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Public entity can reject low-bid contractor after bid accepted and contract signed.

July 1, 2011
Cetco Contracting Services Co. v. Cumberland County Improvement Authority, et. al., 2011 N.J. Super. Unpub. LEXIS 1274 (May 17, 2011)

Bids were accepted, and a contract was awarded for improvements to a solid waste facility. Subsequent to the signing of the contract, the second-lowest bidder, Cetco, challenged the awarding of the contract, claiming that certifications of contractor responsibility had not been submitted for all subcontractors. Shortly thereafter, it was revealed that one of the subcontractor’s owners had been found guilty of issuing false invoices on his company’s behalf to create false tax deductions. Thereafter, the public entity rejected all bids and indicated that they would scale back the project as financial concerns had arisen. The trial court held that the public entity's actions were permissible, and the Appellate Division affirmed. The court held that it was acceptable for the public entity to reject the low-bid, even after the contract had been awarded and signed, because the subcontractor who was awarded the contract was ineligible to work on the project due to his felony conviction. Moreover, the court found that a public entity can always choose to reject all bids, even after the 60-day time period to do so has expired, when the public entity finds it is no longer financially able to move forward with the project.

Case Law Alert - 3rd Qtr 2011

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