STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
BRASFIELD AND GORRIE )
GENERAL CONTRACTORS, INC., )
)
Petitioner, )
)
vs. ) CASE NO. 89-4400
) DEPARTMENT OF GENERAL SERVICES, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, the above-styled matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Daniel M. Kilbride, on November 30, 1989 in Orlando, Florida. The following appearances were entered:
APPEARANCES
For Petitioner: Leslie King O'Neal, Esquire
Post Office Drawer 1991 Orlando, Florida 32802
For Respondent: Sylvan Strickland, Esquire
2737 Centerview Drive Knight Building, Suite 110
Tallahassee, Florida 32399-0950 STATEMENT OF THE ISSUES
Whether the Insurance Commissioner's Order of December 7, 1988, granting a 28 percent increase in premiums for workers' compensation insurance, is a law or a change in the law.
Whether a substantial increase in the premium for workers' compensation insurance constitutes a change in the Work which entitles the contractor to seek an adjustment in the contract sum from the Department of General Services under the terms of the contract documents.
PRELIMINARY STATEMENT
On June 16, 1989, Petitioner filed a petition for claim seeking additional compensation from Respondent due to an increase in workers' compensation premiums. On July 20, 1989, Respondent filed its Owner's Determination on Contractor's Claim denying the claim. On July 28, 1989, Petitioner disputed the findings and requested a formal hearing under the provisions of Section 120.57(1), Florida Statutes. This matter was referred to the Division of Administrative Hearings and this hearing followed.
At the hearing, Petitioner offered the testimony of two witnesses and presented six exhibits in evidence. Respondent offered the testimony of one witness and eight exhibits. The transcript of the hearing was filed with the Division on December 11, 1989. Petitioner filed its proposed recommended order on December 15, 1989 and Respondent filed its on December 20, 1989. These submittals have been carefully considered in the rendering of this order and have been incorporated where appropriate. Specific rulings on each proposed finding of fact are included in the Appendix attached to this order.
Based upon all of the evidence, the following findings of fact are determined:
FINDINGS OF FACT
In late 1988, the Respondent, Department of General Services (DGS), invited bids on a building construction project entitled "Orange County Regional Service Center Phase II, DGS-86126000" (the Project). The invitation to bid included a project manual, Volumes I and II, which contained instructions to bidders and proposed contract terms and conditions. The project manual is referred to colloquially as "the specifications."
The specifications incorporated by reference A1A Document A201, General Conditions of the Contract for Construction, 1976 Edition.
On October 20, 1988, the State of Florida Department of Insurance issued a notice of public hearing to the National Council on Compensation Insurance at its New York and Florida addresses and all whom it may concern. It gave notice of a public hearing to be held on November 4, 1988, for the purpose of considering a proposal filed by the council on October 17 and placed on file for public inspection on October 20, proposing an overall average increase of
47.7 percent in annual workers' compensation insurance premium rates to take effect January 1, 1989.. On October 28, 1988, there was published in the Florida Administrative Weekly a notice of hearing by the Department of Insurance, which notice advised that the council's proposal called for revised rates effective January 1, 1989, to new and renewal policies.
The public hearing was held on November 4, 1988, and on November 9, 1988, the insurance commissioner rendered an "Order On Rate Filing" which called for the council to file amendments to its original filing no later than 30 days after November 9, 1988. It provided that no rate change would be implemented until the amendments were properly filed and final approval was issued by the Department of Insurance.
Petitioner, Brasfield and Gorrie General Contractor, Inc., a general contracting firm, submitted a bid on the Project. Petitioner signed its bid on November 22, 1988, submitted it the same day, and bids were opened that day. The amount of the contractor's base bid was $23,487,000. Petitioner was notified that it was the low bidder on November 22, 1988. The bid submitted by Petitioner included a bid bond, named in favor of DGS, which would have been forfeited if Petitioner were the low bidder and failed to execute the contract with DGS.
