Nearly 60 years ago, the New Jersey Supreme Court published one of its seminal bidding cases in Commercial Cleaning Corp. v. Sullivan, holding that a trial-type hearing is not required when challenging a bid award. Nevertheless, the Court recognized the policy concerns underpinning the State’s procurement processes, including the promotion of free competition among bidders and fair treatment of participants, and thus articulated the need for all public agencies to provide participants a reasonable process to protest or challenge award decisions.
In the years that followed, courts have referenced this decision as setting forth the basic procedural due process rights for procurement matters, which includes access to the administrative record and a fair opportunity to present law and facts supporting a protest. There is, however, no uniform procedure or process beyond that. In fact, courts have consistently found that the absence of codified rules does not vitiate the protest proceeding so long as basic due process is accorded.
The present system is flawed in several respects. As one example, the fundamental procedural requirements underlying a bid protest are widely varied and inconsistent depending on the soliciting agency. This includes the operative time for a bidder to file a protest, the agency or court to which the protest should be submitted, the time for the agency or court to render a decision on that protest and the time for the agency or court to rule on a motion seeking a stay of award pending appeal. Similarly, there is no consistency in the mechanisms available to the bidder for obtaining a copy of the administrative record underlying the award.
The Supreme Court’s logic was sound in holding that a trial-type hearing is not required when challenging a bid award so long as the bidder is accorded basic due process. That said, the Court likely did not envision the current system as best suited to accomplish that objective. Each of the above concerns, among others, would benefit from standardization. At present, the varied and inconsistent procedural requirements frequently and unfortunately cause unnecessary delay in the bid protest process, placing an undue burden on all bidders and otherwise hindering the business of government. The bid protest process need not be so difficult and prolonged. Indeed, New Jersey’s public bidding framework exists for the benefit of taxpayers, not bidders.
Filing a Bid Protest
The timing and process to file a bid protest varies widely depending on what public entity issued the solicitation. New Jersey’s primary public bidding statutes are the Local Public Contracts Law (LPCL), which governs most public bidding for municipalities, counties and local government authorities and boards, and the State Procurement Law (SPL) and its implementing regulations, which apply to contracts issued by the New Jersey Department of the Treasury, Division of Purchase and Property (DPP) and Division of Property Management and Construction (DPMC).
The LPCL does not contain any process for the filing of bid protests at the local level; challenges to bid awards are brought via an action in lieu of prerogative writs in the Superior Court and must be filed within 45 days of the adoption of the award resolution by the governing body. Meanwhile, for contracts issued by Treasury, the timing and process depends on whether the bid is for goods or services or construction — with DPP, bidders must file a protest within 10 business days of the notice of intent to award, and with DPMC, within five calendar days of bid opening. Thereafter, any appeal from a final decision rendered by a state-level agency must be initiated within 45 days.
There are, however, other statutes and regulations that govern procurements conducted by independent authorities, agencies and schools. Examples include the New Jersey Public Broadcasting Authority, which requires that bid protests be filed within five business days of public announcement of the award, and the New Jersey Turnpike Authority, which requires filing within five calendar days after the bidder knows or should have known the facts that give rise to its protest, i.e., the “Discovery Rule.” Although the New Jersey Transit Corporation generally establishes a five-business day protest period in its specifications, there is no specific timeline articulated in its governing regulations.
Regardless of which procedure applies, the adoption of consistent and uniform timeframes would likely prove beneficial.
Final Agency Decision
In practice, it is rare that an administrative agency will overturn its own decision to award. What’s more, there is no established timeframe under any of the above regulations governing the timeframe in which the agency must render a final decision. As a result, it is not uncommon for protests to remain pending for many months, necessitating indefinite extensions of bid pricing and incumbent contracts. At the local level, given the absence of any established procedure for protest, a protesting party may learn of the final award decision when the governing body adopts a resolution awarding the contract.
The adoption of a consistent and uniform timeframe within which the soliciting agency must render a final decision on a protest would help to eliminate delay and uncertainty.
Stay of Award Pending Appeal
Under Rule 2:9-5 of the New Jersey Rules of Court, a protestor seeking a stay of award pending appeal must first seek a stay from the trial court or agency before filing a motion for a stay with the appellate division. There is, however, no rule defining the timeframe within which the trial court or agency must respond to the request for a stay pending appeal. This void leaves practitioners in a difficult situation, particularly in emergent matters where the subject matter of the appeal — the contract — may well be proceeding.
Pennsylvania’s Rules of Appellate Procedure may offer useful guidance on how to eliminate some of this uncertainty and hardship. Under Rule 1732, an application for stay of an order of a lower court pending appeal, must ordinarily be made in the first instance to the lower court. If, however, application to the lower court is not practicable, or the lower court has denied the application or failed to afford the relief requested, the application may be made directly to the appellate court.
Administrative Record
Although the administrative record underlying award of a contract is generally open for review by the protestor and other interested parties, the mechanism for obtaining such access varies depending upon the applicable regulatory scheme. Some agencies will provide the protester with the administrative record as a matter of practice, while others will require that the protestor file a records request under the Open Public Records Act (OPRA), New Jersey’s equivalent to the federal Freedom of Information Act (FOIA). The seven-business day response window under OPRA is frequently not conducive to the emergent nature of many bid protests. Moreover, there is almost always a lengthy dispute concerning the redaction of certain documents, and in the event any dispute cannot be resolved amongst the parties, the protestor must initiate a separate action in the Superior Court under OPRA to retrieve any records it believes were improperly withheld.
To resolve these issues, the criminal discovery process articulated under Rule 3:13-3 of the New Jersey Rules of Court may be instructive. Specifically, a criminal defendant is entitled to automatic, prompt and broad discovery of the evidence the State has gathered in support of its charges. A protestor should likewise be entitled to immediate review of any documents necessary to file a cogent and valid protest. There is no dispute that OPRA serves a critical and important purpose by ensuring public access to government records and promoting transparency. In the context of public bidding, however, its limitations serve only to foster unnecessary delays and costly disputes.
Standardization of the procedural requirements in the prosecution of bid protests would not only help to preserve the procedural due process rights of bidders but also streamline the protest process and avoid the unnecessary costs and lengthy delays in contract award and implementation that can result under the present system.
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