vs. ) CASE NO. 86-3551
Respondent. )
Upon due notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Ella Jane P. Davis, held a formal hearing in the above-styled case on October 13, 1986 in Tallahassee, Florida. The parties were represented by:
For Respondent: F. Alan Cummings, Esquire
This cause for disqualification of a prequalified contractor upon allegations of delinquency was originally brought by Florida Department of Transportation (FDOT) pursuant to Rule 14-23 Florida Administrative Code and Section 337.16 Florida Statutes (1985). Cf. Conclusions of Law infra. The formal hearing was timely scheduled under that authority but by stipulation, the parties agreed to a continuance of hearing until date certain of October 13, 1986.
At hearing, Petitioner presented the testimony of Raymond Humphreys, and Robert Cannon, and had admitted 8 exhibits. Respondent presented the testimony of James W. Allen and had submitted 4 exhibits.
Transcript and proposed findings of fact and conclusions of law have been timely filed in accord with the stipulated posthearing schedule. Rulings pursuant to Section 120.59(2) F.S. have been rendered in the appendix hereto for each proposed finding of fact.
Respondent Sloan, (hereafter SLOAN), is a contractor engaged in the highway construction industry and holds a current FDOT certificate of qualification. The certificate entitles SLOAN to bid on construction contracts to be awarded by FDOT.
Pursuant to its prequalified status, SLOAN entered into State Project #29180-3442 (Project). FDOT seeks to suspend SLOAN's certificate of qualification upon allegation of delinquency in the progress of SLOAN's work on the project.
DOT received bids on the Project July 31, 1985 and awarded a contract to SLOAN for performance of the work on September 13, 1985. The purpose of the Project was to resurface approximately 12 and one-half miles of Interstate Highway 75 in Columbia County, Florida. The contract required SLOAN to mill the existing asphalt on the highway, recycle the old asphalt and lay new pavement on the highway for a certain section of Interstate 75 (I-75) in Columbia County, Florida.
SLOAN anticipated the contract work to require 80 calendar days work; the contract as awarded allowed 150 days for performance. SLOAN had ample personnel and equipment resources to fulfill the contract.
SLOAN intended to perform the work required on the Project by moving an idle portable asphalt plant and crew from its home base of South Carolina to Columbia County. Prior to the end of August, 1985 James W. Allen, Vice- President and Florida Manager of SLOAN, visited Columbia County to secure an asphalt plant site. Mr. Allen secured a site in Columbia County and made arrangements with the railroad and power company for their services. At the same time he contacted County Manager Dale Williams and informed him that SLOAN was the apparent low bidder on the Project and attempted to secure verbal permission to erect an asphalt plant in Columbia County. This was in accord with SLOAN's past experience with erecting an asphalt plant in adjacent Suwannee County.
Mr. Allen visited with Columbia County officials three times beginning in August, 1985, and understood from his meetings that there would be no problem obtaining approval to locate an asphalt plant on the proposed site since it was an industrial site with a rail siding. In SLOAN's experience, other local governments have never required more than 60 days to give final approval or disapproval to a request for permission to locate an asphalt plant. However, after four months of informal meetings, the county manager of Columbia County directed SLOAN to make formal application for approval to locate an asphalt plant in Columbia County. SLOAN eventually made formal application on January 13, 1986 with negative results on January 22, 1986. Since formal hearing before the Columbia County Board of County Commissioners could not be immediately obtained, and because FDOT had begun charging time against the contract on January 11, 1986, SLOAN determined it would be futile to pursue Columbia County approval and revised its plans for fulfilling its contract obligations to obtain asphalt from its existing Suwannee County asphalt plant.
SLOAN began work for the project on the seventy-seventh contract day, April 14, 1986, the date it was able to utilize its Suwannee County plant for this project.
FDOT had specified a design mix different than SLOAN's normal Suwannee County asphalt output. Therefore, SLOAN's FDOT Suwannee County Project had to be completed before its Suwannee County plant could gear up for the FDOT Columbia County project. This occasioned start-up delay, but SLOAN attempted to mitigate the delay by subcontracting out much of the asphalt on SLOAN's FDOT Suwannee County Project and another Suwannee County job of SLOAN's.
Because its Suwannee County asphalt plant was over 22 miles away from the north end of the Project, (approximately 16 miles over what SLOAN had anticipated), SLOAN incurred increased costs in hauling asphalt to and from the Project. The additional transport distance and time reduced SLOAN's anticipated production capabilities. Delay resulted on a daily basis and geometrically progressed.
