vs. ) CASE NO. 87-0250BID
Intervenor. )
Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, W. Matthew Stevenson, held a formal hearing in this cause on February 4-5, 1987 in Tallahassee, Florida. The following appearances were entered.
John O. Williams, Esquire 1343 East Tennessee Street Tallahassee, Florida 32308
FOR RESPONDENT: Jay O. Barber, Esquire and
Mark E. Parsons
The issue for determination at the final hearing was whether the Respondent, Department of Transportation, properly rejected the bid of Petitioner, Golden Eagle Contractors, Inc., as nonresponsive and awarded the contractor to Intervenor, Toppino's, Inc.
The Petitioner, Golden Eagle Contractors, Inc. (Golden Eagle) timely submitted a bid to Respondent seeking to perform work under a state road project. The Intervenor, Toppino's, Inc. also timely submitted a bid to Respondent seeking to perform work under the same state road project. Upon bid
opening, on October 29, 1986 the Petitioner was the apparent lowest bidder and Intervenor was the second lowest bidder. After a review of the bid proposals Respondent mailed to Petitioner and Intervenor a Notice of Switch of Apparent Low Bidder from Petitioner to Intervenor. On December 17, 1986, the Petitioner timely filed its formal written bid protest. The Intervenor was granted leave to intervene in these proceedings on January 30, 1987.
This cause came on for Final Hearing on February 4 and 5, 1987. Petitioner called the following witnesses: Jose Rodriquez; Thaddeus Fortune; and Heather Calligan. Petitioner's Exhibits 1-5 were duly offered and admitted into evidence. Respondent called the following witnesses: Ted Barfield, Thaddeus Fortune and Keith Pitchford. In addition, Respondent's Exhibits 1-13 were duly offered and 1-10, 12 and 13 were admitted into evidence. Ruling was reserved as to Respondent's Exhibit 11, but after due consideration, Respondent's Exhibit 11 is admitted into evidence. The Intervenor called Edward Toppino as its only witness. Intervenors Exhibit 1 was duly offered and admitted into evidence.
Based upon my observation of the witnesses and their demeanor while testifying, the stipulation of facts entered into among the parties, the documentary evidence received and the entire record compiled herein, I hereby make the following Findings of Fact:
The name and address of the Petitioner is Golden Eagle Engineering Construction, Inc. (Golden Eagle) 1302 Northwest 33rd Street, Pompano Beach, Florida.
The name and address of the Respondent is State of Florida, Department of Transportation, 605 Suwannee Street, Haydon Burns Bldg., Tallahassee, Florida.
The name and address of the Intervenor is Toppino's, Inc. (Toppino's) Post Office Box 787, Key West, Florida.
The Petitioner timely submitted a bid with regard to state project SR-5 (U.S-1), from the North end of State Bridge No. 900001 to Kennedy Drive in Key West, Budget Item No. 6116637, State Job No. 90010-3519 in Monroe County.
The Petitioner was the apparent low bidder with a bid in the amount of
$386,017.43.
The Intervenor timely submitted a bid in regard to the same state road project (State Job No. 90010-3519). The Intervenor was the second low bidder with a bid in the amount of $398,132.10.
The bid specifications required that bids submitted by contractors were to include a designation of at least fifteen percent (15 percent) of work to be performed by certified disadvantaged business enterprises (D.B.E.'s). The bid documents provided a separate form entitled "D.B.E./W.B.E. Utilization Form No. 1" on which the designation of work to the chosen D.B.E. was to be listed.
The Respondent "certifies" DBE's in accordance with the standards and procedures set forth in Rule 14-78, Florida Administrative Code. Along with project specifications and other information concerning the proposed job, the Respondent provides hopeful contractors with a D/WBE Directory which lists qualified DBE and WBE businesses. The latest directory prior to the bid opening
on the contract at issue here was published by D-O-T in October of 1986. Respondent's Bureau of Minority Programs maintains a current register and will advise any bidder so requesting whether or not a firm qualifies as a DSE or WBE.
The invitation to bid provided that the contractor's bid submission must include the following information:
The names and addresses of certified DBE and WBE firms that will partici-
pate in the contract. Only DBEs and WSEs certified by the Department at the time the bid is submitted may be counted toward DBE and WBE goals.
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(4) If the DBE or WBE goal is not met sufficient information to demonstrate that the contractor made good faith efforts to meet the goals.
The DBE's utilized by the Petitioner to satisfy the requirements of the bid were as follows:
(a) Millit $8,972.60
Highway Concrete Corporation $45,330.60
A. Falero Trucking, Inc. $21,500.00
The Petitioner's Bidder's Utilization Form disclosed an apparent 19.5 percent DBE participation. The Petitioner honestly believed that its bid proposal met and exceeded the DBE participation goals specified for the contract.
