Deductive Changes Should Affect Contract Price Equitably

M.J. Paquet, Inc. v. N.J. Dep’t of Transportation, 794 A.2d 141, 171 N.J. 378 (2002)

In this case, a contractor submitted an unbalanced bid to the New Jersey Department of Transportation (“DOT”) for the rehabilitation of a bridge with the expense of painting over-estimated and other expenses underestimated.  Following the award of the project, OSHA released new paint safety requirements that the contractor claimed significantly raised the price of the project.  DOT decided that the increased price was too much and decided to excise the bridge painting from the contract.  The contractor then filed suit claiming that DOT was not authorized to delete the painting from the contract and alternatively, that DOT could not subtract the entire amount attributed to painting in the initial unbalanced bid from the contract price.  The Supreme Court concluded that while it was appropriate for the DOT to excise the painting component from the contract it was not proper to simply subtract the value of that item from the initial bid.  Rather, the contractor must have an equitable adjustment to the contract price.

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