STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
BADGETT RESOURCES, INC., )
)
Petitioner, )
)
vs. ) CASE NO. 83-1655BID
)
CAPELETTI BROTHERS and ) DEPARTMENT OF TRANSPORTATION, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, a formal hearing was held in the above case before the Division of Administrative Hearings by its duly designated Hearing Officer, DONALD R. ALEXANDER, on August 18 and 19, 1983 in Fort Lauderdale, Florida.
APPEARANCES
For Petitioner: Carlos Alvarez, Esquire and
Carolyn S. Raepple, Esquire Post Office Box 6526 Tallahassee, Florida 32314
For Respondent: Mark A. Linsky, Esquire
Department of Haydon Burns Building, Mail Station 58 Transportation Tallahassee, Florida 32301
For Respondent: Kenneth G. Oertel, Esquire Capeletti 646 Lewis State Bank Building Brothers, Inc. Tallahassee, Florida 32314
BACKGROUND
On March 31, 1983, respondent, Department of Transportation (Department), gave notice to qualified contractors that it would receive bids for Federal Aid Project No. I-ID-75-4(38) 255, which involved construction work on I-75 in Broward County. The sealed bids, numbering seven, were received by the Department on April 27, 1983. They included bids from petitioner, Badgett Resources, Inc. (Badgett), and respondent, Capeletti Brothers, Inc. (Capeletti). Capeletti submitted a bid for $6,917,515.50 which was ultimately found to be the lowest bid. Petitioner's bid was for $6,922,625.50, or $5,110.00 higher than that of Respondent.
On May 20, 1983, the Department posted the bids and designated Capeletti Brothers, Inc. as the lowest responsive bidder. On May 23, 1983, petitioner filed its notice of protest pursuant to Subsection 120.53(5)(b), Florida Statutes. In its protest petitioner generally alleged that Capeletti had materially deviated from the Bid Specifications relative to minority business enterprises thereby warranting rejection of its bid. The matter was referred to
the Division of Administrative Hearings by the Department on May 31, 1983, with a request that a Hearing Officer be assigned to conduct a hearing.
The case was initially held in abeyance at the request of the parties pending the disposition of an appeal by petitioner to the First District Court of Appeals. Thereafter, by notice of hearing dated July 5, 1983, the final hearing was scheduled for August 18 and 19, 1983 in Fort Lauderdale, Florida.
At the final hearing petitioner presented the testimony of Jose L. Fernandez, Marion C. Mosely, A. J. Capeletti, Robert S. Stoddard, Tyrone W. Reddish, Carmen Proenza, Narjol J. Proena, Thaddeus A. Fortune, Richard L. Halpern, Brian Neighbor, Walter R. Greenwell and Jorge de Moya, and offered petitioner's exhibits 1-6, 9 10, 13-14, 19-25, 30-35, 37, 39, 40-43, 44A-D and 46; all were received in evidence. Respondent Capeletti presented the testimony of Kathryn Hogg, Kathleen Kepler, George Miranda, James Bitonti, Frankie Alday, Tyrone W. Reddish and Sunil B. Nath and offered Capeletti exhibits 2, 5-9; 11, 14-16, 18, 28 and 44-E; all were received in evidence.
The transcripts of hearing (two volumes) were filed on September 14, 1983.
Proposed findings of fact and conclusions of law were filed by the parties on September 6, 1983 and have been considered by the undersigned in the preparation of this order. Findings of fact not included in this order were considered irrelevant to the issues, immaterial to the results reached, or were not supported by competent and substantial evidence.
The issue herein is whether the award of DOT contract number 14936 to Capeletti Brothers, Inc. was correct, or whether petitioner submitted the lowest and most responsive bid.
Based upon all of the evidence, the following findings of fact are determined:
FINDINGS OF FACT
Introduction
On March 31, 1983, Respondent, Department of Transportation (Department), gave notice to qualified contractors that it would receive sealed bids on the following project:
BROWARD COUNTY: FEDERAL AID PROJECT NO.
I-iD-75-4(38)225 (JOB NO. 86075-3417), SR-93,
(I-75), from S. of Nova Dr. to S. of S.W. 13th St.. Work consists of Extra Heavy Embankment; Pav't. of Alt. 10" Limerock Base or 9", 7" or 6" Asph. Base Cse. (Type 1, 2 or 3) and Section of Alt. 8" Limerock Base of 7 1/2", 6" or 5" Asph. Base Cse. (Type 1, 2 or 3)
all with Type S Structural Cse. and Asph. Conc. Fri-tion Cse. (FC-2), Shoulder Pav't.; Two Bridges (OAL 821') of Conc. Slab Deck and Prestr. Conc. Beams on Conc. Piers and Spread Footings; Conc. Handrail (Barrier and Sidewalk); Conc. Box Culverts; Storm Sewer and Small Drainage Structures; Conc. Curb and Gutter and Shoulder Gutter; Staked Silt Barrier;
Guardrail (Rdwy.); Fencing; Roadway Signs;
Pav't. Markings (Rer. Pav't. Markers and Thermoplastic Striping); and Incidental Items. Length 1.914 miles. (B. I. 440803) cost
$20.00 FEMALE GOAL 1 percent M.B.E. GOAL 5
percent TOTAL M.B.E. GOALS 6 percent NOTE:
ON-THE-JOB TRAINING WILL BE REQUIRED FOR THIS
PROJECT. (Approx. 550 Cal. Days)
The project is also known as the "Nova Drive Project". Such bids were to be received by the Department no later than April 27, 1983.
