STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
GRAY CONTRACTING, INC., )
)
Petitioner, )
)
vs. ) CASE NO. 91-0257
) DEPARTMENT OF NATURAL RESOURCES, )
)
Respondent. )
)
RECOMMENDED ORDER
The final hearing in the above-styled matter was heard pursuant to notice by Stephen F. Dean, assigned Hearing Officer of the Division of Administrative Hearings, on July 9 and 10, 1991, in Tallahassee, Florida. On July 25, 1991, the parties agreed to file their proposed findings of fact on August 2, 1991. The parties filed their proposed findings of fact in accordance with their agreement.
APPEARANCES
For Petitioner: Michael F. Coppins, Esq.
DOUGLASS, COOPER, ET AL.
211 East Call Street
P.O. Box 1674
Tallahassee, Florida 32302-1674
For Respondent: Lynne Chapman, Esq.
Kelly Brewton, Esq.
Department of Natural Resources 3900 Commonwealth Boulevard
MS-35, Douglas Building Tallahassee, Florida 32399-2400
STATEMENT OF THE ISSUES
Whether the Respondent is entitled to a credit for unit price work which was not performed under the contract.
Whether the contractor is entitled to additional payment for the electrical work on the outside stairwells and interior modifications.
Whether the contractor is entitled to additional payment for installing the 3-inch drain for the HVAC discharge.
Whether the Respondent is entitled to access $3,750.00 in liquidated damages against the contractor for completing the project ten (10) days beyond the scheduled completion date.
PRELIMINARY STATEMENT
The Petitioner presented the testimony of Jerry Hicks and Marvin Gray. The Respondent presented the testimony of Larry Cliett, Frederick Hand, and Thomas Miller. The Respondent filed a composite supplemental exhibit in accordance with the Hearing Officer's instructions. The Petitioner filed no objection to this exhibit, and it is received and made a part of the record. Both parties submitted proposed findings of fact and conclusions of law, which were read and considered. The Appendix to this Recommended Order states which findings were adopted and which were rejected and why.
FINDINGS OF FACT JURISDICTION
In 1989, the Respondent issued an Invitation to Bid for Project Nos. NR-8710 5360 and NR-8710 5370 for water system improvements and fire code corrections at Edward Ball Wakulla Springs State Park.
The Invitation to Bid contains the following provision:
Under the term of this Agreement, the CONTRACTOR shall not have any right to compensation other than, or in addition to, that provided by this Agreement to satisfy any claim for costs, liabil- ities or debts of any kind whatever resulting from any act or omission attributable to the OWNER unless the CONTRACTOR has provided notice as required by Article 8 or 12 of the AIA docu- ment A-201 and unless the claim therefore is delivered to the OWNER.
* * *
Within thirty (30) days from the date any such claim is received, the OWNER shall deliver to the CONTRACTOR its written determination on the claim. Unless the OWNER's determination is agreed to by the CONTRACTOR and a consent order adopting the determination is entered within thirty (30) days of receipt of the OWNER's determination, the Executive Director of the Department of Natural Resources shall designate a hearing officer who shall conduct a proceeding in accordance with Chapter 13-4, Florida Adminis- trative Code.
CONCLUSION OF LAW ON JURISDICTION
The Division of Administrative Hearings has jurisdiction over the proceedings by virtue of the referral of the matter to the Division, and subsequent designation of the Hearing Officer pursuant to the aforestated provisions of the bid and subsequent contract.
FINDINGS OF FACT ON UNIT PRICES
The Invitation to Bid contained a copy of the bid form to be used in submitting a bid. In summary, the bid form states that the contractor will
perform the work outlined in the invitation to bid under the conditions outlined in the invitation to bid if awarded the bid for,
". . . the following bid price Base Bid
(Dollars) $
With foregoing as a Base Bid, the following cost of alternate proposals are submitted in accordance with the bidding documents.
Additive Alternate No. 1:
Electric Code and Life Safety Code Corrections
ADD $
Additive Alternate No. 2:
Rework the chiller system pipes and the pumphouse equipment as indicated:
ADD $ Additive Alternate No. 3:
Install wood trim to fire sprinkler line in
public areas
ADD $ Additive Alternate No. 4:
Rework exterior walks and ramps to meet handicap access code
ADD $
If more or less work is required than that qualified by the specifications and drawings, the following unit prices shall be applicable:
Unit price schedule (refer to specification Section 01206 - Unit Prices).
Reinstallation of Marble $ /sq.ft.
Replacement of Marble $ /sq.ft.
