Barrick v. State

• Decision Date: 23 July 2014
• Court: New Jersey Supreme Court
• Parties: Matthew J. BARRICK, Jr., Appellant–Respondent, v. STATE of New Jersey, DEPARTMENT OF TREASURY, DIVISION OF PROPERTY MANAGEMENT AND CONSTRUCTION, Respondents–Appellants.

218 N.J. 247

94 A.3d 895

Matthew J. BARRICK, Jr., Appellant–Respondent,

v.STATE of New Jersey, DEPARTMENT OF TREASURY, DIVISION OF PROPERTY MANAGEMENT AND CONSTRUCTION, Respondents–Appellants.

Supreme Court of New Jersey.

Argued May 6, 2014.

Decided July 23, 2014.

Christine Cartwright Baker, Deputy Attorney General, argued the cause for appellants State of New Jersey, Department of Treasury, Division of Property Management and Construction (John J. Hoffman, Acting Attorney General, attorney; Beth Leigh Mitchell, Assistant Attorney General, of counsel; Thomas A. Edenbaum, Trenton, on the briefs).

Karen A. Confoy argued the cause for appellant RMD Properties, LLC (Fox Rothschild, attorneys; Ms. Confoy and Joseph Schramm, III, Lawrenceville, on the briefs).

Vito A. Pinto, Westfield, argued the cause for respondent (Lindabury, McCormick, Estabrook & Cooper and Brierley & Humick, attorneys; Douglas S. Brierley, Lyndhurst, of counsel; Francis G. Grather of Daly & Associates, on the briefs).

Justice LaVECCHIA delivered the opinion of the Court.

At issue in this appeal is whether the New Jersey Division of Property Management and Construction (the Division) acted arbitrarily when it awarded a contract for the lease of office space for use as a one-stop career center to RMD Properties, LLC (RMD), the lowest bidder. The award was made to RMD after the Directorof the Division,¹ in consultation with the Department of Labor (DOL), the agency for which the space was to be used, determined that an advertised requirement that the site location be within one-quarter mile of public transportation could be waived. The distance requirement was not compelled by law and, at the time of the bid opening, no bid submitted by a qualified bidder satisfied the original distance requirement. After the Director awarded the bid, respondent, Matthew J. Barrick, Jr., an unsuccessful bidder, appealed. However, he failed to seek a stay. Accordingly, also at issue is whether the matter was rendered moot by the expenditure of State resources in performance of the contract after Barrick's failure to seek a stay of the award.

The Appellate Division held that the waiver of the advertised distance requirement was improper, reversed the Director's award of the lease, and remanded the matter to the Division to award the lease to Barrick or to rebid the project. We granted the Division's and RMD's petitions for certification and now reverse the judgment of the Appellate Division. We conclude that the agency determination was not arbitrary or capricious and that it was error for the appellate panel to have substituted its judgment for that of the Director.

I.

The Division is tasked with procuring and managing leases for the State. On September 28, 2010, the Division posted a request for proposals (RFP) on its website seeking bids from property owners in Morris County for the ten-year lease of office space to be used by the DOL as a one-stop career center. The center provides career and occupational skills training services to unemployed, disadvantaged, displaced, and disabled persons. The Division also sent a leased space proposal package to four property owners that previously had requested to be maintained on the agency's files: respondent, Matthew Barrick; RMD; Highway Enterprises, Inc.; and Mynt Properties, LLC (Mynt). The one-stop career center had been located on Barrick's property for many years prior to the RFP but the State, citing public safety concerns, had decided to seek bids for a new lease.

A detailed scope of work (SOW), incorporated by reference into the RFP, set forth several requirements for the prospective location. Among those requirements was that “[t]he office shall be located within 1/4 mile of a mode of accessible public transportation (bus route or other means).”

At the close of the RFP period on November 10, 2010, the Division had received four bids. Barrick, RMD, Highway Enterprises, and Mynt each submitted bids. Mynt's bid subsequently was rejected as nonresponsive.² On May 12, 2011, the Division requested a best and final offer (BAFO) from each of the remaining three bidders. Barrick's bid was determined to be the most cost effective, followed by RMD's and then Highway Enterprises'. On September 22, 2011, because over ninety days had elapsed since the submission of bids, the Division requested a second round of BAFOs. See N.J.A.C. 17:11–6.4 (“Unless the RFP states otherwise,the prices submitted shall remain effective for 90 days after the opening date ....”). After receiving the second round of BAFOs, the Division determined that RMD—which had reduced its BAFO, resulting in a net present value of $3,022,596 for the life of the lease—had submitted the most cost-effective bid, followed by Barrick and Highway Enterprises, whose BAFOs had not changed. The Division calculated the net present value for the life of the lease of Barrick's property to be $3,106,638. On October 20, 2011, the Division issued a notice of intent to award the lease to RMD.

