The Battle Continues in Bid Protest Against Bergen County

by Cole Schotz
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Echoing down Main Street in Hackensack is the incessant and repetitive booming of the driving of piles into the ground on what was once the visitor parking lot next to the Courthouse and former jail.  The pile driving is part of Phase I of the most expensive public works project in Bergen County history that will include, among other things, the construction of a new Bergen County Justice Center and parking deck.  In response to the County’s request for bids earlier this year for the construction of those new buildings, Dobco Construction Services (“Dobco”) was low bidder out of seven bids by a substantial margin.  Dobco’s $65,925,000 bid was almost $6 million less than the second lowest bidder, Terminal Construction Corporation (“Terminal”).

Dobco’s bid, however, listed as its electrical subcontractor, Abco Electrical Company LLC (“Abco”), a company with the same ownership as Dobco and which admittedly did not have a licensed electrician as an officer, partner or employee.  As one might expect with so much money at stake, Terminal was not going down without a fight, and claimed that the listing of Abco as electrical subcontractor in Dobco’s bid was a material and non-waivable defect, which disqualified Dobco’s bid.  Terminal’s bid protest to the County, however, was denied.

Terminal then filed an action in lieu of prerogative writs in the Superior Court of New Jersey, Chancery Division (the “Trial Court”), challenging the County’s denial of Terminal’s bid protest and the County’s award of the contract to Dobco.  In a lengthy written decision issued on July 28, the Trial Court rejected Terminal’s claims and dismissed its action with prejudice, determining, among other things, that:  (1) Abco was fully credentialed and bonded, and thus “responsible,” and (2) the failure of Abco to have a licensed electrician as an officer, partner or employee at the time of bid opening would not prevent the County from awarding the contract to Abco, as long as the particular electrician that was listed in the bid document by license number becomes associated with Abco and is the electrician who actually performs the supervisory work pursuant to N.J.S.A. 45:5A-9(a).  Regarding that last point, the Trial Court, citing to the July 23, 2014 New Jersey Supreme Court decision in Mathew J. Barrick v. State of New Jersey (A-8/9-13 (072795), wrote: “the public bidding laws exist for the benefit of the taxpayers and are construed as nearly as possible with sole reference to the public good; their objects are to guard against favoritism, improvidence, extravagance and corruption;  their aim is to secure for the public the benefits of unfiltered competition.  …The public good is not served by rejecting Dobco’s bid.”

After the Trial Court denied Terminal’s motion to reconsider its decision and Terminal’s application for a stay of the contract pending an appeal, Terminal sought emergent relief from the Appellate Division.  Last Monday, August 4, the Appellate Division granted Terminal a slight reprieve, ordering a temporary stay of the performance of Dobco’s contract while it considers Terminal’s motion for its appeal of the Trial Court’s decision to be heard on an emergent basis.  The Appellate Division ordered Terminal to file its motion seeking the emergent relief and a notice of appeal no later than last Friday, August 8, and that opposition be filed by Dobco, the County and the County’s Board of Chosen Freeholders no later than Wednesday, August 13.  While the Appellate Division’s actions in granting a stay pending an emergent review is uncommon, it is understandable where there is a clear public interest at stake (ensuring that such a highly significant public works project was subject to a fair bid process) and if the appeal were heard in the normal course without a stay in place, the ultimate outcome of the appeal may be rendered moot by Dobco’s actual performance of the contract.   Similarly, the Appellate Division would be disinclined to stay the performance of Dobco’s contract pending an appeal in the normal course, as that would cause a substantial delay in the construction of such a critical public project.

In any event, the Appellate Division likely will take prompt action in rejecting or granting Terminal’s appeal, or issuing further orders in regard to its consideration of the appeal.  We will continue to monitor this bid dispute and provide an update when the dust has settled.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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