STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SPIRIT CONSTRUCTION, INC., )

)

Petitioner, )

)

vs. ) CASE NO 89-1579BID

) SCHOOL BOARD OF PALM BEACH COUNTY, )

)

Respondent. )

)

RECOMMENDED ORDER

This matter was heard by William R. Dorsey, Jr., the Hearing Officer assigned by the Division of Administrative Hearings, in West Palm Beach, on April 11, 1989. A transcript of the proceedings has been filed and the parties have filed proposed findings of fact and conclusions of law. Rulings on proposed findings of fact are made in the Appendix to this Recommended Order.

APPEARANCES

For Petitioner: Ira Libanoff, Esquire

Leiby and Elder

290 Northwest 165th Street, Penthouse 2 Miami, Florida 33169

For Respondent: Abbey G. Hairston, Esquire

Palm Beach County School Board Post Office Box 24690

West Palm Beach, Florida 33416 ISSUE

The issue is whether Milne and Nicholls, Inc., submitted a responsive bid for construction project 0071-8755 of the School Board of Palm Beach County, for additions to and remodeling of the Jupiter Elementary School.

PRELIMINARY STATEMENT

The School Board of Palm Beach County opened sealed bids on March 9, 1989 for the construction of additions to and remodeling of the Jupiter Elementary School. The apparent low bidder was Milne and Nicholls, Inc., with a base bid of $1,452,000. The next lowest bidder was Spirit Construction, Inc. Spirit Construction filed a timely formal protest to the bid tabulation showing Milne and Nicholls, Inc. as low bidder. Ultimately, the proceeding was assigned to the Division of Administrative Hearings for formal proceedings.

At the final hearing, Spirit Construction's Exhibits 1-6 were admitted into evidence, but Exhibit 3 was admitted only to corroborate the testimony by William Hodge of Spirit Construction. School Board Exhibits 1 and 2 were admitted into evidence as was Joint Exhibit 1.

Spirit Construction presented the testimony of the following witnesses: William Hodge, its vice-president; Christopher Ollier, of Milne and Nicholls, Inc.; James W. Anderson, of J. W. Anderson Hardware Company; and David P. Snyder of Thoro System Products.

The School Board presented the testimony of Albert P. Paglia, the contract administrator for the School Board and Mort Mason, the assistant director for the Department of Facility Design for the School Board.

FINDINGS OF FACT

1. The School Board of Palm Beach County opened sealed bids on March 9, 1989, for the construction of additions to and remodeling of the Jupiter Elementary School. The apparent low bidder was Milne and Nicholls, Inc. The next lowest bidder was Spirit Construction, Inc. The other remaining bidders, Burkhardt Construction Company and State Paving Corporation were given notice of the hearing, but declined to participate.

   
   

2. On March 15, 1989, Spirit Construction filed its formal bid protest which alleged that the bid of Milne and Nicholls Inc. was defective and unresponsive. It sought an administrative hearing under Section 120.53(5)(d), Florida Statutes.

   
   

3. The School Board has established certain policies, not codified in rule, that require bidders to submit specified documents with their sealed bids. All bidders must submit a list of major subcontractors at the bid opening on Form 00420. Within 24 hours of the bid opening, the apparent low bidder and any other bidder the Board asks to do so must submit Form 00430, which lists the subcontractors and suppliers on 37 other aspects of the project. School Board staff reviews Forms 00420 and 00430 to assure that all of the subcontractors listed by bidders are duly licensed to perform the items of work for which they are listed.

   
   

4. The School Beard has enacted a rule on bid procodures, Rule 6Gx50-7.10, Florida Adninistrative Code. Subsection (6) of that rule provides:

   
   

   No bid shall be considered if the bidder fails to comply with the terms and conditions of the bid form or the procedure for submitting bids as authorized in the official advertisement and other documents pertaining to the bidding as authorized by the Board.

   The Board reserves the right to waive minor irregularities.

   
   

   The rule serves to incorporate into the bid process those policies of the Board which have not been promulgated as a rule, but which are found in the bid form or in procedures which are disclosed to bidders in the official advertisement for the project.

