Hunt, Inc., Whitesell-Green, Inc., Mathews Corporation, Inc., Biltmore Construction Company, Inc., Hawkins and Mouw Construction, Sessoms-Grice Construction Company, Inc., and Florida Associated General Contractors Council.
Due to the imminence of final hearing in Case No. 80-2099RX, the Hearing Officer, on December 8, 1980, requested agency counsel to informally contact each of the bidders on the state project to determine if any others wished to intervene in Case No. 80-2220 and, if so, whether objection would be raised to holding a consolidated hearing on December 16, 1980. Said counsel advised the Hearing Officer by letter of December 15, 1980, that all bidders had been contacted and that only the proposed intervenor, Sam L. Hamilton, Inc., had indicated that it might petition to intervene in the proceedings. Although one bidder, Poole and Kent Company, advised the Hearing Officer subsequent to the hearing that it had not been so contacted, Respondent asserts that such claim is erroneous. No objection to the procedure followed in this case has been filed by any bidder.
Accordingly, at the commencement of the hearing on December 16, 1980, the motion for consolidation of the two cases was granted. No objection was raised to the intervention of Sam L. Hamilton, Inc., and it was therefore accorded the status of an intervenor in both cases.
Respondent objected to intervention by SAC Construction Company, et al., on the ground that they were not substantially affected in the proceedings and therefore lacked standing. Intervention was provisionally granted to afford the proposed intervenors an opportunity to establish such a substantial interest during the course of the hearing. No evidence was presented by the petitioning firms and organization at the hearing and, consequently, they have failed to establish a substantial interest in the proceedings. Their petitions for leave to intervene are therefore denied.
Petitioner Cobo Company, Inc., is a mechanical contractor located in Miami, Florida, whose qualifying agent, Jose Cobo, is certified in that capacity pursuant to Chapter 489, Florida Statutes. By letter of August 18, 1980,
Respondent Department of General Services confirmed Petitioner's annual prequalification as a potential bidder for building construction contracts pursuant to Section 255.29, Florida Statutes, for the "type or class as defined in your license." (Testimony of Cobo, Exhibit 1)
At an undisclosed date, Respondent published an advertisement for bids for Project No. DGS-7969-C, "Major Repairs-Chiller Replacement, Graham Building, Miami, Florida." The advertisement required all bidders to submit prequalification data of their eligibility to submit proposals if not previously qualified for the current fiscal year. The advertisement and invitation for bids stated that bids must be submitted in full in accordance with the requirements of the drawings, specifications, bidding conditions, and contractual conditions, and that sealed bids would be opened on September 30, 1980. Section B-2 of the specifications required that the bidder present evidence that he was "authorized to perform the work required in these documents in accordance with the applicable provisions of Florida Statutes governing contractors." (Exhibit 4)
Respondent's Instructions to Bidders further required that bidders submit evidence of ability to provide necessary performance and labor and material payment bonds, and that bids should be accompanied by a bid guarantee of not less than 5 percent of the amount of the bid. The instructions also required bidders to submit a list of previous contracts involving similar work which had been satisfactorily completed, and to list those qualified subcontractors which the bidder intended to be employed on the contract. They further required a bidder to indicate bid prices on the proposal form for the entire work and for any alternates on which he bids. The instructions stated that if the base bid was within the amount of funds available to finance the contract and the owner (Respondent) wished to accept alternate additive bids, contract award would be made to that responsible bidder submitting the low combined bid, consisting of the base bid plus alternate additive bids. Section B-24 of the contract document reads in part as follows:
B-24 CONTRACT AWARD
The Contract will be awarded by the Executive Direction, Department of General Services, as soon as possible, to the lowest qualified bidder provided his bid is reasonable and it is in the best interest of the Owner to accept it.
The Owner reserves the right to waive any informality on bids received when such waiver is in the interest of the Owner.
The Agreement will only be entered into with reasonable contractors, found to be satisfactory by the Owner, qualified by experience and in a financial position to do the work specified.
Section 01010 of the specifications provides in part as follows: SECTION 01010 - SUMMARY OF WORK
1. GENERAL DESCRIPTION.
The project in general consists of the construction of the contract entitled Major Repairs-Chiller Replacement, Graham building, Miami, Florida, State Project NO. DGS-7069-C.
A general description of the project and its scope include the following:
Replacement of chiller for central air conditioning system.
Install new cooling towers and pump.
