STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SANMAR GENERAL CONTRACTORS, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 83-1919BID

)

STATE UNIVERSITY SYSTEM OF )

FLORIDA, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice the Division of Administrative Hearings by its designated Hearing Officer, Michael Pearce Dodson, held the final hearing in this case on October 21, 1983, in Coral Gables, Florida. The following appearances were entered:

APPEARANCES

For Petitioner: Lawrence R. Metsch, Esquire

HAUSER AND METSCH, P.A.

4770 Biscayne Boulevard, Suite 1070

Miami, Florida 33137

For Respondent: Gregg A. Gleason, Esquire

Associate General Counsel Florida Board of Regents Room 210-D Collins Building

107 West Gaines Street Tallahassee, Florida 32301

BACKGROUND

These proceedings began on May 18, 1983 when Petitioner sent a telegram to Respondent protesting the rejection of Petitioner's bid on the project in issue. The protest was perfected by a formal bid protest letter on May 25, 1983, and on June 9, 1983 the case was forwarded to the Division of Administrative Hearings pursuant to Section 120.53(5)(d)2., Florida Statutes for the assignment of a Hearing Officer and the scheduling of a final hearing.

At that hearing, Petitioner offered Composite Exhibit No. 1 which was received into evidence. It consists of pages 15 through 89 of Petitioner's appendix to its prehearing brief filed on October 17, 1983. Respondent presented the testimony of witnesses and offered exhibits 1 through 7, which were received into evidence. Subsequent to the final hearing Petitioner has filed a Proposed Recommended Order containing findings of fact and Respondent has filed a Post-hearing Brief. To the extent that Petitioner's proposed findings are not included in this Order, they are specifically rejected as being

either not supported by the weight of credible admissible evidence, or as being irrelevant to the issues determined here. 1/

FINDINGS OF FACT

1. On November 30, 1982 the Chancellor of the State University System approved Amendment 567, as revised, to the Capital Outlay Implementation Plan. This Amendment budgeted $6,350,000 for the construction and equipment of a teaching gymnasium at Florida International University on the Tamiami Campus. Included within that figure were $350,000 of planning expenses appropriated by the 1981 Florida Legislature and $6,000,000 appropriated by the Legislature in 1982 for the expenses of construction, art work and contingencies.

   
   

2. In the early part of 1983 the State University System advertised for bids from contractors to construct the gymnasium. The bids were open on May 17, 1983 at 2:00 PM. on the Florida International University Tamiami Campus. Petitioner's base bid of $5,998,000 was the lowest of the 17 received, nevertheless it was $350,000 above the estimate in Amendment 567. The next lowest bid was for $6,045,000. The bid specifications required that six alternatives in addition to the base cost be bid on, but through an oversight Sanmar's bids on these alternatives did not conform to the bid specifications. Sanmar's alternative bids failed to indicate that the amount reflected was in addition to the base cost bid. However, because the issues in this case concern the base bid amount, Sanmar's error with respect to the alternatives is not material.

   
   

3. At the May 17, 1983 bid opening Respondent's agent, the architectural firm of Greenleaf-Telesca, announced that it would recommend to the Board of Regents that all bids be rejected as being in excess of the funds available through legislative appropriations. Respondent intends to make design changes in the project to make it less expensive and to then rebid it.

   
   

4. On May 18, 1983 Sanmar timely filed a protest to the rejection of its bid. Subsequent to May 17, 1983 and Respondent's decision to reject all bids, the Florida Legislature through Section 2(2)(y), Chapter 83-333, Laws of Florida (1983), appropriated an additional $500,000 for the construction of the gymnasium. This appropriation became effective on July 1, 1983. After its receipt of Sanmar's bid protest Respondent provided in a letter dated June 3, 1983 the figures on which the Respondent based its decision to reject all bids including Sanmar's. These figures follow:

   
   

   Architects fee including

   additional services $ 379,240.00

   
   

   **Architects construction observation (included in architects estimate as part

   of the fee and contingencies) $ 90,000.00

   
   

   Sanmar Base Bid $5,998,000.00

   
   

   Equipment $ 200,000.00

   
   

   Contingency (3 percent of construction

   cost) $ 179,940.00

   
   

   Based on Sanmar's bid $6,847,420.00

   Artwork $ 28,240.00

   
   

   
   

   $6,875,420.00

   
   

   **Estimated based on 18-month construction time.

   
   

5. Petitioner has taken issue with the 3 percent contingency amount included in the above figures, however, the evidence shows that 3 percent is a reasonable amount based upon the State University System's experience with previous construction and is a fair estimate to insure that projects once begun can be adequately funded by the amount appropriated for their construction.