FDOT and SLOAN entered into two supplemental agreements to the original contract. The first supplemental agreement required SLOAN to mill and pave a particular area during daylight hours so that there would not be any lanes closed to traffic during nighttime hours. When FDOT requested this change in the contract its representatives did not contemplate that SLOAN would need additional time or money for contract completion because of it but SLOAN determined that it could accomplish the requested change only if it received additional money in the amount of $15,000.00 or additional contract time of 30 days. Therefore, FDOT agreed to pay SLOAN an extra $15,000.00 as per SLOAN's request, plus FDOT allowed one day's extension time.
The second supplemental agreement required a change in the asphalt design mix for the job for which FDOT agreed to pay SLOAN $58,728.51, which amount of money automatically added 7 days to the contract time.
On July 13, 1986 the contract time, as modified, was consumed. However, FDOT acknowledges SLOAN is entitled to additional time extensions. SLOAN is also entitled to an additional 16 days contract time extension due to extra work that SLOAN was required to perform. In addition, SLOAN is entitled to a 5 day contract time extension for a final estimate overrun and a 7 day extension for the design mix changes. When contract time was halted for 30 days in order to allow the finished pavement to "cure," SLOAN was not expected to work on the project during those 30 days. The parties' respective proposals concede that, taking these entitlements into account, the date for calculating any delinquency should begin on September 12, 1986 (inclusive).
FDOT's witnesses further acknowledged that SLOAN could, speculatively, at least, be awarded additional time in the final estimates based upon final quantities of work performed.
Subsequent to the notice of delinquency, SLOAN requested a 29 day extension of contract time due to delays it says it encountered as a result of the FDOT-initiated construction change requiring SLOAN to keep all lanes of traffic open on the Project during nighttime hours and due to the combined effect of losing paving time each morning and milling time each afternoon. However, as to any delays resulting from the requirement of keeping all lanes of traffic open at night, those delays were compromised and settled by the first supplemental agreement and FDOT's extension of one day plus payment to SLOAN of
$15,000. SLOAN chose to accept this solution in lieu of a 30 day time extension and this operates as a "mini-" accord and satisfaction. Although James W. Allen, testified that the $15,000 was not now as crucial as the extension needed to forestall a finding of delinquency, mere hindsight is always clearer than foresight, and not sufficient to set aside a bona fide negotiated supplemental
agreement. This is especially so where FDOT acceded to a resolution of the matter proposed by the contractor and not the other way around. A contract is normally construed against its proponent of the resultant terms.
The foregoing finding of fact based on an earlier miniaccord and satisfaction, is not weakened by SLOAN's now claiming that part of its 29 day extension request is due to failure to obtain a permit for location of its asphalt plant in Columbia County. FDOT may have accorded the $15,000 compromise undue weight in denying the requested 29 day extension, which request lumps both reasons together, but an extension for the Columbia County asphalt plant permit was not warranted in any case.
The contractor is required to secure all permits and to provide sufficient labor, materials and equipment to insure completion of work as set forth in his approved working schedule. While it may be questionable whether specification 7-2(P-8) truly contemplates this type of asphalt plant permit as opposed to permits for the Project itself, it is still clear that SLOAN knew it was not assured of a permit for an asphalt plant in Columbia County. SLOAN erroneously relied on county employees' representations that a permit would be forthcoming and then the permit was denied by the elective body which had the only and ultimate power and authority capable of granting the permit in the first place. SLOAN's reliance on Columbia County employees' representations as to matters over which they had no ultimate control and SLOAN's assumption that Columbia County's permit process would exactly track the process SLOAN had experienced in Suwannee County, were not reasonable reliances and assumptions by SLOAN. Additionally, waiting approximately five months (August to January) for such a permit to be granted in retrospect of SLOAN's own experience that most counties approve such permits within 60 days is also not reasonable behavior, especially since some additional timeframe must necessarily have been anticipated for the relocation of SLOAN's portable asphalt plant from South Carolina to Columbia County.
SLOAN had a plant which was idle in South Carolina, which plant was originally intended for use on the project. SLOAN, however, did not attempt to get permission to place that plant in the adjoining county of Suwannee as close to the Columbia County Project as possible so as to accomplish the FDOT project in question. Instead, SLOAN chose to use an existing plant in that same adjacent county to complete two jobs simultaneously, which decision turned out not to be workable.
A suspension of SLOAN's certificate of qualification would significantly and negatively impact SLOAN's operation which can only be profitable when SLOAN has a constant flow of work from FDOT. According to the uncontroverted testimony in the record, SLOAN has the current bonding capacity, financial capacity and plant capacity to perform additional FDOT work, and has recently been honored a number of times by FDOT and state and national trade associations for excellence in paving. SLOAN has not previously had its certificate of qualification suspended because of delinquency on any project. There is no scintilla of evidence that in any way is SLOAN's work on this or any FDOT project defective or substandard. The parties acknowledge that only 5 days remain necessary to totally complete the project.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the parties and subject matter of this cause.
