STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

WHITE CONSTRUCTION COMPANY, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 88-2063RU

) DEPARTMENT OF TRANSPORTATION, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated hearing officer, K. N. Ayers, held a public hearing in the above- styled case, on May 25, 1988, at Tallahassee, Florida.

APPEARANCES

For Petitioner: Albert E. Penson, Esquire

1004 DeSota Park Drive Tallahassee, Florida 32302-0589

For Respondent: E. Clay McGonagill, Esquire

Department of Transportation Haydon Burns Building Tallahassee, Florida 32399-0458

By Amended Petition for Administrative Determination of Invalidity of Unpromulgated Rules, dated April 19, 1988, White Construction Company, Inc., Petitioner, by and through its attorney, contends that two long standing and unpromulgated "policies" of the Florida Department of Transportation (DOT), Respondent, are rules and invalid by reason of not being properly promulgated as rules. Specifically, Petitioner contends that Respondent requires contractors such as Petitioner who bid on road construction projects to subcontract 10 percent of the work to Disadvantaged Business Enterprises (DBE) taken from a list of DBE's certified by DOT and, as a policy of general application, will not thereafter grant extensions of time for the completion of the contract due to delicts of the DBE subcontractor which are "beyond the control" of the prime contractor; and that DOT has a policy of general applicability not to grant an additional extension of the contract period for rain delays which occur during an initial extension of the contract period.

At the hearing, the only testimony presented was that of Robert D. Buser, State Construction Engineer for DOT. The parties stipulated that Petitioner is a regular bidder on DOT road building contracts and has standing to bring this action.

Proposed orders were not timely submitted by the parties.

FINDINGS OF FACT

1. Standard Specifications are a part of every DOT construction contract issued.

   
   

2. Subsection 8-1.1 of these standard Specifications provides that a subcontractor shall be recognized only in the capacity of an employee or agent of the Contractor, and his removal may be required by the Engineer, as in the case of any employee (Exhibit 1). Subsection 8-5 thereof provides the Contractor shall assure that all superintendents, foreman and workman employed by him are competent, careful and reliable (Exhibit 3).

   
   

3. All contracts entered into by DOT provide for a contract completion time and provide for adjustment to the contract period for delays in construction due to factors beyond the contractor's control which could not be reasonably anticipated at the time bids for the contract were received (Exhibit 4).

   
   

4. Requests for extension of contract time are made by the Contractor to DOT, and each request is evaluated on its merits. Often these requests for extension of contract time are made after the contract is completed and the contractor is seeking relief from penalties accrued as a result of his failure to complete the contract in the time allocated.

   
   

5. Prior to 1987, all contracts entered into by DOT contained built-in delays based on average weather conditions expected during the contract period. Since mid-1987, contract delays due to expected adverse weather are not included in the contract time, but the period is subsequently adjusted based on daily recording of weather conditions during the contract period. There is no policy by DOT, as suggested by Petitioner, that delays due to weather outside the initial contract period but within the extension granted due to weather delays will not be considered by DOT in granting extensions of contract time.

   
   

6. Federal Department of Transportation grants to Florida DOT for road construction in Florida contain a provision that a certain percentage of the contract must be subcontracted to DBE's. This provision is included in the contracts on which the prime contractors submit bids. In order to qualify as a responsible bidder on these contracts, the Contractor must show compliance with the DBE quota for the job at the time his bid is submitted or show that despite good faith efforts the Contractor was unable to meet the DBE goals.

   
   

7. DOT certifies individuals and companies which meet the minority business standards needed for certification and maintains a current list of all potential subcontractors who can be used by the Contractor to meet the DBE quota for the specific contract on which the Contractor bids. These DBE subcontractors are not qualified by DOT as capable to perform the work for which they hold themselves out as able to perform. DOT qualifies no subcontractors, either DBE or non-DBE.

   
   

8. In the event the Contractor needs to replace a subcontractor for any reason, his application to replace a non- DBE subcontractor is routinely approved by DOT. However, if the Contractor proposes to replace a DBE subcontractor, the Contractor must replace him with another DBE subcontractor (if this is necessary to retain the required DBE participation) and show to DOT that the replacement was for just cause and does not constitute unlawful discrimination. Accordingly, it is more likely to delay a project if a DBE subcontractor is replaced for failure to perform the work for which he

   subcontracted than if a non-DBE subcontractor has to be replaced for the same reason.

