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Ferreira Construction Co., Inc. v. Board of Chosen Freeholders of the County of Somerset

June 28, 2007


On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Docket No. 1400-06.

Per curiam.


Argued June 5, 2006

Before Judges Coburn, Axelrad and Gilroy.

Plaintiff Ferreira Construction Co., Inc., appeals the award of a construction contract by the Board of Chosen Freeholders of the County of Somerset (County) to Midlantic Construction, LLC (Midlantic). We affirm.

In July 2006, the County invited bids for the replacement of County Bridge No. G0702 over the Raritan River. Instead of using the New Jersey Department of Transportation (NJDOT) Standard Specifications for Road and Bridge Construction, 2001 Edition (Standard Specifications), in its entirety, the County opted to delete Paragraph 102.01 from its bid requirements for the project, which paragraph requires bidders to be pre-qualified with the NJDOT before submitting a bid. Instead, the County included the following language in its supplementary specifications:

Bids will not be accepted from bidders who are included in the report of suspensions, debarments and disqualifications of firms and individuals as maintained by the Department of Treasury, Division of Building and Construction, Bureau of Contractor Qualification . . . any bidders on said list of suspensions, debarments and disqualification[]s are disqualified as a bidder and deemed not [to be] a responsible bidder or contractor.

In addition, the County required that the contractor provide a Consent of Surety whereby a surety, qualified under N.J.S.A. 2A:44-143 to conduct business in the State of New Jersey, commits to post performance and payment bonds if the contractor is the low bidder and is awarded the project. The County also solicited information from each bidder concerning the bidder's financial condition.

The County provided bidders three options to comply with the financial statement solicitation. The first option was to complete and submit financial statement bid Forms FS-2 through 12 or their equivalent. The second option was to submit the bidder's NJDOT Notice of Classification, which contains a substantial amount of financial information pertaining to the bidder. If bidders selected the second option, they were also required to submit bid Forms UNC1, a certification regarding their line of credit; and UNC2, a listing of all their contracts. The third option, only available if the bidder was a public company, was to submit its most recent 10K report form with the Securities and Exchange Commission.

Midlantic was the lowest bidder, submitting a bid of $15,128,887. Plaintiff was the second lowest bidder at $15,464,000. Both plaintiff and Midlantic submitted Notices of Classification in lieu of completing the County's financial disclosure forms. Plaintiff is pre-qualified by NJDOT for "Heavy Highway" projects "over $99,999,999", with an "Aggregate Rating" of $105,000,001 to $110,000,000. Midlantic is pre-qualified by NJDOT for individual projects between $8,000,000 to $10,000,000, with an "Aggregate Rating" of $25,000,001 to $30,000,000. Midlantic submitted a Consent of Surety from Liberty Mutual Insurance Company, agreeing to post performance and payment bonds. Liberty Mutual currently affords Midlantic a $35,000,000 overall bonding program (its cumulative capacity) and has authorized bonds for individual projects up to $20,000,000 in value. The amount of Midlantic's outstanding work from other projects is $4,382,309.74. That amount, together with the $15,000,000 County bridge project, is not only within the NJDOT "Aggregate Rating" for Midlantic, but also within Liberty Mutual's aggregate bonding program.

On September 19, 2006, the County awarded the contract to Midlantic. On September 21, 2006, Ferreira filed its complaint by way of order to show cause (OTSC), requesting that an order be entered: 1) temporarily restraining and enjoining the County from entering into the contract for the project with Midlantic; 2) temporarily restraining and enjoining the County and Midlantic from performing any work on the project if the contract had already been awarded; 3) declaring any contract between the County and Midlantic void; and 4) directing the County to award the contract to Ferreira. On October 3, 2006, Judge Ciccone denied plaintiff's application, stating:

Here, plaintiff Ferreira's request for injunctive relief against the defendant Somerset County, as well as Midlantic Construction should be denied. The actions of the defendant Somerset County in awarding the public contract to the low bidder defendant Midlantic were not arbitrary, capricious or unreasonable.

Contrary to plaintiff Ferreira's arguments, New Jersey Statute 40A:11-28 does not mandate the County to establish or utilize a classification or prequalification system. Instead, it provides that the governing body of any contracting unit may establish reasonable regulations with regards to prequalification and qualification of bidders.

Defendant Somerset County exercised its reasonable discretion when it chose to eliminate the New Jersey DOT prequalification system as part of the bidding process. The County eliminated this requirement from its bidding process in an attempt to increase the pool of bidders that would be available to bid on the project. The result of that is increased competition and is good for the taxpayer and the public at large. Indeed, the County's actions support the very purpose of the public bid law, which is to secure for the ...

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