FERREIRA CONSTRUCTION CO., INC. v. THE BOARD OF CHOSEN FREEHOLDERS OF THE COUNTY OF SOMERSET, et al.
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
DOCKET NO. A-0987-06T50987-06T5
FERREIRA CONSTRUCTION CO., INC.
THE BOARD OF CHOSEN FREEHOLDERS OF
THE COUNTY OF SOMERSET, and
MIDLANTIC CONSTRUCTION, LLC,
Argued June 5, 2006 - Decided June 28, 2007
Before Judges Coburn, Axelrad and Gilroy.
On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Docket No. 1400-06.
Louis A. Modugno argued the cause for appellant (McElroy, Deutsch, Mulvaney & Carpenter, attorneys; Mr. Modugno and John W. Morris, of counsel; Craig H. Parker and Jonathan P. Vuotto, on the brief).
Anthony J. Belkowski argued the cause for respondent Midlantic Construction, LLC (Hedinger & Lawless, attorneys; Mr. Belkowski and Robert Hedinger, on the brief).
Thomas C. Miller, Somerset County Counsel, argued the cause for respondent the Board of Chosen Freeholders of the County of Somerset.
(Mr. Miller, on the letter relying on the brief filed on behalf of respondent Midlantic Construction, LLC.)
Plaintiff Ferreira Construction Co., Inc., appeals the award of a construction contract by the Board of Chosen Freeholders of the County of Somerset (County) to Midlantic Construction, LLC (Midlantic). We affirm.
In July 2006, the County invited bids for the replacement of County Bridge No. G0702 over the Raritan River. Instead of using the New Jersey Department of Transportation (NJDOT) Standard Specifications for Road and Bridge Construction, 2001 Edition (Standard Specifications), in its entirety, the County opted to delete Paragraph 102.01 from its bid requirements for the project, which paragraph requires bidders to be pre-qualified with the NJDOT before submitting a bid. Instead, the County included the following language in its supplementary specifications:
Bids will not be accepted from bidders who are included in the report of suspensions, debarments and disqualifications of firms and individuals as maintained by the Department of Treasury, Division of Building and Construction, Bureau of Contractor Qualification . . . any bidders on said list of suspensions, debarments and disqualifications are disqualified as a bidder and deemed not [to be] a responsible bidder or contractor.
In addition, the County required that the contractor provide a Consent of Surety whereby a surety, qualified under N.J.S.A. 2A:44-143 to conduct business in the State of New Jersey, commits to post performance and payment bonds if the contractor is the low bidder and is awarded the project. The County also solicited information from each bidder concerning the bidder's financial condition.
The County provided bidders three options to comply with the financial statement solicitation. The first option was to complete and submit financial statement bid Forms FS-2 through 12 or their equivalent. The second option was to submit the bidder's NJDOT Notice of Classification, which contains a substantial amount of financial information pertaining to the bidder. If bidders selected the second option, they were also required to submit bid Forms UNC1, a certification regarding their line of credit; and UNC2, a listing of all their contracts. The third option, only available if the bidder was a public company, was to submit its most recent 10K report form with the Securities and Exchange Commission.
Midlantic was the lowest bidder, submitting a bid of $15,128,887. Plaintiff was the second lowest bidder at $15,464,000. Both plaintiff and Midlantic submitted Notices of Classification in lieu of completing the County's financial disclosure forms. Plaintiff is pre-qualified by NJDOT for "Heavy Highway" projects "over $99,999,999", with an "Aggregate Rating" of $105,000,001 to $110,000,000. Midlantic is pre-qualified by NJDOT for individual projects between $8,000,000 to $10,000,000, with an "Aggregate Rating" of $25,000,001 to $30,000,000. Midlantic submitted a Consent of Surety from Liberty Mutual Insurance Company, agreeing to post performance and payment bonds. Liberty Mutual currently affords Midlantic a $35,000,000 overall bonding program (its cumulative capacity) and has authorized bonds for individual projects up to $20,000,000 in value. The amount of Midlantic's outstanding work from other projects is $4,382,309.74. That amount, together with the $15,000,000 County bridge project, is not only within the NJDOT "Aggregate Rating" for Midlantic, but also within Liberty Mutual's aggregate bonding program.
