STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ALFAIR DEVELOPMENT COMPANY, INC., )

)

Petitioner, )

)

vs. ) CASE No. 89-0006BID

) STATE OF FLORIDA, DEPARTMENT ) OF TRANSPORTATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on January 20, 1989, to consider the dispute between these parties. See Section 120.57(1), Florida Statutes. Charles C. Adams was the Hearing Officer. The location of the hearing was Tallahassee, Florida. This Recommended Order is being entered following the receipt and review of the transcript of proceedings, exhibits, proposed recommended order of the Respondent and memorandum letter and argument submitted by Petitioner. In an Appendix, which is made part of this Recommended Order, a discussion is made considering the fact finding set forth in the proposed recommended order and the argument set out in the memorandum offered by Petitioner.

APPEARANCES

For Petitioner: James D. Alford, III

1348 Davis Street

Jacksonville, Florida 32209

For Respondent: Marilyn McFadden, Esquire

605 Suwannee Street, M.S.-58 Tallahassee, Florida 32399-0458

ISSUES

The issues presented here concern the propriety of the Respondent's action in its decision to reject all bids submitted for Project 72906-9109, Duval County, thereby excluding the bid of the Petitioner which was the apparent low bid in this process.

FINDINGS OF FACT

1. Alfair Development Company, Inc. (Alfair), is a company owned by Maggie Alford. This company is certified as a "Disadvantaged Business Enterprise" under the terms of Chapter 337, Florida Statutes. This recognition is for benefit of contractual work done for the State of Florida, Department of Transportation.

2. Alfair, together with two other companies who are "Disadvantaged Business Enterprises," responded to a bid opportunity from the Department of Transportation identified as Project No. 72906-9109, Duval County. The other two bidders were ILA Construction Company, Inc., of Daytona Beach, Florida, and Highway Valets, Inc., of Norwalk, Ohio. This project was for the construction of concrete sidewalks and curb cut ramps, installation and repair. The contract was for competition solely among contractors who had been certified as "Disadvantaged Business Enterprises" by the Office of Minority Programs within the Department of Transportation. As such, it is referred to as a "set-aside" job. In a "set-aside" project, bids are accepted from these "Disadvantaged Business Enterprises" in furtherance of the requirements of Section 339.0805, Florida Statutes, which mandates that not less than 10% of the amounts expended from the State Transportation Trust Fund shall be expended with small business concerns owned and controlled by socially and economically disadvantaged individuals.

   
   

3. When the bids were opened related to Project No. 72906-9109, Duval County, Alfair was the apparent winner having offered the lowest bid among the three competitors. However, there was a problem with the bid submission by Alfair and the others, in that Alfair's bid was 70% above the pre-bid estimate of the Department of Transportation concerning the expected price that the agency would have to pay for this project. The other two bidders were even higher, but within the range of the 70% above the pre-bid estimate. The pre-bid estimate had been derived by resort to a manual at the Department of Transportation referred to as the Contract Maintenance Administration and Inspection Manual. Within that manual the pre-bid estimate is found, as it was here, by examining historical workload and/or work needs survey information and development of that information and retention of that information through a computation book. That book includes appropriate forms, square yards, per linear feet, etc., for each item of activity to be paid for in the contract.

   The form to be used in this process shows the project number, the county, the section number of the roadway to be worked, the method of calculating estimated quantities and specific project location, if known. In this arrangement prior contracts of a similar sort to that contemplated in this instance are reviewed in trying to anticipate the contract costs on this occasion. That approach was followed in making the pre-bid estimate in this project. When the comparison was made of those figures it was a comparison to the immediately preceding years' contract for similar work against the work called for in the subject project at hand. In addition, the Department of Transportation contacted concrete companies to make sure that the concrete cost had remained the same.

   It also verified that minimum wage requirements had not changed from the prior year to the year in question.

   
   

4. At hearing, the only rebuttal which the Petitioner offered to this approach of pre-bid estimate was the attempt to present certain documents which were denied admission as evidence in that the representative of the Petitioner, James D. Alford, III, husband to Maggie Alford, was not shown to be sufficiently apprised of contracting matters to explain those exhibits and show how they would tend to rebut the method of pre-bid estimate by the Department of Transportation. The exhibits standing alone did not lend themselves to the interpretation that they were competent rebuttal.