On December 1, 1988, the Council, in response to the November 1, 1988, order, modified its filing of October 17, 1988, and in the modified filing established a premium level increase of 28.8 percent together with certain additional rate modifications to be effective January 1, 1989. On December 7,
1988, the Department of Insurance once rendered an order approving the "filing" made by the Council.
Petitioner was the successful bidder, and the parties executed the building contract on December 21, 1988. On January 18, 1989, DGS issued to the Petitioner a notice to mobilize on site and to proceed with construction which established the date for commencement of construction as January 23, 1989, and the date for completion as of July 25, 1990.
The premium rate increase did not affect the contractor until July 1, 1989, its insurance policy anniversary. The approximate dollar amount of increase in premiums throughout this project was $83,434. The exact amount of the premium increase is to be determined by an audit by the contractor's insurance company after the project is completed.
Petitioner included in the amount of its bid an estimated amount that it expected to pay for Workers' Compensation insurance premiums through the completion of the project. Petitioner knew that the premium rates are established by the National Council on Compensation Insurance.
Petitioner's standard procedure in calculating a bid included obtaining the current rates established by the Council. Petitioner failed to inquire regarding the anticipated increases that would be in effect during most of the time while construction would be in progress.
The bid amount included an anticipated increase in the amount of premiums over the then current rates. In the realm of preparation of an estimate for a 20 million job, the anticipated increase was not a significant figure.
While preparing its bid, the Petitioner knew that payment of Workers' Compensation insurance premiums on a building construction project is the responsibility of the general contractor.
John Mills, the contractor's vice-president and division manager, had overall responsibility for estimating the job. During bid preparation, he knew that a rate increase was pending.
Mr. Mills knew during bid preparation that he could obtain from his insurance agent information on proposed rate increases.
Most of the premiums to be paid on this project are attributable to concrete labor.
Petitioner learned of the December 7, 1988, rate increase approval after it signed the contract on December 21, 1988. The contractor knew that in a competitively bid public contract it is obligated to perform the contract at the bid price in spite of increases in its costs of work.
In calculating the estimated increase in premiums (the amount of its claim), the contractor simply subtracted the estimated amount of premiums that would be charged at the 1988 rate from the estimated amount that would be charged at the new rate. The resulting figure does not give DGS credit for the amount that the contractor included in its bid based on its estimate of three percent rate increase. The amount so included in the bid was approximately three percent of the labor cost for the entire project (estimated at $1,389,518)
rather than three percent of the labor cost (estimated at $891,387) to be incurred after July 1 when the rate increase applied to the contractor.
Section G-1 of the Supplementary General Conditions to the contract provides that:
During the course of the Contractor's performance of the work necessary to complete the subject Project, certain events may occur which have the effect of changing the conditions under which the work is to be performed as specified and described in the Bidding Documents and/or the nature and extent of the work as specified and described in the Bidding Documents. The occurrence of such events may cause the Contractor to incur greater or lesser cost and expense to perform the work required to complete the subject Project than planned to be incurred in the Contractor's successful bid, in which event the Contractor or the Owner shall respectively be entitled to either an increase or decrease in the Contract Sum, whichever is the case, to the extent such greater or lesser cost and expense results . .
DGS drafted the contract and the supplementary general conditions to the contract. Brasfield & Gorrie did not participate in the drafting of the contract or the supplementary general conditions.
Brasfield & Gorrie made a claim for an increase in the contract price pursuant to Article 8.4.3 of the contract as a result of the Workers' Compensation premium base rate increase. DGS denied this claim. Brasfield & Gorrie requested an administrative hearing pursuant to the terms of the contract.
Petitioner has not asked for an increase in the contract price for anything but Workers' Compensation insurance premiums.
Since 1970, the Division of Building Construction has been involved in a large number of building projects that were competitively bid and took two or three years to build. The instant petition is the only claim that has been filed by a contractor on such projects for an increase in contract price based on an increase in Workers' Compensation rates. During that time, the Division never approved a contract-price increase based on an increase in the price of building materials.
The "work" and the cost of the work are two distinct, separate things. There may be a change in the cost of the work without a change in the work. A change in premiums is not a change in the work.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding, and the parties thereto, pursuant to subsection 120.57(1), Florida Statutes.
