A4197

An Act concerning the lowest responsible bidder for local public contracts and amending P.L.1971, c.198.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. Section 4 of P.L.1971, c.198 (C.40A:11-4) is amended to read as follow:

4. a. (1) Every contract awarded by the contracting agent for the provision or performance of any goods or services, the cost of which in the aggregate exceeds the bid threshold, shall be awarded only by resolution of the governing body of the contracting unit to the lowest responsible bidder after public advertising for bids and bidding therefor, except as is provided otherwise in [this act] P.L.1971, c.198 (C.40A:11-1 et seq.) or specifically by any other law.

(2) The governing body of a contracting unit may, by resolution approved by a majority of the governing body and subject to subsections b. and c. of this section, disqualify a bidder who would otherwise be determined to be the lowest responsible bidder, if the governing body finds that it has had prior negative experience with the bidder.

(3) The governing body of a contracting unit may, by resolution approved by a majority of the governing body and subject to subsection d. of this section, award a contract to a bidder that offers a price that is within five percent of the price offered by the lowest responsible bidder.

b. As used in this section, "prior negative experience" means any of the following:

(1) the bidder has been found, through either court adjudication, arbitration, mediation, or other contractually stipulated alternate dispute resolution mechanism, to have: failed to provide or perform goods or services; or failed to complete the contract in a timely manner; or otherwise performed unsatisfactorily under a prior contract with the contracting unit;

(2) the bidder defaulted on a contract, thereby requiring the local unit to utilize the services of another contractor to provide the goods or perform the services or to correct or complete the contract;

(3) the bidder defaulted on a contract, thereby requiring the local unit to look to the bidder's surety for completion of the contract or tender of the costs of completion; or

(4) the bidder is debarred or suspended from contracting with any of the agencies or departments of the executive branch of the State of New Jersey at the time of the contract award, whether or not the action was based on experience with the contracting unit.

c. The following conditions apply if the governing body of a contracting unit is contemplating a disqualification based on prior negative experience:

(1) The existence of any of the indicators of prior negative experience set forth in this section shall not require that a bidder be disqualified. In each instance, the decision to disqualify shall be made within the discretion of the governing body and shall be rendered in the best interests of the contracting unit.

(2) All mitigating factors shall be considered in determining the seriousness of the prior negative experience and in deciding whether disqualification is warranted.

(3) The bidder shall be furnished by the governing body with a written notice (a) stating that a disqualification is being considered; (b) setting forth the reason for the disqualification; and (c) indicating that the bidder shall be accorded an opportunity for a hearing before the governing body if the bidder so requests within a stated period of time. At the hearing, the bidder shall show good cause why the bidder should not be disqualified by presenting documents and testimony. If the governing body determines that good cause has not been shown by the bidder, it may vote to find the bidder lacking in responsibility and, thus, disqualified.

(4) Disqualification shall be for a reasonable, defined period of time which shall not exceed five years.

(5) A disqualification, other than a disqualification pursuant to which a governing body is prohibited by law from entering into a contract with a bidder, may be voided or the period thereof may be reduced, in the discretion of the governing body, upon the submission of a good faith application under oath, supported by documentary evidence, setting forth substantial and appropriate grounds for the granting of relief, such as reversal of a judgment, or actual change of ownership, management or control of the bidder.

(6) An opportunity for a hearing need not be offered to a bidder whose disqualification is based on its suspension or debarment by an agency or department of the executive branch of the State of New Jersey. The term of such a disqualification shall be concurrent with the term of the suspension or debarment by the State agency or department.

d. A bidder may be awarded a contract if the bidder offers a price for a responsive bid that is within five percent of the price offered by the lowest responsible bidder and the contracting unit, in its discretion, determines either that: (1) the response to the request for bids to be the most advantageous, price and other factors considered, of the lowest responsible bid and all bids within five percent of the lowest responsible bid; or (2) the bidder to be the most responsible, as demonstrated by performance history, of the lowest responsible bidder and all bidders with bids within five percent of the lowest responsible bid. If a bidder is awarded a contract pursuant to this subsection, the award resolution shall explain why the bidder selected is the most advantageous or responsible, as appropriate.

(cf: P.L.1999, c.440, s.8)

2. This act shall take effect immediately.

STATEMENT

This bill would allow local contracting units to accept a bid on a local public contract for a good or service exceeding the bid threshold that is up to five percent higher than the lowest responsible bid. Currently, local contracting units are generally required to award these contracts to the lowest responsible bidder. The “lowest responsible bidder” is defined as the bidder who: a) offers a responsive bid at the lowest price; and b) is responsible. The bill would allow the award of a local public contract to a bidder with a responsive bid that is within five percent of the lowest responsible bid if the local contracting unit deems either: a) the bid response to be the most advantageous; or b) the bidder to have the most responsible track record. This will provide local contracting units with the flexibility to award a local public contract to a low-cost bidder that is best suited to perform the contract.