STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PEAVY & SON CONSTRUCTION )

COMPANY, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 84-3433BID

) DEPARTMENT OF TRANSPORTATION, )

)

Respondent, )

and )

) BAXTER ASPHALT & CONCRETE, INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on December 4, 1984, in Tallahassee, Florida. The issues for determination in this proceeding are whether the Department of Transportation properly rejected petitioner's bid on Project No. 50020-3516, or, alternatively, whether all bids should have been rejected and the project relet.

APPEARANCES

For Petitioner: Michael P. Bist, Esquire

300 Lewis State Bank Building Tallahassee, Florida 32301

For Respondent: Larry D. Scott, Esquire

Haydon Burns Building, Mail Station 58 Tallahassee, Florida 32301-8064

For Intervenor: No appearance

INTRODUCTION

Petitioner Peavy & Son Construction Company, Inc. timely filed a protest from the decision of the Department of Transportation to reject all bids received on a construction project. Between the time of the initial protest and the hearing in this matter, the DOT changed its initial determination to reject all bids and elected to award the contract to the second lowest bidder, Baxter Asphalt & Concrete, Inc. Thus, the issues for determination in this proceeding are whether the DOT properly rejected petitioner's bid and whether the DOT properly awarded the contract to the second lowest bidder. Baxter's Asphalt & Concrete, Inc., through its attorney, filed a Motion to Intervene in the proceeding and the motion was granted. However, Baxter made no appearance at the final hearing.

In support of its position, the petitioner presented the testimony of Bonnie M. Stephens, and its Exhibits 1 through 7 were received into evidence.

The respondent DOT presented the testimony of John Ted Barefield, Chief of the Bureau of Contracts Administration, and Tyrone Reddish, the Chief of the Bureau of Minority Programs.

Subsequent to the hearing, petitioner and respondent submitted proposed findings of fact and proposed conclusions of law. To the extent that the parties' proposed findings of fact are not included in this Recommended Order, they are rejected as being either not supported by competent substantial evidence adduced at the hearing, irrelevant or immaterial to the issues in dispute or as constituting legal argument as opposed to factual findings.

FINDINGS OF FACT

1. The Florida Department of Transportation (DOT) is required by state and federal law to ensure that a certain percentage of funds available for construction, design and consulting service contracts be provided as opportunity for utilization by small business concerns owned and controlled by socially and economically disadvantaged individuals (DBEs). DBE contract goals are established by the DOT for each construction contract. Every bidder must submit a form to the DOT which either documents compliance with the DBE contract goal or, if compliance is not met, must provide sufficient information to demonstrate that good faith efforts were made by the bidder to meet the goal.

   
   

2. Prior to June of 1984, it was the practice of the DOT to allow contractors ten days after the bid letting to correct their DBE forms or to submit their good faith effort documentation. After holding numerous workshops throughout the State, the DOT amended its rules relating to participation by disadvantaged business entities. As pertinent to this proceeding, the amendment requires that all DBE documentation be submitted at the time of the submission of the bid proposal. Bidders are notified that:

   
   

   ".... Failure to satisfy these requirements shall result in a contractor's bid being deemed nonresponsive and the bid being rejected." Rule 14-78.03(2)(b)4, Florida Administrative Code.

   
   

   This rule became effective on May 23, 1984. All prequalified bidders were mailed a copy of the rule amendments prior to their effective date. Petitioner received a copy of the new rule prior to May 23, 1984.

   
   

3. By notice dated June 28, 1984, contractors were advised that sealed bids would be received on July 25, 1984, on various road projects. The bid documents advised that the DBE goal for Project Number 50020-3516 was 10 percent. Form 932-10 entitled "Disadvantaged/Women Business Enterprise Utilization Affirmative Action Certification" advised bidders that Form 1 is required to accompany the bid documents. The specifications for Job Number 50020-3516 contain extensive provisions with regard to compliance with the DBE contract goals. Among these provisions is the following language contained in Section 2-5.3.2:

   
   

   "... Award of the Contract shall be conditioned upon submission of the DBE and WBE participa-

   tion information with the bid proposal and upon satisfaction of the contract goals or, if the goals are not met, upon demonstrating that good faith efforts were made to meet the goals." (Emphasis added.)