This is a case of interpretation of a contract. To the extent relevant to the controversy, the contract consists of the provisions of three documents: The project manual, also known as specifications; A1A document A201, General Conditions of the Contract for Construction; and the Construction Agreement. The allegations of the petition limit the scope of disputed contract provisions to (1) paragraph B-3 of the specifications and paragraph 7.1 of the A1A General Conditions, on the issue of whether the insurance commissioner's order approving a premium rate increase constituted a change in the governing law; and (2) Article 12 of the A1A General Conditions, on the issue of whether the rate increase constituted a change in the "work."
The contract provisions put into issue by the petition are paragraph B-3 of the instructions to bidders, on page 9 of the specifications, and paragraph 7.1 of the AIA General Conditions. They are:
B-3 FAMILIARITY WITH LAWS
The Bidder is required to be familiar with all Federal, State and Local laws, ordinances, rules and regulations that in any manner affect the work. Ignorance on the part of the Bidder will in no way relieve him from responsibility.
GOVERNING LAW
The Contract shall be governed by the law of the place where the Project is located.
The specific point is whether the Insurance Commissioner's order of December 7, 1988, is a law or change in the law. The order does not purport to be a law nor to change a law. It merely approves a filing of rates established by the National Council on Compensation Insurance dated October 17, 1988, and modified on December 1, 1988 in response to the order of November 9, 1988. The November 9, 1988 order recites that the Council's filing was pursuant to Section 627.091, Florida Statutes. Subsection (1) of this statute requires every Workers' Compensation insurer to file with the Department of Insurance every manual of classifications, rules and rates, every rating plan, and every modification of any of them which it proposes to use.
Subsection (4) authorizes an insurer to satisfy this obligation by becoming a member of or a subscriber to a licensed rating organization which makes such filings. Subsection (2) indicates that the Department of Insurance's scope of review of such filings is "to determine whether the filing meets the applicable requirements of this part." The Council is a rating organization.
Subsection (3) of Section 627.041 defines "rating organization" to include every person other than an insurer who has as his object or purpose the making of rates, rating plans or rating systems. Section 627.062, Florida Statutes, provides that "insurers or rating organizations shall establish and use rates, rating schedules, or rating manuals to allow the insurer a reasonable rate of return" and requires a copy to be filed with the Department of Insurance.
Section 627.101, Florida Statutes, states in pertinent part:
627.101 When filing becomes effective; workers' compensation and employer's liability insurances
(1) The department shall review filings as to workers' compensation and employer's liability insurances as soon as reasonably possible after they have been made in order to determine whether they meet the applicable requirements of this part. If the department determines that part of a rate filing does not meet the applicable requirements of this part, it may reject so much of the filing as does not meet these requirements, and approve the remainder of the filing.
Subsection (3) thereof provides for "a public hearing to determine whether the filing meets the requirements of this chapter." These statutory provisions, together with the recitals in the November and December orders, show that the rates were established by the Council and that the filing, as distinguished from the rates per se were approved by the Insurance Commissioner. Rates established by a nongovernmental rating organization cannot constitute a law.
The definition of "the work" is in paragraph 1.1.3 of the AIA General Conditions.
1.1.3 THE WORK
The work comprises the completed construction required by the Contract Documents and includes all labor necessary to produce such construction, and all materials and equipment incorporated or to be incorporated in such construction.
Article 12 of the AIA General Conditions is entitled "Changes in the Work" and includes:
CHANGE ORDERS
A Change Order is a written order to the Contractor signed by the Owner and the Architect, issued after execution of the Contract, authorizing a change in the Work or an adjustment in: the Contract Sum or the Contract Time. The Contract Sum and the Contract Time may be changed only by Change Order. . .
The Owner, without invalidating the Contract, may order changes in the Work within the general scope of the Contract consisting of additions,
deletions or other revisions, the Contract sum and the Contract Time being adjusted accordingly. . .
