L. Pucillo & Sons, Inc. v. Mayor and Council of Borough of New Milford

• Court: United States State Supreme Court (New Jersey)
• Citation: 73 N.J. 349,375 A.2d 602
• Parties: L. PUCILLO & SONS, INC., Plaintiff-Appellant, v. MAYOR AND COUNCIL OF the BOROUGH OF NEW MILFORD and Angelo Pacio, trading asPacio Sanitation, Defendants-Respondents.
• Decision Date: 12 May 1977

Page 349

73 N.J. 349

375 A.2d 602

L. PUCILLO & SONS, INC., Plaintiff-Appellant, v. MAYOR AND COUNCIL OF the BOROUGH OF NEW MILFORD and Angelo

Pacio, trading asPacio Sanitation, Defendants-Respondents.

Supreme Court of New Jersey.

Argued March 7, 1977.

Decided May 12, 1977.

Mark D. Larner, Newark, for plaintiff-appellant (Budd, Larner, Kent, Gross, Picillo & Rosenbaum, Newark, attorneys).

Mario R. LaBarbera, New Milford, for respondents Mayor and Council of the Borough of New Milford.

Leopold A. Monaco, Westwood, for respondent Angelo Pacio, trading as Pacio Sanitation.

The opinion of the court was delivered by

PASHMAN, J.

This appeal concerns the validity of a municipality's waiver of certain deviations from its bidding specifications in awarding a garbage scavengers contract. Defendant Borough of New Milford (Borough) originally requested bidders to submit proposals for contracts of one, two, three and five years' duration. Defendant Angelo Pacio, trading as Pacio Sanitation (Pacio), entered bids on the first three proposed contracts, but failed to submit a proposal for the five-year contract. Plaintiff L. Pucillo & Sons, Inc. (Pucillo) and a third competitor bid on all alternatives. The Borough decided to enter into a three-year contract with Pacio, and agreed to waive any nonconformance with the bidding instructions caused by his omission of a five-year bid. Pucillo then brought this action challenging Pacio's status as the "lowest responsible bidder" under N.J.S.A. 40A:11-6.1a. The Law Division and the Appellate Division upheld the award and Pacio began work as scheduled on January 1, 1976. We subsequently granted certification, 70 N.J. 151, 358 A.2d 198 (1976), and now reverse.

Plaintiff concedes that Pacio submitted the low bid on the three-year contract,¹ but argues that Pacio was not the lowest "responsible" bidder because he failed to comply with the Borough's specifications. See Hillside v. Sternin, 25 N.J. 317, 324, 136 A.2d 265 (1957). Accordingly, plaintiff maintains that this deviation from the bidding instructions disqualified Pacio from being awarded all contracts, including those for which he submitted estimates. Plaintiff offers two reasons for rejecting defendants' contention that the Borough could legally reserve the prerogative to waive noncompliance with the requirement to bid on all alternatives: (1) other potential bidders may have been willing to submit estimates if they had known that they would not have been held to the requirement of bidding on all contracts and (2) the actual bidders' costs and risks were greater than Pacio's and placed them at a competitive disadvantage.

The lower courts rejected these arguments. The Law Division judge interpreted the language in the specifications as permissive, thus disputing plaintiff's assumption that the Borough had made bids on all proposals mandatory. Since Pacio was eliminated from consideration from the five-year contract, for which he did not bid, the court held that the requisite "equal footing" among bidders had been maintained on all options. Stressing that the Borough's decision to award the three-year contract was most economical for the municipality, the trial judge found that its waiver was technical in nature and served the public interest. In an unreported decision, the Appellate Division affirmed for substantially the same reasons, adding only that the irregularity "did not afford (Pacio) any competitive advantage over the other bidders and did not tend to stifle competition."

The critical question in this case is whether the portion of the bidding specifications which directed garbage scavengers to submit proposals on all options was mandatory or permissive. ² Since there is no dispute concerning the facts of this case, resolution of this issue turns on the meaning of the language utilized in the specifications.

The Borough initially advertised for bids on September 4, 1975, and announced that sealed bids, prepared in accordance with its specifications and bid proposal forms, would be received on September 17, 1975. Its public notice to garbage scavengers also contained the following statement:

The Mayor and Council reserves (sic) the right to waive any informalities and the right to reject any and all bids to the best interest of the Borough of New Milford.

Interested bidders received four bid proposal forms, for one, two, three and five-year contracts;³ a questionnaire concerning their financial ability and experience in performing public work; and detailed specifications for completion and submission of the required documents. Among the provisions of the bidding specifications were these warnings:

Bidders are cautioned not to attach any conditions, limitations, provisos or restrictions to any proposal, or to make any changes or erasures on the proposal blank, as such conditions, limitations, erasures or provisos may render the bid informal and cause its rejection.