Seven construction firms submitted bids on the project. As is pertinent here these included petitioner, Badgett Resources, Inc. (Badgett), a firm located in Fort Lauderdale, Florida, and respondent, Capeletti Brothers, Inc. (Capeletti), a firm with principal offices located in Miami, Florida. Capeletti submitted a bid for $6,917,515.50, which was the lowest bid on the project Badgett's bid was for $6,922,625.50, or $5,110.00 higher than the Capeletti bid, and was the next lowest bid.
On April 27, 1983 the Department opened the sealed bids. Because certain information was not furnished with Capeletti's bid, Capeletti made another submittal on May 9, 1983. After reviewing this information, and having further communications with Capeletti, the Department finally concluded on May 17, 1983, that Capeletti met all applicable requirements. Thereafter, on May 20, 1983 the Department posted the bids and designated Capeletti as the lowest responsive bidder.
On May 23, 1983 Badgett filed its notice of protest in which it requested a formal hearing prior to the award of the contract to Capeletti. That same day the Department notified Badgett that because it believed the failure to proceed with the award of the contract "would result in an immediate and serious danger to the public health, safety and welfare", it intended to
immediately award the contract to Capeletti pursuant to Subsection 120.53(5)(c), Florida Statutes. It did so since the project was federally funded with Discretionary Interstate Lapse Funds, and if work did not commence prior to June 27, 1983, the State would suffer the loss of those funds.
Capeletti began construction on the project prior to June 27 and has actively continued such work since that time.
Bid Specifications
According to the notice requesting bids, all work related to the project had to comply with the "Plans, Specifications and Special Provisions of the State of Florida Department of Transportation." These bidding requirements are more commonly known as the Bid Specifications. As is pertinent here, the Bid Specifications included a requirement that each bidder comply with the Minority Business Enterprises (MBE) requirements developed by the Department.
The Department has a policy that firms owned and controlled by minorities or women shall be given the maximum opportunity to participate in the performance of contracts let by the Department. In this vein it has established overall minority goals in Rule 14-78.03, Florida Administrative Code, for its MBE program. These include contract goals for minority business enterprises (firms owned and controlled by minorities) and contract goals for women business enterprises (firms owned and controlled by women), both of which applied to the project in question. The MBE goals for the Nova drive Project were 5 percent
for minority business enterprises and 1 percent for women business enterprises. This meant that 5 percent and 1 percent of the estimated total dollar value of the contract should have been performed by certified minority and women controlled enterprises respectively. However, Rule 14-78.03(1)(c)2. provides that if the successful bidder cannot meet the 5 percent and 1 percent goals, it "must satisfy the Department that the contractor has made good faith efforts to meet the goals."
In this regard, the Rule requires that the bidder "actively and aggressively" attempt to comply with the goals, and sets forth nine relevant factors or types of effort that may be considered in determining whether a good faith effort has been made. (Rule 14-78.03(1)(c)2.a.i.-ix). The Rule cautions that "pro forma" good faith efforts are unacceptable.
Department rules and the Bid Specifications made it quite clear that in order to be eligible to participate as MBE's the Department must first certify the firm. The specific requirements for certification are set forth in Rule 14- 78.05, Florida Administrative Code. A failure to comply with these requirements can result in the denial of a bid award.
The Bid Specifications provided the following requirement pertaining to the submission of information showing compliance with the MBE goals:
The Florida Department of Transportation prefers the Minority Business Enterprises Form I to accompany the bid documents. If this is not possible, the form must be received by the Florida Department of Transportation's Office of Minority Programs, attention MBE Liaison Officer, no later than ten (10) calendar days after the bid opening date. (Emphasis added)
The term "calendar day" is defined in the Bid Specifications as "every day shown on the calendar, ending and beginning at Midnight". Since the bid opening date was April 27, 1983, a strict interpretation of this standard required that the MBE submissions by the bidders to be filed with and received by the Department's Office of Minority Programs no later than Saturday, May 7, 1983. This is confirmed by a memorandum prepared by the Secretary of the Department on June 4, 1982 which was sent to all prequalified contractors and clarified the requirements relative to MBE's. There he stated that "(i)t must be remembered that all the above information (including MBE Utilization Form No. 1) is to be in the Department's hands within ten (10) days following the bid opening as opposed, for example, to simply being mailed within the ten-day-period." However, it-has been an informal Department policy for many years to require a document to be filed on the next following Monday when the original deadline falls on a Saturday or Sunday.
The Minority Business Enterprises Certification Form No.1 to be submitted in conjunction with the bid, or ten days thereafter, is a two-page Department prescribed form that identifies each minority subcontractor to be used on the project by the contractor, the class of work, dollar amount of work, percent of contract, sex, type of minority, and whether the subcontractor has been certified by the Department as an MBE. The Bid Specifications provide not only that "(t)he MBE Utilization Form No.1. . .only include firms which are certified by the Department", but also that they be ". . .certified prior to the submission of the. . .Form". (Emphasis added).
MBE Submissions by the parties
Badgett submitted its MBE Utilization Form No.1 with its bid on April
That form reflected that Community Asphalt, Post Office Box 9179, Pembroke Pines, Florida, would perform the paving portion of the project at a cost of
$1,022,853.97, or 15 percent of the total contract. Community is Hispanic owned and controlled, and was represented on the form as being certified by the Department. A female controlled firm identified as Triple J, Post Office Box 6321, Fort Myers, Florida, was listed as the grassing subcontractor, which represented 2 percent of the total contract. These percentages exceeded the 5 percent and 1 percent goals established by the Department. Badgett did not utilize the lowest bid it received for grass work since that was submitted by a non-MBE firm. Had it done so, its bid on the project would have been $7,111.63 lower, or approximately $2,000 less than the overall bid submitted by Capeletti.
