In Surety Mechanical Services v. Bridgton Board of Education, the Appellate Division of the New Jersey Superior Court upheld the decision of the Bridgton Board of Education to reject all of the bids submitted to perform upgrades at one of its schools. The court concluded that the board was well within its authority to do so and its decision was neither arbitrary nor capricious.
The Facts of the Case
On November 8, 2012, the Bridgton Board of Education published a Bid Invitation and Notice to Bidders to upgrade its high school HVAC system. Plaintiff Surety Mechanical Services was the lowest responsible bidder, since the lowest bid was found materially defective.
However, the Board ultimately passed a resolution that rejected all bids in “in accordance with N.J.S.A. 18A:18A-22”; it further stated that the specifications would be revised and the project would be re-bid. In the revised specification, the only substantial change was the inclusion of additional automatic temperature control manufacturers.
Plaintiff subsequently filed a verified complaint and order to show cause seeking to invalidate the resolution rejecting the bids and to restrain the Board from awarding the HVAC project based upon its invitation to bidders to re-bid. In the suit that followed, Surety Mechanical Services argued that because there was no legitimate basis to re-bid the project, it could reasonably be inferred the Board’s action reflects a bias against it.
The plaintiff further contended that having articulated one reason for rejecting all bids, the Board was precluded from raising another reason to reject all bids. That reason was the fact that the estimated costs exceeded the projected budget recommended by the Schools Development Authority (SDA), the public entity providing the funding for the project.
The Court’s Decision
The Appellate Division ultimately concluded that there was substantial, credible evidence in the record supporting the lower court’s determination that the Board’s action was neither arbitrary nor capricious and that it had proceeded in good faith.
As explained in the opinion, “the Board, as the contracting agent, has the discretion to reject all bids, although this discretion is ‘not unfettered.’ Because the bids were opened before the Board determined that it would reject all the bids, its rejection requires ‘cogent or compelling reasons’ for doing so.” The court noted that the Public School Contracts Law, N.J.S.A. 18A:18A-1 to -59, does not require that a school board specifically articulate the reason for a decision to reject all bids.
With regard to the plaintiff’s argument that the Board could not reject the bids based on the fact that the costs exceeded those approved by the SDA, the court held that “the cost factor was not actually a different reason than that which was set forth in the resolution, noting that the Board’s resolution merely stated that it was rejecting all bids ‘in accordance with N.J.S.A. 18A:18A-22.”
In addition, the court held that “the fact that it was unnecessary to reject all bids in order to permit substitutions does not render the Board’s action arbitrary or capricious. Further, there was no evidence proffered that the action was in bad faith.”
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.