Opinion ID: 2054068
Heading Depth: 1
Heading Rank: 12

Heading: Do public-bidding laws permit a public entity to specify a sole source of labor on its projects?

Text: Another issue is whether, under our public-contract-bidding laws, State agencies may draft bid specifications knowingly to exclude all but one supplier of construction labor. As noted, the fundamental premise of the Boston Harbor decision is that a governmental agency that is acting as a market participant is purchasing contracting services. ___ U.S. at ___, 113 S.Ct. at 1198, 122 L.Ed. 2d at 578-79. In that role, it acts just like a private contractor would act. Associated Builders, supra, 935 F. 2d at 361 (Breyer, C.J., dissenting). A private contractor can pick a sole source of labor or materials. May a government contractor do so? Our constitutional traditions bespeak a denial of legislative power to create monopolies, making the acquisition of franchises open to all. N.J. Const. art. IV, § 7, ¶ 9. In passing only general laws, the Legislature benefits the public by creating a healthy competition among those who seek the franchises. Atlantic City Water Works Co. v. Consumers Water Co., 44 N.J. Eq. 427, 15 A. 581 (Ch. 1888). In a recent decision reviewing sole source or lock out bidding specifications, the Law Division has repeated the principles that apply in such cases: The purpose of the bidding laws is to protect the public by placing bidders on an equal footing and to ensure that competition will eliminate the possibility of fraud, extravagance or favoritism in the expenditure of public funds.    Bidders are induced to participate by the promise of impartiality which only quality specifications can insure. [ Utilimatic, Inc. v. Brick Township Mun. Util. Auth., 267 N.J. Super. 139, 144, 630 A. 2d 862 (Law Div. 1993) (citation omitted).] Under those principles, the court held that the specifications cannot be so precise as to knowingly exclude all but one prospective bidder. Id. at 145, 630 A. 2d 862. Although some projects are so unique that specifications will come close to creating a sole source, In re Burroughs Corp. Protest, 184 N.J. Super. 416, 446 A. 2d 533 (App.Div. 1981), that does not appear to be an issue here. Our Local Public Contracts law, which is analogous to the TPA bidding statute, N.J.S.A. 27:23-6.1(a), supra at 36, 644 A. 2d at 90-91, states that any specification that knowingly excludes [with certain statutory exceptions] qualification by any but one bidder    shall be null and void   . N.J.S.A. 40A:11-13. All specifications are to be drawn in a manner to encourage free, open and competitive bidding. Ibid. The TPA counters the concern about a sole-source bidding specification by arguing that, quite to the contrary, its bids are open to all. That is like saying that a bid specification that requires a contractor to use Smith Family Steel would be acceptable because anyone can bid on the job. True enough, but does real competition exist? And although prevailing-wage acts minimize any potential difference in hourly-wage costs, we do not yet understand that all conditions of work are identical in the building industry. On this note, we observe that Governor Whitman's Executive Order No. 11, which superseded then-Governor Florio's Executive Order No. 99, recognizes the use of project-labor agreements when appropriate but refrains from designating a particular union, trade council, or labor organization. In a March 21, 1994, statement that accompanied Executive Order No. 11, Governor Whitman noted that Executive Order No. 99 had raised questions about competitiveness and that her order was intended to broaden competition for public works contracts. Considering all the factors, we conclude that the TPA's specification that prospective contractors enter project-labor agreements in this case is not now consistent with the policies of our State's bidding laws.