   
   

5. Form 00430 is entitled "List of Subcontractors and Suppliers", and it contains instructions for the bidding general contractors. It states:

To be executed within 24 hours of bid opening if apparent low bidder or if requested by Owner [the School Board]. If, due to

Alternate Bids, more than one subcontractor or supplier must be considered, [the] Contractor [is] to list each and stae which is to be considered with [the] Base Bid and which to consider if a specific alternate is to be taken.

All Subcontractors and suppliers are subject to approval of the Owner. The following are the subcontractors and suppliers proposed to be used in [sic] if the undersigned is awarded the contract for: additions to and remodeling of, Jupiter Elementary School...

It has been the practice of the school Board's staff to allow a general contractor to list itself as a subcontractor on any of the 37 trade classifications found on Form 00430, if the general contractor is legally entitled to perform the work in the classification for which it lists itself. Contract administrators have not required the bidding general contractor to list the supply or distribution entities from which it will obtain the goods or materials to complete those categories of work. The Board could not monitor or make use of that information. For example, two of the 37 categories on the form are "rough carpentry" and "finish carpentry". General contractors ordinarily have employees capable of performing these types of work, and general contractors often list themselves as the subcontractor in those spaces on the form. They do not also list the lumber supply houses from which they will obtain wood, nails, etc., which they will use when performing such carpentry work.

1. Milne and Nicholls, Inc., listed itself on Form 00430 as its own subcontractor for the following 11 classes of work:

   
   

   Metal deck; Concrete; Structural steel; Steel bar joists, Rough carpentry; Finish carpentry;

   Hollow metal doors and frames; Wood doors;

   Finish hardware; Miscellaneous specialty items; Toilet accessories.

   
   

   It did not list its suppliers for the materials it will use in those 11 categories of work. It does not manufacture or supply the materials used in any of those items to others.

   
   

2. Spirit Construction Company also submitted a Form 00430 with respect to this bid. Like Milne and Nichools, it listed itself as its subcontractor in the following 5 work classifications:

   
   

   Building layout and clearing; Earthwork;

   Concrete;

   Rough carpentry; Finish carpentry.

   Spirit Construction argues that by not listing its suppliers on Form 00430, Milne and Nicholls, Inc. gained an advantage over other bidders which permitted it the opportunity to engage in bid shopping. Bid shopping occurs when a general contractor estimates the amount it will cost to do certain facets of the work, such as the 37 categories of work listed on Form 00430, includes that estimate in its sealed bid to the school Board, and attempts to find a subcontractor willing to do the work for that amount (or less) if it is awarded the contract. Bid shopping permits the general contractor to procure the work for less than the amount included in its bid, and to pocket the difference. 1/ This defeats, to some extent, the purpose of competitive bidding.

   
   

3. Milne and Nicholls' estimates for materials and installation prices for the 11 categories of work for which it listed itself as subcontractor on Form 00430 were based on prices from vendors in the industry.

   
   

4. Spirit Construction's argument that suppliers should have been listed for the areas of work on which Milne and Nicholls would act as its own subcontractor is not supported by Spirit's own Form 00430 for this bid. Assuming, for the sake of argument, that Spirit Construction's employees could complete the rough carpentry and finish carpentry work itself, there is no listing of any of its suppliers for carpentry materials. Neither is there a listing of any supplier of materials for the category of building layout and clearing, or for earthwork. For concrete, Spirit Construction listed itself on the line for the subcontractor, along with standard Concrete Company. Apparently Spirit meant that it would act as its own subcontractor for concrete work, and that Standard Concrete would be its supplier of concrete, but its submission does not make the relationship between Spirit and Standard Concrete clear.

   
   

5. The School Board makes much of the fact that Spirit Construction never sought a formal interpretation from the School Board about what the Board expected to be disclosed on Form 00430. This is not significant, because the argument made by Spirit arises from one reasonable reading of the form and no formal interpretation of the meaning of the form's instructions was necessary to prepare a bid.

   
   

6. The bid package for the Jupiter Elementary School project contains a list of acceptable manufacturers for some materials, including steel doors and frames, in Section 08110 of the bid package, and for metal decking in Section 05300 (Spirit Exhibit 6). The significance of these lists of acceptable manufacturers is unclear. Form 00430 does not require the disclosure of subcontractors or suppliers for "steel doors and frames", but only for "hollow metal doors and frames". Assuming that Part 2.01 of Section 08110 of the specifications is meant to be an exclusive list of acceptable suppliers for hollow metal doors and frames, it is impossible to tell from Spirit's form 00430 whether Quality Engineered Products Company of Tampa, Florida, (Spirit's subcontractor for hollow metal doors and frames), will provide doors from the manufacturers listed in Part 2.01 of Section 08110 of the Specifications.