Capeletti did not submit an MBE Utilization Form No. 1 or its MBE "good faith efforts" submittal with its sealed bid. Neither did it make such submissions by the tenth calendar day, or May 7, 1983. On the following Monday, May 9, Capeletti filed an incomplete MBE Utilization Form No. 1 and a "good faith efforts" submittal. Form No. 1 reflected that Pro Contracting, Inc., 15111 Falkirk Place, Miami Springs, Florida, a Hispanic owned and controlled firm, would perform 5.04 percent of the total contract work. In answer to the question of whether the firm has been certified by the Department, Capeletti answered that such certification had been "applied for". Capeletti also listed three female owned and controlled firms, Len Hazen Painters, Inc., Advance Barricades and Signing, Inc., and C & G Specialties, Inc., as being subcontracted to perform 1 percent of the total contract price. The first two firms were shown as being certified by the Department while Capeletti indicated that, like Pro Contracting, certification for C & G Specialties had been "applied for". The percentage levels (5.04 percent and 1 percent) met the Department established goals.
Although Capeletti indicated on its Form No. 1 that MBE certifications had been "applied for", this was incorrect. Neither Pro Contracting or C & G Specialties had in fact filed such an application on that date. Further, C & G Specialties had not applied for certification as of the time of the final hearing in mid-August. Both firms were also conspicuously omitted from the directories published by the Department which listed all MBE firms qualified to participate in Department contracts.
On May 10, 1983, the Department Minority Programs Coordinator reviewed the Capeletti filing and found it to be deficient. He then telephoned Capeletti's MBE liaison officer, R. S. Stoddard, and informed him of "possible noncompliance" because of the non-certification of the two firms listed on the Form. He also advised Stoddard that Capeletti would have to submit other "qualified" MBE or WBE firms or provide the Department with evidence of its good faith efforts to meet the contract goals. The next day, May 12, the president of Pro Contracting flew to Tallahassee with an application for certification. Why he waited until after the deadline to seek certification was not disclosed. In any event, by 5:30 p.m. that day, it had been given a "temporary" certification good for ninety days, or until August 12, 1983, subject to a follow-up on-site evaluation of the firm by the Department. The temporary certification was given despite the application being incomplete in several respects and there being an admonition on the form itself that "INCOMPLETE FORMS WILL BE RETURNED." The less than twenty-four hour turnaround time for reviewing the application was by far the quickest time such an application had ever been processed, and a firm issued an MBE certification. In the past, such
certifications had taken weeks or months since the Department has up to ninety days to review such applications pursuant to its rules. However, the Coordinator explained that "time was a factor", and justified the expedited approval on this basis. The temporary certificate expired on August 12 without being renewed, but the Coordinator stated it would be changed to a permanent certification on August 22, 1983. There are no Department rules which provide for "temporary" certification. However, the evidence reveals that this type of certificate had been issued to other subcontractors in the past, including Community Asphalt, which was used by Badgett.
Because the 1 percent WBE goal was not met, it was necessary that Capeletti satisfy the Department it had made good faith efforts to meet the unmet goals. A "Good Faith Efforts" form specifying the information required to meet this test was sent by the Department on April 28, 1983. The form contained nine questions pertaining to the contractor's effort to meet the contract goal and tracked the criteria enumerated in the Rule. Although the form itself was not returned, Capeletti responded by letter dated May 6 and stated that it had mailed a letter to 85 WBEs and 10 MBEs on April 12 1983 soliciting quotes, and mailed the same letter to various WBE and MBE associations in the State of Florida. It also submitted a list of MBE/WBE firms that had subcontracted on Capeletti jobs in recent years. The reply by Capeletti essentially satisfied four of the nine suggested criteria in Rule 14-78.03(1)(c)2.a.i.-ix. It did not respond to the other five factors.
Notwithstanding the failure of Capeletti to fully respond to all of the requested information, the Department recommended that 72 percent of the 1 percent WBE goal be waived since Capeletti had made a good faith effort to meet that goal. In so doing, the Department relied solely upon Capeletti's letter of May 6 as a basis for that determination. This recommendation was concurred in by a representative of the Federal Highway Administration on May 16. This was necessary since federal funds were being used on the project.
On May 17, 1983, the Department determined that Capeletti had complied with the Department MBE requirements. This determination was based on the utilization of Pro Contracting to meet the entire 5 percent MBE goal, and the Federal Highway Administration's waiver of 72 percent of the 1 percent WBE goal of the project. On May 20 the Department posted the bids and designated Capeletti as the lowest responsive bidder for the project.
The Status of Community Asphalt
Respondents have raised the issue of whether Community Asphalt was a certified MBE at the time the bids were submitted on April 27. That subcontractor was used by Badgett to meet the 5 percent MBE goal.
Community Asphalt was incorporated on September 22, 1980. Fifty-one percent of the stock is held by two Hispanics while the remaining 49 percent is held by non-Hispanic shareholders, one of whom owns Badgett. The purpose of the business was to qualify as a minority business enterprise for paving work on construction projects. The corporation is structured so that the Hispanic shareholders have ultimate control of the business and can elect the majority of the board of directors. Although Capeletti contended that the 49 percent block of stock can control the corporation's operations, or prevent it from bidding on jobs, sufficient provisions are available in the by-laws, articles of incorporation and statutes to allow effective Hispanic control.
