STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PRELUDE CONSTRUCTION COMPANY, )

)

Petitioner, )

and )

) LINCOLN CONSTRUCTION COMPANY, )

)

Intervenor, )

)

vs. ) CASE No. 89-1468BID

) SCHOOL BOARD OF PINELLAS COUNTY, )

)

Respondent, )

and )

) BANDES CONSTRUCTION COMPANY, )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on April 3, 1989 in Clearwater, Florida.

APPEARANCES

For Petitioner: Dennis P. Thompson, Esquire (Withdrawn) Citizens Bank Building, Suite 270

1130 Cleveland Street

Clearwater, Florida 34615

For Intervenor, Gary W. Lincoln

Lincoln 6727 First Avenue, South Construction Suite 101

Company: St. Petersburg, Florida 33707

For Respondent: Bruce P. Taylor, Esquire

Post Office Box 4688 Clearwater, Florida 34618-4688

For Intervenor, Robert Bandes

Bandes 2569 Countryside Boulevard

Construction Suite 1

Company: Clearwater, Florida 34621

BACKGROUND

This matter began on March 8, 1989, when petitioner, Prelude Construction Company, Inc. (Prelude), filed its written notice of intent to protest an award of a contract by respondent, School Board of Pinellas County (Board). The contract in question called for certain pre-kindergarten construction work to be performed on Walsingham and Cross Bayou Elementary Schools, both located in Pinellas County, Florida. The notice of intent was followed by a formal written protest filed on March 17, 1989. According to the written protest, the apparent winning bidder, Lincoln Construction Company (Lincoln), had submitted a facially non-conforming bid document and thus should have been disqualified. More specifically, the protest alleged that the bid bond accompanying the bid proposal was not dated "on the day or the day prior to the date of bid opening," as required by the specifications. As a consequence, the protest requested that the contract be awarded to Prelude, the next lowest and most responsive bidder.

The matter was referred by respondent to the Division of Administrative Hearings on March 21, 1989, with a request that a hearing officer be assigned to conduct a formal hearing.

By notice of hearing dated March 23, 1989, a final hearing was scheduled on April 3, 1989, in Clearwater, Florida. Also, on March 23, 1989, the case was transferred from Hearing officer Don W. Davis to the undersigned.

At hearing, intervenors, Lincoln and Bandes Construction Company (Bandes), filed ore tenus requests to intervene. Both requests were granted. Also, the Board, through its counsel, announced that, as a result of further review of the bid proposals, all bids except that of Bandes were found to be nonresponsive because only Bandes had listed on its proposal the name of its roofing subcontractor as required by the specifications. Accordingly, counsel announced that the Board staff intended to recommend to the Board that Lincoln be disqualified and that the contract be awarded to Bandes, the only responsive bidder. As a result of this revelation, Prelude withdrew its protest and request for hearing. However, Lincoln and Bandes remained active parties for the purpose of opposing and supporting, respectively, the new agency position.

At final hearing, intervenor Lincoln presented the testimony of Gary W. Lincoln, its vice-president, and offered Lincoln exhibits 1 and 2. Both exhibits were received in evidence. Respondent presented the testimony of Steven D. Swanberg, its outside architectural consultant on the project. Also, it offered respondent's exhibits H-K. All exhibits were received in evidence.

There is no transcript of hearing. Proposed findings of fact and conclusions of law were filed by Lincoln and the Board on April 7 and by Bandes on April 10, 1989. A ruling on each proposed finding is made in the Appendix attached to this Recommended Order. 1/

The issue is whether the Board's action in awarding the construction contract on Cross Bayou and Walsingham Elementary Schools was arbitrary and capricious.