   
   

   The specifications lists as grounds for disqualification of bidders "failure to satisfy the requirements of 2-5.3."

   
   

4. On July 25, 1984, Petitioner submitted a bid in the amount of 8171,370.51 for Job Number 50020-3516. Attached to the bid was Form 932-10 and Form No. 1, the latter indicating that petitioner's proposed utilization of DBEs was 7.6 percent of the total contract amount. While noting that two other DBEs were contacted without success, petitioner provided no further documentation regarding its good faith efforts to comply with the 10 percent contract goal. Three contractors submitted bids on this project. The next lowest bidder was Baxter Asphalt & Concrete, Inc., which submitted a bid of $191,540.92 and demonstrated compliance with the DBE contract goal. The third bidder, Capital Asphalt, Inc., submitted a bid of $204,651.35, fell below the 10 percent DBE contract goal and, like the petitioner, failed to demonstrate that it made a good faith effort to comply. The DOT engineer's estimate on this project was approximately $147,000.00.

   
   

5. By notice dated August 17, 1984, the DOT advised that all bids received on Job Number 50020-3516 had been rejected. Two reasons were given for the rejection: that "the low bidder failed to meet DBE Contract Requirements" and that "awarding to the second low bidder is not in the best interest of the State." During June, July, and August following the adoption of the new rules regarding DBE requirements, it was the general policy of the DOT Awards Committee to reject all bids on a project if the low bidder failed to meet DBE requirements and there was more than a one percent difference between the first and second low bids. Beginning in September or October, 1984, this policy was changed to one of awarding to the second or third most responsible bidder as long as the bid was within the State estimate. Consequently, the DOT has now determined to award this challenged bid to Baxter Asphalt & Concrete, Inc.

   
   

6. In another bid letting occurring on May 30, 1984, on Project Number 55160-3517, petitioner failed to submit with its bid proposal the forms for demonstrating compliance with the DBE requirements. By letter dated May 30, 1984, and received on June 4, 1984, petitioner was advised to forward, without delay, the necessary Form No. 1. The Form returned by petitioner showed 8 percent DBE participation. Since the contract goal was 10 percent, petitioner was afforded another opportunity to comply, did comply and receive approval on June 11, 1984, and was later advised that yet another DBE form needed to be completed. On July 17, 1984, petitioner received a letter from the DOT advising that the contract had been awarded to petitioner as of July 16, 1984.

   
   

7. For all bid lettings occurring since June or thereafter, the DOT has rejected bids from contractors who have not submitted evidence with their bid proposal of either DBE compliance or a good faith effort to comply. New forms have been utilized to require such submittals with the bid proposal and removing the prior 10 day grace period language. Also, on August 22, 1984, the DOT sent a "Notice to All Contractors" that:

   
   

   "... all submittals for evaluating Good Faith Efforts in meeting DBE/WBE goals must be submitted with the bid proposal in order to

   be considered for award of the contract. Failure to submit the Good Faith Effort documentation with the bid may result in rejection of the bid."

   
   

   CONCLUSIONS OF LAW

   
   

8. In support of its position that the DOT improperly rejected its bid on Job Number 50020-3516, the petitioner relies upon the DOT's prior custom and policy of notifying bidders of errors and discrepancies in their bids and of providing an opportunity to submit additional information concerning good faith efforts to meet DBE contract goals. Petitioner places particular reliance upon the May 30, 1984, bid letting on another project. It is pointed out that even though this occurred some seven days after the effective date of the new rule requiring the submission of DBE information at the same time as the bid, the DOT allowed the later submission of the pertinent data and awarded the bid to petitioner. Petitioner further argues that the August 22, 1984, Notice to All Contractors discussed in Paragraph 7 above, as well as the new forms, constitutes an admission by the DOT that its prior notice was insufficient.