Although initially this cause was brought, pursuant to Rule 14-23
F.A.C. and Section 337.16 F.S. (1985), it is determined that these proceedings are governed by Rule 14-23.01 F.A.C. implementing Section 7.16 F.S. (1983). In 1985 the legislature enacted revisions to Section 337.16 [Ch. 85-180 Laws of Florida Section 27]. The newly revised statute applies only to bids submitted after September 1, 1985 unless a legislative intent of retroactive application can be demonstrated. Such retroactive application has not been demonstrated. Rule 14 23.01(1) F.A.C. provides that its rule chapter shall apply to all construction contracts for which bids are received after its effective date. The rule's effective date is subsequent to the dates upon which the SLOAN bid was received by FDOT. This rule is therefore governed by Rule 14-23 F.A.C. and Section 337.16 F.S. (1983) and its less stringent timeframe.
The applicable 1983 statute and rule as they pertain to the situation at hand are:
Delinquent bidding, suspension and revocation of certificate; hearing.--
No contractor shall be qualified to bid when an investigation by the highway engineer discloses that such contractor is delinquent on a previously awarded contract, and in such case his certificate of qualification shall be suspended or revoked.
The department may suspend, for a specified period of time, or revoke for good cause any certificate of qualification.
Rule 14-23.01 F.A.C. (1983) provides in pertinent part:
Disqualification. Any contractor declared delinquent under the provisions of this Rule shall be disqualified from further bidding and shall be disapproved as a subcontractor during the period of the contractor's certificate of qualification is suspended or revoked. Also, any individual firm, partnership or corporation affiliated with a delinquent contractor to the extent that it is dependent upon the delinquent contractor for either personnel, equipment or finances, shall likewise be disqualified.
Determination of Delinquent Status:
(a) A contractor may be declared delinquent because of unsatisfactory progress on a contract with the Department, determined as follows:
The contract time allowed has not
been entirely consumed, but the contractor's progress at any time check period does not meet at least one of the following two tests:
The percentage of dollar value of completed work with respect to the total amount of the contract is within 10 percentage points of the percentage of contract time elapsed.
The percentage of dollar value of completed work is within 10 percentage points of the dollar value which should have been performed according to the contractor's own progress schedule on file with and approved by the Department.
A contractor who, in the opinion of the State Highway engineer, has adequate organization, equipment and financial
resources to undertake other contract work without conflict with or delay in prosecuting work under existing contracts with the Department will not be declared delinquent under the 10 percentage points tests of this subsection "a."
A contractor shall be considered delinquent because of unsatisfactory progress on a contract with
the Department under the following circumstances:
The contract time allowed has been consumed and the work has not been completed.
The contract time allowed has not been entirely consumed, but the contractor's progress at any check period does not meet either of the two tests described in subsection "a" above, modified to substitute
20 percentage points in place of 10.
(c) Within 10 days of receiving a Notice of Delinquency, a contractor may submit a request for an extension of contract time to the Department of Transportation.
The following issues may be considered by the Department of Transportation in determining whether a contractor is entitled to additional contract time.
Whether the contract time allowed
was sufficient and reasonable. However, the question of sufficiency of the contract time will only be considered by the department in situations where the contractor prior to the expiration of 50 percent of the allowable contract time has notified the department that it considers the contract time to have been insufficient.
Whether the contractor was delayed in the performance of the job by factors
beyond his control. It shall be an absolute defense to a charge of delinquency when the contractor can demonstrate that he has expended his best efforts in a diligent attempt to complete the job on time or in an expeditious manner, and was delayed through no fault on his part. A contractor who was delayed through no fault or neglect on his part will not be determined to be delinquent. However, a finding that a contractor did not
have sufficient personnel, equipment and finances to complete a job in a timely manner shall be prima facie evidence that the contractor was at fault and therefore delinquent. In all proceedings to determine whether a contractor is entitled to additional time or is delinquent the contractor shall have the affirmative burden of proof to establish any defense allowable under this rule or the contract specifications.
Notice of Delinquency: Effective Date. Whenever a contractor is considered to be delinquent under the above provisions, the State Highway Engineer will give preliminary notice to the contractor by telegram and by certified or registered mail. The contractor shall not be declared delinquent before a period of 10 calendar days after mailing of the preliminary notice has elapsed. During this 10-day period requests for time extension will be considered by the Department.
Upon expiration of the 10-day period following the preliminary notice of delinquency, if no extension of time or other consideration is deemed proper by the Department, the State Highway Engineer shall declare the contractor delinquent and notify him immediately by wire and certified or registered mail. (Emphasis supplied.)
