Influence the Outcome: A Contractor's Guide to NJDOT's Proposed Bidding Rules

This guide outlines the key modifications and their potential impacts, demonstrating how the new framework grants the Department substantial discretionary authority and imposes several challenging new requirements. Most importantly, it explains how you can act now to help influence the final rule.

Here is a breakdown of the proposed modifications and the specific administrative and time burdens they could create for your business:

Proposed Changes to Prequalification Process

While prequalification will still be determined based on two primary criteria: Financial Capability and Acceptable Past Performance or Work Experience, the data considered by the NJDOT will change under the proposed regulations.

1. Despite Complicated Regulations, the NJDOT Wants to Reserve Complete Discretion in Prequalification Decisions.

One of the more troubling changes is the department’s reservation of unrestrained discretion in prequalification.

• In the current regulations, the NJDOT does not reserve the right to change its prequalification decision during the prequalification period, and it can only deny prequalification for “good cause.” In the proposed regulations, the NJDOT added a “catchall” provision that gives the department complete discretion to “not prequalify any contractor” or to change a classification.
• Each new discretionary power creates a substantial burden of uncertainty and can result in a significant financial loss from reduced bidding opportunities. This is because bidders will not know when the department will choose to exercise its discretion rather than follow the result of the formulas in the regulations.
• Expanded Discretionary Authority Over Contractors with High Performance Reviews. Under the current regulations, a contractor with performance scores of 70 or above “will” be prequalified in the amount of its financial capability. The proposed regulations diminish this prequalification to a suggestion by allowing the department to reduce a prequalification due to “unsatisfactory performance.” Given the lack of clear criteria on what the NJDOT will consider as “unsatisfactory,” NJDOT project managers will have significant power to impact a contractor’s prequalification bidding capacity.
• Expanded Discretion Over Prequalification of All Contractors. A single “unsatisfactory performance” rating, or a project that the department determines was “significantly unsatisfactory” could empower NJDOT to reduce a contractor’s work classification limit for a period of up to five years, or allow the NJDOT to mandate a “performance improvement plan” (“PIP”).
• The NJDOT would like to be able to take these actions “at any time, whether the contractor is currently prequalified to bid . . . or is seeking to renew or change its prequalification.” In other words, one bad job for a contractor with reviews below 70 could lead to the NJDOT reducing the bidding capacity of a contractor even if it just renewed its prequalification.
• The obligation to counter any mediocre performance. Reviews, project complaints or to comply with a PIP, would be burdensome for many contractors.

2. Contractors’ Recent Performance Will Dictate Prequalification

• Emphasis on Recent Performance: A contractor’s rating will now be based on a four-year look-back period, reduced from the previous 12-year period. This places a greater weight on recent projects and increases the significance of “one bad job.”

3. Revisions to Financial Documentation and Reporting Standards

• New Financial Statement Options: Contractors can now submit financial statements for a 6-month accounting cycle, not just a 12-month cycle, which offers greater flexibility. However, choosing this option means prequalification will only be valid for 9 months, doubling the frequency of this significant administrative task compared to the 12-month accounting cycle.
• Important Note on Statement Type: Submitting a CPA-reviewed financial statement, rather than a CPA-audit, will cap a contractor’s maximum project bidding capacity at $10,000,000.

4. Updated Formulas for Financial Capability Assessment

The proposed changes could significantly reduce a contractor’s calculated financial capability, potentially affecting their ability to bid on larger projects.

• Net Worth Calculation: The NJDOT proposes to utilize the lesser of a firm’s net working capital or its net worth. Under the current regulations, contractors who have high net worth can boost their financial capability, despite a lower working capital. The proposed approach could lower a firm’s financial rating, especially if they have significant assets but low working capital.
• Impact of Outstanding Loans on Unsecured Liens of Credit: The formula will now explicitly deduct outstanding loans on unsecured lines of credit when calculating financial capability. This introduces a new layer of administrative burden as contractors must meticulously document evidence of loans against credit lines and supply it to NJDOT. It will also reduce the capacity of more leveraged contractors.

5. New Requirements for Joint Venture Classification

The formation of joint ventures is now subject to stricter rules.

• Shared Work Classification Requirement: The new rule states that all contractors listed on a joint venture must share the same, valid work classification required for the specific project.
• This change removes flexibility. For example, two contractors could not joint venture for a large new bridge project that involves dredging unless both contractors are classified in heavy highway, dredging and any required bridge construction classifications.

6. Tight Deadlines for the Appeal of Prequalification Decisions.

A new subchapter establishes formal hearing processes governed by short deadlines and strict procedural requirements.

• A Contractor dissatisfied with a prequalification decision must request a hearing with the Prequalification Committee within 15 days of receiving notice of the assigned or change.
• More challenging is that the hearing request must include all “disputed material fact and legal issues” the contractor intends to present at the hearing. A 15-day deadline is a very tight timeline for such an onerous hearing request.

Other Proposed Changes to Bidding, Bid Protests and Appeals

1. Bidding

While most of the proposed changes to the bidding regulations update the regulations to conform to a fully online bidding process, a few make more substantive changes.

• Bid Protests: A written protest must be received by the Director of the Division of Procurement no more than 5 calendar days after the bid opening or after the date on the notice of a bid rejection. This is an exceptionally tight window, leaving no time to waste in preparing a detailed, factually and legally sound challenge.
  • Basing the five-day time to appeal on the date of the notice is also highly problematic, as a contractor could miss the deadline due to delivery delays, a very short vacation, an illness, or a holiday.

2. Debarment, Suspension, or Disqualification Appeals

Contractors also have only 15 calendar days from the date on the notice to request a hearing to appeal debarment, suspension, or disqualification.

• Failure to meet this deadline or the strict pleading requirements can result in a summary denial, without hearing, potentially barring a contractor from NJDOT work for up to five years.
• This is highly problematic; the decision-maker at a contractor may not receive the notice for a week or more and would only have days to put together a complex hearing request.

3. Imperative Requirement for all Hearings

A request for a hearing must specify all disputed material facts and legal issues. Failure to do so will result in outright denial.

• The short deadlines make it exceptionally difficult to gather all necessary information and consult with counsel in time.

Can I do Anything About These Proposed Regulations?

Yes. The NJDOT is accepting written comments on the proposed regulation changes through November 1, 2025. We can help you draft comments to the proposed regulations and explain to the NJDOT how the regulations would negatively affect your industry or public procurement. With enough feedback from contractors, the NJDOT may pivot on some of the more egregious changes.

Some version of these proposed regulations will be implemented. Navigating regulatory changes can be complex, and our team can help you walk through how they may affect your business. When the time comes to bid on new projects, we’ll be available to guide you through the process and any appeals that may follow.