• New Jersey Establishes Process for Bid Withdrawal
  • March 2, 2011
  • Law Firm: Cohen Seglias Pallas Greenhall Furman P.C. - Philadelphia Office
  • Since public bidding began in the State of New Jersey, contractors have had to be especially diligent in the computation and review of their bid packages. This is because New Jersey has remained one of the few states that does not have an established procedure that permits bidders to request a withdrawal of the bid, under certain circumstances. Until recently, if, post bid, a bidder discovered a gross mistake in their bid, they could not rescind the bid without jeopardizing their bonding capacity and/or losing their bid bond.

    On January 4, 2011, Governor Chris Christie signed S514 (now P.L. 2010, C. 108) into law. The new law goes into effect on March 4, 2011, and will permit a bidder, under certain circumstances, to withdraw a bid involving “public works”, due to mistakes in the bid, under the Local Public Contracts Law (LPCL).

    Under the LPCL, “public works” is defined to mean building, altering, repairing, improving or demolishing any public structure or facility constructed or acquired by a contracting unit to house local government functions or provide water, waste disposal, power, transportation, and other public infrastructure. In other words, nearly all public projects fall under this definition.

    Now, a bidder can request a withdrawal within five business days after either a bid opening or a scheduled pre-award meeting, whichever comes later, by certified or registered mail. The request for withdrawal must include evidence demonstrating that:

    • An error, clerical in nature and not judgmental, occurred in the computation of the bid, which is verifiable by written evidence;

    • The error is either an unintentional and substantial computational error or an unintentional omission of a substantial quantity of labor, material, or both, from the final bid computation; and

    • There is no gross negligence in the preparation of the bid.

    Essentially, this new law injects the concept of fairness and equity in public bidding and recognizes that both the government and bidders benefit from bidding in good faith.

    One note of caution:
    A bidder who withdraws a bid under this new law is disqualified from submitting future bids on the same project, even if the government entity rejects all bids.