New Jersey Supreme Court Decision Appears to Impose New Non-Waivable Requirement for Bid Submissions

By Andrew S. Kent of CSG Law
Originally published May 19, 2025

Earlier this month, the New Jersey Supreme Court issued a decision upholding the New Jersey Turnpike Authority’s (the “Authority”) rejection of a bid for a reason the Authority had previously overlooked. Sureties and their contractor customers need to be aware of this apparent change in both the law and in bidding procedures or risk facing a needless bid rejection or award challenge.

In In re Protest filed by El Sol Contracting & Construction Corp., No. 090076, 2025 WL 1287828 (N.J. May 5, 2025), the New Jersey Supreme Court held that a bid for a contract for certain construction for the Turnpike Authority was “legally deficient” where the required Consent of Surety was signed by an agent on the surety’s behalf but the bid submission did not include a Power of Attorney that specifically authorized the agent to sign a Consent of Surety for the surety. Consequently, the Court concluded that the Turnpike Authority’s rejection of the bid, which included a Power of Attorney as to the agent’s authority to sign bonds on the surety’s behalf (but not a Consent of Surety), was not arbitrary, capricious, or unreasonable.

A “Consent of Surety” is a document containing the surety’s enforceable promise that, if the bidder is awarded the contract, the surety will provide the performance and payment bond on the bidder’s behalf in the form and amount required by the bid documents. In New Jersey, a Consent of Surety must be included in a bid for public construction work. The Consent of Surety prevents a bidder from using a supposed inability to obtain the required performance and payment bond to, in effect, cancel its bid after the opening of bids and avoid entering into what it believes may be an unfavorable contract – for example, if the bidder learns that its low bid is far below the second low bid – limiting abuse of the competitive bidding process for public work.

For more than 30 years, since the Supreme Court’s decision in Meadowbrook Carting Co. v. Borough of Island Heights, 138 N.J. 307 (1994), the failure to include the required Consent of Surety with a bid has been considered to be an unwaivable, incurable defect, requiring rejection of the bid. This holding has since been codified in various statutes pertaining to certain types of public work. See, e.g., N.J.S.A. §§ 40A:11-22, 11-23.2(b) (Local Public Contracts Law); N.J.S.A. § 18A:18A-25 (Public Schools Contracts Law). The Court considered the submission of a Consent of Surety that might not bind the surety to be no different than omitting the Consent of Surety entirely.

The Turnpike Authority regulations in force at the time of the bid in El Sol expressly required that bid submissions include a bid bond accompanied by a Power of Attorney evidencing the signatory’s authority to sign the bid bond on behalf of the surety. The regulations also required that the bid submission include a Consent of Surety that was “executed by the surety company.” The low bidder submitted both a bid bond and a Consent of Surety, signed by the surety’s agent as its attorney-in-fact. The Power of Attorney (which was annexed to the bid bond) referred only to the agent’s authority to sign the specific bid bond to which it was attached. The Court concluded that, under New Jersey’s strict application of public bidding requirements, the Turnpike Authority could not be certain, at the time of bid opening, that the Consent of Surety had been executed by someone with authority to bind the surety, and that the Turnpike Authority therefore acted properly in rejecting the bid. The fact that the specifications did not expressly require that a Power of Attorney accompany the Consent of Surety, according to the Court, was not relevant, nor was the fact that the Turnpike Authority overlooked this deficiency in the past.

While El Sol concerns a Turnpike Authority bid, the holding is likely to be extended to all public bidding that requires a Consent of Surety. Sureties and contractors should expect that any bid that includes a Consent of Surety signed by an agent as attorney-in-fact but which does not include a Power of Attorney specifically authorizing the agent to sign the Consent of Surety on the surety’s behalf either will be rejected as non-conforming or will be subject to contest by another bidder.

Andrew S. Kent focuses his practice with CSG Law on surety and fidelity claims, providing legal advice with respect to surety-related regulatory and transactional matters, commercial litigation, and public contract bid disputes. For more than 25 years, he has regularly authored and assisted on articles related to the topics of fidelity and surety law and is a presenter and speaker at conferences in those fields. Kent can be reached at akent@csglaw.com or 973.530.2104.