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Suburban Disposal, Inc v. City of Bayonne and Joseph Smentkowski


March 26, 2012


On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-4770-11.

Per curiam.


Argued February 29, 2012 -

Before Judges Graves, J. N. Harris and Koblitz.

Plaintiff Suburban Disposal, Inc. (Suburban) appeals from an October 7, 2011 order denying its request to restrain the award of solid waste collection and recycling contracts by the City of Bayonne to Joseph Smentkowski, Inc., d/b/a Galaxy Carting (Galaxy). The facts are not in dispute. After reviewing the legal arguments, we determine that Galaxy was not a responsible bidder because, at the time of its bid, it was compliant with neither N.J.A.C. 7:27-32.1 to -32.25, the Diesel Retrofit Program (DRP) regulations, nor the unambiguous language of the bid specifications. We therefore reverse.

Bayonne's contracts for solid waste and recycling collection were set to expire on September 30, 2011. As a result, in April 2011, Bayonne publicly issued specifications to solicit bids for these services. Bayonne then issued an addendum to both contract specifications stating, "[i]n the event of conflict or inconsistency between the terms of this Addendum and the Bid Specifications, the terms of the Addendum shall govern and control."

Under the first Addendum, each bidder was required to sign and submit an affidavit "certifying that the bidder is in full compliance" with the DRP and to also furnish proof of such compliance "upon award" of a contract. Section 4.8 of the Addendum provided:

Any potential bidder shall sign the affidavit attached to this addendum certifying that the bidder is in full compliance with all applicable portions of N.J.A.C. 7:27.32 et seq. ("Diesel Retrofit Program"). The winning bidder shall at all times remain in compliance with the N.J.A.C. 7:27-32 et seq. Non-compliance at any time with said Program shall be deemed a breach of the Contract. In case of non-compliance, the successful bidder may be served by the City with notice to cure. If within 30 days of service, the winning bidder remains in non-compliance with the Diesel Retrofit Program, said bidder may be served with notice of cancellation of the Contract by the City of Bayonne.

The attached "6.9 Affidavit of Compliance With Diesel Retrofit Program" stated in pertinent part:

2. [NAME OF BIDDER] shall provide all documentation, if any, of compliance with N.J.A.C. 7:27-32, et seq., if applicable, upon award of the Contract, at any time new documentation becomes available throughout the duration of the Contract, and at any time if requested by the City of Bayonne or its agents.

Pursuant to N.J.S.A. 40A:11-13 and Section 6.9 of the Bid Specifications, Bayonne provided the following instructions to prospective bidders regarding their right to challenge bid specifications: Per N.J.S.A. 40A:11-13, any prospective bidder who wishes to challenge a bid specification shall file such challenges in writing with the contracting agent no less than three business days prior to the opening of the bids. Challenges filed after that time shall be considered void and having no impact on the contracting unit or the award of the contract.

Suburban did not challenge the bid specifications before the opening of the bids on July 25, 2011. Galaxy bid on both contracts. It was determined to be the lowest bidder for the recycling contract by $128,140 and by $20,820 for the solid waste contract. Suburban was the second lowest bidder on both contracts. By letter to Bayonne dated August 5, 2011, Suburban claimed Galaxy's failure to comply with the DRP compelled Bayonne to reject Galaxy's bids as non-responsive.

On August 10, 2011, Bayonne forwarded Suburban's objection to Galaxy, indicating that "the bid specifications require appropriate documentation, if any, of compliance with the Diesel Retrofit Program, if applicable, upon award of a contract." On August 24, 2011, Bayonne informed Galaxy that it must submit proof of compliance with the DRP on or before September 8, 2011. In late August 2011, Galaxy spent more than $830,000 to purchase four DRP-compliant 2011 and 2012 model year trucks to perform the two contracts.