Construction of masonry partitions $ /sq.ft.
Install lath and plaster $ /sq.ft.
Plaster over masonry $ /sq.ft.
Painting $ /sq.ft.
The Petitioner determined through contact with the asbestos removal contractor, whose work proceeded the work which was the subject of the invitation to bid, that the marble would not be disturbed. The Petitioner also determined that replacement and installation of the marble was the most expensive part of the unit price work.
Section 01026 of the bid specifications, which states, in pertinent part, as follows, was completed by the Petitioner inserting the dollar amounts as indicated in bold print:
A unit price is an amount proposed by Bidders and stated on the Bid Form as a price per unit of measurement for materials or services that will be added to or deducted from the Contract Sum by Change Order if estimated quantities of Work required by the Contract Documents are increased or decreased.
* * *
Refer to individual Sections for construction activities requiring establishment of unit prices. Methods of measurement and payment for unit prices are specified in those Sections.
* * *
Schedule: A "Unit Price Schedule" is included below. Sections referenced in the schedule contain requirements for materials and methods described under each unit price.
* * * UNIT PRICE SCHEDULE
Reinstallation of marble removed during asbestos abatement which was not
part of this contract. $24.00/sq.ft.
Replacement of marble removed and damaged during asbestos abatement which was not part of
this contract. $59.95/sq.ft.
Construction of 4" masonry partitions demolished during asbestos abatement which was
not part of this contract. $ 3.27/sq.ft.
Installation of lath and plaster to patch and repair ceilings damaged or where holes remain due to asbestos abatement which was not part
of this contract. $15.26/sq.ft.
Plaster over masonry demolished during asbestos abatement which was not part
of this construction. $15.26/sq.ft.
Painting ceiling and/or
wall surface where patch and repairs were required due to the asbestos abatement contract. Entire surface
plane shall be painted. $ .35/sq.ft.
* * *
The contractor shall provide in his base bid the following work related to unit prices and the separate asbestos abatement contract. A change order will be issued to credit the owner with the difference in cost or charge the owner the additional unit price quantity cost. (Original emphasis shown.)
Reinstallation of 350 S.F. of marble removed during asbestos abatement contract.
Replacement of 350 S.F. of marble and substrate removed during asbestos abatement contract.
Replacement of 300 S.F. of lathe and plaster to patch and repair ceilings demolished during asbestos abatement contract.
Replacement of 350 S.F. of masonry partitions and 350 S.F. of plaster over masonry for patch and repair due to demolition during asbestos abatement contract.
Include 4,500 S.F. painting of entire surface plane of areas where patch and repair due to asbestos abatement is required.
The Petitioner completed the bid forms. See Supplemental Exhibit A. Petitioner filled in the unit prices, but excluded the prices for the unit price work from the "base bid."
It is upon the language, "The contractor shall provide in his base bid the following work related to unit prices and the separate asbestos abatement contract," that the agency asserts that the bidder should have included in his base bid quantities of work related to unit pricing.
The base bids submitted by the contractors were as follows:
Gray Contraction, Inc. $323,916.00
Bass Construction Company, Inc.: $430,660.00
W.B. Carlile Construction: $445,000.00
Council Contracting, Inc.: $447,968.00
Allstate Construction Corporation: $478,250.00
Pro-Steel Building, Inc.: $498,803.00
The total bid, including all additive alternates, submitted by the contractors was as follows:
A. Gray Contracting, Inc. | $442,992.00 | |
B. W.B. Carlile Construction: | $560,200.00 | |
C. Bass Construction Company, | Inc.: | $579,210.00 |
D. Council Contracting, Inc.: | $582,427.00 |
Allstate Construction Corporation: $642,485.00
Pro-Steel Building, Inc.: $647,700.00
On November 22, 1989, the Petitioner submitted a bid for the project. The Petitioner's bid form contained the following entries regarding unit prices reproduced in bold print in paragraph 5 above.
On November 22, 1989, the bids were opened and tabulated by the Respondent. The Petitioner was the apparent low bidder.
The Petitioner was contacted by representatives of the agency, and asked if he had made an error based upon his figures and wanted to withdraw his bid. The Petitioner checked his figures, and found that the calculations were correct. The Petitioner thought that his low bid was the result of his accurate assessment of the work which would not have to be done.
With the bid form used by the agency, the agency could not determine what work the contractors subsumed in the base bid.
On November 27, 1989, the Petitioner's bid was recommended and accepted by the Respondent. On December 13, 1989, Contract Number C-6264 was executed between the Petitioner and the Respondent.