   
   

7. Similarly, with respect to metal decking, Section 05300 of the Specifications for the Jupiter Elementary School project lists acceptable manufacturers in Part 2.01. The list of subcontractors which Spirit Construction provided on Form 00430 designates Skyline Steel, Inc. as its subcontractor for metal decking. There is no way to tell whether the metal decking to be provided by Skyline Steel, Inc. comes from one of the acceptable manufacturers listed in Part 2.01 of Section 05300 of the Specifications.

8. The listing of subcontractors and suppliers on Form 00430 is not designed to permit the Board's staff to insure that the materials to be provided by a general contractor, (or for that matter, by any subcontractor) are materials of the type approved in the project Specifications. Spirit argues in its proposed finding of fact 16 that by listing itself as supplier of metal roof decks and hollow metal doors and frames, Milne and Nicholls could go to the manufacturers listed as approved manufacturers in the Specifications "and shop the price of the metal deck/hollow metal doors and frames, so as to make an additional profit over and above the percentage of profit included in its bid." Whether or not this is true does not determine whether the bid is responsive. Milne and Nicholls could have received a price from a subcontractor, and listed the subcontractor on form 00430. After receiving the contract, the listed subcontractor could engage in the same type of price shopping Spirit Construction inveighs against, and pocket any savings itself.

   
   

9. Listing a supplier for the items of work found on Form 00430 for which the general contractor will act as its own subcontractor comports with one careful reading of the instructions on the form. The form's instructions do not require, however, that a supplier listed be one of the acceptable manufacturers for a product listed in the project Specifications. Thus, the failure of a contractor to list the supplier deprives the board's staff of no useful information, does nct give a competing general contractor an unfair advantage, and is not a material defect in a bid.

   
   

   CONCLUSIONS OF LAW

   
   

10. The Division of Administrative Hearings has jurisdiction over this matter. Section 120.53(5)(d), Florida Statutes (1987).

    
    

11. The instructions to Form 00430 are not as clear as they might be. A general contractor may list on the form a subcontractor for each of the categories of work found on that form. It may also list itself, if it is able to do that type of work. When the general contractor lists itself, it is not clear whether the supplier of materials needed to complete that category of work must also be disclosed. The contract administrator for the school Board checks the list of subcontractors on Form 00430 to see that each is appropriately licensed, but does not use that form to determine whether subcontractors or suppliers listed are able to deliver items from acceptable manufacturers, as those manutacturers are def ined ifl the project specifications. The failure of a general contractor to list a supplier on the form when it lists itself s a subcontractor for an item of work is not a material defect in its bid.

    
    

12. Spirit Construction urges that the case of E. M. Watkins and Company

v. Board of Regents, 414 So.2d 583 (Fla. 1st DCA 1982) requires a contrary result. The Watkins case involved the construction of Section 255.0515, Florida Statutes, which does not control this matter. In the Watkins case an apparent low bidder had failed to include a mandatory list of five major subcontractors on a project to be built for the Board of Regents. In this case, Milne and Nichols' list of major subcontractors, Form 00420, has not given rise to any dispute. The statute at issue in Watkins specifically forbade a contractor from replacing a subcontractor listed in its bid after the bid was opened. The court found that "the transcript of the legislative committee hearings on Section 255.0515 clearly indicates that one of the major purposes of that legislation was to prevent bid shopping by contractors after a bid was awarded." id. at

587. There is no proof in this record that the School Board of Palm Beach County had a similar purpose in view when it required that contractors submit

Form 00430 within 24 hours of the bid opening. Rather, the evidence shows that the form is used to insure that the subcontractors the general contractor proposes to use are appropriately licensed.

