Court Opinion

ID: 4430858
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:48:20.858844+00
Date Added: 2024-06-11T14:51:08.783649
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                      APPROVAL OF THE APPELLATE DIVISION
     This opinion shall not "constitute precedent or be binding upon any court."
      Although it is posted on the internet, this opinion is binding only on the
        parties in the case and its use in other cases is limited. R. 1:36-3.

                                       SUPERIOR COURT OF NEW JERSEY
                                       APPELLATE DIVISION
                                       DOCKET NO. A-3818-16T3

EPIC MANAGEMENT, INC.,

        Appellant,

v.

NEW JERSEY SCHOOLS
DEVELOPMENT AUTHORITY, and
HALL CONSTRUCTION CO., INC., and
ERNEST BOCK & SONS, INC.,

        Respondents.

              Argued July 2, 2018 – Decided July 18, 2018

              Before Judges Carroll and Rose.

              On appeal from the             New   Jersey     Schools
              Development Authority.

              Patrick T. Murray argued the cause for
              appellant (Peckar & Abramson, PC, attorneys;
              Gerard J. Onorata and Patrick T. Murray, on
              the brief).

              William Harla argued the cause for respondent
              New Jersey Schools Development Authority
              (DeCotiis, FitzPatrick, Cole & Giblin, LLP,
              attorneys; William Harla and Thomas A. Abbate,
              of counsel; Gregory J. Hazley, on the brief).
              Robert T. Lawless argued the cause for
              respondent   Hall   Construction   Co.,   Inc.
             (Hedinger & Lawless, LLC, attorneys; Robert
             T. Lawless, on the brief).

PER CURIAM

       Appellant Epic Management, Inc. (Epic), the second-ranked

bidder, appeals from the April 27, 2017 final agency decision of

the New Jersey Schools Development Authority (SDA) awarding a

contract to Hall Construction Co., Inc. (Hall), the first-ranked

bidder,     for    the   design       and   construction        of    an   addition   and

renovations to Millville Senior High School (the Project).                        In its

decision, the SDA rejected bid protests filed by Epic and Ernest

Bock & Sons, Inc. (Bock),1 the third-ranked bidder.

       The SDA concluded that Hall's chosen electrical contractor,

R.    Palmieri     Electrical      Contractors,         Inc.    (Palmieri),     did   not

exceed its aggregate rating limit set by the Treasury Division of

Property Management and Construction (DPMC).                         The SDA also found

Hall's alleged failure to indicate it would be self-performing

electrical work on the Project not to be a material defect that

warranted     rejection       of   its      bid   because       Hall's     purchase     of

electrical        equipment     did    not    constitute        the     performance     of

electrical work.

       On   appeal,      Epic      contends       the     SDA    violated      its    own

administrative        regulations,          and   that    its    final     decision     is

1
     Bock is not involved in this appeal.

                                             2                                   A-3818-16T3
arbitrary, capricious, and unreasonable.                  We conclude otherwise,

and affirm substantially for the reasons expressed by the SDA in

its April 27, 2017 decision.

                                        I.

       The record establishes that on September 30, 2016, the SDA

solicited bids for the Project.                  The SDA received five price

proposals, which were publicly opened on March 2, 2017.                   Price and

non-price scores were then weighted and tabulated to arrive at a

final ranking of the bidders.           Hall was ranked first, while Epic

and Bock were ranked second and third, respectively.

       As required by N.J.S.A. 52:18A-243(b) and the SDA's bid

specifications,      each     bidder    was        required      to   identify     any

subcontractors     it   intended       to    use    for    the    plumbing,      HVAC,

electrical, and structural steel work components of the Project.

Section 1.3 of the bid specifications further required a design

builder to indicate whether it intended to self-perform any of

those four component services.

       Hall's bid designated Palmieri as its electrical contractor.

Hall   did   not   identify    itself       as   self-performing       any    of   the

electrical work.

                                        3                                     A-3818-16T3
       Palmieri was DPMC classified and SDA prequalified for an

aggregate contract limit of $15 million.2       As part of Hall's bid,

Palmieri submitted a DPMC Form 701 certifying that its unfinished

work   totaled   $5,420,508.    Palmieri's     quote    to    Hall   for   the

electrical subcontract work was $9,168,000.        Together, Palmieri's

subcontract quote and the value of its unfinished work fell within

its $15 million aggregate limit.

       On March 17, 2017, Epic lodged a formal protest with the SDA

seeking a rejection of Hall's bid.        Epic argued that Hall's bid

was    materially   defective   because   it    named        an   unqualified

subcontractor.      Specifically, Epic contended the value of the

electrical work on the Project exceeded the approximately $9.5

million Palmieri had remaining under its aggregate limit and hence

Palmieri was ineligible to perform the Project's electrical work.

