FALASCA MECHANICAL, INC v. GLOUCESTER COUNTY IMPROVEMENT AUTHORITY

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1757-08T11757-08T1

A-1872-08T1

FALASCA MECHANICAL, INC.,

Plaintiff-Appellant,

v.

GLOUCESTER COUNTY IMPROVEMENT

AUTHORITY, DOLAN MECHANICAL,

INC., DELAWARE VALLEY MECHANICAL

CONTRACTORS, INC., and

SURETY MECHANICAL SERVICES OF

NEW JERSEY, L.L.C.,

Defendants-Respondents.

____________________________________

FALASCA MECHANICAL, INC.,

Plaintiff-Respondent,

v.

GLOUCESTER COUNTY IMPROVEMENT

AUTHORITY, DOLAN MECHANICAL,

INC., DELAWARE VALLEY MECHANICAL

CONTRACTORS, INC.,

Defendants-Respondents,

and

SURETY MECHANICAL SERVICES OF

NEW JERSEY, L.L.C.,

Defendant-Appellant.

_______________________________

 
Argued May 11, 2009 - Decided

Before Judges Reisner, Sapp-Peterson and Alvarez.

On appeal from the Superior Court of New Jersey, Law Division, Gloucester County,

L-1589-08.

Dean E. Weisgold argued the cause for appellant in A-1757-08T1 and respondent in A-1872-08T1 (Dean E. Weisgold, P.C., attorney; Mr. Weisgold and Leonard A. Windish, on the brief).

Andrew B. Cohn argued the cause for respondent in A-1757-08T1 and appellant in A-1872-08T1 (Kaplin Stewart Meloff Reiter & Stein, P.C., attorneys; Mr. Cohn and Lisa A. Buckalew, of counsel and on the brief).

Dawnn E. Briddell argued the cause for respondent Gloucester County Improvement Authority (Wolfblock, L.L.P., attorneys; Harvey C. Johnson and Ms. Briddell, of counsel and on the brief).

Jose W. Hernandez argued the cause for respondent Dolan Mechanical, Inc. (The Ferrara Law Firm, attorneys; Mr. Hernandez, on the brief).

Dennis P. Talty argued the cause for respondent Delaware Valley Mechanical Contractors, Inc. (Law Firm of Dennis P. Talty, attorney; Mr. Talty and Amanda Noble, on the brief).

PER CURIAM

This is a public bidding case. Falasca Mechanical, Inc. (Falasca) and Surety Mechanical Services of New Jersey, L.L.C. (Surety), appeal from a November 19, 2008 trial court order rejecting their challenges to the Gloucester County Improvement Authority's (GCIA) award of plumbing and mechanical contracts to Delaware Valley Mechanical Contractors, Inc. (Delaware) and Dolan Mechanical, Inc. (Dolan).

In an order dated December 12, 2008, we denied Falasca's and Surety's emergent stay applications, agreeing with the trial judge that they had not demonstrated a likelihood of success on the merits of their appeals. Noting the trial court's cogent oral opinion of November 12, 2008, we further reasoned that the "public interest in completing the work involved outweighs applicants' interest in delaying the work pending appeal" and that "the applicants inexplicably delayed applying to us for a stay for several weeks after the trial court issued its decision." In an order dated January 27, 2009, we denied a second stay application from Surety, but consolidated and accelerated these appeals. We now affirm.

I

This is what happened. The GCIA advertised for bids on a project for improvements to the Gloucester County Justice Complex. The bid specifications required each bidder to list its subcontractors and indicated that, if the contractor was not going to use subcontractors for a particular trade or sub-trade, it must so specify. The bid specifications also required bidders to provide a business registration certificate (BRC) for each subcontractor listed in the bid. The bid specifications further provided that, once a bid was awarded, the successful bidder could not change subcontractors without submitting a written application and obtaining written permission from the GCIC. Among other things, the application had to list the reasons for the change and "any potential savings or additional costs that may be derived as a result of the change."

Falasca was the low bidder on two of the five separate prime bids for the project: (1) plumbing and fire protection construction, and (2) mechanical construction. Surety was the second lowest bidder on the mechanical contract. However, GCIA rejected Falasca's and Surety's bids due to what GCIA considered non-waivable defects. GCIA awarded the mechanical contract to Delaware Valley, the third lowest bidder. It awarded the plumbing and fire protection contract to the second lowest bidder, Dolan.

GCIA rejected Falasca's bid because it failed to list all of its subcontractors and failed to provide BRCs for all of the subcontractors it did list. GCIA's stated reasons for including those requirements was to ensure that the subcontractors were legally authorized to perform the work, and to prevent the contractors from engaging in "bid shopping" or price negotiation with potential subcontractors after the bid was awarded. However, as the trial judge noted, there were other flaws in Falasca's bids. In particular, on both bids, the signature of the company president on the bid was not attested, and on the mechanical bid the total sum of the bid was higher than the mathematical sum of the amounts listed for each segment of the work.