Barrick challenged the award pursuant to N.J.A.C. 17:11–8.3 arguing, among other things, that RMD's proposal failed to satisfy the distance-to-public-transportation requirement because its property was located .58 miles from the nearest bus stop. After further evaluation, the Division determined that none of the three bid properties were located within one-quarter mile of public transit.³ The Division conferred with the DOL and determined, first, that no statute or regulation imposed the quarter-mile requirement and, further, that each of the proposed properties were close enough to public transportation to meet the DOL's needs because none of the distance overages were significant. Based on those determinations, the Division determined that the proposals would not be deemed nonconforming based on the distance requirement and accepted all three bids.

On March 30, 2012, the Director issued a final agency decision that recommended the award of the lease to RMD.⁴ In his decision, the Director declared that the extent to which each proposed property exceeded the public transportation distance requirement was de minimis and not a determinative factor in the Director's bid award. Cost-effectiveness was identified as of paramount importance in the Director's decision to whom to award the bid.

On April 9, 2012, Barrick sought reconsideration and contended that the record should be supplemented to reflect that there is a bus stop .2498 miles from his property. He argued that he had incorrectly identified in his original proposal a more distant bus stop as the nearest to his property. On April 24, the Division upheld the award to RMD. The Division acknowledged that Barrick's property, in fact as supplemented by the additional new information, did satisfy the distance requirement by one foot but noted that it had determined prior to awarding the lease to RMD that the distance requirement would not be outcome-determinative.

Barrick appealed the Division's final determination to the Appellate Division; however, he did not seek a stay of the agency's decision either from the agency or from the Appellate Division. As noted, the Appellate Division reversed the Director's award of the lease to RMD and remanded the matter back to the Division either to award the lease to Barrick or to rebid the project. Barrick v. State, Dep't of Treasury, Div. of Prop. Mgmt. & Constr., 430 N.J.Super. 377, 391, 64 A.3d 1004 (App.Div.2013). The panel determined that the distance-to-public-transportation requirement in the RFP was not waivable and that the Division's “conclusory statement that RMD had the ‘most cost effective proposal’ ” was inadequate in light of the insignificance of the monetary difference between bids relative to the roughly $3 million total cost of the project. Id. at 389, 64 A.3d 1004. Because the distance requirement was non-waivable, the panel accepted the supplemental information submitted by Barrick and concluded that Barrick's was the only compliant bid and that the Division abused its discretion when it awarded the lease to RMD. Id. at 391, 64 A.3d 1004.

The Division and RMD filed a motion for reconsideration before the Appellate Division, contending that the appeal was now moot because the lease had already been executed and significant resources had been expended to bring RMD's property into compliance with the SOW. Specifically, RMD stated that it had secured a $1.8 million loan and that the renovations needed to comply with the SOW had begun. The Division represented that it had also purchased fitted furniture systems designed for RMD's property and was paying rent as a holdover tenant at a temporary location during the renovation.

On May 24, 2013, the panel denied the motion for reconsideration and refused to address the mootness issue because the parties had failed to raise it on direct appeal. We granted the Division's and RMD's petitions for certification. 215 N.J. 487, 73 A.3d 513 (2013).

II.

A.

The Division argues that the Appellate Division erred by interfering with a legitimate decision by the Director to award the bid to RMD. It stresses the broad discretion vested in the Director by N.J.S.A. 52:34–12 to protect the public interest and obtain for the State the most advantageous contract, “price and other factors considered.” That discretion was not abused, according to the Division; rather, the Appellate Division misstepped by not allotting the agency's final determination the deference that is owed to an administrative agency acting within its field of expertise.

Moreover, focusing on its argument that Barrick's claim should have been held to be moot, the Division contends that the Appellate Division failed to consider analogous decisions involving construction contracts. The Division contends that those cases militate against review of an agency's contract award decision if, when review is sought, the project is substantially complete or if considerable funds...