On September 16, 2011, Suburban filed a verified complaint and an order to show cause seeking to restrain the award of the solid waste and recycling contracts to Galaxy. The trial judge denied the restraints and we granted an emergent stay.

On October 14, 2011, the trial judge issued a written amplification of her reasons for denying Suburban's application pursuant to Rule 2:5-1(b). Suburban, Bayonne's previous contract provider, continues to perform both contracts pending our decision. Bayonne's position is that Galaxy was a responsible bidder because it became compliant with the DRP prior to the award of the contracts, which Bayonne maintains is in compliance with the bid specifications.

Suburban argues on appeal that Galaxy was not a responsible bidder because it lacked DRP-compliant equipment necessary to perform under the contracts on the bid submission date.*fn1

As the judge made a legal decision without the need to resolve contested facts, we independently evaluate her legal assessments de novo. See Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995); Finderne Mgmt. Co., Inc. v. Barrett, 402 N.J. Super. 546, 573 (App. Div. 2008) (indicating that a reviewing court does "not owe any special deference to a trial court's legal conclusion . . . ."), certif. denied, 199 N.J. 542 (2009) (citation omitted). "A reviewing court cannot overturn the decision of a municipal body unless it finds that the decision was arbitrary, capricious and unreasonable." Palamar Constr., Inc. v. Twp. of Pennsauken, 196 N.J. Super. 241, 250 (App. Div. 1983) (citing Kramer v. Sea Girt Bd. of Adj., 45 N.J. 268, 296 (1965)). "Even when doubt is entertained as to the wisdom of the action, or as to some part of it, there can be no judicial declaration of invalidity in the absence of clear abuse of discretion by the public agencies involved." Ibid. (quoting Kramer, supra, 45 N.J. at 296-97).

"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 Cnty. Improvement Auth., 150 N.J. 209, 220 (1997). The statutes' purpose is to foster competition by keeping bidders "on an equal footing and guarding against 'favoritism, improvidence, extravagance and corruption.'" Meadowbrook Carting Co., Inc. v. Borough of Island Heights, 138 N.J. 307, 313 (1994) (quoting Twp. of Hillside v. Sternin, 25 N.J. 317, 322 (1957)). The Supreme Court has curtailed "the discretion of local authorities by demanding strict compliance with public bidding guidelines." L. Pucillo & Sons, Inc. v. Mayor and Council of the Borough of New Milford, 73 N.J. 349, 356 (1977); see also Kurman v. City of Newark, 124 N.J. Super. 89, 94 (App. Div.) ("Statutes calling for public bidding . . . should be construed with sole reference to the public good and rigidly adhered to by the court . . . ."), certif. denied, 63 N.J. 563 (1973).

"As a result, all bids must comply with the terms imposed, and any material departure invalidates a nonconforming bid as well as any contract based upon it." Meadowbrook, supra, 138 N.J. at 314. "It is firmly established in New Jersey that material conditions contained in bidding specifications may not be waived." Terminal Constr. Corp. v. Atlantic Cnty. Sewerage Auth., 67 N.J. 403, 411 (1975) (citing Sternin, supra, 25 N.J. at 324). "However, minor or inconsequential discrepancies and technical omissions can be the subject of waiver." Meadowbrook, supra, 138 N.J. at 314.

In Twp. of River Vale v. R. J. Construction Co., 127 N.J. Super. 207, 216 (Law Div. 1974), Judge Pressler set forth a two-part test for determining "whether a specific noncompliance constitutes a substantial and hence non-waivable irregularity . . . ." It requires a determination: first, whether the effect of a waiver would be to deprive the municipality of its assurance that the contract will be entered into, performed and guaranteed according to its specified requirements, and second, whether it is of such a nature that its waiver would adversely affect competitive bidding by placing a bidder in a position of advantage over other bidders or by otherwise undermining the necessary common standard of competition. [Ibid.]

