NJ Appellate Court Rejects “Hybrid Procurement Process” Used in Award of Ferry Services Contract

The New Jersey Superior Court, Appellate Division recently reversed a decision of the trial court that upheld the $2 million award of a ferry services contract under Monmouth County’s purportedly “hybrid” procurement process. The resulting appellate opinion will serve as an important case for future bidding challenges, emphasizing that New Jersey’s competitive-bidding process is neither a guessing game for bidders, nor an open-ended endeavor left to the discretion of public entities.

In its request for proposals, the County advised that award of the contract was being made as an “extraordinary unspecifiable service,” which is an exception to the traditional public bidding requirements of the state’s Local Public Contracts Law (LPCL). During discovery, however, counsel learned that the County had failed to comply with the statutory requirements to properly effectuate such an award, or in the alternative, to effectuate a similar award under the LPCL’s competitive contracting provisions or as a low bid process. For those reasons, the County should have rejected all proposals and conducted a rebid. It declined to do so, and the trial court ultimately upheld the County’s award.

The Appellate Division disagreed, finding the County’s use of a “hybrid procurement process” to be “contrary to the statutory mandate of the LPCL that exceptions be narrowly construed.” It declared all proposals rejected, and ordered that the contract be rebid. In doing so, the Appellate Division “depart[ed] from the trial court’s conclusion that the award of the contract should ‘stand,’ finding its decision “not based on substantial credible evidence in the record and supported by case law.”

The Court’s decision signals that statutory exceptions to public bidding requirements must not only be strictly construed, but strictly complied with. Indeed, the Legislature enacted the LPCL as a comprehensive statutory framework designed to secure for the benefit of taxpayers the most economical result in the expenditure of public monies by promoting uninhibited competition and guarding against favoritism, improvidence, extravagance and corruption. The efficacy of the LPCL, as a result, is critically dependent upon its rigorous enforcement. Where public officials are permitted to modify or otherwise depart from the strict procedures of the LPCL, the very issues that such rigorous enforcement is intended to eliminate are free to endure.

Attorneys for Stevens & Lee successfully represented the Plaintiff-Appellant bidder whose proposal was rejected by the County. Maeve E. Cannon argued the case before the Appellate Division and was on the brief, with Patrick D. Kennedy, Wade D. Koenecke, Michael A. Cedrone and Catherin MacDuff.