The contract drawings and specifications provided for the removal of a portion of an interior wall, and removal of an exterior wall window and masonry work below the window to provide access for removal of the existing chiller and its replacement with new equipment. In addition, the contract included electrical work incident to the installation of the chiller, removal of an existing hand rail for clear access to the equipment and later replacement, installation of pitch pans for pipes and other openings on the roof, and the erection and installation of structural steel cooling towers. The specifications call for painting, plaster work, replacement of flooring and ceiling, and installation of a window wall panel, as required in restoring the demolished area. They further called for a replacement demountable interior wall partition to provide future access to the air conditioning equipment, as an alternate portion of the project. Section 01021 of the specifications described the bid items as a Base bid, Additive Alternate No. 1 for using higher efficiency chiller, and Additive Alternate No. 2 for installation of the demountable partition. However, the specifications had been altered prior to the issuance of the bid invitation to provide for the higher efficiency chiller as part of the base bid, but Section 01021 had not been changed accordingly. Respondent's proposal form for use by bidders, however, had provisions for entry of only a Base bid and Alternate No.
1 for the installation of the demountable partition. (Testimony of Karagianis, Exhibits 4-6)
Petitioner submitted its bid for the project on September 30, 1980. Its base bid was $225,440. It also bid on the alternate for installation of demountable partitions in the sum of $1,170, and added to the bid form an alternate for the use of higher efficiency chiller in the amount of $1,150. Seven other bids were submitted on the proposal ranging from $239,300 by Sam L. Hamilton, Inc., to a high bid of $430,624. Hamilton's additive bid for the alternate partitions was in the amount of $1,950. Petitioner enclosed with its proposal the required contractor's qualification statement showing previous
experience as a mechanical contractor, bid bond, and other required information. It listed L. Milton Construction, Inc., as a general construction subcontractor and Sparta Insulation as an insulation contractor. Although Petitioner intended that Lloyd N. Jones perform the electrical work on the project, he was not listed as a subcontractor because Petitioner did not know at that time whether he would be a subcontractor of Milton or of his own firm. Petitioner included the alternate bid for the higher efficiency chiller because it was required under Section 01021 of the specifications. Milton's bid to Petitioner for the construction work on the contract was in the sum of $7,000. (Testimony of Cobo, Exhibits 2-3)
By letter of October 7, 1980, Respondent informed Petitioner that it intended to contract with Sam L. Hamilton, Inc., which had been determined the qualified low bidder meeting the requirements of the specifications. The letter advised the Petitioner that is bid was rejected because it was not a certified or registered general or building contractor as required by Section 489.105, Florida Statutes. Attached to the letter was a copy of a letter of William J. Roberts, attorney for the Florida Construction Industry Licensing Board, to Respondent, dated October 18, 1977, setting forth a legal opinion that a mechanical contractor could not be the prime contractor on a state contract in which the bulk of the work is mechanical in nature, but the remaining portion is
to be subcontracted to a general contractor. Roberts testified at the hearing that he had drafted legislation which changed the definition of "contractor" previously found in subsection 478.102(1), and in his view, under such definition, a mechanical contractor would not be authorized to become a prime contractor is it were necessary for him to subcontract any non-mechanical work called for under the contract provisions which he was not qualified to perform. (Testimony of Roberts, Exhibit 7)
Respondent's project director estimates that the chiller replacement project was approximately 90 to 93 percent mechanical in nature, and 7 to 10 percent requiring general construction and electrical work. It was his understanding of departmental policy that if any portion of a contract involved general construction work, only a general contractor would be eligible to receive the award and that, in this case, Petitioner could not therefore be accepted as a prime contractor. Respondent's Chief of the Bureau of Construction has instructed Bureau personnel not to award contracts to mechanical contractors which involve non-mechanical work unless the contractor is certified in the non-mechanical area for which the work is required. Several contracts awarded by Respondent to mechanical contractors in 1980 which involved non-mechanical work were "incorrect" awards, in the view of the Chief of the Bureau of Construction. (Testimony of Karagianis, Scaringe, Composite Exhibit 8)
General contractors and mechanical contractors are required to be licensed under Chapter 489, Florida Statutes. Any person who desires to be certified statewide in a particular contracting area must establish his competency and qualifications by a combination of education and experience, plus the successful completion of an appropriate examination. The general contractor's examination and mechanical contractor's examination have similar portions relating to applicable federal and state laws and regulations in the contracting field. The remaining and major portion of the mechanical contractor's examination deals with subjects of that specialty such as air conditioning, refrigeration, heating, and the like. The general contractor's examination primarily covers matters relative to construction, such as site work, excavation, structural steel, masonry walls, piles, columns, and form work. (Testimony of Allen, Composite Exhibits 9-10)