The sealed bids were opened on October 29, 1986. The Respondent, in its initial review of Petitioner's bid, discovered that A. Falero Trucking, Inc., (Falero) was not a certified DBE.
On October 31, 1986, Ms. Heather Calligan, majority shareholder of Golden Eagle, wrote Respondent a letter in which she stated that the owners of Falero had assured Golden Eagle that Falero was a certified DBE firm, that they had a current DBE certification letter and that their exclusion from the D/WBE Directory was an oversight on the part of Respondent. Ms. Calligan further advised Respondent that she believed Falero's assertion that the firm was DBE certified because her company is W.B.E. certified and had been omitted from the D/WBE Directory in error in the recent past. Further, Ms. Calligan stated that she had been acquainted with the owners of Falero on a personal and business basis for several years and did not believe that they would mislead her.
On November 3, 1986, Ms. Calligan wrote another letter to Respondent wherein she stated that she had contacted Falero concerning their certification and that Falero could not locate their certification letter. Ms. Calligan requested that Golden Eagle be allowed to substitute F.R.E. Construction Company (F.R.E.), a DBE certified company for Falero, should Falero not substantiate its claim of being currently DBE certified.
At all times material hereto, Amable Falero and Jose M. Rodriquez owned 100 percent (50 percent each) of the stock of Falero and 70 percent (35 percent each) of the stock of FRE. Falero and FRE, although independent
companies, operate from the same business location, have the same management and office staff and use some of the same employees interchangeably.
On November 5, 1986, the Respondent received a letter from Mr. Rodriquez, co-owner of Falero. Mr. Rodriquez stated that he personally advised Golden Eagle that Falero was a certified DBE firm and that he had a letter in his files substantiating his claim. Mr. Rodriquez advised Respondent that he had made this representation to Golden Eagle in error.
When Respondent discovered that Falero was not a certified DBE, the bid documents were forwarded to its Good Faith Efforts Review Committee for a determination of Petitioner's good faith efforts. The Good Faith Efforts Committee was formed in 1984 and its primary responsibility is to make an objective evaluation of good faith efforts of prime contractors who submit bids to D-O-T. Rule 14-78.03(2)(b)4, F.A.C. lists several factors that the Respondent is required to consider in evaluating a contractor's good faith efforts. (Those factors are enumerated in detail in the Conclusions of law Section herein).
The Respondent's practice and procedure is that it will conduct a limited review of the good faith evaluative criteria listed in the Rule even where the contractor has not included a "good faith efforts package" in its bid submission demonstrating good faith efforts. In such cases, the Respondent usually finds the bid non-responsive because of failure to provide documentation of good faith efforts. However, circumstances could exist where the Good Faith Efforts Committee may find good faith in the absence of any good faith efforts documentation specifically submitted by the contractor in its bid proposal. Thus, pursuant to the practice of the Good Faith Efforts Committee, the absence of information demonstrating good faith efforts within the bid proposal does not preclude its evaluation of the contractors' good faith efforts to achieve the goals.
The Good Faith Efforts Committee completed a report form entitled "Good Faith Efforts Evaluation" in regard to Petitioner's bid. All of the required statutory criteria was listed on the form. In response to criteria IV ("whether the DBE or WBE goal was met by other bidders") the Respondent entered: "Goal met by other bidder." In response to criteria VII ("whether the contractor elected to sub-contract types of work that match the capabilities of solicited DBE's of WBE's"), the Respondent entered: "Bidder used quotes from three (3) areas." In response to criteria IX ("whether the contractor has on other contracts within the past six (6) months utilized DBE's and WBE's") the Respondent entered: "No projects in the last six (6) months." In response to all of the other criteria, the Respondent entered: "bidder did not submit any documentation", "no documentations", "did not provide documentation" or simply "none submitted".
During the Good Faith Efforts Committee review of the Petitioner's bid, the committee was aware that Falero had been a certified DBE in the past, that the Petitioner's bid included an apparent 19.5 percent DBE participation with Falero and that without Falero the Petitioner achieved over 90 percent of the DBE participation goals.
Based on the information which it had, the Good Faith Efforts Committee was apparently satisfied that such information did not establish good faith efforts and recommended that the bid be declared non-responsive based on the Petitioner's failure to include good faith efforts documentation with its bid proposal.
On November 12, 1986, the report of the Good Faith Efforts Committee was forwarded to the Technical Awards Committee, and based on that report, the Technical Awards Committee voted unanimously to reject the Petitioner's bid as non-responsive and to recommend awarding the contract to Intervenor.