CONCEALED CONDITIONS
Should concealed conditions encountered in the performance of the Work below the surface of the ground or should concealed or unknown conditions in an existing structure be at variance with the conditions indicated by the Contract Documents, or should unknown physical conditions below the surface of the ground or should concealed or unknown conditions in an existing structure of an unusual nature, differing materially from those ordinarily encountered and generally recognized as inherent in work of the character provided for in this Contract, be encountered, the Contract Sum shall be equitably adjusted by Change Order. .
Paragraph 8.4.2 of the main contract, entitled "Delays; Changes In The Work," includes:
In the event of a change in the Work, Contractor's claim for adjustments in contract sum are limited exclusively to its actual costs for such changes plus fixed percentages for overhead, additional profit and bond costs, as specified in Section G.
Paragraph 8.4.2 has reference to Article G-1 entitled "Changes in the Work," of the Supplementary General Conditions in the project specifications, at pages 52 and 53, which includes:
During the course of the Contractor's performance of the work necessary to complete the subject Project, certain events may occur which have the effect of changing the conditions under which the work is to be performed as specified and described in the Bidding Documents, and/or the nature and extent of the work as specified and described in the Bidding Documents. . . .
All adjustments to the Contract Sum resulting from a change in the work shall be determined by the measure of actual, or estimated as the case may be, out-of- pocket costs and expenses incurred or spared by the Contractor for labor, materials, equipment, and equipment rental, plus overhead and profit thereon, for performing the changed work.
. . overhead and profit shall be determined as follows:
Overhead and profit shall be calculated at the rate of 15 percent of the Contractor's labor, material, equipment and equipment rental costs, incurred or spared, as measured under the preceding paragraphs for changes in the work .
4. In addition to the foregoing, all adjustments to the Contract Sum resulting
from a change in the work shall include all out-of-pocket expenses, incurred or spared, in performing the changes in the work for:
Paying the premiums required to obtain Performance Bonds and Labor and Material Payment Bonds called for by the Contract Documents; .
These provisions show clearly that there is a precise distinction between the work and the cost of the work. The work is comprised only of the specified materials and equipment and the labor required to incorporate them into the completed construction, and the completed construction. A change in the work would be a change in either materials or equipment and the labor (man-hours) necessary to perform such change. It necessarily
follows that a change in the cost of materials or equipment or labor cannot be a change in the materials or the equipment or the labor. In order for a change in the work to occur, there must be some change in specifications such as adding a room, deleting a room, specifying a different type of roof, or specifying a different brand of heating and air-conditioning equipment. AIA General Conditions authorize the owner to order changes in materials and equipment within the general scope of the design of the building without consent of the contractor. Paragraph 12.1.2 This paragraph provides that such changes will consist of "additions, deletions or other revisions," and it provides that "All such changes in the Work . . . shall be performed . . . ." A contractor cannot "perform" an increase in insurance premium rates. The contract obviously prohibits claims by the contractor based on increases in the costs of material, equipment and labor as distinguished from additions to the materials, equipment and labor. If the owner orders a deletion that decreases the cost of the work, the owner is entitled to a decrease in the contract price. If there had been a decrease in the amount of Workers' Compensation premiums, the owner certainly would not be entitled to a decrease in the contract price.
Under Article G-1, there may not be an increase in the contract price for a change in the work unless the change in the work is something that the contractor will "perform" and involves additional materials, equipment or equipment rental and additional labor involved in the performance thereof; in such an event, paragraph (1) on page 53 (within G-1) authorizes insurance premiums to be paid only as a part of an increase in the contract price occasioned by "job site cost for . . . Laborer's wages ." The expression of a circumstance under which an increase in the amount of insurance premiums may be reimbursed by the owner is an exclusion of the owner's obligation to pay same under all other circumstances. In other words, if there is no increase in the man-hours of labor caused by a change order, the owner is not required to pay Workers' Compensation premiums. This illustrates one of the decisive points in this case: the work and the cost of the work are mutually exclusive; the owner
is required to pay for changes in the cost of the work as originally specified and bid upon.
