Commercial Cleaning Corp. v. Sullivan, A--144

• Decision Date: 12 July 1966
• Docket Number: No. A--144,A--144
• Citation: 47 N.J. 539,222 A.2d 4
• Parties: COMMERCIAL CLEANING CORPORATION, a New Jersey corporation, Appellant, v. Charles F. SULLIVAN, Director, Division of Purchase and Property, Department of the Treasury, State of New Jersey, Respondent.
• Court: New Jersey Supreme Court

Page 539

47 N.J. 539

222 A.2d 4

COMMERCIAL CLEANING CORPORATION, a New Jersey corporation, Appellant, v. Charles F. SULLIVAN, Director, Division of Purchase and Property, Department of the Treasury, State of New Jersey, Respondent.

No. A--144.

Supreme Court of New Jersey.

Argued May 24, 1966.

Decided July 12, 1966.

William L. Boyan, Trenton, for appellant (George Warren, Trenton, attorney).

Richard Newman, Deputy Atty. Gen., for respondent (Arthur J. Sills, Atty. Gen., attorney; Alan D. Kirby, Deputy Atty. Gen., of counsel and on the brief).

The opinion of the court was delivered by

FRANCIS, J.

In this proceeding appellant Commercial Cleaning Corporation in effect seeks a declaration that respondent, Director, Division of Purchase and Property, Department of the Treasury, State of New Jersey, improperly rejected its bid on a public contract. The action was instituted in the Appellate Division, and we certified it before argument there.

In January 1965 the Director invited bids on a one-year contract, April 10, 1965 to April 10, 1966, for the furnishing of janitorial, maintenance and related services in the new State library and archives building, the museum, auditorium and planetarium, known as the Cultural Center on West Main Street in Trenton, N.J. The specifications upon which the bids were to be furnished were minutely detailed, and called for elaborate and thoroughgoing cleaning, maintenance and janitorial services. It was obvious that a sufficiently manned and experienced organization was required for the project. In terms of space alone, 190,000 square feet had to be maintained in these buildings. To insure that the standard of performance would be met the specifications required bidders to furnish (1) evidence of net worth sufficient to assure contract performance, and (2) evidence of experience in supplying similar janitorial and maintenance services during the previous five years, or other adequate proof of qualification to meet all the demands of the contract. A statement was to be submitted outlining the claimed qualifications including 'the extent of the services offered, the point from which the services will be available, the number of personnel employed regularly in the area, and the number of years the bidder has been in the business.' A list of institutions or industries for which the bidder presently or previously had similar contracts was also to be supplied. It was specified that the award would be based upon the bidder's 'experience, reputation, financial stability, quality of products and services offered and after a comparison of the prices quoted.' The specifications reserved to the Director 'the right to reject any or all bids, or to award in whole or in part if deemed to the best interests of the State to do so.' All prospective bidders were required to meet with a representative of the Division of Purchase in the Bid Room at the State House on a fixed day and make a tour with him of the areas specified in the proposal in order to acquaint themselves with the work and services to be performed.

Six bids were submitted. Commercial's bid of $67,651.20 was the lowest. Trenton Window Cleaning Co. was the second with $72,447.12. The other four were substantially higher.

Commercial's bid was accompanied by a letter from its president indicating his company had been in the business in the Trenton area since 1927 and employed between 30 and 50 persons depending on the work load. He listed also certain commercial, industrial and institutional customers, and suggested they would attest to the quality of Commercial's service.

Certain staff members of the Division conducted an investigation of the bids and bidders. They held interviews with bidders and reviewed the bids. Commercial's president supported his low bid with the statement that his was a small firm and with tight supervision and low overhead he could accomplish the task. A Dun & Bradstreet report showed Commercial's sales volume for 1964 would probably total somewhat in excess of $80,000. (Thus this contract if obtained would represent more than 75% Of the usual gross annual income.) The report noted also that the number of employees varied up to 25. Its work quarters were rented space 15 30 in a two-story brick structure near the main shopping area in Trenton.

Four members of the Division staff made on-site tours of some locations presently or formerly serviced by the bidders. Commercial had held the janitorial and maintenance contract for one sizeable plant. Its work was said to have been acceptable, but the plant representative considered Commercial too small to handle a task of that magnitude to complete satisfaction because of inability to supply enough men and equipment at all times necessary. As the result Commercial was denied the latest contract awarded although its bid was the lowest submitted. The successful applicant's bid was $22,000 higher but it was deemed better equipped to manage the job. This information was contrary to that furnished by appellant's president who said he lost the contract on account of price.