Community Asphalt was first certified on a temporary basis by the Department as a minority business enterprise for a 3-month period beginning October 28, 1981. A renewal application for continued certification was filed with the Department around January 7, 1982. That application was never acted upon by the Department despite numerous written and oral inquiries by the applicant and its attorneys over an extended period of time. The lack of action was caused in part by a shortage of personnel in the Department MBE office. Community was orally advised in June, 1982 by a Department MBE representative that its application had been approved and it would be placed on the approved list of MBE subcontractors for participation in Department contracts. Community relied upon this representation and did not pursue the matter further. Thereafter, Community's name appeared in the Department MBE directory provided to contractors for Department projects, including the updated directory used for the April, 1983 letting of projects. Most recently, it was again included in the June, 1983 directory. Badgett relied upon these directories to comply with the MBE goals. Although the Department "routinely" advises MBE contractors in writing whenever their certifications have expired, the Department did not do so in Community's case at the end of its 90-day certification on January 28, 1982, or at any time thereafter. The Department attributed this to an oversight and shortage of personnel.
In March, 1983 Badgett submitted a bid on the I-75 and SR 84 Department project in Broward County. On that particular job it had also received a bid quote from Community Asphalt. The Department awarded the contract to Badgett and authorized Community Asphalt to be used to meet the MBE contract goals. It is now performing the contract. Further, Community consistently submitted bids from January, 1982 until the Nova Drive project without any question being raised by the Department and participated in numerous Department jobs over that period of time.
Department Practice on MBE Submissions and Waiver of Irregularities
The Department views the MBE program as being an opportunity for minority and female owned companies to participate in the road and bridge construction program. According to its Coordinator, the policy in the past has been to "stretch" the rules if necessary to afford MBEs such an opportunity.
The MBE Coordinator could not recall ever rejecting a contract for noncompliance by a bidder with the MBE good faith requirements. In situations where a contractor has not submitted its good faith efforts in conjunction with its bid, the Coordinator has allowed contractors to supply such information after the tenth calendar day and even up to twenty-five days thereafter where "continuous communication" occurs, and the contractor is attempting to fulfill the requirements.
The Department internally created an awards committee some fourteen years ago which reviews all bids whenever irregularities, discrepancies or unbalancing of bid items occur on a particular job. In determining how to resolve such problems, the committee's primary concerns are to protect the integrity of the competitive bid system and do whatever is in the best interest of the State. The committee did not get involved in the Nova Drive Project, but the director of the division of construction, who sits on the committee, considered the tardiness of Capeletti in complying with the MBE requirements to be a "minor deficiency" and a "waiverable irregularity". He described "major" deficiencies as being a failure to submit a bid bond or not signing the bond, either of which would warrant rejecting an apparent low bidder.
Section 3-1 of the Florida Department of Transportation Standard Specifications for Road and Bridge Construction (1982 edition) provides in part as follows:
Until the actual award of the contract, however, the right will be reserved to reject any and all proposals and to waive technical errors as may be deemed best for the interest of the State. (Emphasis added)
Effects of Cancelling the Contract
As noted earlier Capeletti has been performing under the contract since the latter part of June, 1983. Should the contract be cancelled, Capeletti estimates its reimbursable costs from the State to range from $500,000 to $1,000,000. This amount represents expenditures already made for such things as earth-work, drainage structures and pilings and beams ordered or already made. This amount was not considered to be unrealistic by a Department representative.
The contract specifications call for the contract to be completed in approximately 550 calendar days. If the work is done at an even pace, around 20 percent of the job will have been completed at the time this recommended order is issued. However, from a construction standpoint, performance of the contract can be terminated at any time and the construction completed by another contractor.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes.
Although not an issue in dispute, the question of who has the burden of proof in a bid case did arise at the outset of the hearing. The undersigned, with the concurrence of the parties, ruled that Badgett, as petitioner, would have the burden of initially going forward, and thereafter Capeletti and the agency would present their cases-in-chief. Although arguably it can be stated that the agency and successful bidder should initially present a prima facie case to support the agency's intended action, J.W.C. Co., Inc. v. Department of Transportation, 396 So.2d 778 (Fla. 1st DCA 1981), the procedure used in the case at bar appears to be permissible. See, Capeletti Brothers, Inc. v. Department of General Services and Bergeron Land Development, Inc., So.2d, (Fla. 1st DCA op. filed 6/7/83). Moreover, a bid dispute is not the type of case that turns on burden of proof in a classical sense. Rather, the prevailing party should be the one who demonstrates that it submitted the lowest and most responsive bid. The evidence has been reviewed in this light.
Initially, the question of whether Capeletti's MBE participation information was due on May 7 or May 9 should be resolved. Both the Department rule (Rule 14-78.03(1)(c)1.) as well as the Bid Specifications required that such information be filed within ten calendar days after the bid opening. That would result in a deadline falling on Saturday, May 7. The evidence reveals that the long-time Department policy in construing the 10-day requirement was that if the deadline fell on a weekend or holiday, the filing must be made the next succeeding workday. The logic of such a policy is so obvious that it requires no explanation. 1/ Moreover, this policy is consistent with the long-
standing judicial rule which holds that when the last day for filing falls on a weekend or legal holiday, the time period is extended to the following secular or business day. See, for example, Stockslager v. Daly Aluminum Products, Inc.,
256 So.2d 97, 98 (Fla. 1971); Mooney v. Eytchison and Hoppes, Inc., 338 So.2d 558, 559 (Fla. 2nd DCA 1976); Page Heating and Cooling, Inc. v. Goldmar Homes, Inc., 338 So.2d 265, 266 (Fla. 1st DCA 1976). Compare Rule 28-5.102, Florida Administrative Code (which construes the filing requirements in administrative proceedings in a similar vein). To hold otherwise would require a bidder to perform the impossible act of filing its documentation with the agency on a day when the agency is closed. Accordingly, it is concluded that the MBE participation information was due in the agency's hands by Monday, May 9, 1983 according to its rule and the specifications. 2/
Badgett next contends that even if the deadline for submission of the MBE information was May 9, Capeletti must be rejected as the successful bidder for two reasons. First, it argues that the submission on May 9 was incomplete, and secondly, that Capeletti never demonstrated good faith efforts to fulfill the WBE goal for the project. It goes on to contend that these deviations from the Bid Specifications were material because (a) they resulted in favoritism or the opportunity for favoritism on the part of the Department, (b) they resulted in misconduct or the opportunity for misconduct on the part of the Department, and (c) they resulted in a competitive disadvantage to Badgett. Because such deviations were material, it argues that the decisional law of this State favors the rejection of Capeletti's bid, and the award of the contract to Badgett, who submitted the next lowest bid, or to simply reopen the bidding process for the remainder of the job.