Requiring bidders to bid on work which the owner is uncertain will have to be done also is unusual. Such a process requires the contractor to include work in his bid amount which he does not expect to have to do. As a result, the bid of the contractor who correctly assesses which portions of the bid will not have to be done will not differ from the competing contractor who concludes erroneously all the work must be done, or the contractor who does the work notwithstanding it was not needed. Such a bid process does not enhance the competitive bidding process or benefit the public.
Generally, additions and deletions to a contract are handled through change orders. If work does not have to be done, the Owner puts in a change order. If additional work is required, the Contractor puts in a change order. Contract conditions setting forth unit prices for such changes are not unusual, and provisions for making change orders are covered in the specifications here.
The manner in which the Petitioner responded to the invitation to bid excluded from the base bid the unit price values for the work that he did not think would have to be done. The Petitioner did not think that the terms of the invitation to bid required him to include the amounts for the work which did not have to be done in his base bid. Such work is customarily and effectively addressed through changes and additions to the contract. The Petitioner thought that the changes and additions for the unit price work were to be handled under
the provisions for such changes to unit price work contained in the invitation to bid.
The Agency seeks to reduce the Petitioner's contract price by the value of the unit price work which DNR asserts was to be included in the base bid.
In completing the contract, the Petitioner performed the following work listed in Section 01026 of the Bid Requirements:
Installation of 300 S.F. of lathe and plaster: The Petitioner performed 490 square feet of this work at a unit price of
$15.26/square foot for a total of $7,477.00. DNR asserts that $4,578.00 of this amount was to be included in the base contract price.
Painting 4,500 S.F.: The Petitioner performed 7,500 square feet of this work at a unit price of $.35/square foot for a total of
$2,625.00. DNR asserts that $1,575.00 of this amount was to be included in the base contract price.
The Petitioner did not perform the following work listed in Section 01206 of the Bid Requirements and the agency asserts it is entitled to recoup the amount of money indicated:
Reinstallation of 350 S.F. of marble at a unit price of $24/square foot for a total of $8,400.00.
Replacement of 350 S.F. of marble and substrata at a unit price of $59/square foot for a total of $20,982.50.
Construction 350 S.F. of masonry partitions at a unit price of $3.27/square foot for a total of $1,144.50.
Replaster 350 S.F. of masonry at a unit price of $15.26/square foot for a total of
$5,341.00.
The total dollar amount for the unit price work which is in controversy is stipulated to be $33,444.60.
The format of the bid form did not break out unit price allowances as part of the base bid. (T.48, 176, Joint Exhibit 3) There absolutely was no clear way to exclude the work which the contractor felt would not have to be done from the bid and have it included in the agreement sum except use of the change process under Article 8.
The manner in which the Petitioner presented his bid was consistent with handling the unit price work through change orders. It presented his proposal clearly, and the DNR could compute additional work based on unit prices provided.
Neither the agency's representatives nor its architect were aware initially that the Petitioner had not included the unit price work in the agreement sum. Gray was not aware that they assumed that the unit price work was included in the agreement sum.
It is the policy of the Respondent's purchasing section to reject a bid that does not include all of the work contained in the bid specifications. (T.51) If the Respondent had discovered before the bids were opened that the unit price allowances were not included in the Petitioner's bid, the bid would have been rejected as nonconforming. (T.51,60) The Respondent could not tell the unit price work was not included in the base bid for the same reason the Petitioner could not tell it was supposed to be included; i.e., the contract does not clearly state prices are to be included and the bid form does not break out the unit price work within the base bid.
Mr. Gray read the bid documents and specifications before submitting his bid. Mr. Gray's signed bid document stated that he had read and understood all of the plans and specifications and knew what the job entailed. (T.268, Joint Exhibit 3) Based upon what he read, Mr. Gray did not think that Section 01026 required the unit price allowances to be included in the base bid. (T.266) Mr. Gray did not realize that DNR interpreted the language to require including the unit price allowances in the base bid until near the end of the project. (T.184)
The Petitioner thought that the project was a "turn key" project. (T.267) A "turn key" project is a project where the contractor is given a set of plans and he gives one price for the complete project. (T.118) DNR did not interpret the Wakulla Springs project to be a "turn key" project. (T.118)
The Petitioner submitted a change order for this and the other claims which are the subject of this case.
CONCLUSION OF LAW ON UNIT PRICES
A bidder may inquire and challenge bid specifications for a specified period after they are posted. If a bidder fails to challenge the bid specifications within that time, the bid process moves forward and the bidders may not later challenge the bid specifications.
