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Alaska Services, Inc. v. County of Morris


August 23, 2007


On appeal from the Superior Court of New Jersey, Law Division, Morris County, Docket No. L-1283-06.

Per curiam.


Argued May 1, 2007

Before Judges Graves and Lihotz.

The issue presented for consideration is whether a county contract to outsource laundry services must be awarded pursuant to the public bidding statute, N.J.S.A. 40A:11-4, or whether such a contract may be awarded subject to the competitive contracting provisions of N.J.S.A. 40A:11-4.1. Plaintiff Alaska Services, Inc., who submitted the lowest bid, appeals from the June 13, 2006 summary judgment in favor of defendants, and the dismissal of its action in lieu of prerogative writs, filed to challenge the competitive contract awarded to defendant Sodexho Operations, LLC. (Sodexho). Plaintiff, additionally appeals from the denial of its motion for reconsideration entered on August 16, 2006.

On February 2, 2006, defendant County of Morris (County) advertised in the Daily Record, its newspaper of record, that it was soliciting proposals for a laundry services provider for the Morris View Nursing Home (MVNH), a county-run long-term nursing care facility, with 315 skilled nursing beds (282 of which are filled), a thirty-bed assisted living unit, and a non-medical adult daycare center serving approximately fifty clients. The MVNH laundry facility operated a full-time service laundry department that collected, laundered, and delivered linen, residential clothing items, staff uniforms, and certain specialty items.

On March 10, 2006, James Abline, the County's purchasing agent, advised all bidders that a revision of the bidding qualifications required the process to begin anew. On March 14, 2006, an advertisement reflecting the revised qualifications was published in the Daily Record. Submissions were due by April 3, 2006.

The revised proposal required that seven items accompany each proposal, including a "Consent of Surety" and a "Corporate Disclosure Statement." The revised proposal also stated that "the County Purchasing Agent reserves the right to reject any or all bids and to waive immaterial formalities." No objections to the specifications were filed. N.J.S.A. 40A:11-13. Only plaintiff, Sodexho, and Healthcare Services Group, Inc. provided submissions. On April 3, 2006, the County informed plaintiff that its proposal was rejected for failure to meet bid specifications. Specifically, the County found plaintiff's submission lacked verifiable references and did not provide for a full-time manager during required laundry operations. Plaintiff was also deemed insufficiently experienced to operate a laundry service at a facility as large as MVNH. Sodexho was awarded the contract.

As a result, on May 9, 2006, plaintiff filed a verified complaint and order to show cause (OTSC) for a temporary restraining order, barring the award of the contract to Sodexho.*fn2 Argument was heard on May 10, and the court scheduled a hearing for June 12, 2006. Plaintiff's requests for a temporary restraining order and expedited discovery were denied by the motion judge, who determined the discovery requests were "premature" given that plaintiff's arguments arose from the bids which had already been submitted. Motions for summary judgment were filed by defendants to be heard on the scheduled hearing date.

The only challenge to the award set forth in plaintiff's complaint was that Sodexho's proposal failed to include a price per pound for the laundry services. Plaintiff also refuted that its proposal failed to provide adequate references and the provision of a full time manager, as required. At the June 13 hearing, plaintiff sought to raise additional arguments challenging the adequacy of Sodexho's bid, which had not been raised in plaintiff's complaint, OTSC, or brief in opposition to defendant's motion for summary judgment. The court, therefore, declined to hear these arguments and limited plaintiff's complaint to those presented in its brief. The motion judge, however, did suggest that plaintiff file a motion for reconsideration on the issues raised for the first time at the hearing.

The motion judge first determined that plaintiff's bid failed to conform to the requisite specifications sought by the County inasmuch as it neither provided for an available full-time manager nor demonstrated past experience working with similar-sized facilities. The contention that Sodexho's submission contained a material violation of the published specifications was rejected. The County, in awarding the contract to Sodexho, noted it could calculate the per pound cost based upon the total price stated in Sodexho's proposal.

The court also determined that pursuant to the process employed, the County awarded the contract to Sodexho as a competitive contract in lieu of public bidding, which required the evaluation and comparison of the bidders based on the documentation provided in the bid submission. Thus, the trial court reasoned, awarding of the contract was governed by N.J.S.A. 40A:11-4.1. Defendants' motions for summary judgment were granted. Plaintiff's motion for reconsideration was denied, after review.

Plaintiff now appeals presenting these issues, which were first raised at the reconsideration hearing:





Plaintiff argues that the County's bid specifications for laundry services must be subject to the provisions of N.J.S.A. 40A:11-4a, which address advertised public bids awarded to the lowest responsible bidder, rather than N.J.S.A. 40A:11-4.1, which delineates when competitive contracting may be used in lieu of public bidding. Plaintiff's principal argument is that N.J.S.A. 40A:11-4.1, applies solely to professional or other "specialized goods and services," requiring "advanced degrees, advanced knowledge, or advanced skill"; while performing "public laundry services" is "unskilled." Further, N.J.S.A. 40A:11-4.1 enumerates specific types of services that fall outside the ambit of the public bidding requirements mandated by N.J.S.A. 40A:11-4, and laundry services is not listed among those specifically listed. Thus, plaintiff maintains, the trial court erred by applying the provisions of N.J.S.A. 40A:11-4.1, to the contract at issue.

