether a specific deviation constituted a substantial and, therefore, non-waivable irregularity. It requires a determination first, whether the effect of a waiver would be to deprive the municipality of its assurance that the contract will be entered into, performed and guaranteed according to its specified requirements, and second, whether it is of such a nature that its waiver would adversely affect competitive bidding by ...


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