Respondent's Final Review Committee, the Contract Awards Committee then decided to declare Petitioner's bid non- responsive and to award the contract to Intervenor.
On November 18, 1986, the Respondent mailed a Notice of Switch in Apparent Low Bidder to all parties indicating that Golden Eagle, the apparent low bidder, had been declared non-responsive due to failure to meet DBE requirements and proposing to award the contract to Intervenor, the second low bidder.
GOLDEN EAGLE'S HONEST MISTAKE
While compiling its bid, one of Petitioner's employees noted that Falero was not listed in the D/WSE Directory. The Petitioner contacted Falero and was informed by one of Falero's owners that Falero was a certified DBE and had a current certification letter. Ms. Heather Calligan, the Petitioner's majority stock holder, was satisfied in her belief that Falero was a certified DBE for several reasons. First, Ms. Calligan was personally acquainted with the owners and knew them to have been DBE certified by Respondent in the past. In addition, Golden Eagle has been a WBE since 1979 and Ms. Calligan was aware that her company's name had been occasionally left off of the D/WBE Directory during times it was certified and should have been included. Based on those factors, the Petitioner honestly believed that Falero was DBE certified and did not call the Department's Minority Programs office to verify Falero's DBE status nor request that Falero produce its letter of certification.
FALERO'S STATUS
Falero was certified by the Respondent on April 4, 1983, as a minority business enterprise for a period of one year. On May 14, 1984, the company was re-certified for another one year period.
On November 20, 1985, the Respondent received an application for re- certification as a disadvantaged business enterprise from Falero. After an initial review of the application, the Respondent wrote Falero a letter dated December 3, 1985 requesting that the company provide:
The current financial statement or a breakdown of current assets and liabilities and,
Copies of the registration of all vehicles owned by the company.
The policy of the Respondent with regard to incorrect or incomplete information submitted by DBE's is to acknowledge receipt of the information and to advise the DBE as to what information should be submitted. The file is then placed in an "abeyance" status pending receipt of the requested information.
In October of 1986, Falero had still not fully responded to the Respondent's letter of December 3, 1985 with the complete information requested.
After its initial request for additional information, the Respondent made no further request for additional information from Falero with regard to the November 20, 1985 application for re-certification.
Falero finally supplied all of the information requested in the December 3, 1985 letter to Respondent in December 1986 in conjunction with a new application for certification. Thereafter, Falero was certified as a DBE in January 1987.
Between May 1985 and January 1987 Falero was not a certified DBE and was not included on any of the D/WBE directories prepared by the Respondent during that period.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings. Section 120.57(1), Florida Statutes (1985).
In general, a contracting agency "has wide discretion in soliciting and accepting bids for public improvements, and its decision, when based on the honest exercise of this discretion, will not be overturned by a court even if it might appear erroneous or even if reasonable persons may disagree." Liberty County v. Baxter's Asphalt and Concrete, 421 So.2d 505, 507 (Fla. 1982). Of course, the Division of Administrative Hearings is not a court. Formal administrative proceedings like these are de novo and require the Department of Transportation to "defend its decision on the basis of what it knows at the time the Order is entered." Couch Construction Company, Inc. v. Department of Transportation, 361 So.2d 172, 176 (Fla. 1978).
The Petitioner presents four (4) primary reasons as to why it believes the Respondent acted arbitrarily in rejecting its bid and accepting Intervenors'. First, the Petitioner contends that the Respondent should award the contract to its company because Falero was or should have been certified as a DBE as a matter of law. Secondly, the Petitioner submits that the Respondent arbitrarily and capriciously refused to allow Petitioner to substitute FRE Construction Company for Falero as requested. Thirdly, the Petitioner contends that its bid was responsive because even if Falero were eliminated from its bid, the remaining DBE's would comprise approximately 94 percent of the DBE goal. Lastly, the Petitioner submits that the Respondent acted arbitrarily and capriciously in rejecting its bid because Petitioner in fact made a good faith effort to comply with specified DBE goals.
The evidence did not establish that Falero was or should have been properly certified as a DBE as a matter of law at the time of the bid opening in October 1986. To the contrary, the evidence was uncontroverted that Falero Trucking was not certified as a DBE in October 1986. Further, no facts existed which would have entitled the company to a "default certification". See Doheny
v. Grove Isle, Ltd., 442 So.2d 966 (Fla. App. 1st Dist. 1983). The Respondent had no duty to either approve or deny Falero's November 20, 1985 application for certification before it received the information which it requested in its letter of December 3, 1985. See Rule 14-78.07(2), Florida Administrative Code. The record did not establish that Falero submitted the requested information prior to December 1986.