       Hall subsequently explained that it intended to directly

purchase certain electrical supplies, and therefore Palmieri's

pre-bid proposal to Hall excluded some of the required electrical

equipment and materials for the Project.          In turn, Epic argued

that Hall's bid was defective because Hall failed to disclose its

2
  This meant that the amount of any subcontract to Palmieri, plus
the value of Palmieri's unfinished work on other projects, public
and private, could not exceed $15 million.

                                   4                                  A-3818-16T3
decision to purchase materials and equipment as self-performing

work.

     The   SDA   received   extensive   written   submissions    from   the

parties and addressed in detail each of the issues they raised in

its thorough April 27, 2017 decision.      Initially, the SDA rejected

Epic's contention that Hall was precluded from purchasing the

materials used in the electrical phase of the Project.          Citing the

statutory language of N.J.S.A. 52:18A-243, the SDA explained:

                A plain reading of these provisions
           reveals that the work and materials for
           [school] facilities construction projects may
           be performed by a single contracting party.
           In other words, these provisions expressly
           authorize one contractor to provide all of the
           work and materials. However, these provisions
           also require that, to the extent another
           subcontractor will be used to provide "any"
           of the work and materials in the plumbing,
           HVAC, electrical or structural branches, then
           that subcontractor must be identified.

                Accordingly, there is nothing in the
           cited statute that precludes Hall from
           performing any of the work in the various
           branches or from obtaining any of the
           materials for that work.     N.J.S.A. 52:18A-
           243(b) merely requires Hall to identify any
           of the subcontractors to whom it will
           subcontract for the furnishing of "any of the
           work and materials" for the applicable
           branches. Here, Hall has identified Palmieri
           as the subcontractor it will subcontract with
           to perform the electrical work. While there
           may be an inherent assumption that Palmieri
           will also purchase the associated materials,
           the statutory provision at issue here does not
           mandate that that be the case.

                                   5                               A-3818-16T3
     Next, the SDA rejected Epic's argument that if Hall purchased

the electrical supplies, it was required by both the statute and

Section 1.3 of the bid specifications to disclose itself as "self-

performing" the specified electrical work, and that Hall's failure

to do so was a material defect in its bid.      The SDA found it

"plainly evident" that

          the terms of the [request for proposals] only
          impose the self-performing identification and
          DPMC      classification       and      [SDA]
          prequalification for the performance of any
          "work" in the applicable branches. There is
          absolutely no reference to the provision of
          materials in the context of the above
          requirements.     As such, there was no
          requirement for Hall to identify itself as
          "self[-]performing"   in   the   context   of
          purchasing or obtaining materials for work
          relating to the four branches.

               . . . .

               This analysis is entirely consistent with
          common sense.     As noted by Hall in its
          submissions, anyone can purchase electrical
          equipment from a supplier. Put another way,
          one need not be licensed as an electrical
          contractor to obtain such equipment.

               Furthermore,    simply     because    the
          electrical   subcontractor    might   not   be
          purchasing the equipment does not mean that
          the electrical subcontractor can disclaim
          responsibility for the electrical work.
          N.J.S.A.   45:5A-9(a)    provides    that   an
          electrical contractor "shall assume full
          responsibility for inspection and supervision
          of all electrical work to be performed by the
          permittee in compliance with recognized safety
          standards." As such, even if the electrical

                                6                          A-3818-16T3
          equipment is purchased by another entity, the
          electrical contractor retains the statutory
          duty to ensure that the electrical work is
          performed in compliance with recognized safety
          standards.

               We   would  also   note  that   N.J.S.A.
          2A:52:18A-243(a) makes explicit reference to
          "materials" when discussing plumbing and gas
          fitting, steam and hot water heating and
          ventilating apparatus, steam power plants,
          structural steel and miscellaneous ironwork.
          Significant by its omission is the absence of
          a similar reference to materials in the
          context of electrical work.     As such, the
          terms of the statute itself suggest an
          intentional exclusion of the provision of
          electrical materials from the scope of
          electrical work.

                                II.

     On appeal, Epic argues that Hall's bid should have been

disqualified because (1) it did not disclose its intention to

self-perform work and the SDA's definition of "work" includes the

providing of materials to a project; and (2) Hall's arrangement

with Palmieri is an "improper sidestep" to the DPMC aggregate

rating system.   We disagree.

     The general purpose of all public bidding laws is to "secure

for the taxpayers the benefits of competition and to promote the

honesty and integrity of the bidders and the system."       In re

Protest of the Award of On-Line Games Prod. & Operation Servs.

Contract, Bid No. 95-X-20175, 279 N.J. Super. 566, 589 (App. Div.