One of the bid specifications provided, "The contractor shall provide in his base bid the following work related to unit prices and the separate asbestos abatement contract." (Emphasis supplied.) The agency asserts this provision required the bidder to include in his base bid quantities of work related to unit prices, and that if the contractor did not do the quantities of work so included, the agency must deduct the value of that work from the base bid.
The contractor argues that it had the lowest bid, that it did the work, did it cheaper than any of the other bidders, made provision for handling the unit price work in Section 01026 in accordance with the bid specifications by making change orders, and should not be penalized because it did not include the value of this work in the base bid. The agency argues that it cannot let the contractor avoid the consequences of its "mistake" to the disadvantage of the taxpayers. Both parties cite cases in support of their respective positions.
This matter turns on the language of the bid specifications. The bid specifications state that the bidder will "provide in his base bid the following work related to unit prices and the separate asbestos abatement contract." (Emphasis supplied) Interpretation of the requirement turns upon the meaning of "provide."
"Provide" is defined by Webster's New Collegiate Dictionary, 1975 Edition, as follows:
Verb intransitive 1: to take precautionary measures, 2: to make a proviso or stipulation, 3: to supply what is needed for sustenance of support. Verb transitive 1:
archaic: to procure in advance: prepare, 2a:
to fit out, b: to supply for use, 3: to have as a condition; stipulate.
DNR interprets the language "will provide" to mean the contractor must include the work in the base bid. The term "include," according to Webster's New Collegiate Dictionary, means "to take in or comprise as a part of a larger aggregate." None of the meanings of "provide" relate to the meanings of "include." The two words share no common synonyms.
The best interpretation of the word "provide" in the context of the bid specifications requires that the contractor "make proviso for" or speak to the matter of the work related to unit prices in his base bid.
The bid form, as noted above, did not break out the unit price work. Following the provision of Section 01026 upon which DNR bases its claim, Section 01026 also states, "A change order will be issued to credit the owner with the difference in cost or charge the owner the additional unit price quantity cost." The last portion of Section 01026 provides blanks for the insertion of unit price costs. The specifications appear to permit one to make "provision" for the unit value work without including it in the base bid by excluding it from the base bid and addressing the unit value work in change orders utilizing the alternative method contained in Section 01026 and Section G.
Changes in the work are specifically addressed in Section G, Page 50, DNR Exhibit 1. Section G provides in pertinent part:
During the course of the CONTRACTOR'S performance of the work. . . 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. . . [.] . . . [I]n such event the CONTRACTOR or the OWNER shall respectively be entitled to either an increase or decrease in the Agreement Sum . .
. (upon). . . written demand therefor on the other party through the Consultant.
The Petitioner testified that he started with the base bid and added alternate costs plus changes to establish the Agreement Sum. This interpretation is not strained and is consistent with the custom in the trade. DNR could easily compute its maximum potential liability based upon the unit price costs provided by Petitioner and DNR's estimate of the work to be done.
The method used by Gray clearly presented his bid for work which he intended to perform; it prevented DNR having to assay work not done and submit a change order "deleting" the work; and permitted him to present a change order for that work which he had to do at the stated unit price.
The language of the specifications does not clearly state that the listed work was to be included in the base bid, and the interpretation urged by DNR is contrary to custom. However, the terms of the invitation to bid are not "unclear" to the extent that the bidders would have questioned the unit value provisions.
The agency seeks to avoid ambiguity of its contract by placing all the burden for interpretation, ambiguity, etc. on the bidders. See Section B-9, Interpretation of Bidding Documents. By placing its own interpretation on this ambiguous provision of the specifications, the agency seeks to avoid paying over
$30,000.00 for services which it does not deny it received. The language of the specifications and subsequent contract was prepared by the agency, and it cannot hide behind those ambiguities at significant costs to the bidder who applied a reasonable interpretation to the terms which is consistent with the custom in the trade. If the terms were ambiguous, the State cannot place its interpretation upon the language to the exclusion of the more reasonable interpretation of the provision.
In summary, by filling in the unit prices, the contractor "made proviso for" the work in the "base bid" by excluding it from the base bid and dealing with it subsequently in change orders to the contract. This is provided for in Section G and Section 01026, and is customary in the trade. By providing for these items this way, the Contractor was able to avoid the problem, pointed out above, of including work which he did not anticipate doing in the bid price. He was able to state accurately the amount of money which the state would have to pay to obtain the work it desired to have done. This is the purpose of the bidding process. The Petitioner did what he said he would do in the manner in which he bid it and was still the low bidder. The Petitioner should be compensated for the unit price work.