We have analyzed the record in light of these contentions and the applicable law. We agree with the motion judge's conclusion to reject as not meritorious plaintiff's challenge to Sodexho's submission. The failure to specifically state the price per pound was a non-material, inconsequential discrepancy, which would not defeat compliance with the solicitation's requisites. See, e.g., Weidner v. Tully Environmental, Inc., 372 N.J. Super. 315, 323-24 (App. Div. 2004).

We also find sufficient credible evidence in the record to support the determination that plaintiff's submission failed to comply with the material provisions in the County's request for proposal. It was required that a "Manager/Supervisor must be on duty at all times while the Laundry Department is in operation," which was elsewhere listed as 5:30 a.m. to 5:00 p.m., every day. Plaintiff's submission on staffing recited the hours for a working supervisor as "6 a.m. to 2 p.m. (or other shifts assigned)" and for a manager as "minimum 40 hr/week" for "5 days/week." This material deficiency is not resolved by consideration of plaintiff's statements that its "main goal was to please [MVNH] administration, nurses and residents" and it intended to "do what ever is necessary to do a good job in accordance with your policies."

Additionally, plaintiff's submission could not demonstrate past experience providing laundry services for a facility as large as that of MVNH. Of plaintiff's two current customers listed, one, a facility with 180 residents, did not respond to the County's inquiry, and the other was for a significantly smaller eighty-bed home.

Although plaintiff's submission may have been the lowest in price, it failed to conform with the specifications of the County and could be rejected. See Meadowbrook Carting Co., Inc. v. Island Heights, 138 N.J. 307, 314-15 (1994). Based on this record, viewing the facts in the light most favorable to plaintiff and, according to plaintiff all favorable inferences, Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995), we conclude the trial court rightly determined that the County's rejection of plaintiff's bid was neither arbitrary nor capricious.

We next examine the issue raised in the motion for reconsideration, which forms the primary basis of plaintiff's appeal, that is, whether the County properly complied with requirements of the Local Public Contracts Law (LPCL), N.J.S.A. 40A:11-1 to -49, in awarding the contract to Sodexho. The LPCL provides that all contracts for the performance of work or services must be advertised for and awarded to the lowest responsible bidder. See N.J.S.A. 40A:11-4.*fn3 The purpose is not to obtain services at the lowest cost but to ensure that bidding on public contracts is fair and free from fraud, thus inviting unfettered honest competition in which bidders are placed on an equal footing. Terminal Constr. Corp. v. Atlantic County Sewage Auth., 67 N.J. 403, 410 (1975); see also Visiting Homemaker Serv. of Hudson County v. Bd. of Chosen Freeholders of County of Hudson, 380 N.J. Super. 596, 606 n. 2 (App. Div. 2005). "Public bidding statutes exist for the benefit of taxpayers, not bidders, and should be construed with sole reference to the public good." Nat'l Waste Recycling, Inc. v. Middlesex County Improvement Auth., 150 N.J. 209, 220 (1997).

Statutory amendments enacted in January 2000, N.J.S.A. 40A:11-4.1 to -4.5, provided public entities with an alternative means of advertising for specific public services. See Weidner, supra, 372 N.J. Super. at 318. The competitive contracting provisions recognize that a governmental entity may have a service need where other factors outweigh the public benefit of cost savings. The Legislature intended to provide a flexible method to award bids by the use of a scoring and evaluation process. Specifically, N.J.S.A. 40A:11-4.4b, establishes a process by which public projects can be awarded on a basis other than the lowest cost. The statute states:

The methodology for awarding of competitive contracts shall be based on an evaluation and ranking, which shall include technical, management, and cost related criteria, and may include a weighting of criteria, all developed in a way that is intended to meet the specific needs of the contracting unit . . . .

Consistent with this provision, the County, in search of a provider of laundry services for the MVNH, considered the bidders' respective abilities to provide full-time management, as well as whether each bidder had experience in comparable settings, which could serve as a predictor of its likely success in servicing the residents and staff at MVNH. The contracting body is entitled to deference in its evaluation of the needs of the contracting unit.

The question of which statute to apply is best examined not by looking to the evaluation process used by the County, as did the motion judge, but by a determination of whether the contract required the "procurement of specialized goods and services" as allowed by N.J.S.A. 40A:11-4.1.

We disagree with plaintiff's suggestion that the provisions of N.J.S.A. 40A:11-4.1 apply solely to "professional services" contracts. First, an examination of the categories of services amenable to competitive contracts includes recreational, homemaker, and food services, which arguably fall outside the statutory definition of professional services.*fn4 Second, professional services are exempt from the rigors of "public advertising for bids and bidding . . . and shall be awarded by resolution of the governing body," as authorized by N.J.S.A. 40A:11-5(1)(a)(i).