Based upon all of the evidence, the following findings of fact are determined:

FINDINGS OF FACT

1. On February 7, 14 and 21, 1989, respondent, School Board of Pinellas County (Board), published a legal advertisement in an area newspaper inviting prospective bidders to submit proposals for certain construction work to be performed on two elementary schools, Walsingham and Cross Bayou, located in Largo and Pinellas Park, Florida, respectively. The bidders were advised that their bids must be "prepared and submitted in accordance with the drawings and specifications" and that such drawings and specifications could be obtained from the Board. Such bids were to be filed with the Board no later than 2:00 p.m. on March 6, 1989. The notice also provided that the bids would be opened the same day.

   
   

2. Bids were timely filed by at least five contracting firms, including petitioner, Prelude Construction Company, Inc. (Prelude), and intervenors, Lincoln Construction Company (Lincoln) and Bandes Construction Company (Bandes). In filing these proposals, each bidder represented he had "thoroughly examined all of the contract documents." After the bids were opened and reviewed by Board personnel, Lincoln, Prelude and Bandes were ranked first, second and fourth, respectively, based upon the dollar amount of their proposals. 2/ Thereafter, the Board issued its notice of intended action on March 7, 1989, wherein it advised all parties of its intention to award the contract to Lincoln. In doing so, the Board concluded that, although a bid bond accompanying Lincoln's proposal was not dated March 5 or 6 as required by the specifications, the deviation was minor and could be waived. That action prompted Prelude to file its protest.

   
   

3. Through testimony of Lincoln's vice-president, it was established that the Board staff intended to change its initial position and to recommend to the Board that Lincoln's bid proposal be rejected and the contract awarded to Bandes. This change was prompted by the Board staff's discovery on the day of hearing (April 3) that, with the exception of Bandes, all bidders had failed to list the, roofing subcontractor on their bid proposals. The Board staff accordingly concluded that all bidders except Bandes should be disqualified.

   
   

4. The bid specification upon which the Board relies to award the contract to Bandes is found in Part One, paragraph 1.1 of section 07511 of the bid specifications. The requirement is a relatively new one and imposes the following requirement upon bidders:

   
   

   NOTE: The contractor is required to list the name of the roofing subcontractor on the form of proposal, Section 1C.

   
   

   Section 1C is entitled "Form of Proposal" and includes the following section on page 1C-3 to be filled in by the bidder:

   
   

   The following subcontractors will be contracted with on this project.

   
   

   Type of Subcontractor Name of Subcontractor (Trade Specialty) (Company/Firm)

   
   

   
   

   
   

   
   

   The column on the left side is intended to identify the subcontractor by specialty, such as plumbing or roofing, while the blank spaces in the right hand column are to be filled in by the bidders with the name of the subcontractor who will perform the specialty.

   
   

5. The Board has not been consistent in requiring bidders to list the name of subcontractors on the bid documents. According to the uncontroverted testimony of Lincoln, the Board requires the listing of subcontractors on some projects but not on others. For example, on the specifications for the recently let contract for the prototype new media center at four elementary schools, the left hand column on the above form was filled in by the Board with five types of subcontractors who were required on the project, including roofing. This meant that the bidder was to fill in the blanks in the right hand column with the name of the subcontractor who he intended to use on each specialty. However, on other contracts, including the one under challenge, both columns in the Form for Proposal have been left blank, and Lincoln construed this to mean that the name of the subcontractor was not required. Indeed, Lincoln pointed out, without contradiction, that on a recent contract which left both columns blank, as was true in this case, it was awarded the contract even though it did not identify the roofing subcontractor on its proposal. Because of this prior agency practice, Lincoln assumed the same policy would be used again. However, Lincoln conceded it had failed to read the requirement in paragraph 1.1 of section 07511 before preparing its proposal. There was no evidence that Lincoln gained any substantial advantage over other bidders by this omission.

   
   

6. Also relevant to this controversy is Paragraph 10A of the General Requirements. This item is found on page 1B-11 and reads as follows:

   
   

   1. Each bidder shall indicate the names of specific major Subcontractors if called for on the form of proposal. If listing of Subcontractors is required and the Bidder fails to list them, the bid may, at Owner's option, be disqualified. (Emphasis added)

      
      

      This authority to waive the requirement is reinforced by language in Paragraph

      21 of the General Requirements which provides in part that "(t)he owner reserves the right to waive minor technicalities."