The MBE submission by Capeletti on May 9 was indeed incomplete, and Capeletti readily concedes this fact. The record shows that its only MBE subcontractor (Pro Contracting) was not certified on that date, despite there being a bid specification requiring that "MBE Utilization Form No. 1. . .only include firms which are certified by the Department." But Capeletti argues that Rule 14-78.05(1) is controlling, and it requires only that a firm be certified prior to participation (performance), or at least by the time the contract is awarded. It then contends the specification conflicts with the rule, and under the authority of Graham Contracting Co., Inc. v. Department of General Services,
363 So.2d 810 (Fla. 1st DCA 1978), the rule must prevail. The rule in question reads as follows:
To ensure that this rule benefits only MBE's which are owned and controlled in both form and substance by one or more minorities or women, the Department shall certify firms who wish to participate under this rule.
Capeletti's construction of the rule is incorrect. The rule makes no reference as to the specific time or deadline when certification must be made. However, it may be reasonably implied that certification of a firm should be completed prior to the submission of MBE Utilization Form No. 1. This is consistent with the terms of the Bid Specifications themselves, and avoids the potential problem of having an apparent lowest and most responsive bidder subsequently rejected because its designated MBE firms could not qualify for certification. Moreover, it is in accord with the requirement that certification is a prerequisite to being listed in the MBE/WBE directory, a list from which potential bidders obtain the names of qualified MBE/WBE firms to solicit quotes prior to the submission of their bids. Therefore, it is concluded that no conflict between the rule and Bid Specifications exists, that MBE firms should be certified no
later than the time when MBE Utilization Form No. 1 is submitted, and that Capeletti's submission did not comply with this requirement. 3/
The next alleged deficiency concerns Capeletti's good faith efforts to fulfill the WBE goal for the project. Rule 14-78.03(1)(2)2. is controlling and it provides in pertinent part as follows:
In order to award a contract to a contractor that has failed to meet MBE contract goals, the Department shall determine that the contractor's efforts were those that, given all relevant circumstances, a contractor actively and aggressively seeking to meet the goals would make.
The rule goes on to list nine criteria to be considered in making that determination but specifically provides that "the list is not intended to be exclusive or exhaustive." Therefore, the fact that Capeletti did not provide information relative to certain enumerated criteria is not fatal in this determination. Petitioner's Exhibit 6 is the good faith submittal of Capeletti and it reflects that Capeletti essentially complied with the four criteria set forth in Rule 14-78.03(1)(c)2.a.ii.,iii,vi, and ix. While this is less than half of the suggested factors to be considered, it was nonetheless sufficient under the circumstances, according to the rule, to consider it a good faith effort to meet the WBE requirements. 4/ Moreover, Badgett did not establish that these limited efforts were insincere or pro forma, but rather its complaint centered around the fact that not all of the nine criteria had been met.
Accordingly, it is concluded that the good faith submittal was sufficient to demonstrate that Capeletti was "actively and aggressively" seeking to meet the WBE goals, and that under these circumstances, a waiver of the WBE contract goals is appropriate.
As noted earlier, the MBE submission by Capeletti on May 9 did not comply with the Bid Specifications on the project because the designated MBE subcontractor was not timely certified. Therefore, the crucial issue remaining is whether this deviation was so material as to result in favoritism or misconduct on the part of the Department, or to give a competitive advantage to Capeletti not enjoyed by other bidders, as Badgett asserts.
Most recently, the Supreme Court of Florida provided us with the general rule to govern situations such as this. In Liberty County v. Baxter's Asphalt and Concrete, Inc., 421 So.2d 505 (Fla. 1982) the Court held that where an agency reserves the right to waive "relatively minor" irregularities in the technical bidding process, and there is no fraud or misconduct on its part, and no competitive advantage has accrued to the successful bidder, a finding of substantial compliance with the law is appropriate even where bid irregularities have occurred.
In the case at bar, the Department specifically reserved the right to waive irregularities on the Nova Drive project. Indeed, Section 3-1 of the Standard Specifications for Road and Bridge Construction in the State provides as follows:
Until the actual award of the contract, however, the right will be reserved to reject any or all proposals and to waive technical
errors as may be deemed best for the interest of the State. (Emphasis added)
Therefore, the Department reserved the authority, and so advised potential bidders, to waive any "technical errors" that might arise in the bidding process. Capeletti's error was to not qualify its MBE subcontractor prior to the submission of the MBE Utilization Form No. 1. But since Pro Contracting was ultimately found to be qualified, it is concluded that this error was "technical" in nature, and within the scope of Section 3-1 of the Standard Specifications.
Next, there has been no evidence to support a finding that the Department was engaged in "fraud or misconduct" during the review and award of the project, or that it otherwise did not act in good faith. Therefore, the deviation was not material in this respect.
