In the Matter of Protest Filed by El Sol Contracting and Construction Corp., Contract T100.638, ___ N.J. ___ (2025). This public bidding case resulted in a 5-2 split at the Supreme Court, the first non-unanimous ruling of the current Term. Justice Hoffman wrote the majority opinion, while Justice Fasciale authored the dissent for himself and Justice Pierre-Louis.
The appeal centered on whether a Consent of Surety (“CoS”) submitted by the low bidder (“El Sol”) on a bridge redecking project of the New Jersey Turnpike Authority (“NJTA”) was sufficient. The CoS is an essential document in the awarding of a bid, as the Supreme Court held in Meadowbrook Carting Co. v. Borough of Island Heights, 138 N.J. 307 (1994), which stated that (as Justice Hoffman summarized) “the guarantee provided by a CoS, when required, is so critical to the integrity and fairness of the competitive bidding process that it cannot be waived.”
The CoS from Liberty was signed by an attorney-in-fact pursuant to a power of attorney (“PoA”). But the PoA empowered that individual to sign only Liberty’s Proposal Bond and not Liberty’s CoS, both of which were required as part of the bid package.
“Because of the defect in Liberty’s PoA, El Sol did not submit a CoS that validly bound Liberty to execute the Contract Bond, and its bid was therefore incomplete.” For that reason, the NJTA rejected El Sol’s bid and awarded the contract to the second-lowest bidder, who had provided a proper CoS. El Sol and Liberty offered to amend the PoA, but the NJTA would not allow that, as doing so would have violated the ruling in Meadowbrook.
El Sol appealed, and the Appellate Division reversed the NJTA’s action, finding it arbitrary, capricious, and unreasonable. The panel determined that the bid specifications were imprecise and concluded by “by stating that the ‘NJTA’s practical concerns in obtaining assurances that El Sol will execute the Contract and perform its contractual obligations are obviated by Liberty’s . . . offer to modify the language of the POA to address the issue.”
The Supreme Court granted certification and set an expedited schedule. By a 5-2 vote, the Court reversed the Appellate Division.
Justice Hoffman noted that the standard of review of an agency’s decision in the bid context is a deferential one, and that such a decision is not to be reversed unless arbitrary, capricious, and unreasonable. That was not the case here. Meadowbrook required a valid CoS, and El Sol’s CoS from Liberty was signed by a person not authorized to do so by the PoA. In Meadowbrook, Justice Hoffman said, the Court “ha[d] no doubt that the overriding interest in insuring the integrity of the bidding process is more important than the isolated savings at stake,” such that “failing to include a CoS is a material defect that can be neither waived nor cured.”
For that reason, El Sol’s arguments were all in vain. Those included the central argument that El Sol raised for the first time in the Supreme Court that “the Court should overlook any problems associated with the CoS because the Proposal Bond can be read to serve the same function,” which the Court found had been waived but, regardless, could not avail. El Sol’s offer to fix the PoA, an attempt to estop the NJTA because that agency had, in thirteen prior instances, accepted Liberty’s PoA and CoS in similar circumstances, a contention that because all the documents at issue were submitted together under the same identifying number, the PoA’s authorization to sign the Proposal Bond should also have been applied to the CoS regardless of the PoA’s actual language, and that the NJTA should have allowed El Sol to fix the problem all also failed.
The dissenters saw some of those issues differently. They also observed that the bid specifications in existence when El Sol bid on the project did not require that a PoA accompany a CoS. Telling for the dissenters was another fact: “after Liberty Mutual’s submission, the NJTA substantively changed the specifications to require, for the first time, that a POA accompany a COS. If the applicable specifications already imposed such a requirement, then there would be no reason to revise them” (emphasis by Justice Fasciale). The majority had noted that fact but “agree[d] with the Appellate Division that this prospective change ‘does not dictate the outcome here since the modification post-dates the bid opening date for the Project.’”