   
   

5. When the degree of difference between the pre-bid estimate and the quotes by the bidders was examined by employees within the Department of Transportation, the belief was expressed that the bids were so out of keeping with the pre-bid estimate as to put to question the advisability of contracting with the apparent low bidder, Alfair. The Department felt that it needed to

   make certain that its pre-bid estimate was not flawed in some fashion and a determination was made to undergo reevaluation of the initial perception held about the bids offered before making a decision. Nonetheless, the impression was created in the mind of Barry D. Bunn, District Contract Administrator for District II, Department of Transportation, that he was expected in his employment to notice that the bids had been rejected. As a consequence on October 25, 1988, the bidders were advised that all bids were rejected for the project. On that same date, an advertisement was placed in the local newspaper that the project was being resolicited for bid purposes and through the advertisement the "set-aside" was deleted. This meant that for purposes of the re-advertisement of October 25, 1988, a general class of bidders could respond, to include "Disadvantaged Business Enterprises." Having been made mindful of this error, Bunn contacted the newspaper where the advertisement had been placed and told them to take that advertisement out of circulation. This occurred on October 26,1988. On that same date further correspondence was directed to the bidders, to include Alfair, in which it was stated that the bids had not been rejected, identifying that the bids were undergoing a reevaluation process.

   That reevaluation process did not change the initial impression by the Department of Transportation concerning the quotations received as being too far in excess of the Department's pre-bid estimate. Consequently, on November 1, 1988, a further notice of bid rejection was dispatched. That notice did not describe the reason for the rejection, but upon inquiry Mr. Alford was informed that the basis of the rejection was that the bid quotations were too costly when compared to the pre-bid estimate. Under inquiry the Department of Transportation did not identify the details of that explanation in the sense of saying what items they resorted to for drawing that conclusion and the Alfair company did not seek to gain a further explanation of their reasoning through prehearing discovery. The Department of Transportation had refused to give any further information to the Petitioner about this in the course of the telephone conversation between Mr. Alford and an employee in the Lake City, Florida Office of the Department of Transportation based upon the Department's belief that Section 337.168, Florida Statutes exempts it from having to state the pre-bid cost estimate until a contract has been entered into concerning the project.

   Nonetheless, it was revealed in the course of the hearing what the difference between the bid quotation of Alfair and the pre-bid estimate had been, as well as identifying the methods for deriving that difference.

   
   

6. When Alfair received the notice of rejection of its bid it filed a timely notice of protest followed by a timely petition in protest. In addition, the Petitioner posted the appropriate amount of bond under Section 337.11(3)(b), Florida Statutes, to allow it to pursue this case.

   
   

7. The pleadings by the Petitioner are not particularly informative but the sum and substance off the allegations as demonstrated in those pleadings and as set forth by remarks of the representative at hearing, identify the belief held by the Petitioner that the Department of Transportation in rejecting the Alfair bid has been unjust, illegal, dishonest and arbitrary. Moreover, Alfair through its representative found fault with the refusal to reveal to him over the phone the methods of arriving at the pre-bid estimate and the general belief that the Department allows the participation in the bidding process and in the award of contract related to "Disadvantaged Business Enterprises" of persons who are not registered or licensed as contractors through the offices of the Department of professional Regulation within the State of Florida. None of these claims were shown to be meritorious through the proofs submitted at hearing.

   The Department of Transportation seeks the award of costs under the provisions of Section 337.11(3)(b), Florida statutes.

   
   

8. The evidence in this hearing reveals that the salaries of the two witnesses who testified for the Department of Transportation, namely Russell O. Davis and Barry D. Bunn, were $125.80 and $130.00, respectively, per day. These employees were involved in the hearing process for one day. In addition to salary costs the State had to pay these employees $62.50 each for per diem allowance in that the witnesses were from out of town. The cost of attendance at hearing by the court reporter is $67.50.

   
   

   CONCLUSIONS OF LAW

   
   

9. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this action in accordance with Sections 120.53 and 120.57(1), Florida Statutes (1987).

   
   

10. In attacking the decision of the Department of Transportation to reject all bids Petitioner does so in a setting in which the Department of Transportation has the statutory opportunity to reject all bids. Section 337.11(3), Florida statutes states:

    
    

    The department may award the proposed work to the lowest responsible bidder, or it may reject all bids and proceed to readvertise the work or otherwise perform the work.

    
    

    Therefore, the option is presented to reject the bid of Alfair as lowest responsible bidder and to readvertise as was done in this instance. The decision to readvertise may only be overturned based upon illegality, fraud, oppression, arbitrariness, dishonesty or misconduct by the Department. See Department of Transportation v. Groves-Watkins Constructors, 530 So.2d 912 (Fla. 1988) and Liberty County v. Baxter's Asphalt and Concrete, Inc., 421 So.2d 505 (Fla. 1982). The Petitioner has failed to make such showing and the decision to reject all bids should not be overturned. The proof demonstrates 70% divergence between the pre-bid estimate and the lowest quotation, that offered by Alfair, leading to the conclusion that the Department was clear in its right to reject all bids and start anew. The procedural problems that arose in the course of the decision to reject all bids and begin anew are not such as to change this outcome nor was the failure to disclose the exact reasoning for believing that the bid responses were too high when compared to the pre-bid estimate.