In the opinion of an expert in the field of architecture, there are no parts of the chiller replacement project which require the services of a general contractor. The demolition of the interior partition and the window wall properly may be accomplished by a mechanical contractor and installation of demountable partitions in lieu thereof can be obtained from speciality suppliers. Other aspects of the project, such as concrete pads, installation of cooling tower, pitch pans, and painting similarly are all considered to be incidental work to a project that is basically mechanical in nature. Certain large mechanical contractors customarily employ qualified individuals to perform specialty tasks such as painting and demolition work, but smaller contractors accomplish such portions of a job by subcontract. (Testimony of Coxen)
A recent contract award was made by Dade County to a mechanical contractor for a project similar to the one here in controversy. In that case, the mechanical contractor had listed a general contractor as a subcontractor for the project. (Exhibit 11)
CONCLUSIONS OF LAW
Petitioner seeks to invalidate an alleged unwritten policy of Respondent which is asserted to be an invalid rule because it has not been adopted pursuant to Chapter 120, Florida Statutes. The petition states that the purported unwritten policy is that "On all projects for the State of Florida if any of the work has to be subcontracted on any part of the project, the prime contractor must be a general contractor." Petitioner apparently concluded that the above proposition constituted Respondent's policy by virtue of the Respondent's October 7, 1980 bid rejection letter and its enclosure. The letter simply stated that the bid was rejected because Petitioner was not a certified or registered general or building contractor as required by Section 489.105, Florida Statutes. The enclosure which constituted a legal opinion of an attorney for the Florida Construction Industry Licensing Board in response to a 1977 query of Respondent's Bureau of Construction, stated essentially that a mechanical contractor could not subcontract a portion of a project to a general contractor, and implied that only a general contractor could subcontract work on a state project.
Although Respondent's answer to the petition stated that its position was that a mechanical contractor could only perform work which it is licensed to do and could not, through the "subterfuge of a subcontract with a general contractor" circumvent the clear and unambiguous provisions of Section 489.105(3), Florida Statutes, testimony of its officials at the hearing established that its policy is not to award contracts to a mechanical contractor if the contract specifications require non-mechanical work to be performed or if the bidder proposes to subcontract any such work to the other trades. In essence, Respondent's position is that a mechanical contractor can perform only that work for which it is licensed, as specified in Section 489.105(3)(i), Florida Statutes, and cannot subcontract portions of the contract involving work for which it is not licensed. Of course, the determination of what is "mechanical" or "nonmechanical" work depends upon construction of that statutory provision and the particular requirements of each contract. Respondent further claims that it is not required to adopt a rule which would be nothing more than a rephrasing or reiteration of the language in subsection 489.105(3).
Respondent also seeks to shelter any failure to promulgate rules as to a contractor's qualifications and authority with regard to subcontracting by claiming that it is bound by the non-rule policy of the Construction Industry Licensing Board in this respect.
No issue was raised at the hearing as to whether Petitioner or the Intervenor Sam L. Hamilton, Inc., are substantially affected by the purported rule. It is apparent by the rejection of Petitioner's bid on the instant project and Respondent's acceptance of the Intervenor's bid wherein Respondent's policy was applied that they are so affected within the contemplation of subsection 120.56(1), Florida Statutes. Respondent now claims, however, that Petitioner could have secured a general contractor's license and thus become eligible for the contract award. It apparently believes that failure to do so deprives Petitioner of standing in this proceeding. This contention is not deemed meritorious.
Section 120.52(14), F.S., defines "rule" pertinently as ". . . each agency statement of general applicability that implements, interprets, or prescribes law or policy . . ." The exceptions specified in the statute are not applicable in this proceeding. The Intervenor contends that the exception in subsection 120.52(14)(b) as to "agency legal opinions" applies in this case to affect jurisdiction, in that the purported agency policy is based on a legal
opinion of the Construction Industry Licensing Board. This contention is rejected because the alleged policy in question is that of the Respondent and not the Board. Further, the exception applies only to legal opinions "prior to their use in connection with an agency action." Such is not the case here.
In McDonald v. Dept. of Banking and Finance, 356 So.2d 569, the First District Court of Appeal stated that:
. . . Section 120.54 rule making procedures are imposed only on policy statements of general applicability, i.e., those statements which are intended by their own effect to create rights, or to require compliance, or otherwise to have the direct and consistent effect of law.
* * *
While the Florida APA thus requires rule making for policy statements of general applicability, it also recognizes the inevitability and desirability of refining incipient agency policy through adjudication of individual cases.