   
   

9. Although DOT individually considers each request for extension of contract time, it treats delays resulting from DBE subcontractor performance the same as it treats delays resulting from non-DBE subcontractor performance. As noted in finding 2 above, the contract provides that subcontractors are agents or employees of the Contractor. Accordingly, extensions of time for completion of the contract are not generally granted when the delay is due to the agents or employees of the Contractor. It is the refusal of DOT to treat DBE subcontractors different from non-DBE subcontractors that forms the basis of Petitioner's challenge to this "policy" that extensions of contract time are not granted when the delay was due to the DBE subcontractor failing to comply with his subcontract which failure was "beyond the control" of the Contractor.

   
   

   CONCLUSIONS OF LAW

   
   

10. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.

    
    

11. "Rule" is defined in Section 120.52(16), Florida Statutes, as an agency statement of general applicability that implements, interprets, or prescribes law or policy or describes the organization, procedure, or practice requirements of an agency and includes any form which imposes any requirement or solicits any information not specifically required by statute or by an existing rule.

    
    

12. Here those "policies" challenged have not been promulgated as rules and, if they constitute rules, they are invalid.

    
    

13. The Petitioner has the burden to prove, by a preponderance of the evidence, the allegations made. Balino v. Department of Health and Rehabilitative Services, 348 So.2d 349 (Fla. 1st DCA 1977).

    
    

14. With respect to the "policy" that DOT will never extend the contract time for rain days that occur outside the original contract period, the evidence fails to show such a policy exists. To the contrary, the evidence shows that extensions of the contract time are routinely granted when documentation shows that delays beyond the contract period were caused by weather conditions. However, if the contract period expired before the contract was completed and documented weather conditions did not justify an extension of the contract, delays subsequent to the contract period caused by inclement weather will not be excused by an extension of the contract. Once the project is completed after the contract period expires and the Contractor seeks an extension for weather related delays, the Contractor may well be required to include all weather delays occurring during the period the contract was extended for weather delays occurring during the original contract period. This computation of contract time is included in Section 8-7 of the Standard Specifications which is part of every contract. Interpretations of these specifications are made on an individual basis for each application for extension of time, and this interpretation constitutes a ruling in the nature of an order rather than a rule.

    
    

15. With respect to the allegation that Respondent uniformly refuses to grant an extension of contract time when the delay is due to the fault of the DBE subcontractor, this is a non-rule policy. As such, it can be challenged in a Section 120.57 proceeding where the agency has a considerable burden of proof.

    Department of Corrections v. McCain Sales for Florida, 400 So.2d 1301 (Fla. 1st DCA 1981). The fact that DOT did not reduce its policy to a rule does not automatically invalidate use of such a policy. Home Health Professional Services v. Department of Health and Rehabilitative Services, 463 So.2d 345, 348 (Fla. 1st DCA 1985).

    
    

16. The Florida Supreme Court has stated that "administrative agencies may develop policies by adjudication and that formal rulemaking is not initially necessary in all cases." City of Tallahassee v. Florida Public Service Commission, 433 So.2d 505, 508 (Fla. 1983). Once an agency has solidified its position on policy in a particular area, it should codify such policy by rule. Until that time, however, any decisions of the agency made through adversary proceedings are to be viewed as de facto rules or "incipient policy" for which a formal rule is not yet necessary. Phillips v. Department of Corrections, 472 So.2d 1307 (Fla. 1st DCA 1985).

    
    

17. Here the "policies" challenged have not been reduced to writing. Until such time as this occurs, the policy remains amorphous and subject to modification each time it is applied.

    
    

18. Administrative agencies are not required to institute rulemaking procedures each time a new policy is developed, McDonald v. Department of Banking and Finance, 346 So.2d 569 (Fla. 1st DCA 1977). That procedure would be better where agency wide policy is being altered. City of Plant City v. Mayo, 337 So.2d 966, 974-75 (Fla. 1976).

    
    

19. When an agency elects to adopt incipient policy in a non-rule proceeding, there must be adequate support for its decision in the record of proceedings. Florida Cities Water Co. v. Florida Public Service Commission, 384 So.2d 1280 (Fla. 1980).

    
    

20. The days when agencies' policies of general applicability must be formally adopted as rules in order to be used by the agency in a contested proceeding are long past. Such policies can be developed on a case by case basis with the agency having the burden in each case to support the validity of the policy with evidence in the record.

    
    

21. From the foregoing, it is concluded that DOT has no policy of general applicability to the effect that extensions for rain delays or other delays due to factors beyond the control of the contractor will not be granted if such delays occur outside the initial contract period. It is further concluded that the policy of treating all subcontractors as agents and employees of the Contractor is a specification of the contract under which the Contractor agrees to operate, and treating DBE subcontractors the same as non-DBE subcontractors is at best incipient agency policy being tested on a case by case basis with the agency having the burden each time the policy is used to justify the validity of the policy. It is

ORDERED that the Amended Petition for Administrative Determination of Invalidity of Unpromulgated Rules of White Construction Company, Inc. be dismissed.

