Public Bidding Law - Consent of Surety

In Meadowbrook Carting Company, Inc. v. Borough of Island Heights, et al., decided on December 7, 1994, the New Jersey Supreme Court held that a failure to include a consent of surety with a bid proposal is a material defect that can be neither waived nor cured.

In Meadowbrook, the Borough of Island Heights advertised for bids for the collection and removal of garbage. The bid specification mandated that bidders submit with their proposal a consent of surety guaranteeing that a bonding company issue a performance bond in accordance with the specifications. The borough reserved the right to reject a bid if the bidder failed to furnish any of the information or documents required by the specifications. However, the borough "reserved the right to waive, in its sole discretion, any minor informalities, defects, or non-conformities in any bid documents submitted if it is determined to be in the best interest of the Borough of Island Heights to do so."

The borough received two bids. Consolidated Waste Services, Inc.'s bid for the three-year contract was $556,300, and Meadowbrook Carting Company, Inc.'s bid was $657,405. Consolidated's bid, however, failed to include either a consent of surety or a certificate of insurance and did not contain an adequate ownership/disclosure statement. Meadowbrook's bid complied in all respects with the bid specifications.

Consolidated delivered the required certificate of insurance to borough officials approximately one-half hour after the opening of bids, and four days later provided the borough with a consent of surety. The borough waived the deficiencies and awarded the contract to Consolidated. Meadowbrook instituted a lawsuit seeking to compel the borough to award the contract to Meadowbrook. The Law Division dismissed Meadowbrook's complaint, determining that the submission of the incomplete ownership/disclosure statement was a non-material defect that had been cured by the furnishing of a consent of surety four days later. The Appellate Division affirmed the Law Division, and on December 7, 1994, the New Jersey Supreme Court reversed, holding that "Consolidated's failure to include a consent of surety with its bid proposal is a material defect that can be neither waived nor cured."

The Supreme Court specifically stated that to "permit waiver of the consent-of-surety requirement would undermine the stability of the public bidding process. The Supreme Court also stated that to permit a waiver of the "consent of surety requirement could affect the fairness of the competitive bidding process and "may result in additional costs to the public . . .. If an exception were made, its effect would be to encourage bidders not to provide consents of surety, a result contrary to the purpose of the local public contracts law."

Connell Foley LLP submitted an amicus curie brief on behalf of the Construction Industry Advancement Program, urging a reversal of the Appellate Division's decision.