With reference to the provision in Article G-1 on events which change the conditions under which the work is to be performed, the only definition of "conditions" in the contract documents is quoted above from paragraph 12.2 of the AIA General Conditions. It pertains only to physical conditions at the job site. The clause in G-1 pertains to the performance of the work; since insurance rates are not something that a contractor can "perform," G-1 has no reference to an increase in rates. "Conditions" may have reference to matters such as unexpectedly severe weather at the job site or an unexpected subsoil cavity.
As to the 15 percent fee claimed in the petition and in Exhibit 6, this is covered by Article G-1. Paragraph(3) (a) limits the 15 percent to instances of overhead and profit when the contractor has "performed" an addition to the work. This paragraph applies the percentage to the additional costs incurred for changes in material, equipment, equipment rental and the additional labor (man-hours) required to perform such change from the original specifications. In other words, without additional man-hours, there is no additional "labor"; additional insurance premiums are not additional labor.
The testimony of Petitioner's vice-president division manager and its project manager, demonstrate that the request for a contract price increase is tantamount to a request for permission to increase the amount of its bid after bid opening, which is prohibited. The integrity of the public bidding process is more important than the disadvantage to a particular bidder on a specific contract when the amount of the bid is less than the bidder on reflection after bid opening desires it to be, in the absence of misconduct on the part of the public agency that invited bids. The purposes of competitive bidding on public contracts include securing the best values at the lowest possible expense to the public and affording an equal advantage to all who desire to do business with the public agencies by providing an opportunity for an exact comparison of bids. See 43 Fla. Jur. 2d Public Works and Contracts, Section 13. The test for measuring whether a deviation in a bid is sufficiently material to destroy its competitive character is whether the variation affects the amount of the bid by giving the bidder an advantage or benefit not enjoyed by the other bidders. Harry Pepper & Associates, Inc. v. City of Cape Coral, 352 So.2d 1190, 1193 (Fla. 2nd DCA 1987). Awarding a price increase to the contractor in the instant case is the equivalent of accepting the amendment of one bid among several bids after bid opening without giving the other bidders the same opportunity. The record does not show whether the requested price increase would, in effect, make this contractor the second or third low bidder. Of the contractor's choices to forfeit its bid bond or perform the contract at its bid price in spite of the rate increase, performance of the contract is by far the more advantageous to the contractor because bid bond forfeiture would cost the contractor approximately two million dollars. Having chosen to perform and having completed a substantial percentage of the work, the contractor has made an irrevocable election and must "live with" it.
It necessarily follows that the contract documents prohibit the requested price increase and that consideration of the oral testimony is not necessary to a decision dismissing the petition. Nevertheless, the testimony shows that the contractor is not entitled to the increase in this particular instance because of the circumstances surrounding the calculation of the bid even if the contract provisions do not clearly show absence of DGS liability. If the rate increase had occurred before the bid was figured and if the
contractor had known the exact amount of rate increase, the submission of the bid in any amount of the contractor's choice would have been a waiver of any claim that the contractor might have had. The surrounding circumstances are equivalent to such knowledge. The National Council on behalf of the insurers established rates and sought the insurance commissioner's approval not of rates per se but of the fact that the filing met the requirements of Chapter 627. Public notice of a public hearing was published 25 days before the bid was signed. The filing was open to public view. The insurers presumably had actual knowledge of the proposed rates. The contractor knew that rates are established by the Council, and its standard procedure in calculating bids included obtaining the rates established by the Council but it failed to inquire this time. The chief estimator knew that a rate increase could be implemented at any time and knew that he could obtain such information from his insurance agent. He testified that he thinks that he and others preparing the bid knew that rate increase discussions were in progress. He testified that for the latter reason they did their best to estimate what the new premiums would be, but estimated the increase on the rate increases that had been made in recent years instead of the actual currently proposed increase. They included in the bid at least a 3 percent increase over current rates. He testified that a 3 percent increase is not significant in a 20 million dollar bid. He further testified that he knew that payment of Workers' Compensation premiums is the contractor's responsibility but that they might not have made their bid any higher even if they had known that the proposed increase was 28 percent. He knew that most of the Workers' Compensation premiums included in the bid were for concrete price increase when the unit price of concrete is drastically and unexpectedly increased. He knew that in a competitively bid public contract situation the contractor is obligated to perform the contract at the bid price in spite of increases in its costs of the work, but during the hearing the contractor made no attempt to show a distinction in principle between a concrete price increase and a Workers' Compensation premium increase. Both are changes in the cost of the work rather than changes in the work.