DONE and ORDERED this 14th day of June, 1988, in Tallahassee, Florida.

K. N. AYERS Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 14th day of June, 1988.

COPIES FURNISHED:

Albert C. Fenson, Esquire 1104 DeSota Park Drive

Tallahassee, Florida 32302-0589

E. Clay McGonagill, Esquire Department of Transportation Haydon Burns Building Tallahassee, Florida 32399-0458

Thomas H. Bateman, III, General Counsel

562 Haydon Burns Building Tallahassee, FL 32399-0450

Kaye N. Henderson, Secretary Department of Transportation

Haydon Burns Building, 605 Suwannee Street Tallahassee, FL 32399-0450

Liz Cloud, Chief

Bureau of Administrative Code Room 1802, The Capitol Tallahassee, Florida 32399-0250

Carroll Webb, Executive Director Administrative Procedures Committee

120 Holland Building Tallahassee, Florida 32399-1300

NOTICE OF RIGHT TO JUDICIAL REVIEW

A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW PROCEEDINGS ARE GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE COMMENCED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE DIVISION OF ADMINISTRATIVE HEARINGS AND A SECOND COPY, ACCOMPANIED BY FILING FEES PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, OR WITH THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

WHITE CONSTRUCTION COMPANY, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 88-2063RU

) DEPARTMENT OF TRANSPORTATION, )

)

Respondent. )

)

AMENDED FINAL ORDER

The final sentence before the Findings of Fact in the initial Final Order is deleted, and the following is substituted therefor.

Proposed orders were not timely received by the Hearing Officer and were not commented on in the initial Final Order. Subsequent to the submission of the initial Final order, both parties have stated that they hand-delivered proposed findings on June 10, 1988. A search of DOAH files failed to disclose the existence of these proposed orders.

Upon receipt of Petitioner's MOTION TO CORRECT FINAL ORDER dated June 24, 1988, it was noted that the copy of proposed findings included with this Motion shows the case number to be 88-1631-R which is actually another case involving the same parties. A check of that file showed that Petitioner's proposed findings had been docketed and filed in Case No. 88-1631R. Respondent was requested to refile a copy of the Proposed Final Order which has been done.

This copy shows the original certificate of service to be dated June 9, 1988. Both of these proposed orders have been considered. Treatment accorded these proposed orders is contained in the Appendix attached hereto and made a part hereof. All other portions of the initial Final Order are reaffirmed.

DONE and ORDERED this 7th day of July, 1988, in Tallahassee, Florida.

K. N. AYERS Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 7th day of July, 1988.

APPENDIX

Treatment Accorded Petitioner's Proposed Findings 1-6. Accepted.

1. Rejected insofar as inconsistent with HO #6 and #7.

2. Accepted insofar as consistent with HO #8; otherwise rejected.

3. Included in HO #8.

4. Accepted only insofar as consistent with HO #8.

5. Accepted only insofar as consistent with HO #9.

6. Accepted insofar as consistent with HO #3.

7. Rejected. See HO #2. 14-19. Included with HO #5.

Treatment Accorded Respondent's Proposed Findings 1-2. Included in HO preamble.

1. Included in HO #3.

2. Included in HO #4.

3. Included in HO #9.

4. Included in HO #2.

5. Included in HO #2.

6. Rejected. Since all subcontractors are, by the terms of the contract, agents and employees of the contractor, they have no independent entity under the contract.

7. First sentence accepted. Second sentence rejected as argument, not fact.

8. True, but irrelevant to the issues here presented.

9. True, but irrelevant to the issues here presented.

10. First sentence true, but irrelevant to the issues here presented. Second sentence rejected as a conclusion.

11. Included in HO #2.

12. Rejected as conclusion of law.

13. Accepted.

14. Included in HO #5.

15. Rejected as immaterial in these proceedings. 18-19. Included in HO #5.

20. Rejected as fact. Accepted as legal conclusion.

COPIES FURNISHED:

E. Clay McGonagill, Jr. Senior Litigation Attorney Department of Transportation Haydon Burns Building, MS-58

Tallahassee, Florida 32399-0458

Samantha Boge Cummings, Esquire Cummings, Lawrence & Vezina, P.A. Post Office Box 589

1004 DeSoto Park

Tallahassee, Florida 32302

Docket for Case No: 88-002063RU

Orders for Case No: 88-002063RU