As a preliminary consideration, it would appear that the applicable rule provides for a 10 day grace period following initial notification of delinquency. During that period of time, the contractor may apply for an extension of time. If the extension of time is not granted, the effective date of delinquency is the tenth day following the notice.
In the instant case, the contract time for completion of the project has been consumed and the work has not been completed. See Rule 14-23.01(2)(b)1
F.A.C. Rule 14-23.01(3)(c)2 is also applicable to the instant situation. Delinquency may not be established until it is determined, pursuant to subsections 1, and 2 that the contractor is not entitled to additional contract time. Subsection 1 is not applicable to the facts at bar. Subsection 2 is controlling.
FDOT has, through the formal administrative process granted all appropriate time requests which brings the earliest possible date of delinquency up to September 13, 1986.
Respondent's proposed conclusion of law that the supplemental agreement of the parties regarding SLOAN's compensation for the change in construction methods has no impact on a determination of delinquency is rejected as simply illogical. The assertion that, for purposes of determining delinquency, the rule permits the trier of fact only to consider whether the contractor was delayed in performance of the job by factors beyond his control is a tortured reading of the rule. The rule must be read seriatum. First, the
question to be determined is, Is the Respondent entitled to any additional time for the delays occasioned by the traffic restriction? He is not entitled to additional time on this basis if he has agreed to waive any additional time or if he has already been granted an extension of time therefor. SLOAN requested
30 days' extension and waived 29 days in exchange for a $15,000 payment and 1 day extension which has now been consumed.
Respondent's proposed conclusion that delays due to SLOAN's difficulties with Columbia County can be established as being through no fault of SLOAN's and that those delinquent days can be applied to SLOAN's credit presents a more difficult legal problem.
The burden of affirmatively proving any defense is upon the contractor. Here, it has not been carried.
Upon findings of fact 4, 5, and 16, supra, it is clear that SLOAN had ample personnel and equipment resources to fulfill the contract and thereby no prima facie case of delinquency is established. However, it is equally clear from the totality of the circumstances that the personnel and equipment resources were not utilized in a diligent manner. The operative language of Rule 14-23.01(3)(c)2 is that the contractor must prove three elements. He must prove (1) he expended his best efforts (2) in a diligent manner and (3) he was delayed through no fault of his own. "Best efforts" and "diligent manner" cannot be interpreted in a vacuum as applicable solely to best efforts of respective individual contractors' unilateral experience. An "ordinary prudent contractor" or "reasonable contractor" corollary must be applied to the rule. Upon the totality of all the foregoing findings of fact but most particularly upon findings of fact 15 16, it is concluded that SLOAN did not act reasonably, prudently, or diligently toward securing a Columbia County plant permit.
SLOAN's unreasonable reliance on third parties not privy to the contract between SLOAN and FDOT, individuals with no ultimate permit approval authority, and reliance in excess of 60 days will not support a conclusion of no delinquency.
After January, 1986, SLOAN did make some significant attempts at mitigation of its earlier delays. Unfortunately, they were not enough to prevent the eventual delinquency commencing on September 13, 1986.
Rule 23.01(4)(b) F.A.C. must also be considered in rendering a recommendation of penalty. It provides:
Reinstatement. Any contractor
disqualified under the above provisions shall be disqualified from further bidding and shall be disapproved as a contractor until the delinquency is cured. Where a contractor cures the alleged delinquency during the course of administrative proceedings, the accountable department may suspend the qualification to bid and disapprove as a subcontractor for the number of days the contractor is administratively determined to be delinquent.
RECOMMENDED that a Final Order be entered finding Sloan Construction delinquent on State Job No. 29180-3442 for the number of days from September 13, 1986 (inclusive) until five days after date of hearing (October 18, 1986) or until conditional acceptance by FDOT of the project, whichever delinquency period is greater and removing SLOAN from the FDOT bidder's list for the same period of time.
DONE and Ordered this 26th day of November, 1986 in Tallahassee, Florida.
ELLA JANE P. DAVIS
Filed with the Clerk of the Division of Administrative Hearings this 26th day of November, 1986.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-3551T
The following constitute specific rulings pursuant to Section 120.59(2) F.S. upon the proposed findings of fact and conclusions of law filed by the parties November 4, 1986. [FOF = Finding(s) of Fact]
1-2. Accepted and contained in the parties' stipulation but not adopted because subordinate and unnecessary.
3-5. Covered in FOF 4.
8-9. Covered in FOF 5-6.
F. Alan Cummings, Esquire 1020 East Lafayette Street Tallahassee, Florida 32302
