STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GLOBAL WATER CONDITIONING, )

)

Petitioner, )

)

vs. ) CASE NO. 89-2642BID

) DEPARTMENT OF AGRICULTURE AND ) CONSUMER SERVICES, DIVISION OF ) FORESTRY, )

)

Respondent. )

)

RECOMMENDED ORDER

The final hearing in this case was held before Donald D. Conn, Hearing Officer, Division of Administrative Hearings, on June 13, 1989, in Tallahassee, Florida.

APPEARANCES

For Petitioner: James C. Barth, Esquire

433 North Magnolia Drive Tallahassee, Florida 32308

For Respondent: Mallory E. Horne, Esquire

Clinton H. Coulter, Jr., Esquire Mayo Building, Room 515 Tallahassee, Florida 32399-0800

STATEMENT OF THE ISSUE

The issue in this case is whether the Department of Agriculture and Consumer Services (Department) acted in an arbitrary or capricious manner in rejecting all bids due to the vagueness of an addendum to bid specifications, and rebidding a contract for the installation and replacement of EDB water filters.

PRELIMINARY STATEMENT

At the hearing, the parties stipulated to the introduction of one (1) composite exhibit. Global Water Conditioning (Global) called James Tate as a witness, and filed the depositions of Robert Chastain and John Folks.

Respondent called James Tate, Sr., as a witness, and introduced the deposition of Bob Read. Exhibits attached to the depositions introduced in lieu of live testimony have also been admitted.

The parties filed proposed recommended orders, including proposed findings of fact, which have been considered and utilized in the preparation of this Recommended Order. Specific rulings on the parties' proposed findings of fact are contained in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. In September, 1986, Global submitted a bid to the Department for the installation and exchange of EDB water filters. The three lowest bidders, including Global, were disqualified. This bid was designated DOF-ADM-13.

   
   

2. On or about November 14, 1986, the Department issued new bid specifications, and an invitation to bid designated DOF-ADM-29. Bidders were required to prequalify, but in other respects these specifications were essentially the same as the previous bid, DOF-ADM-13. The deadline for prequalification was December 2, 1986.

   
   

3. Prior to the prequalification deadline, Global contacted the Department's contract manager, John Folks, and sought a change in the following prequalification requirement:

   
   

   All vendors must provide in writing from the National Water Quality Association proof that all management personnel involved in the development of the bid and in the completion of the contract (if vendor is awarded bid) have a NWQA CWD-V certification and that all staff members involved in the actual construction, installation and maintenance of the filter systems are NWQA certified installers. Please note the calendar of events for deadlines. (Emphasis Supplied.)

   
   

4. Global did not have NWQA level V certified installers, and therefore, could not qualify under this provision. However, they did have Class I plumber's licenses, the highest designation in North Carolina, the company's headquarters. James Tate, Global's Vice President, testified that a Class I plumber's license is the same as a master plumber in Florida.

   
   

5. The Department's contract manager approved and issued an addendum which constituted an amended bid specification on November 20, 1986, to permit a Class I plumber's license or equivalent, as follows:

   
   

   All vendors must provide in writing from the National Water Quality Association proof that all management personnel involved in the development of the bid and in the completion of the contract (if vendor is awarded bid) have a NWQA CWD-V certification or a class one plumber's license or equivalent and that all staff members involved in the actual construction, installation and maintenance of the filter systems are NWQA certified installers. Please note the calendar of events for deadlines. (Emphasis Supplied.)

   
   

6. On December 3, 1986, Folks determined that Global was qualified to bid.

7. Global submitted its bid on DOF-ADM-29 in a timely manner, and upon opening of all bids on December 15, 1986, was determined to be the lowest qualified bidder. Global was informed on December 15, 1986, that it was the winning bidder.

   
   

8. However, on December 19, 1986, the Department posted its tabulation on bid DOF-ADM-29 which rejected all bids "due to ambiguities in specifications and prequalifying requirements." The specific reason for this rejection was that upon review of the addendum by the Department's General Counsel at the time, Robert Chastain, it was determined that the addendum was vague and ambiguous. Specifically, Chastain and Folks concluded that the reference to Class I plumber's license was ambiguous since such a designation does not exist in Florida, and it was unclear whether such licensure in another state would allow a plumber to work in the four Florida counties affected by this bid. This ambiguity in the addendum had been brought to the Department's attention by a competing bidder, Continental Water Systems, Inc., after bids had been opened on December 15, 1986, through a threatened bid protest.