We also disagree that the performance of the contract in question is "unskilled," necessitating application only of N.J.S.A. 40A:11-4. The provision of daily laundry services accommodating the numerous residents, who have varying needs, and the requests presented by the staff require specific skills to assure competent and consistent service.

We do agree, however, that N.J.S.A. 40A:11-4.1 is clearly limiting in its application and we find compelling plaintiff's argument, which correctly identifies that the provision of "laundry services" is not enumerated among the "specialized goods and services" found in N.J.S.A. 40A:11-4.1a to -h. Additionally, we are not presented with evidence in this record to suggest the County sought approval for the competitive contract from the Director of the Division of Local Government Services, N.J.S.A. 40A:11-4.1k, notwithstanding the likelihood of approval, as the services sought are similar to others that are listed in the statute. Absent this approval, we find no provision allowing the use of a competitive contract in the instance presented.

The New Jersey Supreme Court has underscored the importance of the unique public policy concerns of LPCL and to "'secure for the public the benefits of unfettered competition,' and to 'guard against favoritism, improvidence, extravagance, and corruption.'" Nat'l Waste Recycling, Inc., supra, 150 N.J. at 219 (quoting Terminal Constr. Corp., supra, 67 N.J. at 410); see also Borough of Princeton v. Bd. of Chosen Freeholders of Mercer, 169 N.J. 135, 155 (2001). Courts have accordingly "curtailed the discretion of local authorities by demanding strict compliance with public bidding guidelines." Borough of Princeton, supra, 169 N.J. at 160. (internal quotations and citations omitted). The County's authority to request proposals for award of a competitive contract is, in fact, limited to the instances specifically enunciated in N.J.S.A. 40A:11-4.1.

Other statutory exemptions to public bidding are found at N.J.S.A. 40A:11-5(1)(a) to -(bb). These exemptions generally apply to situations in which public bidding would be "meaningless or impractical." Nat'l Waste Recycling, Inc., supra, 150 N.J. at 223 (quoting Capasso v. L. Pucillo & Sons, 132 N.J. Super. 542, 550, aff'd, 132 N.J. Super. 473 (App. Div. 1974)). In addition to professional services, contracts to perform "extraordinary unspecifiable services" are exempt.

N.J.S.A. 40A:11-5(1)(a)(ii). "Extraordinary unspecifiable services" is defined to mean "services which are specialized and qualitative in nature requiring expertise, extensive training and proven reputation in the field of endeavor." N.J.A.C. 5:34-1.2. There are few reported cases interpreting the nature of such services; those where the issue is mentioned address insurance, consulting and health-care benefit services. See Local 1081 of Communications Workers of America, AFL-CIO v. Essex County, 255 N.J. Super. 671, 680 (App. Div. 1992). Although this issue was not briefed, it seems clear that the subject contract does not fall within the category of extraordinary unspecifiable services.

As a result of this analysis, we conclude that the Legislature provided no exemption from the public-bidding requirement of N.J.S.A. 40A:11-4, for a laundry services contract absent prior approval to utilize a competitive contract. Yet, we determine a re-bid would be inappropriate and inequitable at this juncture. First, plaintiff did not, itself, satisfy the requirements for successful bidding and its defective bid was properly rejected by the County. Second, as no stay was issued, the county employees who had been performing laundry services were given notices of lay-off and a lay-off plan was filed with the State. Some of the employees transferred to other county positions, and others were integrated by Sodexho as its employees. Were the Sodexho contract declared void, the County no longer has employees to provide laundry functions pending further bidding proceedings. Thus, the MVNH would have no laundry services until a new bid could be confirmed. Third, Sodexho has successfully completed more than one year of the three-year contract. We acknowledge that the County engaged in a fairly conducted, competitive process to retain Sodexho's services for MVNH. Sodexho complied with the County's contract requests as formulated. No hint exists that the award to Sodexho resulted from "favoritism, improvidence, extravagance, and corruption." Nat'l Waste Recycling, Inc., supra, 150 N.J. at 219 (citations omitted). Finally, County taxpayers would bear the cost not only for the re-bidding process, but also for obtaining temporary laundry services to MVNH; costs that may be inordinately excessive. Accordingly, the contract may remain in effect until its termination date. All subsequent contracts for laundry services must be procured in compliance with the LPCL bidding requirements of N.J.S.A. 40A:11-4 or through use of a competitive contract after obtaining approval from the Director of the Division of Local Government Services, N.J.S.A. 40A:11-4.1k. See Nat'l Waste Recycling, Inc., supra, 150 N.J. at 232. We are satisfied that plaintiff's remaining arguments are without sufficient merit to warrant further discussion. R. 2:11-3(e)(1)(E).


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