Don’t Forget the Winner: The Successful Bidder in a New Jersey Public Bid Is a Necessary and Indispensable Party to a Bid Protest and Appeal
In New Jersey, it is a well-established principle that any person or organization whose rights may be affected by a legal action is typically considered a necessary and indispensable party that must be included as a party in the case. Rule 4:28-1 of the New Jersey Rules of Court codifies this principle of mandatory joinder, which is especially important in the context of a protest to a publicly bid contract. There, all bidders have a real interest in the outcome of that challenge, having accepted the specifications as written and submitted bid proposals in accordance with those specifications. The successful bidder, in addition, has a vested interest in the contract awarded.
Indeed, any challenge to the contract award — whether based on a material defect in the successful bid or the awarding agency’s failure to comply with applicable statutes, regulations or the specific terms of the bid solicitation — directly threatens the contract rights of the successful bidder. For this reason, courts in New Jersey (and in other jurisdictions) have consistently found that the successful bidder awarded a public contract is always a necessary and indispensable party to any action seeking to challenge the award of that contract. The court could not reasonably or fairly adjudicate a dispute that might invalidate a contract award without first providing the awardee with notice and an opportunity to participate in the legal process to defend its interests.
It is also important to remember that although the government agency may raise arguments that align with the successful bidder’s interests, or otherwise appear to support the successful bidder’s position, the government agency’s primary responsibility is to serve the public interest, not to defend the bidder’s private rights. The government agency cannot be relied on to adequately protect the successful bidder’s interests in its absence. For instance, should the agency’s position shift over time from advocating for award to the successful bidder to a rebid of the contract, the successful bidder must be afforded an opportunity to defend its award.
The failure to join all necessary and indispensable parties, especially the successful bidder, is undertaken at the protester’s peril. If the court determines that the successful bidder’s absence prevents a just adjudication or risks exposing the existing parties (the protester and the public entity) to inconsistent obligations, the entire action could be dismissed under Rule 4:28-1, as the successful bidder’s claim to the contract award is so inextricably tied to the subject of the action that the court cannot proceed without potentially prejudicing the successful bidder’s interests. Thus, while it may be tempting for the protester to leave the successful bidder (also the protester’s business competitor in the marketplace) out of the litigation, the risk of doing so seems to outweigh the benefit.
Stevens & Lee’s Administrative Law and Government Contracts Group provides advice on all aspects of public procurement and regularly assists clients in disadvantaged and small business certification and compliance. For questions, please contact Group members Patrick D. Kennedy, Maeve E. Cannon or Michael A. Cedrone, or the Stevens & Lee attorney with whom you regularly work.