The Petitioner has not shown that Respondent acted arbitrarily and capriciously by refusing to allow FRE Construction Company to be substituted for
Falero. A prospective contractor's list of DBE participants must be included in documents submitted with its bid. See Rule 14-78.03, Florida Administrative Code. This requirement, among other things, prevents the successful prime contractor from shopping the quotations from the DBE's found in its original bid against other quotes from DBE's not listed in the bid documents initially submitted. The Respondent's refusal to allow a substitution of DBE's was in compliance with and in furtherance of, the purposes of Rule 14-78.03, Florida Administrative Code.
The Petitioner's argument that its bid was responsive as a matter of law because it achieved 94 percent of the DBE goal even without Falero is without merit. The project goal of 15 percent DBE participation was not met and the Respondent did not abuse its discretion by failing to credit the Petitioner with full compliance when in fact, the Petitioner fell short of the mark.
The Petitioner has failed to show that the Respondent acted arbitrarily and capriciously in finding that the Petitioner's bid proposal was non-responsive because it did not achieve the DBE goal and did not submit documentation of good faith efforts.
Rule 14-78.03(2)(b)4, Florida Administrative Code, provides:
The DBE and WBE participation information shall be submitted with the contractor's bid proposal. Award of the contract shall be conditioned upon submission of the DBE and WBE participation 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. Failure to satisfy these requirements shall result in the contractor's bid being deemed non- responsive and the bid being rejected.
The Petitioner's bid did not meet the DBE requirements and no documentation was submitted to show good faith efforts had been made to meet the DBE goals. When Petitioner's bid failed to meet the minority goals and no documentation of good faith efforts were submitted to justify such failure, the bid was non- responsive.
The D-O-T has provided a method by which the contractor may know for certain whether the firms which it uses to satisfy minority goals are properly certified. The D/WBE Directory specifically advises contractors that verification of a firm's DBE status may be made by telephone inquiry to the Minority Programs office. Thus, even though the Petitioner finds itself caught in a vise-like dilemma, the Petitioner's position was caused by its own actions and could have been avoided.
Curiously, the Respondent's practice is to perform a good faith efforts evaluation even where the contractor has not submitted documentation demonstrating its good faith efforts to meet established minority goals.
Rule 14-78.03(2)(b)4, Florida Administrative Code provides as follows:
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b. In evaluating a contractor's good faith efforts, the Department will consider:
Whether the contractor provided written notice to all
certified DBEs and WBEs which perform the type of work which the contractor intends to subcontract .
Whether the contractor selected economically feasible portions of the work to be performed by DBEs or WBEs
Whether the contractor provided interested DBEs or WBEs assistance in reviewing the contract plans and specifications.
Whether the DBE or WBE goal was met by other bidders.
Whether the contractor submits
all quotations received from DBEs or WBEs, and for those quotations not accepted,
an explanation of why the DBE or WBE will not be used during the course of the contract.
Whether the contractor assisted interested DBEs and WBEs in obtaining any required bonding, lines of credit, or insurance.
Whether the contractor elected to subcontract types of work that match the capabilities of solicited DBEs or WBEs.
VIII. Whether the contractor's efforts were merely pro forma and given all relevant circumstances, could not reasonably be expected to produce sufficient DBE and WBE participation
to meet the goals.
ix. This list is not intended to be exclusive or exhaustive and the Depart- ment will look not only at the different kinds of efforts that the contractor has made but also the quality, quantity and intensity of those efforts.
The Respondent, upon making an evaluation of a contractor's good faith efforts, is required to consider all of the evaluative criteria. Further, the list of criteria is not "intended to be exclusive or exhaustive."
The Respondent's practice of performing a good faith efforts evaluation where the contractor fails to meet DBE project goals and does not submit documentation demonstrating good faith efforts in its bid proposals may lead to the inconsistent application of Rule 14-78.03(2)(b)(4), F.A.C., if Respondent should find that good faith efforts were nevertheless demonstrated. Because it appears that Respondent is indeed precluded from awarding a project to such a contractor, its practice of making an evaluation of good faith efforts in such cases seems a waste of valuable time and resources. Nevertheless, that issue is not squarely presented in this case.
Based on the foregoing Findings of Fact and Conclusions of Law, it is, RECOMMENDED that:
Jay O. Barber, Esquire Department of Transportation 605 Suwannee Street
John O. Williams, Esquire 1343 E. Tennessee Street Tallahassee, Florida 32308
Kaye N. Henderson Secretary
Department of Transportation Haydon Burns Bldg.
A. J. Spalla, Esquire Department of Transportation Haydon Burns Bldg. Tallahassee, Florida 32301
