In re Bid of Agate Construction Co.

Citations: 335 N.J. Super. 161; 761 A.2d 1110; 2000 N.J. Super. LEXIS 406

Court: New Jersey Superior Court Appellate Division; November 20, 2000; New Jersey; State Appellate Court

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Agate Construction Co. Inc. (Agate) appealed a decision by the Department of Environmental Protection (DEP) that determined Agate was not the lowest bidder for a dredging project in Cape May County, which was awarded to Albrecht Heun, Inc. (Albrecht). The bids were opened on April 19, 2000, with Albrecht's bid at $627,666 and Agate's at $628,296. The project required the deposit and management of dredged materials at a site, with specific requirements for fertilization under Sub-item 4.6, which Agate miscalculated in its bid. Agate initially bid $6,000 for spreading 3,000 pounds of fertilizer but later claimed a calculation error, asserting the correct bid should have been $14.20, leading to a total of $622,310.20, which would have made it the lowest bid.

The DEP rejected Agate's claim, asserting that Agate intended to bid $6,000 based on its calculations and noted that other contractors’ bids for the same item ranged from $200 to $1,756, making Agate's proposed $14.20 price unreasonable. The DEP cited that, per the bid specifications, a discrepancy in unit price and extended total could not be used to alter the bid total to become the lowest bidder. The New Jersey Supreme Court's ruling in Meadowbrook Carting Co. v. Borough of Island Heights reinforced the need for strict compliance with bid specifications, stating that contracts must be awarded to the lowest bidder who meets all substantive and procedural requirements. The court affirmed the DEP's decision, concluding it was inappropriate to adjust Agate's bid.

The Supreme Court established that material conditions in bidding specifications are not subject to waiver, but minor discrepancies can be waived. Judge Pressler's two-part test from Township of River Vale v. R.J. Longo Constr. Co. determines if a deviation is substantial and non-waivable by assessing whether waiving it would deprive the municipality of its assurance regarding contract performance and whether it would unfairly advantage one bidder over others. This test was reaffirmed in Meadowbrook. Bid documents often include rules for resolving bid discrepancies, such as preferring unit prices over total calculations, but these must be applied with discretion. In Public Constructors, Inc. v. New Jersey Expressway Auth., a bright-line rule concerning discrepancies favored a lower bid, but the Supreme Court rejected this rule when it led to an unreasonably high price that did not reflect the bidder's intent. Similarly, in Spina Asphalt Paving Excavating Contractors, Inc. v. Borough of Fairview, a mistake in bid calculations was recognized, resulting in the court affirming the trial court's ruling in favor of Spina due to the clear intent of the bidder.

A determination was made that a bid of $400 per item is excessively high, prompting a waiver of the bright-line rule to avoid such exorbitance. In Colonnelli Bros. Inc. v. Village of Ridgefield Park, a bid was rejected due to the disparity between a written bid of $100 and a numerical bid of $10,000, with the court concluding that the low bid was unrealistic compared to market estimates. The appellate court reversed the trial court's decision, emphasizing the need for municipalities to exercise discretion in awarding contracts and warning against potential bid manipulation if bidders were allowed to clarify figures post-submission.

In the current case, the Department of Environmental Protection (DEP) awarded a contract to Albrecht after determining that Agate's bid of $14.20 for 3,000 pounds of fertilizer was unreasonably low. The DEP concluded that Agate intended a total bid of $6,000 based on a unit price of $2.00 per pound, which both parties acknowledged as the correct unit price. Agate argued that the DEP could not reject its bid due to its low amount, referencing past cases; however, the DEP's rejection was based on the unreasonableness of the bid rather than its nominal nature. The court distinguished this case from Cardell, Inc. v. Township of Madison, as the bidding rules in that case allowed for adjustments that did not result in unreasonable prices. The court affirmed the DEP's decision.