In light of the above language, it first must be determined if Respondent indeed follows any "policy" and, if so, whether it is a policy statement of general applicability which requires rule making, or it merely constitutes "incipient agency policy" which may proceed on a case by case basis with the view to eventual rule making. In order to answer this question, a consideration of the applicable statutes governing construction contracts and Respondent's authority and responsibilities in that regard must be considered.
Section 255.29, F.S., requires Respondent to adopt rules on specific subjects, as follows:
255.29 Construction contracts; department rules.-- The Department of General Services shall establish, through the promulgation of administrative rules as provided in chapter 120:
Procedures for determining the qualification and responsibility of potential bidders prior to advertisement for and receipt of bids for building construction contracts, including procedures for the rejection of bidders who are reasonably determined from prior experience to be unqualified or irresponsible to perform the work required by a proposed contract.
Procedures for awarding each state agency construction project to the lowest qualified bidder. . . .
Pursuant to the statutory mandate, Respondent has promulgated Chapter 13D-11, Florida Administrative Code. Rule 13D-11.04 provides that in order for a firm to be eligible to submit a proposal for construction contracts, it must annually meet basic requirements, which include current state contractor license certification or registration when required under Chapter 468, Part II, Florida
Statutes. It also states that to determine qualifications with respect to a specific project, a firm must provide evidence at the time of bid of ability to provide necessary performance and payment bonds for the project, required insurance as established in the project specifications, and any other provisions Respondent may set forth in the "Instruction to Bidders" section of a project's specifications. Rule 13D-11.05 provides that Respondent will annually notify each firm of their eligibility or ineligibility to submit bids for the ensuing year based on the criteria set out in 13D-11.04, and that each firm "notified of its eligibility may submit a proposal at the time and place specified." Rule 13D-11.07 states that the award of a contract will be made to the firm "determined to be qualified in accordance with the provisions herein and meeting the requirements of the specifications, who submits the lowest price proposal for the work . . ." Thus, it can be seen that Respondent has imposed no restrictions by it rules as to the type or extent of contract work that can be performed by a particular category of contractor. However, Respondent's form letter of "Confirmation of Contractor's Pre-qualification" limits approval for bidding only for the "type or class as defined in your license." In its standard Instructions to Bidders, there is no restriction as to use of subcontractors by a particular category of bidder, other than the requirement that the bidder must submit a list of subcontractors intended to be used for a particular phase of the project, and a warning that the bidder must determine that any such subcontractor is qualified and competent.
Chapter 489, Florida Statutes (1980), includes provisions concerning the licensing and regulation of contractors by the Construction Industry Licensing Board. The definitions of "contractor" and "classes of contractors" are set forth in Section 489.105. The definition of "contractor" is stated in part as follows:
489.105 Definitions.--
* * *
"Contractor" means the person who is qualified for and responsible for the entire project contracted for and means, except as exempted in this act, the person, who, for compensation, undertakes to, submits a bid to, or does himself or by others construct, repair, alter, remodel, add to, subtract from, or improve any building or structure, including related improvements to real estate, for others or for resale to others. .
. .(Emphasis added)
A "General contractor" is defined as a contractor "whose services are unlimited as to the type of work which he may do, except as provided in this act." A "mechanical contractor" is defined as follows:
"Mechanical contractor" means any person whose services are unlimited in the execution of contracts requiring the experience, knowledge, and skill to install, maintain, repair, fabricate, alter, extend, or design, when not prohibited by law, central air conditioning refrigeration, hearing, and ventilating systems, including duct work in connection with a complete system only to the extent such duct work is performed by the
contractor as is necessary to make complete an air-distribution system, boiler and unfired pressure vessel systems, lift station equipment and piping, and all appurtenances, apparatus or equipment used in connection therewith and to install, maintain, repair, fabricate, alter, extend, or design, when not prohibited by law, piping, insulation of pipes, vessels and ducts, pressure and
process piping, pneumatic control piping, gasoline tanks and pump installations and piping for same, standpipes, air piping, vacuum line piping, oxygen lines, nitrous oxide piping, ink and chemical lines, fuel transmission lines, and installation of a condensate drain from an air conditioning unit to an existing safe waste or other approved disposal other than a direct connection to a sanitary system. The scope of work for such contractor shall also include any excavation work incidental thereto, but shall not include any work such as liquefied petroleum or natural gas fuel lines within buildings, potable waterlines or connections thereon, sanitary sewer lines, swimming pool piping and filters, or electrical power wiring.