      
      

7. According to the Board's outside architectural consultant, who was the author of a portion of the contract specifications including section 07511, the omission of the name of the roofing subcontractor is a "minor" technicality that can be waived. However, the consultant had no personal knowledge as to whether the provision had actually been waived by the Board on prior contracts.

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes (1987).

   
   

9. As the party challenging the award of the contract, Lincoln must prove by a preponderance of the evidence that the Board's action was arbitrary and capricious or that it acted in an otherwise improper manner. Cf. Capeletti Bros., Inc. v. State, Department of General Services, 432 So.2d 1359, 1363-64 (Fla. 1st DCA 1983) (no error in requiring challenging party to bear burden of proving agency action incorrect).

10. In a bid challenge such as this, the scope of inquiry is limited to determining "whether the agency acted fraudently, arbitrarily, illegally, or dishonestly." Department of Transportation v. Groves-Watkins Constructors, 530 So.2d 912, 914 (Fla. 1988). Ordinarily, where virtually all bidders failed to submit responsive bids because of their failure to notice or to properly construe a requirement in the specifications, one of the options available to the governmental entity is to reject all bids and relet the contract, particularly where the only responsive bidder submitted a substantially higher cost bid than was anticipated. Groves-Watkins at 914. However, Board counsel has pointed out this is not a viable option because the Board must award the contract to one of the bidders who submitted bids on March 6 or else lose essential state funding on the project.

    
    

11. The only issue is whether the Board was arbitrary and capricious in taking the position that Lincoln's bid should be rejected as being nonresponsive. Lincoln contends simply that the omission in question is an immaterial item that can be waived. In their proposed orders, both the Board and Bandes cite the case of E.M. Watkins and Company v. Board of Regents, 414 So.2d 583 (Fla. 1st DCA 1982) for the proposition that the failure by a bidder to list a subcontractor on its proposal is a material irregularity that cannot be waived. Thus, they contend that the Board's action is reasonable and proper.

    
    

12. In resolving this matter, it is noted first that in E.M. Watkins, the court was faced with the problem of construing Section 255.0515, Florida Statutes (1981), in the context of a bid dispute and whether the failure of a bidder to list all subcontractors on its proposal mandated its disqualification. That section reads as follows:

    
    

    With respect to state contracts let pursuant to competitive bidding, whether under chapter 235, relating to educational facilities, or chapter 255, relating to public buildings, the contractor shall not remove or replace subcontractors listed in the bid subsequent to the lists being made public at the bid opening, except upon good cause shown.

    
    

    After reviewing the statute, the court concluded that the requirement to list subcontractors was a mandatory statutory requirement that could not be waived. It held further that if a Board of Regent rule suggested otherwise, the rule was invalid as being contrary to the statute. While clearly section 255.0515 applies to state contracts, including those let for educational facilities under chapter 235, the parties have not addressed the question of whether a local school board contract is also subject to its provisions. Research by the undersigned has disclosed no appellate decision or final agency order that answers this question. Chapter 235 pertains, of course, to both state and local school board contracts. In addition, Board counsel has indicated that the contract in question is partially funded with state moneys, and Section 15A, Part 1, paragraph 2 of the contract specifications provides that the work must conform to Florida Department of Education rules. In light of these considerations, and after liberally construing the section in question, it is concluded that the contract under challenge may be considered to be a state contract within the meaning of section 255.0515 and that the principles enunciated in E.M. Watkins apply. Accordingly, a successful bidder must list all subcontractors on its proposal. Further, the requirement is a material one that cannot be waived.