Surety's bid was rejected for failure to provide BRCs for three of its subcontractors. Surety contended that GCIA properly rejected Falasca's bid for failure to list all of its subcontractors, because the listing requirement was designed to prevent bid shopping. Surety conceded it failed to provide BRCs for all of its subcontractors, and agreed that GCIA had made mandatory the requirement that bidders supply BRCs for all listed subcontractors. However, Surety argued that, unlike the listing requirement, the BRC requirement was waivable.

In an oral opinion placed on the record on November 12, 2008, the trial judge considered GCIA's alternative arguments that N.J.S.A. 40A:11-23.2 required bidders to list all subcontractors and provide BRCs for them, or that GCIA "was permitted and did make both requirements mandatory." The judge found as fact that the bid specifications mandated a "list of all sub-contractors" and BRCs for all subcontractors, and notified bidders that failure to submit those items was cause for automatic rejection of a bid. The judge reasoned that N.J.S.A. 40A:11-23.2 did not in itself require the list or the BRCs, because that section referenced N.J.S.A. 40A:11-16, which in turn only required a list of subcontractors where a bidder was bidding on an entire job, as opposed to bidding on a portion of the work, as was done here.

However, the judge also accepted GCIA's contention that the subcontractor list and the BRCs are mandatory and non-waivable if the governing body chooses to designate them as mandatory in the bid specifications: "I find that GCIA had the right and authority to require sub-contractor information and BRCs even if N.J.S.A. 40A:11-23.2 did not require them. It also had the authority to make the information mandatory . . . and disqualifying both Falasca and Surety for failure to comply was not an abuse of discretion." The judge accepted GCIA's contention that the absence of a BRC would affect competitive bidding, because other potential bidders "may not have bid because they could not or had not obtained BRCs for sub-contractors. Had they known that the GCIA would consider waiving the requirement they might have bid, thus giving GCIA a broader spectrum of bidders on the contracts."

The judge also concluded that both Falasca's and Surety's bids contained additional fatal flaws: Falasca failed to list all of its subcontractors and did not "clearly indicate the areas it would be self-performing"; Falasca also "failed to provide a properly executed signature page," which was a mandatory item; and "Falasca's breakdown of pricing doesn't match the bid. And there is no reasonable explanation for the discrepancy." The judge found that "Surety failed to provide apprentice program information which was also mandatory under the bid specifications," and "submitted bid bonds that did not match the bid."

II

Like the trial judge, we review the GCIA's decision for abuse of discretion. Serenity Contracting Group, Inc. v. Borough of Ft. Lee, 306 N.J. Super. 151, 156-57 (App. Div. 1997), certif. denied, 153 N.J. 214 (1998); Palamar Constr., Inc. v. Twp. of Pennsauken, 196 N.J. Super. 241, 250 (1983). Finding none, we affirm. While we address the merits despite the possible mootness of this dispute, in the circumstances of this case Falasca's and Surety's appellate contentions have no merit and warrant no discussion beyond the following comments. See R. 2:11-3(e)(1)(E).

In Star of the Sea Concrete Corp. v. Lucas Brothers, Inc., 370 N.J. Super. 60 (App. Div. 2004), we construed N.J.S.A. 40A:11-23.2, which provides that when the bid specifications require a bidder to list subcontractors, the failure to include this information with the bid is a non-waivable defect. We rejected an attempt by Lucas Brothers to limit the non-waivability to situations in which other portions of the bidding statute, e.g., N.J.S.A. 40A:11-16, require the listing of subcontractors. Rather, we recognized that, even before the adoption of N.J.S.A. 40A:11-23.2, failure to list subcontractors was a non-waivable defect:

In Gaglioti [Contracting, Inc. v. City of Hoboken, 307 N.J. Super. 421 (App. Div. 1997)], which was decided before N.J.S.A. 40A:11-23.2 was adopted, we concluded that a list of subcontractors was material and nonwaivable. 307 N.J. Super. at 431. We explained that the "list of subcontractors [requirement] . . . prevents a general contractor from negotiating or renegotiating with subcontractors after it is awarded the contract." Ibid. If the general contractor could negotiate with subcontractors after the contract was awarded, any savings achieved would not inure to the public. Governor's Reconsideration and Recommendation Statement, S. 1029, L. 1987, c. 48. Allowing such conduct "'would adversely affect competitive bidding by placing a bidder in a position of advantage.'" Gaglioti, supra, 307 N.J. Super. at 433 (quoting Twp. of River Vale v. R.J. Longo Constr. Co., 127 N.J. Super. 207, 216 (Law Div. 1974)(emphasis omitted)).