The final factor enunciated by the Court which must be considered is whether any competitive advantage accrued to Capeletti by reason of the deviation that was not enjoyed by other bidders. This is clearly the most difficult facet of the case to resolve, for it requires a determination as to whether a "technical" irregularity which an agency reserves the right to waive can still be material because of its deleterious effect. The undersigned concludes that it can. This may seem incongruous at first glance, but further reflection reveals the logic of this statement. While it is true that an agency may reserve the right to waive minor or technical irregularities as the Department did, it must do so at its own risk, and only after weighing the consequences of its action. What may seem inconsequential or minor to the agency can have in reality grave consequences on unsuccessful bidders. Therefore, when an agency elects to waive a so-called minor irregularity in a bid submitted by the apparent low bidder, it should first determine whether that waiver may result in a competitive advantage to that contractor. Clearly, the Department did not do so in this case, but was only concerned in getting Capeletti qualified as soon as possible so that construction could begin by June
27 to avoid a loss of federal funds. It is true that Badgett was forewarned in a general sense that any "technical errors" might be waived, but this obviously did not serve as notice that a wholesale waiver of MBE requirements and deadlines was a possibility should it submit the lowest bid. Badgett argues, and properly so, that had it known that MBE goals could be easily waived or circumvented, it could have utilized a non-qualified grassing firm at a savings of $7,112, which would have placed its overall bid some $2,000 less than that of Capeletti. Badgett also correctly points out that it could have used the longer time period that Capeletti enjoyed to either secure another MBE firm, or to qualify one that was not, and to then submit a lower, more competitive bid. Similarly, by "stretching" the rules and specifications, Capeletti was given additional time not enjoyed by others to being its submittal into compliance with prescribed requirements. These are just the types of competitive advantages that the courts have frowned on, and which have warranted judicial intervention. See, for example, Auroro Pump, etc. v. Goulds Pumps, Inc., 424 So.2d 70 (Fla. 1st DCA 1982); Harry Pepper and Association v. City of Cape Coral, 352 So.2d 1190 (Fla. 2nd DCA 1978). Although Capeletti may not have known of the Department's policy to waive or overlook certain MBE deadlines and requirements, it nonetheless enjoyed the fruits of that policy to the detriment of the other bidders. Capeletti may take no great comfort in this conclusion, but if the tables were turned, and it lost a major contract because rules were "stretched", specifications waived, and certain irregularities passed off as being immaterial, it too would be irate as was Badgett. Judging by the testimony in this case, where MBE projects are concerned, this appears to be the
rule rather than the exception at the Department. 5/ Therefore, it is concluded that the deviation by Capeletti from the Bid Specifications was material in that it resulted in a competitive advantage to Capeletti not enjoyed by others, that Capeletti did not submit a responsive bid, and that it was improper for the Department to designate Capeletti as the successful bidder.
Capeletti contends , and properly so, that Badgett is also guilty of having failed to submit a responsive bid. The evidence reveals that Badgett's MBE contractor, Community Asphalt, was not certified as an MBE contractor when the bids were filed on April 27, and had not yet been certified as of the time of the final hearing. While one may assume that, if Badgett had submitted the lowest numerical bid, the Department would have taken equally great pains to quickly certify Community, and otherwise cure any other apparent defects, this too would have placed the other contractors at the same competitive disadvantage that Badgett now complains of. Therefore, it is concluded that Badgett did not submit a responsive bid, and it is accordingly ineligible to be designated as the successful bidder in Capeletti's stead.
Although Capeletti has been continuously working on the project since before June 27, there is no evidence to show that the project cannot be completed by another qualified bidder. It may be expensive to terminate the present contractor, but once an agency determines an emergency to exist under Subsection 120.53(5)(c), and awards a contract in the face of protests, it does so at its own risk. Here the evidence shows that both the number one and number two bidders materially deviated from the Bid Specifications. Therefore, the contract awarded to Capeletti should be immediately terminated and the remaining portion of the work under the Nova Drive project contract should be relet for bids.
Based on foregoing findings of fact and conclusions of law, it is RECOMMENDED that the Department of Transportation enter a final order
immediately terminating the contract awarded to Capeletti Brothers, Inc. on the
Nova Drive Project, and that the remaining portion of the work under that project be relet for bids.
DONE and ENTERED this 10th day of October, 1983, in Tallahassee, Florida.
DONALD R. ALEXANDER
Hearing Officer
Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32301
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 10th day of October, 1983.
ENDNOTES
1/ Since this is the time-honored policy of the Department, it is suggested that either this policy be disseminated to prospective bidders, or the Bid Specifications themselves be changed in order to avoid a similar problem in the future.
2/ Petitioner's argument that, because May 7 was a Saturday, the information should have been filed on Friday, May 6, is also rejected. Such a view has never been subscribed to by the courts or administrative agencies and petitioner cited no authority in support of this contention.
3/ The Department should not be faulted for expediting the application for certification by Pro Contracting on May 11 and 12, particularly since a large construction project was hanging in the balance, and construction had to commence no later than June 27 in order to avoid a loss of funds. But this is immaterial to the real issue of whether compliance with the Specifications was made. It is noteworthy that even though Capeletti indicated that certification had been "applied for" in its filing on May 9, it had not, and was not applied for until after the Department called the contractor on May 11 to advise it of this obvious deficiency.
4/ Testimony at the final hearing by Capeletti's MBE liaison officer attesting to its prior efforts in this area, while laudable, are irrelevant to the issue at hand. The narrow issue is whether the submittal was satisfactory in terms of the Rule. Even though the proceeding is de novo in nature, it cannot, as Capeletti suggests, be used as a forum to correct or buttress deficiencies already present in the bidding process.