On September 19, 2006, the County awarded the contract to Midlantic. On September 21, 2006, Ferreira filed its complaint by way of order to show cause (OTSC), requesting that an order be entered: 1) temporarily restraining and enjoining the County from entering into the contract for the project with Midlantic; 2) temporarily restraining and enjoining the County and Midlantic from performing any work on the project if the contract had already been awarded; 3) declaring any contract between the County and Midlantic void; and 4) directing the County to award the contract to Ferreira. On October 3, 2006, Judge Ciccone denied plaintiff's application, stating:
Here, plaintiff Ferreira's request for injunctive relief against the defendant Somerset County, as well as Midlantic Construction should be denied. The actions of the defendant Somerset County in awarding the public contract to the low bidder defendant Midlantic were not arbitrary, capricious or unreasonable.
Contrary to plaintiff Ferreira's arguments, New Jersey Statute 40A:11-28 does not mandate the County to establish or utilize a classification or prequalification system. Instead, it provides that the governing body of any contracting unit may establish reasonable regulations with regards to prequalification and qualification of bidders.
Defendant Somerset County exercised its reasonable discretion when it chose to eliminate the New Jersey DOT prequalification system as part of the bidding process. The County eliminated this requirement from its bidding process in an attempt to increase the pool of bidders that would be available to bid on the project. The result of that is increased competition and is good for the taxpayer and the public at large. Indeed, the County's actions support the very purpose of the public bid law, which is to secure for the public the benefit of unfettered competition. MEADOWBROOK CARTING, 138 New Jersey at 313, or TERMINAL CONSTRUCTION at 67 New Jersey at 410.
Given the County's decision to eliminate New Jersey DOT prequalification system from the bidding process, defendant Midlantic was thus a qualified bidder for the project. Where a bidder fails to comply with the owner's bid solicitation or fails to submit a required document, its bid is subject to rejection. That's P&A CONSTRUCTION V. TOWNSHIP OF EDISON.
This is not the case here. Defendant Midlantic supplied all the necessary documentation[.] [I]t included [documentation that] it had never been suspended, disbarred or disqualified, [and] documentation the County required as a substitute for [the] New Jersey Department of Transportation prequalification requirements.
Since the defendant Midlantic complied with the County bid specifications and then in fact is a qualified bidder and the lowest bidder, it is awarded the contract for the project, and as a result plaintiff Ferreira's request for injunctive relief and restraints from enjoining the defendant Somerset County and Midlantic Construction from entering the contract is therefore denied.
A confirming order was entered the same day.
On appeal, plaintiff argues: 1) the County's award of the contract to Midlantic violates New Jersey public policy and should therefore be vacated and the contract awarded to plaintiff; and 2) the County's award of the contract to Midlantic based on Midlantic's unresponsive bid was arbitrary, capricious, and unreasonable.
We have considered plaintiff's arguments in light of the applicable law and briefs. We are not persuaded by either of the arguments and affirm substantially for the reasons articulated by Judge Ciccone in her oral decision of October 3, 2006. R. 2:11-3(e)(1)(A) and (E). Nevertheless, we add the following comment.
Plaintiff argues that by affording bidders the option of providing the Notice of Classification in lieu of submitting financial statement forms, the County reinstated the need for NJDOT pre-qualification, the bid requirement which the County eliminated when it deleted Paragraph 102.01 of the NJDOT's standards of specifications for road and bridge construction. We disagree.
A reviewing court cannot overturn a governing body's decision absent a finding that the decision was arbitrary, capricious or unreasonable. 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. It is not the function of a reviewing court to substitute its judgment for that of the municipality's governing body, and the court is bound by the record before the governing body. Palamar Construction, Inc. v. Tp. of Pennsauken, 196 N.J. Super. 241, 250 (App. Div. 1983).
N.J.S.A. 40A:11-25 states:
The governing body of any contracting unit may establish reasonable regulations appropriate for controlling the qualifications of prospective bidders upon contracts to be awarded on behalf of the contracting unit . . . which may fix the qualifications required according to the financial ability and experience of the bidders and the capital and equipment available to them pertinent to and reasonably related to the . . . contract, and reasonably may require each bidder to furnish a statement thereof . . . .
Here, the County declined to use the NJDOT's pre-qualification guidelines. Rather, it offered the pre-qualification guideline as one of three methods by which a bidder could comply with the financial statement solicitation. The bid documents do not state that if a bidder selected the option of submitting the Notice of Classification, the effect of that selection was to reinstate the NJDOT pre-qualification guideline requirement. Nor does N.J.S.A. 40A:11-28 mandate that the County utilize a classification or pre-qualification system. The statute only requires that a public entity establish "reasonable regulations for the controlling of the qualifications of prospective bidders." We find the County's regulations reasonable.
June 28, 2007