   
   

9. In rejecting all bids, the Department was attempting to avoid a protest either by Continental, if the award was made to Global, or by Global, if the award was made to Continental. The Department was reasonably concerned with the creation of a health emergency if the purchase of EDB filters was delayed through the filing of a bid protest. It sought to avoid any such delay by rejecting all bids and rebidding this contract as DOF-ADM-41 which contained the following redrafted specification:

   
   

   All vendors must provide in writing proof that all management personnel involved in the development of the bid and in the completion of the contract (if vendor is awarded bid) have a National Water Quality Association (NWQA) CWD-V certification or are a

   certified master plumber in the State of Florida and that all staff members involved in the actual construction, installation and maintenance of the filter systems are NWQA certified installers or are a certified plumber in accordance with county regulations and requirements in the State of Florida. (Emphasis Supplied.)

   
   

10. The redraft of the prequalification specification in DOF-ADM-41 corrected the ambiguities created by the November 20, 1986, addendum to DOF-ADM- 29, as to both management and staff.

    
    

11. Global's notice of protest of the Department's decision to reject all bids was timely filed on December 23, 1986, as acknowledged-by the Department's then General Counsel, pursuant to Rule 13A-1.006(3), Florida Administrative Code, which is presumed valid.

    
    

12. On January 23, 1987, the Commissioner of Agriculture issued a Declaration of Emergency in order to be able to proceed with the rebid, DOF-ADM- 41, despite Global's protest of the rejection of all bids in DOF-ADM-29. This Declaration of Emergency was upheld in Global Water Conditioning v. Department of Agriculture, 521 So.2d 126 (Fla. 1st DCA 1987). The contract in DOF-ADM-41 was awarded in February, 1987, to Continental.

13. The contract for the installation and exchange of EDB water filters is an on going project, and, with the exception of the prequalification changes referenced above, the specifications for bids D0F-ADM-13, 29 and 41 were essentially the same.

    
    

    CONCLUSIONS OF LAW

    
    

14. The Division of Administrative Hearings has jurisdiction over the parties, and the subject matter in this cause. Sections 120.53(5) and 120.57(1), Florida Statutes. The final hearing in this case was held in accordance with the decision in Global Water Conditioning v. Department of Agriculture, 11 FALR 2401 (Fla. 1st DCA, Op. filed April 7, 1989), wherein the Court held that Global is entitled to a ruling on the merits of its challenge to the rejection of its bid in DOF-ADM-29, and that the Department erred in dismissing Global's protest based upon its perceived technical insufficiency.

    
    

15. An agency has wide discretion in awarding contracts to responsible bidders, and its exercise of that discretion will not be overturned unless it is arbitrary or capricious, or evidences the agency's bad faith. Department of Transportation v. Groves- Watkins Contractors, 530 So.2d 912, 914 (Fla. 1988); Baxter's Asphalt and Concrete, Inc. v. Department of Transportation, 475 So.2d 1284 (Fla. 1st DCA 1985); Capelletti Brothers v. Department of General Services,

    432 So.2d 1359 (Fla. 1st DCA 1983); Wood- Hopkins Contracting Co. v. Roger J. Au and Son, Inc., 354 So.2d 446 (Fla. 1st DCA 1978). Agencies do not have unbridled discretion, however, and must act in a reasonable manner in the award of contracts.

    
    

16. In reviewing an agency's rejection of all bids, the Florida Supreme Court stated in Groves-Watkins, supra at 914:

    
    

    . . . although the APA provides the procedural mechanism for challenging an agency's decision to award or reject all bids, the scope of the inquiry is limited to whether the purpose of

    competitive bidding has been subverted. In short, the hearing officer's sole responsibility is

    to ascertain whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly.

    
    

    In Groves-Watkins the Supreme Court noted there was not the slightest evidence of fraud or collusion in the rejection of the bids under review, and, further, found that the rejection of all bids was not a means of avoiding competition. Therefore, the Court found that the agency had not abused its discretion in rejecting all bids.

    
    

17. Under the judicially established standard by which an agency's decision to reject all bids must be reviewed, it is concluded that the Department acted within its discretion in rejecting Global's bid in DOF-ADM-29. There is absolutely no evidence of fraud, dishonesty, collusion or bad faith in the record of this proceeding. Rather, a reasonable explanation of the Department's rejection of all bids was shown, based upon its concern that a health emergency might develop if the award of the contract for installation and replacement of EDB water filters was delayed due to the threatened filing of protests by Continental, and also Global, if either were awarded the contract under bid DOF-ADM-29. It is noteworthy that the Department's subsequent

    Declaration of Emergency was challenged by Global, but has been upheld in Global Water Conditioning v. Department of Agriculture, 521 So.2d 126 (Fla. 1st DCA 1987).