   
   

9. The facts in the record of this proceeding negate petitioner's attempt to apply an equitable estoppel theory against the DOT. The application of such a theory in this case would frustrate the very purpose of rule-making by an agency when it attempts to change its prior policy through proper procedures. This is not an instance where an agency is attempting to establish, explicate and defend its policy choices in case-by-case adjudicatory proceedings. Instead, the DOT has apparently followed the rule-making requirements of the Administrative Procedure Act and has given notice to all affected persons that bids which fail to contain and comply with the pertinent DBE requirements will be deemed non-responsive and will be rejected. Rule 14-78.03(2)(b)4, Florida Administrative Code. This rule was adopted on May 23, 1984, and was thus in effect during the subject July 25, 1984 bid letting. Petitioner admits that it received notice of the amendments to Chapter 14-78 prior to their effective

   dates. The bid specifications also clearly inform the bidder that documentation regarding DBE compliance must be submitted with the bid. It is difficult to imagine a situation where an affected person has been placed on more notice of agency requirements than in the instant proceeding. The fact that the DOT allowed late compliance in one instance occurring some seven days after the effective date of the new rule does not create an equitable estoppel situation. The more liberal treatment accorded to the May 30, 1984, bidders may well have been due to the fact that the bid forms in that instance did not yet contain the new requirements. But, even if the DOT erred in that instance by not following its own rules, such an error does not support a continued deviation from properly promulgated rules regarding the bidding process. Surely, the petitioner was not harmed by the prior deviation from the rules. In short, petitioner may not rely upon the prior custom and practice of the agency when the agency has undertaken proper rule-making procedures to change that policy and practice. The evidence is undisputed that in all bid lettings occurring since June of 1984, the DOT has rejected as non-responsive those bids failing to comply with the DBE requirements at the time of bid submittal. Petitioner having failed to so comply, its bid submitted July 25, 1984, was properly rejected.

   
   

10. As an alternative argument, petitioner contends that if its bid is rejected as being non-responsive, all bids should be rejected because the one "responsive" bid cannot be considered a "competitive" bid. Again, petitioner has failed to sustain this contention by any competent evidence. Here, three

bids were received by the DOT for this project. Two of the three failed to meet the DBE requirements and were thus deemed non-responsive. The DOT has the authority to either award the proposed work to the lowest responsive bidder or it may reject all bids. Section 337.11(3), Florida Statutes. While the DOT may not act arbitrarily, the determination as to whether to award or reject is within the discretion of the DOT. The DOT has elected to award the contract to the lowest responsible bidder, Baxter's Asphalt & Concrete. Inc. This exercise of discretion has not been demonstrated to be arbitrary or otherwise beyond the authority of the DOT. While Baxter was the second lowest bidder, it was the only responsible bidder. The fact that the DOT changed its position of initially rejecting all bids to awarding the contract to Baxter has not been demonstrated to be either prejudicial to the petitioner or otherwise erroneous.

RECOMMENDATION

Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that a Final Order be entered rejecting as non-responsive the bid submitted by petitioner on Job Number 50020-3516, and awarding the contract to Baxter's Asphalt & Concrete, Inc.

Respectfully submitted and entered this 27th day of February, 1985, in Tallahassee, Florida.

DIANE D. TREMOR

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 27th day of February, 1985.

COPIES FURNISHED:

Michael P. Bist, Esquire

300 Lewis State Bank Building Tallahassee, Florida 32301

Larry D. Scott, Esquire Haydon Burns Building, MS-58

Tallahassee, Florida 32301-8064

Frank A. Baker, Esquire

204 Market Street Marianna, Florida 32446

Paul Pappas, Secretary Department of Transportation Haydon Burns Building Tallahassee, Florida 32301

Docket for Case No: 84-003433

Orders for Case No: 84-003433