On appeal from the Department of Education, Docket No.315-11/09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Wefing, Baxter and Koblitz.
This appeal concerns a defective bid submitted by K&M Transportation, Inc. (K&M) for pupil transportation bus routes in Passaic County for the 2009-10 school year, and the refusal of the acting Commissioner of the Department of Education (Commissioner) to order the party aggrieved by the defective bid, namely, the Passaic County Educational Services Commission (PCESC), to demand the forfeiture of the bid bond posted by K&M's surety. We reject the Commissioner's conclusion that because PCESC never tendered a contract to K&M, the surety was not required to forfeit its bid bond. We conclude that K&M's repudiation of the bids it had submitted on six of the eight routes on which K&M was declared to be the successful bidder was sufficient to constitute a disavowal of its duty to perform, and that the actual tendering of a contract by PCESC would have been nothing more than a futile act. We therefore reverse the Commissioner's decision, and remand for consideration of the issue the Commissioner never reached, whether PCESC should have demanded payment on the bid bond that had been submitted by Bondex Insurance Company (Bondex), as the surety for K&M.
I. In August 2009, PCESC solicited bids for transporting pupils on sixty-six different bus routes for the upcoming 2009-10 school year. The bid specifications contained a provision requiring each bidder to submit a bid bond, cashier's or certified check for five percent of the amount of the annual contract cost, up to a maximum of $50,000. The bid specifications described the conditions under which forfeiture of the bid bond would be demanded:
Such deposit shall be forfeited upon refusal of a bidder to execute a contract; otherwise, checks shall be returned when the contract is executed and a surety (performance) bond is filed with [PCESC]. The bid security check for all unsuccessful bidders, except for the three lowest bidders, will be returned within 10 days after the bid opening[.]
Potential bidders were permitted to bid on a portion of the sixty-six routes, and were not required to bid on all.
The specifications stated, "All contractors shall comply with current applicable New Jersey statutes, regulations and with the policies and procedures of the [PCESC] governing student transportation." The specifications also stated, "The contractor shall provide and maintain an adequate number of school buses, including spares, to safely transport any and all students assigned to the routes contained in this bid[.]"
The bid form filled out by each contractor stated, above the signature line, "If I am awarded the bid, I agree to furnish a bus to meet your approval and that of the County Superintendent of Schools and to comply with the rules and regulations of the State Board relating to pupil transportation."
On August 5, 2009, K&M submitted a bid for twenty-nine of the sixty-six bus routes, at a price ranging from $141 to $359 per route. K&M included in its bid submission a bid bond issued by Bondex. At the bid opening, PCESC determined that K&M was the lowest bidder on eight of the twenty-nine routes for which K&M had submitted a bid. PCESC immediately contacted K&M to notify the company that it had been awarded the bid for eight routes. Upon being contacted, K&M informed PCESC that it only had two buses, two drivers, and two aides available, and could therefore only service two of the eight routes on which it was the successful bidder. K&M later explained why it had submitted a bid for twenty-nine routes even though it knew it could only provide drivers and buses for two:
[K&M] did not have the ability to perform on all routes for which [K&M] submitted a bid. [K&M] had the ability to perform on any two routes on which [K&M] bid, but [K&M] was concerned about exclusion from being awarded any routes if [K&M] bid on just two, and was not the low bidder. [K&M] would not have been able to compete for any other routes. [K&M] had two buses, two drivers, and two aides available for Passaic County routes. Other vehicles, drivers and aides were assigned for work elsewhere.
Upon learning that K&M only had two school buses available, PCESC chose not to take the step of tendering a contract to K&M for all eight routes on which K&M was the successful bidder. Instead, PCESC decided to award the contract for routes 3025 and 3026 to K&M. The contracts for routes 3004, 3012, 3013, 3017, 3030 and 3033 were awarded to the next-lowest bidder. Notably, PCESC did not demand that Bondex be required to forfeit its bid bond.
In November 2009, Garden State School Bus Contractors Association (Garden State) and Javier Fernandez (collectively, "petitioners") filed a petition with Rochelle Hendricks, the Acting Commissioner of the Department of Education, asking her to: declare K&M to be an unqualified bidder; declare the contracts between K&M and the PCESC null and void; compel PCESC to call for the forfeiture ...