Photo of George E. Pallas

George E. Pallas is the Managing Partner of Cohen Seglias. In his position as Managing Partner, he manages the operations of the Firm's ten offices and spearheads the Firm's plans for strategic growth. He is also a partner in the Firm’s Construction Group.

In Pennsylvania, it is well-established that a homeowner can assert claims for fraud and violation of Pennsylvania’s consumer protection statute – the Unfair Trade Practices and Consumer Protection Law (“UTPCPL”) – against a contractor based upon the contractor’s representations, even absent any contractual relationship between the homeowner and the contractor. Essentially, where a contractor makes a representation on which reliance is “specially foreseeable” and the homeowner relies upon the representation and sustains damages as a result, the homeowner may have a claim against the contractor. This scenario often comes into play where a homeowner asserts a claim against the builder where the homeowner is not the initial purchaser of the home, but rather a subsequent purchaser.  Continue Reading Adams v. Hellings Builders, Inc.: PA Superior Court holds that a homebuilder can be liable for representations made in its promotional materials

On February 12, 2016, New York City Mayor Bill de Blasio and New York City Department of Buildings Commissioner Rick Chandler announced a new aggressive campaign to improve worker safety on construction sites. Specifically, commencing next Tuesday, February 16, rigorous safety sweeps of constructions sites ten stories or less are expected to be performed.

Doubtlessly, this initiative is a direct result of 1) an increase in construction related deaths in 2015, and 2) the investigation into the death of a worker on a project at Ninth Avenue that resulted in, among other things, the August 5, 2015 indictment of Harco Construction and its site safety manager for manslaughter and the debarment of Harco for safety violations.

In 2015, there were 11 deaths on New York City construction sites during which time there has been a 300% increase in construction in the City. However, in an unexpected development, 70% of all accidents occur at building sites of less than 10 stories.

Continue Reading Beware: New Rigorous Safety Sweeps of NYC Construction Sites to Begin

In April, the New Jersey Supreme Court agreed to review the case of Waste Management of New Jersey, Inc. v. Mercer County Improvement Authority.  The matter concerns a defect in a bid submitted under the New Jersey Public Contracts Law (“LPCL”).  This case proves, yet again, that it is critical to pay close attention not just to the requirements of the public bidding laws, but also to the requirements contained in the bid specifications.

The LPCL has five mandatory items that must be included in a bid: (1) a bid bond, (2) a consent of surety, (3) a disclosure of corporate ownership pertaining to shareholders owning 10% of more of the corporate stock, (4) a list of certain required subcontractors and (5) an acknowledgment of the bidder’s receipt of any revisions to the bid documents.  Failure to include any of these five items is considered a fatal defect requiring rejection of the bid.  For all other bid defects, the New Jersey courts consider whether the defect is material and non-waivable based on a two-part test: (1) whether the waiver would undermine the public body’s assurance that the bidder will enter into and perform the contract according to its requirements and (2) whether the waiver of the defect would adversely affect competitive bidding by giving one bidder an advantage over other bidders?

In Waste Management, the bid specifications required bidders to submit a legal opinion regarding the enforceability of the contract to be executed by the Authority and the successful bidder.  The Authority included a form for this legal opinion in the bid documents, which consisted of three assurances: (1) the bidder had full corporate power to execute the contract, (2) the contract was binding on the bidder and (3) the contract was enforceable.

Republic Services of New Jersey, L.L.C. (“Republic”) was the low bidder.  Waste Management was the second lowest bidder.  However, with its bid, Republic’s counsel submitted a letter that addressed the three legal opinions and did not use the provided form.  Additionally, for the third opinion in the letter, Republic’s counsel concluded that certain provisions of the contract might be unenforceable but those questionable provisions did not substantially interfere with the intended benefits of the contract.  Due to the letter format and the additional language, the Authority considered Republic’s bid materially defective.

Because Waste Management failed to include the required disclosure of corporate ownership,  its bid was also rejected.  The Authority then re-bid the contract and Waste Management was deemed the low bidder.  Both Republic and Waste Management challenged the Authority’s decision to re-bid the contract and the trial court held that the Authority properly rejected the bids.

