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DGR Company v. State

July 1, 2003


On appeal from the State of New Jersey, Department of Treasury, Division of Property Management and Construction, SPR00104.

Before Judges Pressler, Ciancia*fn1 and Axelrad.

The opinion of the court was delivered by: Axelrad, J.T.C. (temporarily assigned).


Argued: June 3, 2003

The Labor Department sought to consolidate its two Morris County offices in one location. The Division of Property Management and Construction (DPM&C), a unit of the Treasury Department that handles State leases of real property, advertised for lease proposals in Dover. Two potential landlords responded, Matthew Barrick, the owner of the building that the Labor Department was already occupying in Dover, and DGR Company (DGR). Most versions of the advertisement stated the parking requirement as 70 spaces, but at least one stated it as 125 spaces. DPM&C deemed both DGR's and Barrick's proposals to be acceptable. It intended to choose DGR's proposal, but Barrick protested that DGR's parking arrangements did not conform to the contract requirements. That challenge prompted DPM&C to reject the bids, clarify the parking requirement and choose to readvertise and rebid the lease, on the ground that the confusion about the parking requirement might have discouraged proposals from other potential lessors who could have provided adequate parking but not 125 spaces.*fn2

DGR appealed DPM&C's decision to readvertise rather than to proceed with its proposal, but its appeal has been dismissed for failure to prosecute. The only matter before us is Barrick's cross-appeal of the agency's decision to reject the bids and rebid the lease. Barrick argues that the provision of 125 parking spaces was a material condition of the Labor Department's space planning request, DPM&C lacked the authority to waive it, and DGR could not satisfy the condition without presuming an illegal appropriation of public parking spaces. He claims the confusion over the required number of spaces was a pretext for readvertising, as demonstrated by prior DPM&C assessments of DGR's parking as inadequate. In addition, he argues that DPM&C lacked the authority to reject his conforming proposal, due to the lack of a compelling reason and due to the lapse of the regulations that would otherwise have given it the discretion to reject all proposals. In the alternative, Barrick argues that DPM&C should be ordered to readvertise"within 30 days," and that the new advertisement should specify that satisfaction of the Labor Department's parking needs in conformity with the ADA means that the parking must be on-site.

After considering the record, briefs, and oral argument in light of the applicable law, including our obligation to defer to the findings of an administrative agency, we are satisfied that the decision of the administrative agency is supported by sufficient credible evidence in the record as a whole and that Barrick's arguments are without sufficient merit to warrant extensive discussion in a written opinion. R. 2:11-3(e)(1)(D) & (E); and see, e.g., Campbell v. Department of Civil Serv., 39 N.J. 556, 562 (1963). The agency did not abuse its broad discretion in rejecting all bids and rebidding a State lease as a result of an inadvertent error that affected competitive bidding. We add the following explanation of the public bidding process for State leases and the procedural history of the subject bids.


DPM&C is entrusted with the authority to approve or disapprove agency requests for space, solicit lease proposals, and negotiate leases. N.J.S.A. 52:18A-191.3; see notes following N.J.S.A. 52:18A-178. The Legislature also established the State Leasing and Space Utilization Committee (SLSUC), which must approve all leases and which bases its decisions on DPM&C's recommendations. N.J.S.A. 52:18A-191.5. An agency that seeks space must submit to DPM&C a"space planning request" that includes"special program needs" such as"site requirements" and"legislative mandates." N.J.A.C. 17:11-1.3.*fn3 Upon approval of the space planning request, if DPM&C determines that no property already owned or leased by the State is suitable, it must advertise for"available properties." N.J.A.C. 17:11-4.3. The advertisement must contain either a"project description" or a"scope of work," the latter being considerably more detailed. N.J.A.C. 17:11-4.2(a). The advertisement must appear in the main newspaper serving the location, and it may also appear on the Internet. N.J.A.C. 17:11-5.1. The regulations do not mandate the advertisement's contents, but permit it to specify"threshold criteria" for potential lessors to be eligible. N.J.A.C. 17:11-5.1(c).

DPM&C determines the eligibility of responding potential lessors according to"the threshold criteria for the advertised use," apparently whether or not the advertisement listed them. N.J.A.C. 17:11-5.4(b). It then requests the eligible potential lessors to submit a leased space proposal by a specific date, which may be extended. N.J.A.C. 17:11-6.1(a), 17:11-6.2, 17:11-6.3. The potential lessors must base their proposals on the scope of work and provide the"pertinent cost and site information," including rent and services. N.J.A.C. 17:11-1.3.

An agency may change or withdraw its space planning request even after DPM&C has begun to receive proposals. N.J.A.C. 17:11-4.3(d). DPM&C reviews the proposals to determine which ones satisfy"all material elements" in the scope of work and are"best able to fulfill the space need as defined in the scope of work." N.J.A.C. 17:11-6.9. It also reviews the proposals for cost effectiveness, which means being the least-expensive alternative that"can be demonstrated to conform to" the criteria in DPM&C's request for proposals, as well as to the agency's"operational concerns and restrictions." N.J.A.C. 17:11-1.3, 17:11-6.9. DPM&C may reject all the proposals for having a"price" that is"unfavorable to the State in the current market," or for any other"compelling" reason. N.J.A.C. 17:11-6.8.

For the proposals that pass DPM&C's review, DPM&C negotiates with the potential lessors. N.J.A.C. 17:11-6.10. DPM&C then decides which potential lessor to recommend to SLSUC as the one"who will provide the most cost effective proposed lease agreement." N.J.S.A. 52:18A-191.4, N.J.A.C. 17:11-6.10. However, DPM&C also has the discretion to decide that none of the proposals merits recommendation. N.J.A.C. 17:11-6.11. If DPM&C decides to recommend a potential lessor's proposal, it must give a notice of intent to all the other potential lessors, who may challenge the recommendation. N.J.A.C. 17:11-6.11, 17:11-8.1(a)(2). After receipt of a challenge, DPM&C may decide not to recommend any proposal. N.J.A.C. 17:11-6.11. A challenge requires DPM&C to hold the recommendation in abeyance and not forward it to SLSUC, except when the failure to award a lease would"result in substantial cost to the State or if the public exigency so requires." N.J.A.C. 17:11-8.3(c).

The Director of DPM&C is to resolve a challenge by issuing a written decision on the basis of his or her review of the written record, which includes pertinent administrative rules, statutes and case law, and any other documentation that he or she deems appropriate. N.J.A.C. 17:11-8.3(d).

DPM&C's recommendation to SLSUC takes the form of a"notice of proposed lease." N.J.A.C. 17:11-6.11, 17:11-7.1. The recommended proposal does not constitute a lease until SLSUC has approved it and the State and the lessor have executed it. N.J.A.C. 17:11-6.11, 17:11-7.3. The agency may request cancellation at any time before the ...

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