1. The decision in Department of Transportation v. Groves- Watkins Constructors, 530 5o.2d 912 (Fla. 1988) is also inapposite. It involved a decision by the Department of Transportation to reject all bids and rebid a project. The School Board did not reject all bids here. While a decision of a public body to reject all bids is reviewed under Section 120.53 only on the narrow grounds of whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly, the scope of review in a proceeding to determine whether the apparent low bidder had submitted a responsive bid is not so narrow. The School Board has proven that the information from Form 00430 permits the School Board to determine whether the subcontractors for the 37 items of work listed on that form are appropriately licensed. It is not designed to determine whether the materials to be supplied in each of those 37 categories of work will come from acceptable manufacturers, as those manufacturers are defined in the bid specifications. If that were so, a list of suppliers would be required in all instances. The form has never been interpreted in that manner, and no party to this proceeding has advanced that argument.

   
   

2. It is not clear what purpose would be served by listing suppliers on Form 00430 each time a general contractor acts as its own subcontractor for an item of work. The failure to list a supplier is, at most, an immaterial defect which does not require the disqualification of Milne and Nicholls' bid.

RECOMMENDATION

Upon consideration of the foregoing, it is

RECOMMENDED that the protest filed by Spirit Construction to the bid tabulation for project 0071-8755, additions to and remodeling of the Jupiter Elementary school, be dismissed.

DONE and ORDERED this 16th day of May, 1989, in Tallahassee, Leon County, Florida.

WILLIAM R. DORSEY, JR.

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 16th day of May, 1989.

ENDNOTE

1/ It also places the general contractor at risk that its estimate will be too low and it will have to make up the difference if subcontractors demand more than the contractor estimated.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 89-1579BID

The following constitutes my rulings on proposed findings of fact under Section 120.59(2), Florida Statutes:

Findings Proposed by Spirit Construction

1. Covered in paragraph 3.

2. Covered in paragraph 5.

3. Covered in paragraph 1.

4. Covered in paragraph 7.

5.-10. Covered in finding of fact 7.

1. Implicit in finding of fact 7..

2. Rejected as irrelevant.

3. Rejected as irrelevant.

4. Covered in paragraph 8.

5. Rejected as irrelevant.

6. Covered in paragraph 8.

7. Rejected as irrelevant.

8. Rejected as unnecessary.

9. Rejected as unnecessary.

10. To the extent necessary covered in finding of fact 9.

11. Rejected as unnecessary.

12. Covered in finding of fact 12.

13. Rejected as unnecessary.

14. Rejected as unnecessary.

15. Rejected as subordinate to finding of fact 5.

16. Rejected as unnecessary.

17. Rejected as unnecessary.

18. Covered in finding of fact 6.

19. Covered in finding of fact 10.

20. Rejected as unnecessary.

Rulings on proposed Findings of Fact of the School Board

1. Covered in finding of fact 1.

2. Covered in finding of fact 2.

3. Omitted by School Board.

4. Covered in finding of fact 3.

5. Covered in finding of fact 3.

6. Rejected as unnecessary.

7. Covered in finding of fact 6.

8. Covered in finding of fact 7.

9. Covered in finding of fact 8.

10. To the extent necessary, covered in finding of fact 8.

11. Covered in finding of fact 9.

12. Rejected as irrelevant.

13. Covered in finding of fact 9.

14. Rejected as irrelevant.

15. Rejected as unnecessary.

16. Rejected as unnecessary.

17. Rejected because the matter is not in dispute.

COPIES FURNISHED:

Ira Libanoff, Esquire Penthouse 2

290 Northwest 165th Street Miami, Florida 33169

Abbey G. Hairston, Esquire Palm Beach County School Board Post Office Box 24690

West Palm Beach, Florida 33416-4690

Milne and Nicholls, Inc. 701 Southeast 6th Avenue

Delray Beach, Florida 33444

Burkhardt Construction Company 1400 Alabama Avenue, #20

West Palm Beach, Florida 33402

Honorable Betty Castor Commissioner of Education The Capitol

Tallahassee, Florida 32399-0400

Sydney H. McKenzie, Esquire General Counsel

The Capitol, PL-0

Tallahassee, Florida 32399-0400

Thomas J. Mills, Superintendent Palm Beach County School Board 3323 Belvedere Road

Post Office Box 24690

West Palm Beach, Florida 33416-4690

Docket for Case No: 89-001579BID

Orders for Case No: 89-001579BID