    
    

18. Continental threatened to protest any award to Global under DOF-ADM-29 due to the vagueness of the language used in the addendum to the specifications which had been sought by Global. There is no evidence that Continental was notified and given a point of entry to challenge this addendum, which is, by its very terms, vague and unclear. No evidence was provided to the Department at the time this addendum was considered, and none was offered at hearing, which would support the assertion of Global's Vice President, James Tate, that a Class I plumber's license in North Carolina is the same as a master plumber in Florida, and that a Class I plumber would be able to carry out the work required under the contract in Florida. Although the Department's contract manager John Folks, erred in approving the addendum sought by Global, this did not relieve the Department of its responsibility to review the addendum language when the issue of its vagueness was raised by Continental at the only apparent point of entry which it had to raise this issue, the Department's initial announcement on December 15, 1986, that Global was the lowest qualified bidder. The Department posted its bid tabulation on December 19, 1986, rejecting all bids after its then General Counsel, Robert Chastain, reviewed the addendum and concluded it was vague. There is a reasonable basis for his conclusion from a review of the addendum language, and the evidence in the record.

    
    

19. There is no evidence of fraud, dishonesty, collusion or bad faith on the part of the Department at any time material hereto, and in particular between December 15 and 19, 1986, the time of the initial announcement that Global was the lowest qualified bidder, and the rejection of all bids with the posting of the bid tabulation. The only thing that occurred during this time was that Continental brought its concerns about the vagueness of the addendum to the Department's attention, and the Department determined that those concerns were well founded. Thereafter, the specifications were redrafted to address ambiguities in, and the vagueness of the addendum. In fact, the specifications in the subsequent re-bid, DOF-ADM-41, are clear and correct ambiguities created by the addendum.

    
    

20. Global has failed in this case to meet its burden of proving that the Department acted in an arbitrary or capricious manner, or out of fraud, collusion or bad faith when it rejected all bids in DOF-ADM-29.

RECOMMENDATION

Based on the foregoing, it is recommended that the Department enter a Final Order dismissing Global's protest to the rejection of all bids in DOF-ADM-29.

DONE AND ENTERED this 26th day of July, 1989, in Tallahassee, Leon County, Florida.

DONALD D. CONN

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 26th day of July, 1989.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 89-2642 BID

Rulings on Global's Proposed Findings of Fact:

1. This is not a proposed finding of fact, but a restatement of the issue in this case.

2. Adopted in Finding of Fact 1.

3. Adopted in Finding of Fact 2.

4. Adopted in Finding of Fact 4.

5. Adopted in Finding of Fact 3.

6-7. Adopted in Findings of Fact 4 and 5.

1. Adopted in Finding of Fact 6.

2. Rejected as irrelevant to the issue of whether the Department acted arbitrarily in rejecting all bids due to vagueness of the specifications.

10-16. Adopted in Findings of Fact 7 and 8.

1. Rejected in Findings of Fact 8, 9, and 10.

2. Rejected as cumulative.

3. Adopted in Finding of Fact 13.

4. Adopted in Finding of Fact 11.

21-22. Adopted in Finding of Fact 12.

23-26. Rejected as not based on competent substantial evidence in the record, and as irrelevant.

Rulings on the Department's Proposed Findings of Fact: 1-2. Adopted in Finding of Fact 2.

3-4. Adopted in Finding of Fact 3.

1. Adopted in Finding of Fact 4.

2. Rejected as cumulative.

3. Adopted in. Finding of Fact 5.

4. Adopted in Finding of Fact 6.

9-12. Adopted in Findings of Fact 7 and 8. 13-17. Adopted in Finding of Fact 9.

1. Adopted in Finding of Fact 8.

2. Adopted in Finding of Fact 11.

20-23. Adopted in Findings of Fact 9 and 10.

24-26. Rejected as irrelevant to the issue of whether the Department acted arbitrarily or capriciously in rejecting all bids due to ambiguities in the specifications.

27-28. Adopted in Finding of Fact 12.

29. Rejected as not based on competent substantial evidence, and as irrelevant.

COPIES FURNISHED:

James C. Barth, Esquire

433 North Magnolia Drive Tallahassee, Florida 32308

Honorable Doyle Conner Commissioner of Agriculture The Capitol

Tallahassee, Florida 32399-0810

Mallory E. Horne, General Counsel Clinton H. Coulter, Esquire

Mayo Building, Room 515 Tallahassee, Florida 32399-0800

Docket for Case No: 89-002642BID

Orders for Case No: 89-002642BID