The contractor's purposes in deciding the amount of its bid were to be the low bidder and to make a profit. A bidder can choose to make a larger or smaller margin of profit from bid to bid. During bid preparation the contractor knew that it must take business risks on its costs and that it is not any more entitled to a price increase for a premium rate increase than it is for a price increase of materials.
Workers' compensation insurance premiums are not a part of the "Work" as defined by the contract. They are a part of the cost of the "Work." This distinction is decisive in this case. The contract authorized a price increase based on Workers' Compensation premiums only if the increased premiums were part of an increase in the contract price caused by an increased amount of labor to be performed because of a change in the work ordered by the owner, but not because of a rate increase.
A change in premium rates is not a change in the conditions under which the work is to be performed, within the meaning of the contract. Section G-1 of the Supplementary General Conditions.
Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that Petition for claim filed by Petitioner be DENIED.
DONE AND ENTERED this 18th day of January, 1990, in Tallahassee, Leon County, Florida.
DANIEL M. KILBRIDE
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 18th day of January, 1990.
COPIES FURNISHED:
Susan B. Kirkland, Esquire General Counsel
Sylvan Strickland, Esquire Staff Attorney
Department of General Services Koger Executive Center
2737 Centerview Drive Knight Building, Suite 110 Tallahassee, FL 32399-0950
Leslie King O'Neal, Esquire Markel, McDonough and O'Neal Post Office Drawer 1991 Orlando, FL 32802
Ronald W. Thomas Executive Director
Department of General Services
Knight Building, Koger Executive Center 2737 Centerview Drive
Tallahassee, FL 32399-0950
APPENDIX
The following constitute my specific rulings, in accordance with section 120.59, Florida Statutes, on findings of fact submitted by the parties.
Findings of Fact submitted by Petitioner:
Accepted in substance, except that the estimated increase in the insurance premium is determined to be $83,434.
Findings of Fact submitted by Respondent: Accepted in substance.
=================================================================
AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA DEPARTMENT OF GENERAL SERVICES
BRASFIELD & GORRIE GENERAL CONTRACTOR, INC.,
Petitioner,
vs. CASE NO. 89-4400
DEPARTMENT OF GENERAL SERVICES,
Respondent.
/
FINAL ORDER
Pursuant to notice, the Recommended Order of the Hearing Officer, Petitioner's Exceptions to the Recommended Order and the Respondent's Response to Petitioner's Exceptions came before the Governor and Cabinet, sitting as the Agency Head of the Department of General Services, on March 29, 1990.
Exception #1 objects to the second sentence in finding of fact number 9: "Petitioner knew that the premium rates are established by the National Council on Compensation Insurance." Petitioner asserts that premium rates are determined by the Florida Department of Insurance. If this finding of fact is in error, it is harmless error because the decision would have been the same if the finding of fact had been different. It is based on oral testimony. The Hearing Officer's conclusion of law 2 on page 8 includes:
2. This is a case of interpretation of a contract....
Conclusion of law 13 on page 17 includes:
13. It necessarily follows that the contract documents prohibit the requested price increase and that consideration of the oral testimony is not necessary to a decision dismissing the petition. .
Furthermore, even if the finding of fact in question is incorrect, it is of inconsequential weight in comparison to the findings of fact as a whole.
Exception 1 comes under the issue of whether the Department of Insurance's order approving a workers' compensation insurance premium rate increase was a law or a change in the law. Regardless of whether the rate increase was established by the National Council on Compensation Insurance or by
order of the Department of Insurance, an administrative order of the Department of Insurance does not constitute a law or a change in the law.
