By: Paul t. fader, association legal counsel & adrienne isacoff, Florio, perrucci steinhardt & Fader, LLC
idders have long been used to the requirement to identify their subcontractors who will be performing work in one of the four prime trades (plumbing, HVAC, electrical, and structural steel and ornamental iron work) when bidding on a municipal job. The Local Public Contracts Law (N.J.S.A. 40A:11-1 et seq., “LPCL”) requires subcontractors performing that work to be named in the bid proposal. N.J.S.A. 40A:11-16. What bidders generally do not focus on is that the statutory requirement to identify subcontractors on local jobs is limited to the construction or repair “of any public building by any contracting unit” (emphasis supplied). Most municipalities require bidders to identify their subcontractors regardless of whether the project is a building or some type of horizontal construction – e.g., a road or bridge. However, municipalities have the discretion whether or not to require naming subcontractors in all projects that do not relate to “buildings.” Other requirements of the LPCL apply to projects other than those for the construction or renovation of a building. For example, the provision that allows contractors to deposit bonds with the contracting unit in lieu of retainage applies to contractors for the “construction, alteration or repair of any building, structure, facility or other improvement to real property” (emphasis supplied). N.J.S.A. 40A:11-16.1. A certificate of the bidder showing that it owns, leases or controls all of the necessary equipment required by the plans and specifications may be required from any bidder submitting a bid on “public work.” N.J.S.A. 40A:11-20. A bid bond must be furnished by a person bidding on a contract for “the erection, alteration or repair of a public building, structure, facility or other improvement to real property. . . ” and the bidder’s surety must submit a certificate guaranteeing that it will submit such a performance bond if the contract is awarded to its principal. N.J.S.A. 40A:11-21, 22. Another provision of the LPCL makes it a mandatory bid requirement, which can neither be waived by the municipality, nor cured by the bidder, to name subcontractors and provide the bid bond and surety certificate, but only “when required by the bid plans and specifications.” N.J.S.A. 40A:11-23.2. Since bid bonds and consents of surety must be provided when the project involves utility or transportation work, as well as for public buildings, there is no question that those requirements are mandatory for all jobs that meet the monetary threshold for such requirements. Even if the municipality fails to require those bid elements in its bid specifications, they are statutorily required. If you are the
second low bidder and the low bidder has failed to furnish a bid bond or consent of surety (whether the project is for vertical or horizontal construction), you can challenge the bid, although you may only convince the court that all bids should be rejected and the project should be readvertised to make the specifications conform to public bidding requirements.
Whether a Bidder must name Subcontractors depends on a confusing mix of statutory definitions
what’s so special about “public Buildings”
But even though it may appear that N.J.S.A. 40A:11-23.2 makes it mandatory to name your prime subcontractors on all jobs, it ain’t necessarily so! If the project is a “public building” then the requirement is mandatory. However, if the municipality is soliciting bids for a transportation or utility project, there is no mandatory requirement with respect to naming subcontractors. The municipality has the option of requiring the naming of subcontractors in its bid specifications and only if it does so will the requirement be mandatory. If the low bidder fails to name its subcontractors in this scenario, it is unlikely that you will be able to challenge the bid or the bid specifications. The few court cases that have focused on this messy set of definitions have done little to shed light on why the LPCL requires municipalities, bidders and their counsel to scratch their heads at the nuanced differences between “public buildings,” “public works,” and “public building, structure, facility or other improvement to real property.” Gaglioti Contracting, Inc. v. City of Hoboken, 307 N.J. Super. 421 (App. Div. 1997); Star of the Sea Concrete Corp. v. Lucas Brothers, Inc., 370 N.J. Super. 60 (App. Div. 2004). It may be time to revisit this statute to make the language more consistent and less open to litigation. For now, make sure you know which definition applies to which bid element as you submit bids and before you go to court!
Utility & Transportation Contractor | october | 2017 29