13. Although the Board takes the position in this case that section 255.0515 is controlling, and that its provisions cannot be waived, it has chosen to disregard this requirement on prior contracts, including one recently awarded to Lincoln. The question then arises whether Lincoln is entitled to relief under the theory that persons affected by agency action must be able "to rely on precedents born of consistent application of facts." See, e.g. University Community Hospital v. DHRS, 472 So.2d 756, 758 (Fla. 2d DCA 1985). In this regard, the case of C.H. Barco Contracting Co. v. State of Fla., Department of Transportation, 483 So.2d 796 (Fla. 1st DCA 1986) is instructive. In Barco, the agency had interpreted a contract provision in a certain fashion on a series of prior contracts. However, it adopted a new and more stringent interpretation of the same provision on a contract on which Barco was the lowest bidder. In affirming the agency's rejection of Barco's proposal, the court found that, so long as the new interpretation was consistent with the language of the requirement (rule), the agency did not err in strictly enforcing its provisions even if it had interpreted the rule differently in the past. In the case at bar, the facts are even more compelling to reach this result since state law, and not a rule, underpins the provision in question and mandates that all subcontractors be listed on the bid proposal. This being so, it is concluded that the Board did not act "fraudently, arbitrarily, illegally, or dishonestly," Groves-Watkins, and the contract should be awarded to Bandes, the lowest and most responsive bidder.

    
    

14. Finally, in its post-hearing filing, Lincoln asks that if it is not awarded the contract, that it be given a second hearing to presents testimony "regarding issues which it was unable to do at the April 3 hearing because of the lack of notice of issues." While admittedly the Board gave virtually no notice prior to hearing of its change in position, there was no request for a continuance presented to the undersigned at hearing on April 3. Then, too, Lincoln, although represented at hearing by a lay person, was afforded all rights to which it was entitled under chapter 120. Therefore, the request for further evidentiary hearings is denied.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a Final Order be entered awarding the contract in question

to Bandes Construction Company.

DONE AND ORDERED this 20th day of April, 1989, in Tallahassee, Leon County, Florida.

DONALD R. ALEXANDER

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

20th day of April, 1989.

ENDNOTES

1/ On April 17, or after the record in this proceeding had closed, Lincoln filed another document in which it alleged that Bandes' proposal was nonresponsive because Bandes failed to list a prequalified roofing subcontractor as required by the specifications. For purposes of preparing this order, th undersigned has disregarded this untimely filing.

2/ Lincoln, Prelude and Bandes submitted the following bid amounts: $421,990,

$431,497 and $467,707.

APPENDIX

Intervenor Lincoln:

To the extent the letter filed by Lincoln contains relevant findings of fact, the same have been generally covered in this Recommended Order.

Respondent:

1-2. Covered in finding of fact 1. 3-4. Covered in finding of fact 7.

1. Covered in finding of fact 4.

2. Covered in findings of fact 2 and 3.

3. Covered in finding of fact 3.

4. Covered in finding of fact 2.

5. Covered in finding of fact 6.

6. Covered in finding of fact 7.

   
   

   Bandes:

   
   

   1-4.	Covered	in	finding	of	fact	1.
   5.	Covered	in	finding	of	fact	2.
   6.	Covered	in	finding	of	fact	6.
   7.	Covered	in	finding	of	fact	4.
   8-9.	Covered	in	finding	of	fact	3.
   10.	Covered	in	finding	of	fact	2.

7. Rejected as being subordinate to other findings.

8. Covered in finding of fact 7.

COPIES FURNISHED:

Dennis P. Thompson, Esquire Citizens Bank Bldg., Suite 270 1130 Cleveland Street

Clearwater, FL 34615

Dr. Scott N. Rose, Superintendent School Board of Pinellas County

P.O. Box 4688 Clearwater, FL 34618-4688

Mr. Gary W. Lincoln

6727 First Avenue, South Suite 101

St. Petersburg, FL 33707

Gregory G. Schultz, Esquire

141 Stevens, Suite 14 Clearwater, FL 34677

Bruce P. Taylor, Esquire

P.O. Box 4688 Clearwater, FL 34618-4688

Docket for Case No: 89-001468BID

Orders for Case No: 89-001468BID