STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

TYCO CONSTRUCTORS, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 82-3303BID

)

FLORIDA BOARD OF REGENTS, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal administrative hearing was conducted in this matter on April 13 and 14, 1983, in Orlando, Florida. The following appearances were entered: Timothy J. Manor, Orlando, Florida, appeared on behalf of the Petitioner, Tyco Constructors, Inc.; and Gregg A. Gleason, Tallahassee, Florida, appeared on behalf of the Respondent, Florida Board of Regents.

This is a bid protest proceeding. The Respondent rejected a bid submitted by the Petitioner. The Petitioner has protested the rejection of its bid and requested a formal administrative hearing. The Respondent forwarded the matter to the Division of Administrative Hearings on December 29, 1982, and requested that a Hearing Officer be appointed and a hearing scheduled. The final hearing was originally scheduled to be conducted commencing on March 29, 1983.

Petitioner moved for a continuance of the hearing and with the concurrence of the Respondent, the final hearing was rescheduled as set out above.

At the final hearing, the Petitioner called the following witnesses: Richard John Coble, the Petitioner's president; Forest Kelly, the Director of Capital Programs for the State University System; Robert B. Frasier, a project manager and field supervisor employed by the Petitioner; W. E. McCully, a general contractor; James M. McCrae, a project manager and project administrator employed by Petitioner; and Walter Juergensen, a general contractor. The Respondent called the following witnesses: Forest Kelly and Joel Buzbee, a general contractor. Petitioner's Exhibits 1 through 25 and Joint Exhibits 1 and

2 were offered into evidence and received.

The parties have submitted post-hearing legal memoranda which include proposed findings of fact and conclusions of law. The proposed findings and conclusions have been adopted only to the extent that they are expressly set out in the Findings of Fact and Conclusions of Law which follow. They have been otherwise rejected as not supported by the evidence, contrary to the better weight of the evidence, irrelevant to the issues, or legally erroneous.

ISSUES

The ultimate issues to be resolved in this proceeding are whether the Respondent should award a contract in accordance with an invitation to bid to the Petitioner, to some other bidder, or reject all bids and reissue an invitation. Petitioner contends that it was the low bidder in response to the

invitation; that its bid was responsive; and to the extent that it was not responsive, any defects were of a minor sort which should be waived. Petitioner contends that the Respondent has previously waived irregularities such as existed in the Petitioner's bid and should therefore waive them in this case.

The Respondent contends that the Petitioner's bid was not responsive, that the irregularities in Petitioner's bid are not minor, that any mistakes the Respondent has made in past acquisitions should not be repeated, and that the contract should be awarded to another company.

FINDINGS OF FACT

1. The Respondent issued an invitation to bid for a project known as the "Animal Science/Dairy Science Building" at the University of Florida. The project was given No. BR-108 by the Respondent. Petitioner was the lowest bidder in response to the invitation. The next lowest bidder, Charles R. Perry Construction Company, submitted a bid approximately $37,000 higher than Petitioner's bid. Perry has not filed any formal protest nor intervened in this proceeding. Petitioner is a responsible contractor and has in the past entered into construction contracts with the Respondent. Petitioner's bid was rejected by the Respondent. The Petitioner protested the rejection of its bid in a timely manner.

   
   

2. Paragraph "B-15" of the bid specifications provides in pertinent part, as follows:

   
   

   In order that the Owner may be assured that only qualified and competent sub- contractors will be employed on the project, each Bidder shall submit with his Proposal a list of the subcontractors who would perform the work for each Divi- sion of the Specifications as indicated by the "List of Subcontractors" form contained in these Specifications...

   only one subcontractor shall be listed for each phase of the work.

   * * *

   No change shall be made in the list of subcontractors, before or after

   the award of a contract, unless agreed to in writing by the Owner.

   
   

   Section "B" of the invitation for bid provided space for the bidder to list the name and address of subcontractors for the roofing, masonry, plumbing, mechanical, electrical, meat processing equipment, and controls and instrumentation phases of the project.

