Don’t Be Fooled — New Jersey Court Warns of Misleading Bid Forms
Under the New Jersey Local Public Contracts Law, bid specifications set forth a list of documents that are required to be submitted along with a bid at the time of the submission. With respect to these mandatory submission requirements, the contracting entity is without discretion to waive a bidder’s failure to comply and any such failure automatically renders a bid fatally defective. When this provision was first added to the Local Public Contracts law about a decade ago, it generated confusion as to whether the enumerated “mandatory requirements” represented an exhaustive list of all fatal and non-waivable defects and, therefore, whether public entities necessarily had discretion to waive any other defects. Since then, New Jersey courts have clarified that there is a broad range of non-waivable bid defects that are not specifically enumerated in the bid statute and, in fact, any other bid defect also can be fatal if it is deemed “material.”
Presumably based on the statute’s mandatory requirements provision, public entities in New Jersey began using standard form “bid document checklists” in their bid packages. Widely used iterations of these forms set forth a checklist of documents separated into two sections. One section lists those documents, if not submitted, “shall be a mandatory cause for the bid to be rejected” and the other lists those that “may be a cause for the bid to be rejected” if not included. The first listing of documents typically consists of the “mandatory requirements” enumerated in the Local Public Contracts Law. While likely intended to assist and aid bidders, the format and ambiguous language of these forms has led to greater confusion regarding a contracting entity’s discretion to waive certain bid defects or omissions.
In fact, a frequently used bidder’s checklist form of this type issued by the state agency responsible for supervising compliance with the Local Public Contracts Law — the New Jersey Division of Local Government Services — was scrutinized by the Appellate Division of the New Jersey Superior Court in P & A Construction, Inc. v. Township of Woodbridge. In this case, the second low bidder on a public project brought an action for injunctive relief against a township, arguing that the apparent low bid should have been rejected because it was not accompanied by a certified financial statement. The standard form document checklist used by the Township listed a certified financial statement as one of the documents where the failure to submit “may” be cause for rejection of the bid. The Township rejected the challenge to the low bid, contending instead that it had the authority and discretion to waive the defect because the financial statement was not one of the documents listed in the mandatory submission checklist. The appellate court held that submission of the financial statement was, in fact, a mandatory, non-waivable requirement despite the fact that it was contained in the “may” be rejected list. The court found that the language in the form stating that failure to submit those documents “may” be cause for rejection only meant that failure to submit one of those documents would result in rejection if the contracting agency found the deficiency material, not that submission was unequivocally optional. Notably, the court specifically acknowledged that the language on the form relating to the submissions that “may” be cause for rejection if not submitted was susceptible to erroneous interpretation by bidders “that a contracting agency has unfettered discretion to waiver a bidder’s failure to submit one of those items.” Consequently, the court explicitly advised and noted that “the language in this standard form should be changed.”
While the Division of Local Government Services, perhaps heeding the court’s warning, appears to have modified its standard form bid document checklist to eliminate the two subsections of documents and the potentially misleading language, it is evident that New Jersey entities continue to use the outdated forms, which the Appellate Division of the Superior Court specifically recognized as causing confusion among bidders. A client recently came to the firm for assistance with this very scenario when its bid on a public project was rejected as non-responsive after being misled by the document checklist form in the bid package and mistakenly believing that it was optional to submit a certified financial statement with its bid. The contracting entity in that case was still using the old standard form checklist, which listed the financial statement in the “may” list.
What is important to remember — and could be critical to the responsiveness of your bid — is that failure to submit any item listed on a bid document checklist is always potential grounds for rejection of a bid irrespective of any qualifying or conditional language included on the form. Additionally, if you are bidding on public projects in New Jersey, you should be aware of and on the lookout for the continued use of the outdated checklist forms, which have been explicitly recognized by courts as capable of erroneous interpretation by bidders. The P & A Construction case serves as an important reminder that, even if a document is identified with qualifying language suggesting that failure to submit the document is not necessarily fatal, the omission of that document nevertheless may cause a bid to be fatally defective if it is considered to be material. To minimize the unnecessary risk of rejection of a bid, make every effort to submit all documents identified in bidder checklists even if you are inclined to believe that the submission of one or more of them may be optional.