Representatives of Trenton Window Cleaning Co. were interviewed also, and some of its customers' places visited. Trenton's services were not found to be without some criticism. A Dun & Bradstreet report revealed a sales volume around $200,000 annually, with 90% Of the business produced by maintenance type of work. Including part-time workers Trenton employed 60 persons. The operation was housed in a two-story brick building in Trenton, the upper floor supplying the office space and the ground floor the storage space.

The Deputy Director of Purchase and other staff members met again with Commercial's president and representatives of Trenton Window Cleaning Co. and once more reviewed the matter with them. Shortly thereafter they recommended to the Director that the low bidder, Commercial, be bypassed and the contract awarded to Trenton. The recommendation was based upon the belief that Trenton was more experienced and more adequate for the work. Commercial was considered capable of good work but too small an operation to handle the scope of work required in the Cultural Center. There was some doubt also that its bid would cover its cost. The Director accepted the view of his staff and advised Commercial that the contract was being awarded to Trenton, the second lowest bidder.

No further conference was had between the Director and his staff and Commercial, nor was any hearing given prior to or after the rejection of its bid. Nor does the record reveal that Commercial requested any further conference or a hearing after being notified that the contract was being awarded to Trenton Window Cleaning Co. See Case v. Inhabitants of Trenton, 76 N.J.L. 696, 698, 74 A. 672 (E. & A. 1908); Kelling v. Edwards, 116 Minn. 484, 134 N.W. 221, 38 L.R.A.,N.S., 668 (Sup.Ct. 1912). Apparently the contract went into operation immediately on being awarded. A few days thereafter Commercial challenged the legality of the Director's action by appealing to the Appellate Division under R.R. 4:88--8.

The nature of the appeal creates some procedural issues. There is also the matter of mootness. The contract period was from April 10, 1964 to April 10, 1965, and, of course, by now has been fully performed. We find no case dealing with the statute N.J.S.A. 52:34--12, under which the Director operates in seeking bids and in awarding public contracts. In view of the public nature of the problems presented and the likelihood of their recurrence we shall proceed to a determination of the matter on the merits. See Dyer v. Securities and Exchange Commission, 266 F.2d 33, 47 (8 Cir. 1959), certiorari denied 361 U.S. 835, 80 S.Ct. 86, 4 L.Ed.2d 75 (1959); State by State Highway Com'r v. Board of Chosen Freeholders of Bergen County, 38 N.J. 33, 36, 183 A.2d 8 (1962).

It should be noted that appellant quite properly makes no claim for damages based upon the alleged improper failure to award it the contract. Submission of the lowest bid in answer to an advertisement for bids by the State for public work cannot be the basis of a claim for damages based upon the failure or refusal to accept such bid. Cf. Somers Construction Co. v. Board of Education, 198 F.Supp. 732 (D.N.J. 1962); Malan Const. Corp. v. Board of County Road Com'rs, 187 F.Supp. 937 (E.D.Mich. 1960); Day v. City of Beatrice, 169 Neb. 858, 101 N.W.2d 481, 488 (Sup.Ct. 1960); Allen v. Eberling, 24 App.Div.2d 594, 262 N.Y.S.2d 121 (App.Div. 1965); 43 Am.Jur., Public Works and Contracts, § 65 (1942); 10 McQuillin, Municipal Corporations, § 29.86 (3d ed. 1950).

Appellant contends that since it was the lowest bidder the Director could not reject its bid summarily. Lawful procedure required a hearing and a factual finding that its bid was invalid for failure of compliance with the proposal for bid or that it was not the lowest responsible bidder. In presenting this thesis reliance is placed on such cases as Paterson Contracting Co. v. Hackensack, 99 N.J.L. 260, 122 A. 741 (E. & A. 1923); Sellitto v. Cedar Grove Township, 133 N.J.L. 41, 42 A.2d 383 (Sup.Ct. 1945); Sellitto v. Cedar Grove Tp., 132 N.J.L. 29, 38 A.2d 185 (Sup.Ct. 1944); American Water Corporation v. Borough of Florham Park, 5 N.J.Misc. 969, 139 A. 169 (Sup.Ct.1927); Kelly v. Board of Chosen Freeholders of Essex County, 90 N.J.L. 411, 101 A. 422 (Sup.Ct. 1917); Faist v. City of Hoboken, 72 N.J.L. 361, 60 A. 1120 (Sup.Ct. 1905). It is true that in these cases the courts declared it improper for the public body concerned to reject the low bid for public work without giving a hearing to the bidder before rejecting or disqualifying him. But subordinate public governmental units were involved in those controversies, municipalities and counties, not the State, and moreover they were operating under a statute which in Mandatory terms required them to award the contract to 'the lowest responsible bidder.' See N.J.S.A....