   
   

3. In Section "B" of its bid, Petitioner listed two subcontractors for the plumbing, mechanical, and controls and instrumentation phases of the project. Listing two subcontractors does not comport with the bid specification requiring that only one subcontractor be listed for each phase. Petitioner listed two subcontractors because one of the subcontractors submitted a proposal to Petitioner only fifteen minutes prior to the time when the bid had to be submitted, and Petitioner was unsure of whether the last-minute proposal included all of the work that the Petitioner anticipated would be required. In addition, Petitioner felt that one of the subcontractors may not have been acceptable to the Respondent.

4. The requirement that bidders list only one subcontractor for each phase of a project helps to discourage "bid shopping." Bid shopping is a practice whereby a contractor who receives a bid from a subcontractor approaches another subcontractor with that bid and encourages the other subcontractor to reduce its price. If the other subcontractor responds, this reduced price can be taken back to the original subcontractor. The original subcontractor is then confronted with the choices of either lowering its bid or losing the project. Bid shopping that occurs after a bid has been accepted by the owner does not benefit the owner. It benefits only the bidder, who is able to reduce its costs and therefore increase its profit.

   
   

5. Requiring that one subcontractor be listed for each phase cannot serve to completely eliminate bid shopping. A contractor could still bid shop by listing itself as the subcontractor, then after winning the contract shop between several subcontractors. A contractor could also bid shop by changing subcontractors after the bid award. In either case, however, the contractor would need to secure the approval of the owner. The practice is thus discouraged.

   
   

6. If a bidder lists two subcontractors for a phase of the project, that bidder would have an advantage over those who listed only one subcontractor. Listing two subcontractors enables the bidder to make a choice as to the best subcontract bid at a time later than the choice is made by bidders who list only one subcontractor. In addition, listing two subcontractors makes it easier for the bidder to engage in bid shopping, which would be more difficult for bidders who listed only one subcontractor.

   
   

7. Paragraph "B-24" of the bid specifications for this project provides in pertinent part:

   
   

   The Contract will be awarded . . . to the lowest qualified bidder pro- vided 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 in bids received when

   such waiver is in the interest of the Owner.

   
   

   The listing of two subcontractors for phases of the project is not a mere informality in the bid. It is directly contrary to Paragraph "B-15" of the bid specifications. It would not be in the interest of the owner to accept a bid in which two subcontractors are listed for phases of the project. The integrity of the acquisition process would be damaged by allowing such a deviation because a bidder who listed two subcontractors would have gained an advantage over bidders who complied with the bid specifications. It is not in the best interest of the Respondent to waive the defect in the Petitioner's bid.

   
   

8. On at least two prior occasions, the Respondent awarded contracts to bidders who listed more than one subcontractor per phase of the work. One of these projects was for a gymnasium at Florida Atlantic University (Project No. BR-603). Another was for a window replacement project at Florida State University (Project No. BR-342). In at least three other projects, the Respondent awarded contracts where the bidder failed to list the name of any subcontractor for one or more phases of the work. These were for the cancer

   center at the University of South Florida (Project No. BR-569), the student housing facility at the University of South Florida (Project No. BR-576), and an expansion project at Florida A & M University (Project No. BR-343). The bid specifications for all of these projects were not offered into evidence; however, the Respondent had utilized the same specifications as required in this project at all pertinent times. Failing to list any subcontractor for a phase of a project constitutes approximately the same defect in a bid response as listing two subcontractors. It provides even greater opportunities for bid shopping and an advantage to the bidder over those who list subcontractors as required by the specifications.

   
   

9. In several other projects, it appears that the Respondent has awarded contracts to bidders whose bids contained defects of the same magnitude, but a different sort than the listing of two subcontractors.

