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Seacoast Builders Corp. v. Jackson Township Board of Education

October 21, 2003


On appeal from the Superior Court of New Jersey, Law Division, Ocean County, L-1465-03.

Before Judges Pressler, Parker and Coleman.

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


Argued September 30, 2003

Defendant Jackson Township Board of Education appeals from a judgment of the trial court vacating its award to the low bidder, defendant Art Anderson, Inc. (AAI), of a contract for the construction of a new high school building and giving the Board the option of rebidding. We accelerated the appeal and now reverse.

This appeal raises a novel question respecting the financial qualifications for bidders for governmental contracts. More specifically, prospective bidders for public work are required to be preclassified by the Division of Property Management and Construction (DPMC) in the Department of the Treasury in accordance with the provisions of N.J.A.C. 17:19-2.1 to -2.7. See also N.J.S.A. 18:18A-27. Each classified bidder's aggregate rating must then be calculated in accordance with the formula prescribed by N.J.A.C. 17:19-2.8. The aggregate rating, which is based on a variety of financial factors, including the bidder's working capital, bonding capacity, and performance rating, determines the amount of the proposed contract on which it may bid. N.J.A.C. 17:19-2.8. At the conclusion of the classification process DPMC issues the bidder a notice of classification which includes the maximum amount of public work on which it is qualified to bid. The issues here presented are first, whether the bidder's aggregate rating is to be determined as of the date of the bid or the date of the award of the contract and second, whether, if the specifications include alternates, the aggregate rating is required to be based on the bidder's base bid or on the bid including all the alternates. The trial judge concluded that the aggregate rating is to be determined as of the bid date and must be based on all alternates in the specifications. We have a somewhat different view of the matter.

The factual context in which the issues are raised is undisputed. The Board solicited bids for the general construction of a new high school asking for both a base bid and a bid on each of fifty-two alternates. Which, if any, of the alternates would be required was a matter of the Board's discretion to be exercised at the time of contract award. AAI was the apparent low bidder having submitted a base bid of $28,748,800 and an aggregate bid of $6,598,600 for the alternates. Plaintiff Seacoast Builders Corporation was the second low bidder, submitting a base bid of $30,285,000 and an aggregate bid for the alternates of about $10,000,000. The Board ultimately decided to require seven of the alternates, for which AAI's aggregate bid was $942,000, which, when added to the base bid, yielded a total bid of $29,690,800, still less than Seacoast's base bid. The Board determined, then, to award the general construction contract to AAI.

Seacoast protested the bid award to AAI urging that AAI's bid exceeded its aggregate rating and hence that it was not qualified to bid on the work. These are the facts on which Seacoast relied. AAI's aggregate rating was for work up to $45,000,000. Its bid documents included a certificate attesting that it had uncompleted contract work of a value of $15,188,000. N.J.A.C. 17:19-2.13 generally requires that the value of uncompleted work be deducted from the bidder's aggregate rating in determining its qualification to bid on a specific contract. AAI's aggregate rating of $45,000,000 less its outstanding work of $15,188,000 qualified it to bid no more than $29,812,000. Both AAI's base bid and the amount of the actual contract award, which included seven of the alternates, were within this limitation. Its base bid plus the fifty-two alternates on which it was originally required to bid was beyond this limit. Thus the issues are squarely presented. Does N.J.A.C. 17:19-2.13 require the aggregate rating to be determined as of the date of the bid or the date of contract award and does it take into account specified alternates rather than the alternates actually chosen and included in the contract?

The Board disallowed the protest, concluding that AAI was qualified to bid. Seacoast then brought this action in lieu of prerogative writs by verified complaint, and following the submission of certifications and a brief bench trial, the court concluded, by written opinion, that AAI was disqualified pursuant to the terms of N.J.A.C. 17:19-2.13 because its original bid including the fifty-two alternates exceeded its aggregate rating less the value of uncompleted work. The Board appealed.

N.J.A.C. 17:19-2.13 provides, in pertinent part, as follows:

(a) A firm shall include with each bid a statement of the current value and status of its backlog of uncompleted construction work (not to include"non-at-risk" construction management contracts) as of the bid due date and a certification that the award of the subject contract would not cause the firm to exceed its aggregate rating.


(c) A firm shall not be awarded a contract which, when added to its backlog of uncompleted construction work, as shown on Form DPMC 701, would exceed the firm's aggregate rating....

The Board focuses exclusively on paragraph (c) to urge that it is the contract award date that controls. Seacoast argues that paragraph (a) controls. In our view, both paragraphs must be complied with. That is to say, we think it plain that the bidder must include with its bid the required certification that the bid does not exceed its aggregate rating less uncompleted work and that that condition must also be met at the time of the bid award. We think it clear that a bidder's financial situation may change during the period between submitting the bid and the contract award. For example, new contracts may be entered into during that period that may affect aggregate rating. We are satisfied, therefore, that the plain intent of the ...

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