5/ For example, testimony revealed that rules are always "stretched" to accommodate an MBE firm, the strict ten calendar day requirement to meet the MBE contract goals have been routinely ignored in the past, and no successful bidder has ever been rejected because of noncompliance with MBE requirements.
COPIES FURNISHED:
Carlos Alvarez, Esquire and Carolyn S. Raepple, Esquire Post Office Box 6526 Tallahassee, Florida 32314
Mark A. Linsky, Esquire Haydon Burns Building-MS 58 Tallahassee, Florida 32301
Kenneth G. Oertel, Esquire 646 Lewis State Bank Building Tallahassee, Florida 32314
=================================================================
AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA DEPARTMENT OF TRANSPORTATION
BADGETT RESOURCES, INC.,
Petitioner,
vs. CASE NO. 83-1655
CAPELETTI BROTHERS and DEPARTMENT OF TRANSPORTATION,
Respondent.
/
FINAL ORDER
The record in this proceeding has been reviewed along with the Recommended Order of the Hearing Officer. The exceptions to the Recommended Order, filed by the parties have been considered.
The statement of BACKGROUND and FINDINGS OF FACT made by the Hearing Officer are adopted and made a part of this order except for the finding in paragraph 15 that Capeletti's May 6, 1983, letter stated that Capeletti had mailed a letter to 85 WBE's and ten MBE's on April 12, 1983, soliciting quotes. The May 6 submittal recites that a letter soliciting quotes was mailed to 85 minority/women business enterprises, not to 85 WBE's, and to ten minority business enterprise associations, not to ten MBE's (See: Petitioner's Exhibit 6).
The Petitioner, Badgett Resources, Inc., has protested the determination by the Florida Department of Transportation that Capeletti Brothers, Inc., was the lowest responsible bidder on Project 86075-3417 because the Department approved the MBE submittal by Capeletti despite the fact that the MBE subcontractor was not certified until after the ten day period allowed for submitting the minority business goal compliance information.
It is the law of Florida that a public body has wide discretion in soliciting and accepting bids for public improvements and this decision, when based on an honest exercise of discretion, should not be overturned even if it may appear erroneous and even if reasonable persons may disagree. In a situation of minor irregularity in technical bidding requirements, the bid should be rejected only upon a finding of fraud, bad faith, or by a showing of an economic advantage occurring by waiver of the irregularity. See: Liberty County v. Baxter's Asphalt and Concrete, Inc., 421 So.2d 505 (Fla. 1982). The Final Order must be entered in accordance with these standards.
The Department's MBE and WBE requirements are goals, not quotas.
Accordingly, a contractor who does not meet the MBE and WBE goals set forth in the bid solicitation will not be denied the contract if the contractor satisfies
the Department that good faith efforts were made to actively and aggressively meet the goals. Rule Chapter 14-78.03(1)(c)2, F.A.C. The efforts of Capeletti Brothers to meet the MBE and WBE goals is the crux of the bid protest of Petitioner, Badgett Resources, Inc., in this cause.
The Department of Transportation adopts the Conclusions of the Recommended Order that (1) the WBE participation information was due on May 9, the first business day after expiration of the ten day requirement set forth in the specifications since the tenth day was not a regular business day; (2) the MBE submission by Capeletti on May 9 did not show full compliance with the MBE goal since Pro Contracting was not certified as an MBE on the date of submission; (3) certification is a prerequisite for an MBE or WBE to be considered in meeting the goal set forth in the specifications; (4) Capeletti's MBE submission was sufficient to demonstrate a good faith effort to meet WBE goals and a waiver of the goal was appropriate; (5) the Department specifically reserved the right to waive technical errors in bid documents; and (6) the failure to qualify the MBE subcontractor prior to submission of the MBE utilization form was only a "technical" error, since Pro Contracting was ultimately found to be a qualified MBE.
The Department specifically rejects the conclusion of the Recommended Order that the certification of Pro Contracting by the Department as a qualified MBE subsequent to the submittal of the MBE Utilization Form 1 by Capeletti gave Capeletti a competitive or economic advantage over the other bidders. All bidders have the right to submit the minority business data within ten days after the opening of the bids, but all bid prices are set at the time all bids are opened. No bidder can change his prices, but all bidders know that a good faith effort must be made to actively and aggressively seek to meet the required goals or the bid may be rejected.
The Department takes exception to the Recommended Order's conclusion that the Department "was only concerned in getting Capeletti qualified as soon as possible so that construction could begin by June 27 to avoid a loss of federal funds." The Department has been legislatively mandated by both the United States Congress and the Florida Legislature to expend ten percent of its funds on minority business enterprises. Section 105(f) of Public Law 97-424; Section
58 of Chapter 83-3, Laws of Florida. The Department has made great effort to accommodate and to expedite consideration of minority business certification applications in order to expand the amount of work performed by minorities in accordance with these legislative mandates.
Capeletti's May 9 MBE submittal was timely filed. As filed on May 9, the MBE information did not show compliance with the goals, because 2 of the firms listed were not on that date certified by the Department. However, the analysis must be taken one step farther to determine whether the submittal showed a good faith effort to meet the MBE and WBE goals. The Hearing Officer made that required analysis as to the WBE goals, finding that good faith efforts were made and that a waiver of the goal was appropriate. However, the Hearing Officer did not make the same analysis for the MBE goal. If a good faith effort was made to meet the MBE goals, the analysis concerning a competitive advantage would be immaterial, since the contract requirements would be met.