   
   

10. It does not appear that the Respondent has awarded contracts where bidders have listed more than one subcontractor, no subcontractor, or otherwise violated bid specifications because of any policy or because of any expressed waiver of the defect. Rather, it appears that the Respondent has not adequately policed bids to determine responsiveness to the bid specifications. This is especially true with respect to the listing of subcontractors. It appears that no one on the Respondent's staff took the responsibility to consider whether one subcontractor was listed for each phase of a project as required in the specifications. The only policy that the Respondent established was a policy of being too lax in examining bids.

    
    

11. The Petitioner did not list two subcontractors for various phases of this project because of any reliance on past conduct of the Respondent. Petitioner's agent overlooked the bid requirements in Preparing its bid response. In prior bids submitted by the Petitioner in response to bid invitations issued by Respondent, Petitioner listed only one subcontractor, as required. Generally, unless it is otherwise required, Petitioner prefers to list two subcontractors because of the flexibility it provides to the owner and to Petitioner. Petitioner was not aware that Respondent had previously awarded contracts to bidders who listed more than one subcontractor for a phase of the work when it submitted its bid in this instance.

    
    

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this proceeding. Sections 120.53(5), 120.57(1), Florida Statutes.

    
    

13. Under the provisions of Section 240.225, Florida Statutes, the State University System has been delegated the responsibility to enter into construction contracts for public buildings within the State University System. The Department of Education has adopted rules governing the issuance of construction contracts. Chapter 6C-14.21, Florida Administrative Code. Rule 6C-14.21(4) provides:

    
    

    All projects will be publicly bid in accordance with the provisions in the project specifications. Award of con- tract will be made to the firm deter- mined to be qualified in accordance with the provisions herein and meeting the requirements of the specifications

    who submits the lowest and best priced proposal for the work . . . .

    
    

    The bid submitted by the Petitioner in response to the bid invitation in the instant project did not meet the requirements of the specifications. The specifications expressly required that only one subcontractor be listed for each phase of the work. Petitioner's listing of two subcontractors for three phases of the work is a material deviation from the specifications. It gave Petitioner an advantage over bidders who complied with the specifications. The deviation is such as to render Petitioner's bid unresponsive to the invitation.

    Accordingly, the bid must be rejected. Insofar as the defect in this bid could be viewed as a mere "informality," it would not be in the best interest of the Respondent to waive it because the integrity of the bidding process would be adversely affected by allowing Petitioner an advantage over other bidders.

    
    

14. Prior actions of the Respondent in awarding contracts to firms whose bids contained the same or similar defects as Petitioner's bid in this case did not establish any policy. Instead, such awards resulted from unfortunately lax procedures which should not be repeated. If the Petitioner had relied on those actions in listing two subcontractors for various phases of the work in this case, it would be appropriate to reject all bids and reissue an invitation for the project. There was, however, no such reliance. Petitioner listed more than one subcontractor because it failed to pay adequate attention to the bid specifications. It is therefore appropriate that Petitioner's bid be rejected and that the contract be awarded to the next lowest bidder whose bid comported with the specifications.

RECOMMENDED ORDER

Based upon the foregoing Findings of Fact and Conclusions of Law, it is, hereby,

RECOMMENDED:

That a final order be entered by the Board of Regents rejecting the bid submitted by Tyco Constructors, Inc., in response to the invitation for bid issued for Project BR-108 and awarding a contract for the project to the next lowest bidder whose bid conformed with the bid specifications.

RECOMMENDED this 24th day of May, 1983, in Tallahassee, Florida.

G. STEVEN PFEIFFER Hearing Officer

Division of Administrative Hearings Department of Administration

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 24th day of May, 1983.

COPIES FURNISHED:

Timothy J. Manor, Esquire Lowndes, Drosdick, Doster & Kantor, P.A.

Post Office Box 2809 Orlando, Florida 32802

Gregg A. Gleason, Esquire Associate General Counsel Florida Board of Regents

107 West Gaines Street Tallahassee, Florida 32301

Dr. Barbara W. Newell Chancellor

Florida Board of Regents

107 West Gaines Street Tallahassee, Florida 32301

Docket for Case No: 82-003303

Orders for Case No: 82-003303