On appeal, the Superior Court, Appellate Division held that rejection of Waste Management’s bid for failure to disclose of corporate ownership was proper.  However, it reversed as to Republic.  Applying the two-part test for materiality, the court determined that Republic’s legal opinion did not deprive the Authority of its assurance that the contract would be entered into and performed according to its requirements.  Further, the court determined that the different letter format of the legal opinion would have no effect on competitive bidding.  As such, the court directed that the contract be awarded to Republic.  The Authority has appealed the Appellate Division’s ruling to the New Jersey Supreme Court, and we will report on the Supreme Court’s ruling when it is issued.

As should be evident from this article, the parties, including the public body, have spent thousands of dollars litigating what, to the outside, may seem like rather inconsequential details.  Because of the competitive nature of public bidding, any defect contained in a low bid, no matter how trivial, will likely result in a challenge from another bidder; especially when millions of dollars in new work are at stake.  As a result, it is critical to pay close attention to adhering not just to the required items under all public bidding laws, but also to the requirements contained in the provided bid specifications.  If you are unsure if your bid complies with either the public bidding laws or the bid specifications, please contact us before you submit it so that we can assist you in order to ensure that your bid is compliant.

 

By: Jennifer R. Budd and George E. Pallas

A bill allowing the New Jersey Turnpike Authority (“NJTA”) to enter into design-build contracts has been introduced in the New Jersey Assembly (A1561) and the Senate (S1211). The NJTA is the entity charged with maintaining and implementing capital improvements on the New Jersey Turnpike and the Garden State Parkway. The bill, if passed, would give the NJTA the discretion to administer any project through a design-build contract, rather than through the current design-bid-build method of procurement.

How It Will Work

According to the bill, if the NJTA decides to bid a project as a design-build, the NJTA must adhere to a two-phase procedure for awarding the contract. Under the first phase, the NJTA would qualify interested bidders, which may include joint ventures, by the issuance of a Request for Qualification. The Request for Qualification will list information such as the minimum qualifications needed by the design-build entity, a scope of work statement, the maximum time allowed for the project and the NJTA’s estimated costs of design and construction. Of the phase one bidders that respond to the Request for Qualification, the NJTA must select at least two but no more than five bidders to participate in a second phase Request for Proposal (“RFP”) solicitation.

For the second phase, the NJTA will issue an RFP to the remaining bidders. In response, those contractors will submit a technical proposal and a sealed price bid. The technical proposal will be reviewed by a technical review committee, given a score, and that score shall be submitted to the NJTA and made public. The NJTA will set a minimum technical proposal score, and any proposal that does not meet the minimum shall be rejected. Once the NJTA has determined which proposals have met the minimum score, the price bids will be opened publically, and the NJTA must award the project to the design-build entity with the lowest bid.

The Bill Has Some Traction

During the 2010-2011 term, legislators introduced a similar bill, and the Assembly Transportation, Public Work and Independent Authorities Committee unanimously passed it with amendments. The NJTA bill is very similar to the version passed by the Committee last year, which may be suggestive of the legislature’s belief that design-build bidding will be more efficient and cost effective for the NJTA.

Implications On Contractors

If passed, this bill could have widespread effects on highway and road contractors in New Jersey. Due to the high level of engineering, design and technical skill required to compete in price, and the cost of retaining such professional services, many small and mid-sized contractors could be squeezed out of the competition. On the other hand, larger contractors may enjoy the independence that often accompanies design-build construction since the contractors will have the benefit of design input from project inception.

Notwithstanding the additional independence, contractors should keep in mind that design-build projects are fraught with higher risk because design-builders are responsible for all phases of the project and any liability stemming from it. Additionally, unlike in design-bid-build construction where the contractor can look to the owner or the designer to share the costs from unanticipated circumstances, a design-build contractor is less likely to benefit from such cost-sharing.

Jennifer R. Budd is an Associate at Cohen Seglias Pallas Greenhall & Furman PC and a member of the Construction Group.

George E. Pallas is the Treasurer of the Firm as well as a Shareholder and member of the Board of Directors. He is also a Partner with the Firm’s Construction Group.

Daniel E. Fierstein, an Associate with the Firm contributed to this post.