   
   

   CONCLUSIONS OF LAW

   
   

6. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this case. Sections 120.53(5)(d)2., and Section 120.57(1), Florida Statutes.

   
   

7. Because it is material to the recommended disposition of this case, Petitioner's letter requesting this hearing is quoted in its material parts below:

   
   

   Thank you for your letter of May 19, 1983, acknowledging our client's notice of protest of the failure of the State University System of Florida to award Sanmar General Contractors, Inc., the contract for the construction of the Florida International University's Teaching Gymnasium. This letter constitutes the formal protest of Sanmar General Contractors, Inc., under 120.53(b), Florida Statutes. In addition, this letter constitutes the demand of Sanmar General Contractors, Inc., for a complete halt to the bid solicitation and contract award processes under 120.53(c), Florida Statutes. Finally, this letter constitutes the demand of Sanmar General Contractors, Inc., for a formal hearing under 120.57(1), Florida Statutes.

   * * *

   Personnel employed by Florida International University and the architectural firm, Greenleaf-Telesca, have advised Sanmar General Contractors, Inc., (and you have confirmed) that all bids submitted on May 17, 1983, were rejected and that the project will be redesigned and rebid. Sanmar General Contractors, Inc., vigorously protests the rejection of all bids and of its clear low bid. There exists a disputed issue of material fact as to whether all bids were properly rejected.

   As previously indicated in this formal letter of protest, Sanmar General Contractors, Inc., makes the following legitimate demands:

   1. That no further steps be taken in the bid solicitation and contract award processes concerning this project.

   2. That Sanmar General Contractors, Inc., be afforded a formal hearing with respect to its protest.

   3. That Sanmar General Contractors, Inc., be awarded the contract for the construction of the Florida International University's

      Teaching Gymnasium at the base bid price of

      $5,998,000.00. Thank you very much. (Emphasis added)

      
      

8. Petitioner never filed a detailed statement of what disputed facts were in issue 2/ and Respondent never asked for one. 3/ There is no evidence that at the time Petitioner filed its request for hearing Petitioner had any prescient knowledge that Section 2, Chapter 83-333, Laws of Florida (1983) would be passed by the Legislature or signed into law by the Governor on July 13, 1983. Petitioner now seeks to turn the additional appropriation into a windfall by asserting that since under the rationale of MacDonald v. Department of Banking and Finance, 346 So.2d 569 (Fla. 1st DCA 1977) these proceedings are de novo, the newly appropriated $500,000 must be added to the already appropriated fund of $6,350,000 to create a total of $6,850,000 and thereby entitle Sanmar to the bid award many months subsequent to May 1983.

   
   

9. Petitioner's argument fails on two points. First, even if the latest appropriation is added to the appropriations available in May 1983 each of the bids submitted, when combined with the other necessary expenses of constructing the project, still exceed all the funds appropriated by the Legislature. The best estimate of the cost of the project based on Petitioner's bid is

   $6,875,420, an amount which is $25,420 more than the Board of Regents may legally spend. 4/ This overage requires that the project be modified and rebid as has been the intention of the Respondent since the bids were opened.

   
   

10. Petitioner takes issue with several items which compose the $6,875,420 total. These items include $28,240 for art work pursuant to Section 255.043, Florida Statutes (1981) and the 3 percent contingency estimate which totals

    $179,940. These two figures are well within the competence and authority of the State University System to include in its cost estimate of the project.

    Petitioner has not shown any reason for these figures to be disregarded other than to allow the contract to be awarded to Sanmar. Petitioner has argued that the 3 percent contingency is an illicit rule, but Sanmar has not filed a rule challenge pursuant to Section 120.56, Florida Statutes. This proceeding is therefore in an inappropriate forum for determining the validity of the 3 percent contingency as a rule. As non-rule policy that figure is supported by record evidence in these proceedings indicating that the 3 percent figure is a reasonable and necessary estimate based on the Board of Regents' past experience with prior construction projects. City of Tallahassee v. Public Service Commission, 433 So.2d 505, 507 (Fla. 1983). For the foregoing reasons, all of the line items which make up the total project estimated cost of $6,875,420 are reasonable and necessary for the construction of the Teaching Gymnasium and this figure is more than the funds available to Respondent.