    
    

11. Under Section 337.11(3)(b) the Department of Transportation is entitled to costs in the amount described in the facts related to salaries, per diem and court reporter attendance.

RECOMMENDATION

In consideration of the facts found and the conclusions of law reached, it

is

RECOMMENDED that Final Order be entered which rejects all bids and allows

the re-advertisement of Project No. 72906-9109, Duval County.

DONE and ENTERED this 28th day of March, 1989, in Tallahassee, Leon County, Florida.

CHARLES C. ADAMS

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904)488-9675

Filed with the Clerk of the Division of Administrative Hearings this 28th day of March, 1989.

APPENDIX

Petitioner has submitted a Memorandum in which an indication is given concerning the Project 72906-9109, Duval County, as to the scope of that project-and an explanation in the mind of the representative of Petitioner as to the reason for "set-aside" projects. An accusation is made that the Department of Transportation has tried to avoid bringing black businesses into the mainstream of Florida economy. This is not borne out by the proof. An accusation is made which was not proven at hearing and is not relevant to the resolution of this dispute concerning the contributions to the Florida tax base made by the black community and businesses. This contention together with the allegation that the Department of Transportation is using tactics to deny a small percent.age of tax dollars to recirculate into the black community for economic development and by such arrangement promotes institutional slavery was not proven. Reference to rejection of all bids on October 18, 1988 is at odds with the facts of this case. Further, there is no indication in the facts of this case that for the first time in history a black-owned company was going to cross economic a threshold within the district in terms of gaining business and that the agency rejected the bids to avoid this. Further reference to the procedural history of this case and the fact that corrections had to be made to the process of notification of rejection of all bids is not sufficient reason to overturn the decision to reject all bids. Reference within the Memorandum/Argument to the need to post a bond as being done because it would cause an economic hardship on a black-owned company is rejected as a grounds of argument in that the requirement of bond is a matter of law imposed upon all companies black or otherwise. The fact that office holders within the State Legislature were called upon by the Petitioner to ascertain the status of this project and that the Department of Transportation went through the process of correcting "the initial rejection of bids in favor of a reevaluation phase, has been explained in the fact finding elated to the sequence of events and the procedures involved in rejecting all bids. Reference to the failure to describe the reasons for rejection beyond the fact that the bids were too high has been described in the- fact finding. No evidence was shown that the refusal to indicate the reason in detail or to refer to the source of the data was in the interest of somehow favoring white prime contractors over black contractors. There is some other indication within this Memorandum concerning the meeting of goals for "Disadvantaged Business Enterprises" and the concern that the Department of Transportation is using minority individuals instead of minority businesses to meet those goals. There was no indication that the Department of Transportation

acted inappropriately in its attempts to gain a contract in this case, or that it generally has participated in a process which the Petitioner refers to dualism in preferring minority persons who are not licensed by the Department of Professional Regulation to engage in the construction business over those who are. Moreover, Section 489.103(1), Florida Statutes, states that the license provisions of Florida law, do not pertain to contractors who are working on bridges, roads, streets and highways and services incidental to that work.

Comments about training and apprenticeship found within the Memorandum were not proven in the course of the hearing and are not sufficiently relevant to the inquiry at hand; that they need be considered in resolving this dispute. The suggestion that the Department of Transportation intends to put the contract back out for award in some arrangement other than a "set-aside" is correct in the sense of the intentions expressed in the ad of October 25, 1988; however, that advertisement was not carried forward and the oral indication was made by an official of the Department of Transportation at hearing, that the contract would remain "set- aside" if the Department were allowed to readvertise at some point beyond the outcome of this hearing. Finally, the suggestion that if the second bidder in this case had been a non-black company or individual, the Department would have awarded the project to that entity was not borne out in the proof.

Respondent's facts are subordinate to the facts found.

COPIES FURNISHED:

James D. Alford, III 1348 Davis Street

Jacksonville, Florida 32209

Marilyn McFadden, Esquire Department of Transportation 605 Suwannee Street, M.S.-58 Tallahassee, Florida 32399-0458

Kaye N. Henderson, Secretary Department of Transportation 605 Suwannee Street

Tallahassee, Florida 32399-0450

Thomas H. Bateman, III General Counsel

Department of Transportation

562 Suwannee Street Tallahassee, Florida 32399-0450

Docket for Case No: 89-000006BID

Orders for Case No: 89-000006BID