Capeletti submitted the MBE Utilization Form 1 timely. It revealed that Capeletti was already committed to certain subcontractors for performance of portions of the work. Since the price was established for all bidders on April
27 and since all bidders were afforded an additional ten days to obtain MBE
subcontractors to meet the goals, no competitive advantage can be found in the additional ten days given for submittal of the MBE compliance information.
It was common practice for the Department to seek additional information after submittal of the MBE information to assist in making the subjective determination that good faith efforts had been made. The Department confirmed that a good faith effort had been made by certifying the MBE subcontractor after submittal of the required information. Additionally, Capeletti sent a solicitation letter requesting quotations to 85 minority/women business enterprises and to ten minority business associations prior to the letting.
All actions taken by Capeletti were made prior to the submittal of his MBE form on May 9. His bid price was set and his subcontractors were set. The only action taken after May 9 by Capeletti was to submit additional information documenting his good faith efforts prior to the letting. The Department took action after the May 9 submittal to certify Pro Contracting as an MBE and accept Capeletti's efforts as meeting the contract goals. It is the Department's actions which have allegedly offered Capeletti a competitive advantage.
These facts clearly evidence no wrongdoing by the Department. There is no evidence to support a finding that the Department was engaged in fraud or misconduct during the review and award of the contract, or that it otherwise did not act in good faith.
Neither do the facts evidence an economic advantage to Capeletti. Both Capeletti's and Badgett's prices were set on the date of the letting. The prices cannot be changed. It is highly speculative to isolate one bid item as controlling the award of the contract when Badgett's unit price exceeded Capeletti's on 43 out of the 89 bid items, and when 18 of Badgett's bid prices exceeded Capeletti's by $5,110.00 or more. See: Petitioner's Exhibits 2 and 4. This is especially true when the MBE and WBE subcontracted items of each contractor are not the same between the two bid submittals.
There is evidence that the Department, as a matter of course, will seek information subsequent to a contractor's MBE submittal in order to make the determination that good faith efforts have been made to meet the contract goals. The prime objective of placing MBE and WBE goals in the contract is to expand participation by MBE's and WBE's in public construction projects. The action of the Department in accepting Pro Contracting as an MBE to satisfy the specifications is consistent with that objective and the Department's policy of accommodation has not been shown to be favoritism to Capeletti. This is an honest exercise of discretion by the Department, not to favor the prime contractor, but to expand MBE participation.
The Petitioner in its exceptions to Recommended Order objects at length to the conclusion of the Hearing Officer that Badgett did not submit a responsive bid. But since the Department finds that Capeletti submitted a valid bid and was the lowest responsible bidder, Badgett would gain nothing by establishing that its bid was responsive, since it would not be the lowest responsible bidder. Badgett also takes exception to the failure to award Badgett attorney's fees. Again, the results of this Final Order negate that issue.
Badgett then objects to conclusions of the Hearing Officer that:
Capeletti had met the "good faith" standard for the waiver of the WBE goal.
The filing by Capeletti of MBE participation was timely.
The Hearing Officer reached these conclusions in his Recommended Order only after careful consideration of the facts and the law. Petitioner presents no argument which compels this agency to reject those conclusions of the Hearing Officer and substitute the conclusions offered by Petitioner.
Petitioner then embarks upon a lengthy list of objections to the failure by the Hearing Officer to make Findings of Fact and to reach Conclusions of Law advocated by Petitioner. After considering each exception there is nothing found here which had not previously been submitted to the Hearing Officer and argued at great length in Petitioner's Proposed Findings of Fact, Conclusions of Law and Recommended Order, which the Hearing Officer stated that he had considered. Again, for the Department to adopt Findings of Fact and Conclusions of Law considered and rejected by the Hearing Officer, Petitioner must submit compelling argument. This he has failed to do and the exceptions are rejected.
The other parties' exceptions to the Recommended Order have been considered and disposed of by the prior discussion or have been made irrelevant or inmaterial because of the conclusions reached in this Final Order.
The Department concludes that the bid of Capeletti was responsive to the bid solicitation; that Capeletti was the lowest responsible bidder and that the award of DOT contract number 14936 for Project 86075-3417 to Capeletti Brothers was correct and such award is confirmed
Done and Entered this 5th day of January, 1984, in Tallahassee, Florida.
COPIES FURNISHED:
Carlos Alvarez, Esquire Carolyn S. Raepple, Esquire Post Office Box 6526 Tallahassee, Florida 32314
Kenneth G. Oertel, Esquire 646 Lewis State Bank Building Tallahassee, Florida 32314
Mark A. Linsky, Esquire Haydon Burns Building, MS 58 Tallahassee, Florida 32301
PAUL N. PAPPAS
Secretary
Department of Transportation Haydon Burns Building Tallahassee, Florida 32301
| Issue Date | Proceedings |
|---|---|
| May 29, 1984 | Final Order filed. |
| Oct. 10, 1983 | Recommended Order sent out. CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Jan. 05, 1984 | Agency Final Order | |
| Oct. 10, 1983 | Recommended Order | Both bidders on project found to be nonresponsive. Agency reversed Recommended Order. |
HEWETT-KIER CONSTRUCTION, INC. vs BROWARD COUNTY SCHOOL BOARD, 83-001655 (1983)
K. T. TRANSPORT, INC. vs. DEPARTMENT OF TRANSPORTATION, 83-001655 (1983)
SOUTH FLORIDA WATER MANAGEMENT DISTRICT vs BERRYMAN & HENIGAR, INC., 83-001655 (1983)
HAUL-IT, INC. vs. DEPARTMENT OF TRANSPORTATION, 83-001655 (1983)
CENTEX-ROONEY CONSTRUCTION COMPANY INC. vs BOARD OF REGENTS, 83-001655 (1983)