The Court in Meadowbrook, supra, adopted the above criteria. 138 N.J. at 315. N.J.A.C. 7:26H-6.8(b)(4) requires that a "responsible bidder" be one who "at the time of the bid submission . . . .

[h]as the equipment necessary to perform the work described in the bid specifications." Galaxy's trucks were not compliant with the DRP at the time of its bid submission. Moreover, Galaxy did not purchase proper equipment until after it was informed of its status as the lowest bidder.

One purpose of the DRP, promulgated on August 6, 2007, is "to reduce health risks by . . . lowering the levels of fine particulate diesel emissions emitted from regulated vehicles." N.J.A.C 7:27-32.2. Under the DRP, all owners of vehicles older than model year 2007 performing public solid waste disposal work were to submit a plan to the New Jersey Department of Environmental Protection (DEP) before March 6, 2008, detailing how they proposed to retrofit all vehicles to conform to the current diesel emission standards. N.J.A.C. 7:27-32.1, .8 and .12. The owners of fewer than seventy-five vehicles needing retrofitting then had 120 days to install the best available retrofit technology. N.J.A.C. 7:27-32.18(a)1. They were required to submit a compliance form to the DEP within five business days of installation. N.J.A.C. 7:27-32.20(f). Owners were then eligible for reimbursement of the cost of the purchase and installation of the retrofit devices. N.J.A.C. 7:27-32.24. Galaxy had not submitted a retrofit plan to the DEP for any of its vehicles as of the bid submission date in July 2011.

After Galaxy received a copy of Suburban's letter of objection, Galaxy responded to Bayonne that it was "in the process of insuring that any vehicle used in connection with the Bayonne contract shall be in compliance with the [DRP]." On September 7, 2011, Galaxy provided Bayonne with proof of compliance.

If Galaxy did not comply with the DRP, its performance of the solid waste disposal contract would not be in conformance with State regulation. Thus, if Galaxy decided against performing the contracts after submitting its bid price, its noncompliance with the DRP would have given Galaxy a means through which to avoid the solid waste contract. The interpretation of the bid specifications urged by defendants would provide Galaxy with the unfair advantage of bidding on a contract with an escape hatch in place. Public bid awards should bind the bidder to perform the contract once the bid is accepted.

Also, if defendants' interpretation is adopted, any bidder not in compliance with the DRP could wait to learn if it was the lowest bidder before complying with the DRP. This approach would allow a non-compliant bidder to parlay acceptance of its bid into a better financing position than those who understood the necessity for compliance at the bid submission date. These examples demonstrate why defendants' reading of the bid specifications unfairly advantage Galaxy.

The DEP regulations do not require that recycling contracts use DRP-compliant trucks. However, the bid specifications for both contracts use the same language requiring bidders to be in compliance with the DRP at the time of the bid submission and to prove such compliance at the time the bid award.

Defendants contend that Suburban is merely objecting to the bid specifications, which they interpret as not requiring the bidder to be in compliance with the DRP until the award of the contract. We reject this argument in light of our discussion above. Furthermore, the bid specification contains unambiguous, present-tense language requiring that each bidder sign an affidavit indicating that it "is" in compliance, and the regulatory requirement similarly states that bidders on solid waste collection contracts must "comply with all applicable local, state and Federal laws and regulations in connection with submitting the bid proposal . . . ." N.J.A.C. 7:26H-6.6.

Defendants' proposed interpretation of the bid specifications is antithetical to the goal of the public bidding laws, which is to "foster competition" by keeping bidders "on an equal footing." Meadowbrook Carting, supra, 138 N.J. at 313. Moreover, Galaxy was not in compliance with the bid specifications and was, therefore, not a responsible bidder. Thus, it can not be awarded either contract. We therefore remand to Bayonne to enable it to decide whether to award the contract to Suburban or to take other lawful action pursuant to the Local Public Contracts Law, N.J.S.A. 40A:11-1 to -51.

Reversed and remanded. We do not retain jurisdiction.

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