ANATOMY OF A SCHOOL BID

1. ANATOMY OF A SCHOOL BID Ronald J. Ianoale, Esq., Partner Leslie G. London, Esq., Partner New Jersey Association of School Business Officials November 12, 2013--Mt. Laurel, NJ November 14, 2014--Rockaway, NJ

2. A. Public School Contracts Law • Purchase of real property, N.J.S.A. 18A:20-1 et seq. • Transportation of students, N.J.S.A. 18A:39-1 et seq. • Purchase of goods or services, N.J.S.A. 18A:18A-1 et seq.

3. B. School Business Administrator/QPA • Board can delegate the procurement function • Only board can award contracts that exceed bid threshold • QPA—enhanced threshold • Purchasing agent can delegate procurement function, provided board approves such delegation by resolution

4. C. Selecting Method of Procurement • Does “aggregate” amount exceed bid threshold for the “contract period”? • If less than bid threshold, purchasing agent solicits at least two quotes, “if practical.” • If aggregate amount does not exceed 15% of bid threshold, no quote required—employ “sound business practices” in awarding contract. • EUS when in excess of bid threshold require two competitive quotes, “if practical.” • Multi-year contracts—two step process in determining whether to bid or quote.

5. D. Bid Exemptions • Professional services contracts • Architect • Bond Counsel • Engineer • UES—requirements for appointment • Construction manager • Financial advisor • Management Appraisal Institute (MAI) appraiser for land or building appraisal

6. D. Bid Exemptions - Continued • Cooperative purchasing • State contracts • Local purchasing cooperatives • National purchasing cooperatives • Electronic bidding • Board has advertised twice and failed to receive bid prices that are reasonable or none at all on both occasions—need 2/3 majority approval of the full membership of board of education • Procedure for negotiations • Emergency • 10% below State contract price

7. E. Competitive Contracting • Equivalent to request for proposal format based on several criteria: • Technical criteria • Management criteria • Cost criteria • Most popular use of competitive contracting: • Food services management company • Energy savings improvement program (ESIP) • Power purchase agreement (PPA) • Appeal to the Dept of Community Affairs to use competitive contracting

8. F. Soliciting Quotes • When competitive bidding or competitive contracting are not required at least two competitive quotations are required, unless price of good or service is less than 15% of the bid threshold • The quote award “should be made to the vendor whose response is most advantageous, price and other factors considered.” N.J.S.A. 18A:18-37(a).

9. G. Bidding • Specifications must be drafted to encourage free, open and competitive bidding • If the entire cost of the contract for public work exceeds $20,000, the purchasing agent is required to report to the NJ Department of Treasury if a contractor is in default. • Public works contracts in excess of $1 million board of education require to transfer .5% of the contract price to NJ Dept of Labor and Workforce Development for on-the-job or off-the-job outreach and training for minority and women in the trades.

10. H. Bonds and Sureties • Bid bond • Performance bond • Labor and material bond • Maintenance bond • Bonds must be underwritten by an insurance company licensed in New Jersey

11. I. Advertising for Bids • Publication requirement • Deadline for challenges to bid specifications • Addendum to specifications requirements • What constitutes an “addendum to specifications” rather than a “request for clarification”?

12. J. Construction Bids • Three options for bidding construction bids that exceed bid threshold: • Multiple prime contracts—plumbing, HVAC, electrical, steel, general construction • Single bid—general contractor only—must disclose its sub-contractors • Bids are submitted both ways—multiple prime and general contractor

13. K. American Goods and Products • Are to be used where possible for public work.

14. L. No Bids on Monday • Cannot receive bids on a Monday or any day following a state or federal holiday.

15. M. Bidders’ Eligibility/Bid Requirements • Pre-bid meetings—cannot require attendance • Bidder classification for public work • DBC Form 701—Amount of Uncompleted Contracts • DPMC Form 27—Notice of Classification • Bidders can be required to demonstrate they own, lease, or control equipment required for specifications • Bidders are required to submit a no material change in the contractor’s qualifications since its last statement to the Dept. of Treasury

16. M. Bidders’ Eligibility/Bid Requirements (continued) • New Jersey Prevailing Wage Act • Public Works Contractors Registration Act • Business Registration Certificate • Non-collusion affidavit (optional) • Stockholder Disclosure Certification • Iranian Sanctions Certificate (outline includes a form of certificate) • Project Labor Agreements • Pay-to-Play

17. N. Rejecting Bids • Can only be done for one of six reasons as per N.J.S.A. 18A:18A-4.5(d) • Prior Negative Experience—N.J.S.A. 18A:18A-4(b) • Bidder’s mistake—”Local Public Contracts Law” provides guidance • Bid challenges—who has standing to initiate claim or action?

18. O. Awarding Bids • Formal bids must be awarded by resolution of the board of education to the “lowest responsible bidder,” who offers the lowest price, provided the bidder is both • “Responsive” and “Responsible” • Bids must be awarded within 60 days of their receipt, unless date is extended by mutual consent

19. P. Deviations in the Bid • Is the deviation “material” or can it be “waived”? • Certain deviations in the bid cannot be waived • Two part test for determining whether other types of deviation to be bid can be waived

20. Q. Selected Contract Terms • “Americans with Disabilities Act” • Indemnification and insurance • Compliance with laws • Contract amount and increases in contract amount • Payment terms • Subcontracting and assignment • Contract changes and amendments

21. Q. Selected Contract Terms (cont.) • Termination of contract • Liquidated damages • Application of law and jurisdiction for claims

22. R. Post Award Issues • Contract must be signed within 21 business days of award, unless agreed to mutually extend. • “Prompt Payment Act”—affects all contracts for improvements to real property and structure regardless of the amount of the contract—affects both bid and non-bid contracts. • Change Orders—must be approved by board resolution, but under certain circumstances their authorization can be delegated.

23. R. Post Award Issues (cont.) • Change orders • Change orders for capital projects are governed by N.J.A.C. 6A:26-4.9—if change order exceeds 20% of contract price, the Dept. of Education must approve (this provision likely to sunset) • Change orders for non-capital projects are governed by N.J.A.C. 6A:23A-21.1 et seq. and N.J.A.C. 5:30-11.1 et seq.

24. S. Selected Case Law • Brockwell & Carrington Contractors, Inc. v. Kearny B/E (uncompleted construction work) • Lighton Industries v. N. Haledon B/E (requirement to outline sub-contractors’ scope of work) • Brick Tp. B/E v. Wallace Bros. (unilateral mistake) • Aspen Landscaping Contracting v. Juliano & Sons et al. (request for change order approval) • I/M/O Protest of Scheduled Award of Term Contract (defect in ownership disclosure information)

25. S. Selected Case Law (cont.) • I/M/O the Petition of Thomas United, Inc. Regarding the Award of a Contract for the Atlantic Co. Community College (defect in DPMC Form 701 for Uncompleted Contracts) • Applied Landscape Tech. et al. v. Florham Park Boro. (failure to identify sub-contractor in bid) • In Re: Bid Protest of Fire Protection Sys. Inspection et al. (failure to list all equipment and systems bidder would inspect, maintain, and repair) • CFG Health Systems v. Co. of Hudson (Issues of “standing” to sue and post-contract award changes)

26. S. Selected Case Law (cont.) • I/M/O Bid Solicitation . . . South Jersey Reg. Airport v. Div. of Purchase and Property, Dept. of Treasury, State of New Jersey (Pricing deviation from bid specifications)