Bidders are cautioned also that all proposals must be bid upon. Failure to indicate a bid may render the bid informal and cause its rejection.

The word "must" was underlined by the Borough.

In addition to the bids on various options, the Borough required each bidder to submit a certificate from a surety company indicating that it would furnish a performance bond to that bidder, if successful, within ten days after the contract was awarded. See N.J.S.A. 40A:11-22. And as protection against withdrawal of a bid, the Borough also demanded a guaranty in the form of a certified check or bank cashier's check for 10% of a bidder's highest bid price. See N.J.S.A. 40A:11-21. ⁴

The Mayor and Council reiterated their right to reject "any or all bids, if in the interest of the Borough it is deemed advisable to do so." They announced the following policy:

The Borough Council reserves the right, after receiving the bids to choose the terms of years which it believes is to the best interest of the Borough; and the award, if made, will be to the lowest responsible bidder for that particular term of years, provided his bid complies in all respects with the requirements therefore as contained therein, and provided he has submitted satisfactory evidence of his ability to execute the work satisfactorily and of ownership by him of the necessary capital and equipment to carry out this contract, without default or interference. (Emphasis supplied.)

Pacio submitted bids for the one, two and three-year contracts which were in full compliance with the specifications and substantially below the estimates of his competitors. ⁵ As noted, he failed to complete the bid proposal for the five-year contract or to provide the requisite bid bond and consent of surety. Both Pucillo and Stamato bid on all options.

On October 16, 1975, the Mayor and Council of the Borough adopted a resolution awarding a three-year contract to Pacio as the low bidder. There is no suggestion that they acted for any reason other than to secure the most advantageous financial arrangement for the municipality.

The lower courts attempted to distinguish this case from those in which the specifications had been clear and unequivocal in requiring bids on all proposals, pointing to the sentence "Failure to indicate a bid may render a bid informal and cause its rejection." Although this warning was immediately preceded by the statement "Bidders are cautioned that all proposals must be bid upon," they interpreted the word "may" to qualify the seemingly unconditional nature of that command.

We are unable to accept this view for several reasons. First, the word "must" was deliberately highlighted by the Borough and set apart in the text. Indeed, it was the only word in the lengthy set of documents which was given such emphasis. That sentence clearly indicates that the Borough made bids on all options mandatory. Second, the warning that failure to bid on all alternatives might cause rejection of the entire bid could hardly be considered controlling, since at best it creates an ambiguity. It is settled that bidding requirements particularly those involving material items, should be unmistakably clear. Vague, ambiguous and conflicting terms may seriously affect the purpose of competitive bidding. The Borough inserted the same cautionary note in paragraph 2, where it instructed bidders not to make any changes in the bid proposal forms.

Essentially, defendants urge us to adopt a reading of the specifications which would leave the Borough with the fullest possible discretion. They would have us interpret this paragraph merely as a notification to bidders that failure to bid on each contract would subject them to possible disqualification for all contracts. The Borough would be free to reject a low bidder for such an omission, but it could accept a non-conforming bid when it was "in the best interests of the municipality."

The long-standing judicial policy in construing cases governed by the Local Public Contracts Law, N.J.S.A. 40A:11-1 et seq. and its predecessors, has been to curtail the discretion of local authorities by demanding strict compliance with public bidding guidelines. See, e. g., Hillside Tp. v. Sternin, supra, 25 N.J. at 325-26, 136 A.2d 265; A. C. Schultes & Sons v. Haddon Tp., 8 N.J. 103, 108, 83 A.2d 896 (1951); Waszen v. City of Atlantic City, supra, 1 N.J. at 283, 63 A.2d 255 (1949); J. Turco Paving Con., Inc. v. City Council of Orange, 89 N.J.Super. 93, 103, 218 A.2d 865 (App.Div. 1965); Belousofsky v. Board of Education of City of Linden, 54 N.J.Super. 219, 223, 148 A.2d 632 (App.Div.1957); Case v. Trenton, 76 N.J.L. 696, 700, 74 A. 672 (E. & A.1909); Armitage v. Newark, 86 N.J.L. 5, 10, 90 A. 1035 (Sup.Ct.1914). Bearing in mind the purposes of the act "to guard against favoritism, improvidence, extravagance and corruption" and "to secure for the public the benefits of unfettered competition", Terminal Const. Corp. v. Atlantic Cty. Sewerage Auth., 67 N.J. 403, 410, 341 A.2d 327, 330,...