Exception 1 addresses the provision in the contract documents that the contract shall be governed by the law of the place where the project is located. However, this clause simply means that in case of a dispute between owner and contractor, the laws that will govern the dispute are those of the State of Florida rather than those of the state where the contractor has its principal place of business or the state where it was organized.
The claim is based on a change in the contractor's cost of the work rather than a change in the work. The work and the cost of the work are mutually exclusive; the owner is required to pay for changes in the work based on a change in the plans and specifications, but the contractor is required to pay for changes in the cost of the work that are not caused by changes in the work. An increase in the workers' compensation insurance premium rates occasions a change in the contractor's cost of the work and is not based on a change in the plans and specifications. A request for contract price increase because of an insurance premium rate increase is tantamount to a request for permission to increase the amount of the bid after bid opening, which is prohibited.
The contract authorized a price increase based on workers' compensation insurance premiums only if the increased premiums were part of an increase in the contract price caused by an increased amount of labor to be performed because of a change in the work and not caused by a rate increase. Exception 1 is not well taken.
The second sentence in finding of fact 10 on page 5 of the recommended order is: "Petitioner failed to inquire regarding the anticipated increases that would be in effect during most of the time while construction would be in progress." Exception 2 asserts that this finding is contrary to other facts found by the hearing officer that occurred after the opening of bids. Exception
2 is not responsive to finding of fact 10. This finding concerns "anticipated increases" rather than the actual increase that was approved after the opening of the bids. Finding of fact 10 means that, although Petitioner's standard procedure in calculating a bid included obtaining the current rates established by the Council, Petitioner failed, in this instance during bid preparation, to inquire regarding the increases that were under consideration based on the filing made October 17, 1988, by the National Council, approximately five weeks before the bid was submitted. If Petitioner had so inquired while calculating its bid, it would have obtained the information that an unusually high rate of increase had been proposed in the October 17 filing. In this context "anticipated increase" and "proposed increase" are practically identical. Exception 2 is not well taken.
Exception 3 objects to the failure of the recommended order to include Petitioner's proposed conclusion of law that the rate increase changed the conditions under which the work was to be performed and caused the contractor to incur greater cost for the work required to complete the project. The recommended order properly reached the opposite conclusion of law based on provisions of the contract documents. The only definition of "conditions" in the contract documents is that contained in paragraph 12.2 of AIA Document A201, General Conditions of the Contract for Construction, 1976 Edition. That provision pertains only to physical conditions at the job site such as unexpectedly severe weather or an unexpected subsoil cavity. Accordingly, exception 3 is not well taken because a premium rate increase is not a change in physical conditions at the job site.
It is ordered by the Department of General Services:
The hearing officer's findings of fact and conclusions of law are adopted.
The exceptions are denied.
Brasfield & Gorrie General Contractor, Inc.`s petition for an increase in the contract price on state building project no. DGS-86126000, Orange County Regional Service Center, Hurston Building, Phase II, Orlando, is denied.
Dated this 2nd day of April, 1990.
Ronald W. Thomas Executive Director
Department of General Services Suite 307, Knight Building 2737 Centerview Drive
Tallahassee, Fl 32399-0950
(904) 488-2786
NOTICE OF RIGHT TO APPEAL
A party who is adversely affected by this final agency action is entitled to judicial review which shall be instituted by filing one copy of the notice of appeal with the agency clerk of the Department of General Services, and a second copy, along with the filing fee as prescribed by law, with the District Court of Appeal in the appellate district where the agency maintains its headquarters or where a party resides. The review proceedings shall be conducted in accordance with the Florida Appellate Rules. The notice of appeal must be filed within 30 days of rendition of this order.
Copies furnished to:
Leslie King O'Neal, Esquire Sylvan Strickland, Esquire
| Issue Date | Proceedings |
|---|---|
| Jan. 18, 1990 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Apr. 02, 1990 | Agency Final Order | |
| Jan. 18, 1990 | Recommended Order | Workers' compensation insurance premiums not part of "work"; change in premiums not change in conditions and cannot seek price increase for contract. |
