On Thursday the State Senate will be considering S-2947, which would require municipalities, counties and local authorities to release the names, upon request, of all parties who have received bid documents prior to the bid opening once three or more bid packets have been received by parties. The release of the bidders’ list would have to be made available in a timely manner in accordance with the Open Public Records Act. In addition, municipalities will have the option to post the list on their websites. However, failure to release this information would prohibit a municipality from accepting the bids and require the re-advertisement for bids. The League strongly opposes S-2947.
First and foremost, we are concerned that the release of the bidders’ names prior to the receipt of bids could lead to collusion and bid rigging. We agree with the Appellate Division’s decision in O’Neill Electric Co., Inc. v. the Board of Chosen Freeholders of the County of Warren, 297 N.J. Super. 473 (App. Div. 1997). In that case, the Appellate Division stated that “access to a bidders list facilitates collusive or bid-rigging arrangements and that withholding disclosure makes this more difficult.” Id. at 480. The Court went on to say that bid-rigging is an “extremely serious problem which costs the public enormous sums of money. The relatively insignificant interest of plaintiff and amici in obtaining bidders lists cannot overcome the grave danger to the public resulting from a failure to keep the door tightly closed to potential corruption in public bidding.” Id. We are concerned that potential bidders may be dissuaded from bidding on a project based on the bidders who have picked up bid specifications or may change their pricing based on who the competition is on the project versus what competitive bid price for the project.
Second, we are concerned that the bill as drafted requires a municipality to create and maintain a new record. Presently, the Local Public Contracts Law does not require a municipality to create or maintain such a record. In fact, the only reason a bidders’ list is maintained is to create a centralized list in case there are addenda to specifications for bids or proposals. A municipality does not have to create a centralized list, if it so choose, it could collect the business cards of potential bidders or use the information on checks submitted to pay for the bid packets.
Finally, we are concerned with the benchmark of “three or more bids” before the release of the bidders’ list. We believe that this arbitrary benchmark will lead to costly litigation. For example, if a person only requests a copy of the bidders’ list but at that time only two bid packets have been released and twenty minutes later a third person obtains a bid packet, the legislation is unclear as to the municipality’s obligation to the person who first requested the list. There are a number of other scenarios that we could cite that make this provision problematic.
Contractors have long argued that release of the bidders’ list may force contractors to “sharpen their pencils.” We question why can’t these “pencils be sharpened” regardless of the number of bidders or who is bidding on the project. Shouldn’t potentially responsible bidders be submitting their lowest prices in all their bids?
Subcontractors have longed argued that the release of the bidders’ list before submission of the bids would provide them with an opportunity to solicit potential bidders to work with them on the project. While we do not disagree that subcontractors benefit from knowing who is bidding on a project we strongly question if a general contractor is going to hire a subcontractor for a government contract based on a “cold call”. In our experience we have found that general contractors tend to have a long-standing relationship with the subcontractors that they use for public contracts. The release of the bidders’ list after the submission of bids provides the subcontractors the opportunity to develop those relationships with the general contractor.
We firmly believe that the public bidding process should be open and competitive. The names of bidders are routinely released after a bid opening. We are troubled with releasing the list prior to a bid opening because it has the potential to limit competition, which can drive up costs for taxpayers and create an environment that could possibly lead to bid rigging and collusion.
Contact: Lori Buckelew, Sr. Legislative Analyst, firstname.lastname@example.org, 609-695-3481 x112.