Recently, the Local Public Contracts Law was amended to require bid packets to include certain documentation relating to the condition of on-site soils. Contracting agencies must be aware of this recent amendment since bid packets must now include price line items to account for soil testing and soil disposal. Generally, failure to adhere to Local Public Contracts Law requirements could render a contracting agency’s bidding process, which can be onerous and costly, defective and hence, null and voidable. This article summarizes the recent amendments to the Local Public Contracts Law and identifies changes that contracting agencies may need to make to their bid packets for compliance purposes.
The Local Public Contracts Law, N.J.S.A. 40A:11-1, et seq., (the “LPCL”) requires a competitive bidding process in the solicitation of bid proposals and the award of certain contracts by public entities. In short, the LPCL ensures fairness by requiring transparency in the bidding and contract award process and by providing all potential bidders with an even playing field. In the implementation of the LPCL, contracting agencies are required to publicly advertise certain contracts which exceed the sum of $17,500 and solicit bids from potential bidders (note that in some instances where a purchasing agent is involved, the bid threshold is increased). The advertisement of the contract by the contracting agency must include certain documents and other pertinent information, including a scope of work, which would adequately enable all potential bidders to prepare and submit an “educated” bid and estimate for the work.
The requisite documents, specifications and other information which must be provided by a contracting agency in a Request for Bids (“RFB”) for certain types of contracts are set forth in N.J.S.A. 40A:11-23.1. Specifically, where a contracting agency requests bids for the “erection, alteration or repair of a building, structure, facility or other improvement to real property,” the bid proposal documents (or “bid packet” as it is referenced herein) must include the following:
(1) a document for the bidder to acknowledge receipt of any notice with respect to the bid documents;
(2) a form listing the documents that the contracting agency requires with the bid submission; and
(3) a statement indicating whether a law enforcement officer will be required for the project which is the subject of the RFB.
With the recent amendment of N.J.S.A. 40A:11-23.1, contracting agencies are now also required to include the following in a bid packet, but only where the project at issue would require the removal of any soil from the site: any documentation regarding the “known soil conditions” at the site, including soil test results and known information pertaining to whether the project is located on a site with “historical or suspected contamination.” Wherever this requirement is applicable, the bid packet must include a line item allowance for soil testing and disposal of contaminated soils, which cost is significantly higher than the cost for disposal of clean soils.
The recent amendments to the LPCL also included the addition of N.J.S.A. 40A:11-23.1a, which provision allows for the approval of a change order under certain circumstances. If a site does not have known historic or suspected contamination or if the contracting agency has failed to include in its bid packet the requisite information pertaining to soil conditions and contaminated soil discovered on site cannot be disposed of in accordance with the proposal submitted by the successful bidder (i.e., for the submitted estimate), the contracting agency “shall” approve of a change order to account for any additional costs associated with the testing and disposal of contaminated soils.
Applicability of the requirement for a contracting agency to include information pertaining to known on-site soil conditions and the appropriate price line item in the bid packet can be summarized as follows:
• where the contract calls for the erection, alteration or repair of a building, structure or facility; or
• where the contract calls for an improvement to real property; and
• where the project requires soil removal.
In summary, it is anticipated that this requirement will apply to many projects since numerous parts of New Jersey are known to be situated upon historic fill, much of which is considered “contaminated” pursuant to Technical Regulations for Site Remediation (“Tech Regs”), the Administrative Requirements for the Remediation of Contaminated Sites (“ARRCS”) and the Guidance Documents published thereunder by the New Jersey Department of Environmental Protection (“DEP”) and thus, could be required to be removed even if the project specifications don’t specifically include soil removal. Additionally, since the LPCL does not define the term, “improvement to real property,” the scope of potential applicability of this requirement is expansive and can run the gamut from “small” building/structure repair projects to significant construction projects. Contracting agencies should examine carefully the specifications for each project and conduct, to some reasonable extent, documentary due diligence pertaining to soil conditions on the project site before bid solicitations are published.