Moreover, the subcontractor list requirement "may have deterred others who would have bid, had they known that the condition would be waived." Id. at 433. Thus, waiver of the requirement may also cause the bidding process to be unfair. Ibid.

In the absence of N.J.S.A. 40A:11-23.2, a list of subcontractors, when required by the contracting entity, would be material and nonwaivable. We cannot accept an argument that would reverse this result because of the adoption of N.J.S.A. 40A:11-23.2.

[Id. at 69-70.]

In other words, N.J.S.A. 40A:11-23.2 does not limit a public entity's discretion to require lists of subcontractors and to deem those lists mandatory and non-waivable. In Gaglioti, we emphasized the importance of strict compliance with requirements to list subcontractors, to prevent bid shopping. We also recognized that "an opportunity for favoritism is created by the award of a contract to one who fails to submit a bid in full compliance with the bidding requirements." Gaglioti, supra, 307 N.J. Super. at 433.

Even if not specifically required by statute, a requirement stated in the bid specifications cannot be waived unless waiver would meet the following test:

[F]irst, 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.

[Twp. of River Vale v. R. J. Longo Constr. Co., 127 N.J. Super. 207, 216 (Law Div. 1974).]

See also Meadowbrook Carting Co., Inc. v. Borough of Island Heights, 138 N.J. 307, 315 (1994)(adopting River Vale test). We agree with the trial judge that, whether or not the BRCs and the list of subcontractors are specifically mandated by statute, GCIA had the right to require them as part of the bid specifications and GCIA did not abuse its discretion in deeming them non-waivable. See Star of the Sea, supra, 370 N.J. Super. at 69-70; P & A Constr., Inc. v. Twp. of Woodbridge, 365 N.J. Super. 164, 174-77 (App. Div. 2004).

We reject Falasca's argument that the bid specifications were confusing. Falasca did not file a timely challenge to the specifications. See N.J.S.A. 40A:11-13. Moreover, if either appellant had questions about the bid specifications, it was their responsibility to obtain clarification before submitting their bids. See Dugan Constr. Co., Inc. v. N.J. Tpk. Auth., 398 N.J. Super. 229, 241 (App. Div.), certif. denied, 196 N.J. 346 (2008). Falasca's additional appellate contentions are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

In its appeal, Surety admits that GCIA's bid documents made mandatory the submission of BRCs for the listed subcontractors and provided that failure to provide the BRCs would cause the bid to be rejected. Surety admits that its bid identified three subcontractors for which it failed to submit BRCs. Surety contends, however, that the defect is waivable because these subcontractors were in fact registered, other bidders had submitted BRCs for two of these subcontractors, and GCIA could have looked up the BRCs on the internet. We find no merit in these contentions.

The issue is not whether GCIA might conceivably have exercised its discretion differently, to accept the bid if Surety had expeditiously acted to correct the defect (which it did not). See Palamar, supra, 196 N.J. Super. at 256-57. GCIA articulated sensible policy reasons for requiring the BRCs to be submitted with the bids, and we cannot say this was an abuse of discretion. See Serenity, supra, 306 N.J. Super. at 157-60; William A. Carey & Co. v. Borough of Fair Lawn, 37 N.J. Super. 159, 166 (App. Div. 1955). GCIA contends that it was not unreasonable for the agency to want to know in advance "that there would be no issues concerning delay over registration and that all subcontractors . . . were registered under New Jersey law." We agree. Moreover, having clearly stated its requirements in the bid specifications, the agency was entitled to consider each bid on its merits, and was not obligated to conduct research to fill in gaps left by a bidder who omitted required information. Surety has cited no case law or statute placing such an obligation on GCIA.

Affirmed.

 

The GCIA initially also questioned why Falasca's bid package included business registration certificates for subcontractors not listed in the bid submission. Falasca responded that it had obtained those BRCs just in case it intended to list those subs in its bid and inadvertently included them in the bid package. The GCIA staff acknowledged Falasca's position but also discovered that in addition to providing BRCs for unlisted subs, Falasca had listed subcontractors for which it did not provide BRCs.

On this appeal, Falasca speculates that the successful bidders must have failed to list some of their subcontractors, but Falasca presented no legally competent evidence in the trial court to support that claim.

At oral argument in the trial court, GCIA's attorney explained that the agency did an initial screening of the bids as soon as they were opened, rejecting those with material defects before considering the remaining responsive bids.

(continued)

(continued)

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A-1757-08T1

June 26, 2009