The subject of subcontracting is dealt with in subsection 489.113(3) which provides that a "contractor" shall subcontract the electrical, mechanical, plumbing, roofing, sheet metal, and air-conditioning work if a local examination for a certificate of competency or a license for such work is required, unless the contractor is either certified by the state or licensed by local authority in those trade categories. The statutory provision also provides certain exceptions to subcontracting by general, building, or residential contractors.
It is thus apparent that "contractors" are not precluded from subcontracting, but, in fact, are required to subcontract certain portions of a project unless they are certified or licensed to do such work, if locally required.
In light of the above, the next logical question is the extent to which a contractor certified or licensed in a particular trade may subcontract portions of a particular project. The previously quoted definition of "mechanical contractor" identifies the scope of work as relating to specified subjects, such as air-conditioning, refrigeration, heating, ventilating, piping systems, and the installation of gasoline tanks and pumps. Therefore, if any contract is concerned solely with the installation of one or more such systems, but it is necessary to utilize the services of another trade to perform ancillary electrical, plumbing, or access work to accomplish the installation, such work is within the scope of a mechanical contract, but may not necessarily be work which the mechanical contractor is qualified to perform. In such instances, or even in situations where a mechanical contractor desires to contract part of the purely mechanical work called for under the contract, subcontracting would be authorized under Chapter 489. This determination is in keeping with Petitioner's contention that work which is "incidental" to a mechanical contract does not change the basic nature of the contract. This view is similar to and is supported by reference to a provision of Chapter 489 concerning the separate licensing of electrical contractors. Section 489.537
states that the scope of electrical contracting shall include "other related work incidental thereto," and that ". . . such contractor shall subcontract the work of any other craft for which an examination for a certificate of competency or registration or a license is required, unless such contractor holds a certificate of competency or registration or license for the respective trade category as required by the appropriate local authority." It is unquestionable that each state contract must be separately considered in the light of its particular requirements and scope of work to determine if specific portions thereof are merely incidental to the basic purpose thereof, or involve unrelated, separate aspects.
It is true, as Respondent contends, that subsection 489.105(3) requires the 12 specified categories of "contractors" to be "qualified and responsible for the entire project." However, the provision also permits a contractor to perform the contract work by "himself or by others." By the contract bond and insurance requirements, and the like, any contractor becomes "responsible" for the entire project. By the use of certified, registered, or locally licensed subcontractors, a bidding contractor, be he a general contractor or one of the other categories, becomes "qualified" in the sense of the statute in those areas in which he is not certified or registered, where subcontracting is required under subsection 489.113(3) in certain instances.
The evidence shows that Respondent has issued informal guidelines to its project directors which essentially preclude a mechanical contractor from receiving an award if the contractor proposes to subcontract any work which he is not licensed to perform, regardless of whether or not such work may be merely incidental to an otherwise purely mechanical contract. These guidelines do not permit deviation in any respect and are required to be applied in all contract awards of the type in question. Such guidelines are of general applicability purportedly having the force and applicability of law and must be deemed to constitute a "rule," as contemplated under Chapter 120. As stated in the recent case of Department of Revenue v. U.S. Sugar Corporation, 388 So.2d 596 (Fla. 1st DCA 1980), in construing a policy of the Department of Revenue:
. . . Section 214.71(3)(a), Florida Statutes, makes no distinction between common carrier and contract carrier. The Department, by making such a distinction, has placed upon the statute an interpretation that is not readily apparent from a reading of the statute, but impacts upon the taxpayer with the consistent effect of law. We agree with the hearing officer's conclusion that the statement is one of general applicability that implements, interprets or prescribes law, policy, procedure or practice requirements of the agency and falls squarely within the definition of a rule as defined by Section 120.52(14), Florida Statutes (1977). (Citations omitted)
Similarly, in the instant case, Respondent has placed an inflexible interpretation upon the pertinent provisions of Chapter 489 which are not readily apparent from a reading of the statute. Such interpretation cannot be considered "incipient policy" which, by adjudication of individual cases, may produce a basis for structuring rules. The policy leaves no room for refinement, but purports to affect all cases of the type under consideration.
Since Respondent has not promulgated its policy as a rule pursuant to Chapter 120, it is hereby determined, pursuant to Section 120.56, Florida Statutes, to be an invalid exercise of delegated legislative authority. Dept. of Administration v. Harvey, 356 So.2d 323 (Fla. 1st DCA 1977).
Post hearing submissions by the parties have been fully considered, and those portions not adopted herein are considered to be either unnecessary, irrelevant, or unsupported in law or fact.
