New Jersey Public Bidding Laws Do Not Allow Unsuccessful Bidder to Seek Damages from Public Contract Recipient

New Jersey Public Bidding Laws Do Not Allow Unsuccessful Bidder to Seek Damages from Contract RecipientWhile unsuccessful bidders may challenge a bid rejection, no cause of action exists for damages by an unsuccessful bidder against the bidder who was awarded the contract, according to a recent decision by the Appellate Division of the New Jersey Superior Court.

The Facts of the Case

In Brockwell & Carrington Contractors, Inc. v. Dobco, Inc., the Carlstadt-East Rutherford Board of Education (Board) opened competitive bidding for a renovation project at one of its schools. Defendant Dobco, Inc. (Dobco) was the lowest bidder and subsequently awarded the contract, while plaintiff Brockwell & Carrington Contractors, Inc. (Brockwell) was the fourth lowest bidder.

Dobco’s bid submission identified Environmental Climate Control, Inc. (ECC) as its heating, ventilation and air-conditioning subcontractor for the project. In connection with that submission, ECC provided a notice of classification and “State of New Jersey Form DBC 701” (Form 701), both of which are required before a contractor or subcontractor may become eligible to submit bids on public works projects.

More specifically, under New Jersey’s school bidding laws, every bidder must complete a classification process performed by the Division of Property Management and Construction (DPMC) to determine the maximum amount of public work on which it is qualified to bid, known as the “aggregate rating.” To ensure compliance, every bidder must certify via Form 701 that the bid proposal, “when added to its backlog of uncompleted construction work,” will not exceed the aggregate rating.

In this case, Brockwell argued that at ECC was not qualified to participate in the project because the value of its subcontract, when combined with its outstanding projects, would place ECC above its aggregate rating limit. Brockwell further maintained that this rendered Dobco’s bid materially deficient and thus precluded the Board from legally awarding Dobco the contract.

After ECC provided additional information, the Board determined that Dobco was qualified to perform the contract. Thereafter, Brockwell filed a complaint alleging that ECC’s submissions contained inaccurate, incomplete, and misleading information for the purpose of inducing the Board to award the contract to Dobco; it further sought compensatory damages incurred as a result of Dobco’s misleading submission.

The Court’s Decision

The Appellate Division ultimately upheld the trial court’s dismissal of Brockwell’s claim. As explained by the court, under New Jersey’ public bidding laws, “a bidder claiming to be entitled to the award of a contract for public work has long been held to have sufficient standing to challenge the rejection of his bid or the letting of the contract to another bidder, and to compel the award of the contract to him.” However, in this case, the plaintiff attempted to assert an implied private civil remedy for money damages under New Jersey’s public bidding laws.

As detailed in the opinion, the panel concluded that no such cause of action exists under New Jersey law, finding that “the statutes governing public contracts were not enacted for the special benefit of bidders, and that an implied civil remedy would be inconsistent with the purposes of those laws.”

As further explained by the court, “To authorize a private cause of action would reduce an unsuccessful bidder’s incentive to promptly and comprehensively challenge an award that is improper or illegal under the bidding laws. The bid protest process affords unsuccessful bidders like Brockwell, a full and fair opportunity to challenge the intended award of a public contract, on the grounds that the competing bid submissions do not comply with the bidding laws.”

For more information about this case or the legal issues involved, we encourage you to contact a member of Scarinci Hollenbeck’s Government Law Group.

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