Allows local contracting unit to accept bid up to 10 percent more than lowest responsible bid in awarding public contracts under certain circumstances.

S4176

SENATE, No. 4176

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED MAY 11, 2026

Sponsored by:

Senator� BRIAN P. STACK

District 33 (Hudson)

SYNOPSIS

���� Allows local contracting unit to accept bid up to 10
percent more than lowest responsible bid in awarding public contracts under
certain circumstances.

CURRENT VERSION OF TEXT

���� As introduced.

��

An Act
concerning bidder qualifications in the award of local
public contracts and amending P.L.1971, c.198.

����
Be It
Enacted
by the Senate and General Assembly of
the State of New Jersey:

���� 1.��� Section 4 of P.L.1971,
c.198 (C.40A:11-4) is amended to read as follow:

���� 4.��� a.�
(1)
� Every
contract awarded by the contracting agent for the provision or performance of
any goods or services, the cost of which in the aggregate exceeds the bid
threshold, shall be awarded only by resolution of the governing body of the
contracting unit to the lowest responsible bidder after public advertising for
bids and bidding therefor, except as is provided otherwise in
[
this act
]

P.L.1971,
c.198 (C.40A:11-1 et seq.)
or specifically by any other law.

����
(2)
� The governing body
of a contracting unit may, by resolution approved by a majority of the
governing body and subject to subsections b. and c. of this section, disqualify
a bidder who would otherwise be determined to be the lowest responsible bidder,
if the governing body finds that it has had prior negative experience with the
bidder.

����
(3)� The governing body of
a contracting unit may, by resolution approved by a majority of the governing
body and subject to subsection d. of this section, award a contract to a bidder
that offers a price that is not more than 10 percent higher than the price offered
by the lowest responsible bidder.

���� b.��� As used in this section,
"prior negative experience" means any of the following:

���� (1)�� the bidder has been
found, through either court adjudication, arbitration, mediation, or other
contractually stipulated alternate dispute resolution mechanism, to have:
failed to provide or perform goods or services; or failed to complete the
contract in a timely manner; or otherwise performed unsatisfactorily under a
prior contract with the contracting unit;

���� (2)�� the bidder defaulted on
a contract, thereby requiring the local unit to utilize the services of another
contractor to provide the goods or perform the services or to correct or
complete the contract;

���� (3)�� the bidder defaulted on
a contract, thereby requiring the local unit to look to the bidder's surety for
completion of the contract or tender of the costs of completion; or

���� (4)�� the bidder is debarred
or suspended from contracting with any of the agencies or departments of the
executive branch of the State of New Jersey at the time of the contract award,
whether or not the action was based on experience with the contracting unit.

���� c.���� The following
conditions apply if the governing body of a contracting unit is contemplating a
disqualification based on prior negative experience:

���� (1)�� The existence of any of
the indicators of prior negative experience set forth in this section shall not
require that a bidder be disqualified.� In each instance, the decision to
disqualify shall be made within the discretion of the governing body and shall
be rendered in the best interests of the contracting unit.

���� (2)�� All mitigating factors
shall be considered in determining the seriousness of the prior negative
experience and in deciding whether disqualification is warranted.

���� (3)�� The bidder shall be
furnished by the governing body with a written notice (a) stating that a
disqualification is being considered; (b) setting forth the reason for the
disqualification; and (c) indicating that the bidder shall be accorded an
opportunity for a hearing before the governing body if the bidder so requests
within a stated period of time.� At the hearing, the bidder shall show good
cause why the bidder should not be disqualified by presenting documents and
testimony.� If the governing body determines that good cause has not been shown
by the bidder, it may vote to find the bidder lacking in responsibility and,
thus, disqualified.

���� (4)�� Disqualification shall
be for a reasonable, defined period of time which shall not exceed five years.

���� (5)�� A disqualification,
other than a disqualification pursuant to which a governing body is prohibited
by law from entering into a contract with a bidder, may be voided or the period
thereof may be reduced, in the discretion of the governing body, upon the submission
of a good faith application under oath, supported by documentary evidence,
setting forth substantial and appropriate grounds for the granting of relief,
such as reversal of a judgment, or actual change of ownership, management or
control of the bidder.

���� (6)�� An opportunity for a
hearing need not be offered to a bidder whose disqualification is based on its
suspension or debarment by an agency or department of the executive branch of
the State of New Jersey.� The term of such a disqualification shall be concurrent
with the term of the suspension or debarment by the State agency or department.

����
d.��� A bidder may be
awarded a contract if the bidder offers a price for a responsive bid that is
not more than 10 percent higher than the price offered by the lowest
responsible bidder and the contracting unit, in its discretion, determines
either that:

����
(1) the response to the
request for bids is the most advantageous, price and other factors considered,
among the lowest responsible bid and all other bids that are not more than 10
percent higher than the lowest responsible bid; or

����
(2) the bidder for the
request for bids is determined to be the most responsible, as demonstrated by
performance history, among the lowest responsible bidder and all other bidders that
submitted bids not more than 10 percent higher than the lowest responsible bid.

����
If a bidder is awarded a
contract pursuant to this subsection, the award resolution shall explain why
the response is the most advantageous or the bidder selected is the most
responsible, as appropriate.

(cf: P.L.1999, c.440, s.8)

���� 2.��� This act shall take
effect immediately.

STATEMENT

���� This bill would allow local
contracting units to accept a bid on a local public contract for a good or
service exceeding the bid threshold that is not more than 10 percent higher
than the lowest responsible bid.� Currently, local contracting units are generally
required to award these contracts to the lowest responsible bidder.� The
�lowest responsible bidder� is defined as the bidder who: (1) offers a
responsive bid at the lowest price; and (2) is responsible.� The bill would
allow the award of a local public contract to a bidder with a responsive bid
that is within 10 percent of the lowest responsible bid if the local
contracting unit deems either: (1) the bid response to be the most
advantageous; or (2) the bidder to have the most responsible performance
history.� This will provide local contracting units with the flexibility to
award a local public contract to a low-cost bidder that is best suited to
perform the contract.