New Jersey Supreme Court Upholds Turnpike Authority's Bid Rejection in Important New Jersey Public Bidding Case
- Alexander J. Kemeny
- 1 day ago
- 3 min read
NJ Supreme Court Reinforces Strict Compliance in New Jersey Public Bidding: $70.8M Bridge Contract Rejection Sets Precedent for Contractors and Agencies
In a significant decision for public procurement and construction law, the New Jersey Supreme Court that the New Jersey Turnpike Authority (NJTA) acted within its rights when it rejected a $70.8 million bid from El Sol Contracting and Construction Corp. for a bridge repair project. The Court’s decision was issued yesterday (ruled on May 5, 2025), in In the Matter of Protest Filed by El Sol Contracting and Construction Corp., Contract T100.638.
Our law firm has issued a Guidance Alert as a result of the decision. The Guidance Alert is available for download here.
Background of the Case
El Sol submitted the lowest bid for the NJTA's bridge redecking project in the Newark Bay area. However, the NJTA found that El Sol's bid lacked a validly executed Consent of Surety (CoS) from its surety, Liberty Mutual Insurance Co. Specifically, the Power of Attorney (PoA) provided did not authorize the attorney-in-fact to bind Liberty to the CoS, a requirement explicitly stated in the bid specifications.
Legal Proceedings
After the NJTA awarded the contract to the second-lowest bidder, El Sol protested the decision, arguing that the PoA's limitations were a minor defect and that Liberty had previously used similar language in past NJTA projects without issue. The Appellate Division sided with El Sol, interpreting the specifications to require the PoA only for the Proposal Bond, not the CoS. However, the Supreme Court reversed this decision, emphasizing the importance of strict compliance with bid requirements to maintain the integrity of the public bidding process.
The NJ Supreme Court Decision
In its decision, the New Jersey Supreme Court ruled that El Sol’s bid for a public contract was properly rejected because it did not include a legally valid guarantee from its surety company, Liberty. The problem was with a document called a "Power of Attorney" (PoA), which gives someone authority to act on behalf of a company. In this case, the PoA only allowed Liberty’s agent to sign one type of bond (the Proposal Bond), but not the separate and required Certificate of Surety (CoS), which guarantees that Liberty would back El Sol’s performance of the contract.
The Court explained that the main goal of New Jersey’s public bidding laws is to make sure government contracts are awarded fairly and honestly — without favoritism, waste, or corruption. These rules are designed to protect taxpayers and ensure open and fair competition among all bidders.
To maintain that fairness, certain important requirements — like including a valid Certificate of Surety (CoS), which guarantees the bidder can get a performance bond — must be strictly followed. These rules can't be ignored or "waived," even if it seems harmless in a particular case.
The Court relied on its prior reasoning in Meadowbrook Carting Co. v. Borough of Island Heights, 138 N.J. 307, 324 (1994), where it had determined that allowing a bid to go forward without a valid CoS would weaken the whole bidding process and could lead to unfair results. In that case, it had noted that “the overriding interest in insuring the integrity of the bidding process is more important than the isolated savings at stake.”
Because the PoA didn’t cover the CoS, Liberty wasn’t legally bound by it — meaning the CoS was invalid, and the bid was incomplete. As a result, the Court found that the New Jersey Turnpike Authority (NJTA) acted properly and within its legal rights when it rejected El Sol’s bid.
Implications for Contractors and Public Entities
This ruling underscores the necessity for contractors to meticulously adhere to all bid specifications, especially concerning bonding and surety requirements. Even minor deviations can render a bid non-compliant, leading to its rejection. For public entities, the decision reaffirms the importance of enforcing bid requirements to ensure fairness and transparency in the procurement process.
Conclusion
The New Jersey Supreme Court's decision in this case highlights the critical nature of compliance in public bidding. Contractors must ensure that all documentation are executed precisely as required. Public entities are encouraged to maintain strict adherence to their bid specifications to uphold the integrity of the bidding process.
For legal assistance in navigating public procurement processes or addressing bid disputes, contact Kemeny, Ramp & Renaud, LLC. Our experienced business transaction attorneys are here to guide you through the complexities of public contract law
