Will Online Bidding Soon Be Available for New Jersey Public Works Construction Projects?

Technology has made it easier to conduct a wide range of transactions. It could soon be used to modernize the bidding process for public works construction projects in New Jersey.

The Assembly State and Local Government Committee recently advanced the Electronic Bidding Construction Act, which would require most public contracting units that contract for public works construction projects to use electronic procurement technologies, also known as online bidding, when a project’s value exceeds five million dollars. The State and certain other units will be required to use online bidding for public works project that are required to be bid.  The State Senate already approved a companion bill.  The adoption of such legislation would be a significant change to how most public entities have conducted bidding for public works projects.  As such, any approved legislation should be reviewed carefully in order to ensure compliance with the statute and any governing regulations.  

Electronic Bidding Construction Act

Under the Electronic Bidding Construction Act (Assembly Bill No. 1308), the term “electronic procurement” is defined as “the use of computer technology and the Internet for the advertising and submission of public bids, providing notice of revisions or addenda to advertisements or bid documents, the receipt of proposals and quotations, and related practices to assist in determining the lowest responsible bidder who is most advantageous, price and other factors considered, as appropriate, for the procurement of public works construction.”

The proposed legislation requires the State Treasurer to promulgate regulations to effectuate the electronic procurement of public works. The regulations must set forth each of the steps the State Treasurer deems appropriate to be taken by each public contracting unit when a public works project project’s value exceeds $5,000,000. The regulations must also create a procedure to be followed by a public contracting unit for the awarding of a contract for the administration of the electronic procurement process, and all aspects of electronic procurement. 

Specifically, the Electronic Bidding Construction Act provides that the regulations must mandate that electronic procurement processes meet the following requirements:

  • Five years of use by a public contracting unit to secure electronic bids;
  • Allow public contracting units to advertise bids and distribute bidding documents including plans and specifications;
  • Be a closed loop system that allows contractors, vendors, and bidders, to receive bid solicitations and documentation, as well as submit bids electronically;
  • Provide a digital lockbox that ensures bid information cannot be accessed by a third party before the bid deadline, including an electronic bidding servicer or the State;
  • Allow bids to be encrypted upon submission and when in the digital lockbox;
  • Use digital signature technology and provide for identity verification;
  • Allow for electronic bid validation;
  • Allow bids to be edited or withdrawn by the vendor or bidder at any point up to the published bid deadline;
  • Allow addenda to be issued electronically with addenda automatically applied to the online bid form;
  • Provide capabilities to create and edit templates of bid forms;
  • Provide the means for the State to require data types, including but not limited to numeric prices;
  • Calculate extensions for contractors, bidders or vendors based on price and quality when applicable;
  • Alert contractors, vendors, and bidders of missing required data;
  • Provide email notification to contractors, vendors, and bidders of issuance of bid advertisement and addenda;
  • Provide commodity codes to allow for targeted notifications to contractors, vendors, and bidders;
  • Provide system implementation services and training to public contracting units at no cost; and
  • Offer scheduled training webinars for contractors, vendors, and bidders at no cost.

The regulations promulgated by the State Treasurer must also include practices that convert the current statutory, regulatory, and policy procedures related to sealed bidding to an electronic procurement environment; authorize public contracting units to accept commercial standards for electronic forms of bid security; and establish minimum standards that shall be met by systems and services that provide and administer electronic procurement processes.

The regulations adopted pursuant to theElectronic Bidding Construction Actmust also require that a contractor or vendor seeking a contract for public works under the bill be classified with the Division of Property Management and Construction in the Department of the Treasury, or be prequalified by the Department of Transportation, New Jersey Transit, or the New Jersey Turnpike Authority, prior to submitting a bid. 

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

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