1995).   The laws are to be "construed as nearly as possible with

                                 7                         A-3818-16T3
sole reference to the public good.           Their objects are to guard

against favoritism, improvidence, extravagance and corruption;

their aim is to secure for the public the benefits of unfettered

competition."      Ibid. (quoting Keyes Martin & Co. v. Dir., Div. of

Purchase & Prop., 99 N.J. 244, 256 (1985)).              The conditions and

specifications of a bid "must apply equally to all prospective

bidders; the individual bidder cannot decide to follow or ignore

these conditions . . . ."          Hall Constr. Co. v. N.J. Sports &

Exposition Auth., 295 N.J. Super. 629, 635 (App. Div. 1996).

Moreover,    any   material    departure   from    the   bid   specifications

renders a bid non-conforming and invalid.            Ibid.     Although minor

or inconsequential discrepancies and technical omissions can be

waived, material conditions cannot be waived by the contracting

authority.    Meadowbrook Carting Co. v. Borough of Island Heights,

138 N.J. 307, 314 (1994).

       Hence, in cases involving public bidding, the trial court

must review a public body's determination as to whether a bid was

conforming    to   determine    whether    its    decision     was   arbitrary,

unreasonable, or capricious.        On-Line Games, 279 N.J. Super. at

590.   One legitimate inquiry in reviewing a public body's decision

on whether a bid was conforming is whether there is substantial

evidence in the record to support the conclusion.              Waste Mgmt. of

                                     8                                  A-3818-16T3
N.J., Inc. v. Union Cty. Utils. Auth., 399 N.J. Super. 508, 525-

26 (App. Div. 2008).

      When either a contractor or a subcontractor submits a bid for

a project, it must also submit a certification that the award of

"the subject contract would not cause the firm to exceed its

aggregate rating . . . ."            N.J.A.C. 17:19-2.13(a).        Along with

this certification, the firm must submit a statement of its current

"backlog of uncompleted construction work, including public and

private contracts."       N.J.A.C. 17:19-2.13(a).         "A firm shall not

be   awarded   a   contract    which,    when   added    to   the   backlog    of

uncompleted construction work [as shown on Form DPMC 701] would

exceed the firm's aggregate rating." N.J.A.C. 17:19-2.13(c). This

regulation     applies   to   both   contractors   and    subcontractors       in

school building bidding situations under N.J.S.A. 18A:18A-18.

Advance Elec. Co., Inc. v. Montgomery Twp. Bd. of Educ., 351 N.J.

Super. 160, 176 (App. Div. 2002).

      The aggregate rating limit laws ensure that a bidder is

financially qualified to perform the work in addition to its other

contracts.     See Brockwell & Carrington Contractors, Inc. v. Kearny

Bd. of Educ., 420 N.J. Super. 273, 280 (App. Div. 2011); Seacoast

Builders Corp. v. Jackson Twp. Bd. of Educ., 363 N.J. Super. 373,

378 (App. Div. 2003) ("[T]he plain intent of the regulation was

to insure the bidder's financial responsibility to undertake the

                                        9                               A-3818-16T3
work by requiring aggregate-rating compliance both when the bid

is submitted and when the contract is awarded.").        Significantly,

it is a material, non-waivable defect of a bid for a contractor

to name a subcontractor who is not qualified by reason of failure

to comply with its aggregate rating limit. Brockwell & Carrington,

420 N.J. Super. at 282.

     That   said,   N.J.S.A.   18A:18A-18(b)    does   not   require   the

submission of a pre-bid quote from a subcontractor before awarding

a contract to a contractor. While there is no obligation to submit

such a quote, a contractor may not execute a contract with a public

entity that will place it over that limit, and a public entity is

not authorized to execute that contract.       Brockwell & Carrington,

420 N.J. Super. at 282.   Thus, if Palmieri's quote put it over its

$15 million limit, it would be a material breach of the bid

specifications.

     Applying these well-established principles to this case, we

affirm substantially for the reasons expressed by the SDA in its

April 27, 2017 administrative determination, which is supported

by sufficient credible evidence.       R. 2:11-3(e)(1)(D).    We conclude

that, for purposes of calculating its aggregate rating limit,

Palmieri was not required to include on its DPMC disclosure form

the value of the electrical equipment supplied by Hall, which was

not within the scope of Palmieri's subcontract.              Accordingly,

                                  10                              A-3818-16T3
Palmieri's quote, when coupled with the value of its uncompleted

work, did not exceed its $15 million aggregate rating limit.

Further, N.J.S.A. 52:18A-243 did not prohibit Hall from purchasing

the electrical supplies for the project, nor did its purchase of

such supplies in its capacity as general contractor constitute

self-performance of the Project's electrical work.

     Affirmed.

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