    
    

11. Aside from the fact that the projected cost of the project minimally exceeds all of the funds appropriated for it, I do not believe that Respondent

    may base its decision on whether to reject all bids on events subsequent to the date all bids were opened. In the present posture of this case, only Petitioner may take advantage of the most recent appropriation. The point of entry time for other bidders has expired, Section 120.53(5)(b), Florida Statutes, and Petitioner's formal written protest did not put any one on notice that Sanmar would rely on subsequently passed legislation as a basis for its protest.

    Petitioner correctly cites the decision of Couch Construction Company, Inc. v. Department of Transportation, 361 So.2d 172 (Fla. 1st DCA 1978) as an example of the application of the MacDonald de novo concept to the construction bid process. See also Capeletti Brothers v. Department of General Services, 432 So.2d 1359 (Fla. 1st DCA 1983). These cases make it clear that the decision of Respondent immediately after May 17, 1983 to reject all bids is not final agency action. Therefore the purpose of this hearing is not to apply an appellant standard of review to that decision but is instead to formulate what the agency's final decision should be. These proceedings are therefore prospective because they look to what the agency should do in the future, that is, after receipt of the Recommended Order. Unfortunately in the context of bidding, the de novo concept, if applied in all circumstances, is noxious to the fairness of the procedures.

    
    

12. The purpose of competitive bidding for public works is to:

    
    

    Serve the object of protecting the public against collusive contracts and prevent favoritism towards contractors by public officials and tend to secure fair competition upon equal terms to all bidders.

    Liberty County v. Baxter's Asphalt and Concrete, Inc., 421 So.2d 505, 507 (Fla.

    1982).

    
    

    In order to achieve these goals the bidding process requires that all bids be complete and submitted on a date certain. E. M. Watkins v. Board of Regents, 414 So.2d 583 (Fla. 1st DCA 1982) and Harry Pepper and Associates v. City of Cape Coral, 352 So.2d 1190 (Fla. 2d DCA 1978).

    
    

13. If the bids are not evaluated as of the opening date, bidders could file notices of protest and then take advantage of the de novo concept to revise their bid to secure an unfair advantage over the non-protesting bidders. Once such a procedure were allowed all bidders would thereafter file protests and request hearings in order to revise their bids during the hearing process. Bid opening dates would become meaningless and the bidding process would experience the same confusion which now engulfs the issuance of certificates of need for health care facilities by the Department of Health and Rehabilitative Services.

    
    

14. For these reasons Respondent should not give consideration to Petitioner's bid in light of the most recent fortuitous appropriation but must evaluate all bids as of May 17, 1983 and the funds then available. With insufficient funds for the project available on that date, it is most appropriate that all bids be rejected and all bidders be given an opportunity on equal basis to submit new bids. Such a remedy gives recognition to Petitioner's substantial interest which is to have its bid equally and reasonably considered along with the other bids and not be rejected for arbitrary and capricious reasons.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED:

That the Board of Regents enter a Final Order rejecting all bids for the construction of a teaching gymnasium at the Tamiami Campus of the Florida International University.

DONE and RECOMMENDED this 15th day of December, 1983, in Tallahassee, Florida.

MICHAEL PEARCE DODSON

Hearing Officer

Division of Administrative Hearings 2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 15th day of December, 1983.

ENDNOTES

1/ Sonny's Italian Restaurant v. Department of Business Regulation, 414 So.2d 1156, 1157 (Fla. 3d DCA 1982); Sierra Club v. Orlando Utilities Commission, 436

So.2d 383 (Fla. 5th DCA 1983).

2/ Section 28-5.201(2)(d), Florida Administrative Code. 3/ Section 28-5.205, Florida Administrative Code.

4/ Petitioner has argued that this amount is de minimis when compared to the total cost of the project. The acts under which the appropriations were made do not allow for a de minimis margin of spending error. Section 2(1), Chapter 83- 333, Laws of Florida (1983).

COPIES FURNISHED:

Lawrence R. Metsch, Esquire HAUSER AND METSCH, P.A.

Suite 1070

4770 Biscayne Boulevard

Miami, Florida 33137

Gregg A. Gleason, Esquire Associate General Counsel Florida Board of Regents Room 210-D Collins Building

107 West Gaines Street Tallahassee, Florida 32301

Dr. Barbara W. Newell, Chancellor Florida Board of Regents

210-C Collins Building

107 West Gaines Street Tallahassee, Florida 32301

Docket for Case No: 83-001919BID

Orders for Case No: 83-001919BID