FINDINGS OF FACT ON STAIRWELL AMENDMENT
After the bid was awarded to the Petitioner, the Department of General Services required that additional renovations be made to Wakulla Springs Lodge to comply with existing fire codes. The additional work included construction of outside stairwells and some inside door modifications. (T.97)
The Respondent requested that the architect prepare plans and requested a proposal from the Petitioner. (T.97)
The proposal from the Petitioner was to be based upon drawings provided by DNR, and to be a lump sum increase to the Agreement Sum including all things necessary to build the structure as presented in the plans. (T.81,97,200-201) Plaintiff Exhibits 10 and 11 indicate that plans not detailed enough for construction were provided the Petitioner on January 18, 1889 and February 5, 1990.
The Petitioner submitted a preliminary proposal to the architect on February 5, 1990 based upon the preliminary drawings and updated the proposal on a later date. (T.203-204, Joint Exhibit 12 and 13)
On February 7, 1990, at a construction meeting, the architects hand delivered a set of substantially-completed plans for the stairwells to the Petitioner and the Respondent's representative. (T.98-99, Respondent's Exhibit 3)
On February 14, 1990, the original contract was amended by the parties to include additional fire code work. See Joint Exhibit 4, Agreement Amendment Form dated February 14, 1990. The revised contract price was $574,959.00, and the revised completion time was 113 days.
This contract amendment states regarding the work to be done:
1. Scope of the work is to be expanded to include 3 exterior staircases as shown in Attachment 1 (drawing C.O.1) and all interior doors are changed to fire-rated doors plus 3 exterior doors. Doors are shown on construction drawings N. A-1 & A-2.
At the signing of the contract amendment, Mr. Gray was told that the Respondent wanted to be sure that this was his lump sum figure before he signed the amendment. (T.97,127) Mr. Gray indicated that his price was fixed except for the electrical portion which was still an estimate.
The cost of the electrical work was estimable from the plans or drawings which were included by reference in the contract amendment. (T.90,127,157) There is conflicting testimony whether the Petitioner had the drawings prior to February 14, 1990.
After the contract amendment was signed, Mr. Gray initiated a Change Order to compensate him $9,498.30 for the electrical work on the stairwells, but the Respondent and the consultant considered the cost of the electrical work to be included in the contract amendment and denied the Change Order. (T.101,200- 201, Petitioner's Exhibit 14)
CONCLUSIONS OF LAW ON STAIRWELL AMENDMENT
The contract refers to and includes the work described in the C.O.1 drawings within the scope of work to be done. Those drawing show the electrical work. Although there is conflicting evidence whether the drawing was available and the Petitioner signed the contract to accommodate the agency, the drawing (C.O.1) includes the electrical work, and, therefore, the electrical work is included within the Agreement Sum. The written terms must prevail over the parole evidence. The Petitioner may only submit a change to items not included within the Agreement Sum. The Petitioner may not submit a change order to cover work on the contract subsumed in the amendment's scope of work and Agreement Sum. The change order for the electrical work was properly denied.
FINDINGS OF FACT ON THE HVAC DRAIN
During an inspection to determine if the project was complete, the Petitioner was given verbal approval by the consultant and owner to install a 3- inch drain for the HVAC discharge. (T.161) This was not included in the plans as amended at the time, and installation of the drain was necessary to prevent flooding of the HVAC room.
The Petitioner installed the 3-inch drain pipe, which took several days to complete. (T.29,161) Subsequently, the Petitioner sent a proposal for a change order to the architect for the HVAC drain in the amount of $932.22. (Joint Exhibit 19) To this amount, the Petitioner was entitled to add administrative costs. The parties stipulate that the amount in controversy is
$1,014.85. This proposal did not address an extension of time for completion of the project.
The Petitioner's requested change order became subsumed in the discussions and negotiations over the other change orders discussed above.
During these negotiations, Mr. Gray verbally told the architect that he was relinquishing his claim for additional compensation for the HVAC, and the architect sent a letter dated October 5, 1990 confirming that the Petitioner was abandoning his claim for the HVAC. (T.168,187, Joint Exhibit 20) This offer was made within the context of settling the other change orders and claims, and was contingent upon satisfactory settlement of the other claims.
The other claims were not settled.
CONCLUSIONS OF LAW ON THE HVAC CLAIM
The Respondent denies payment for this modification, which it clearly approved, because it asserts that the Petitioner abandoned the claim. Clearly, the Respondent's offer to "abandon" the claim was predicated upon resolution of the other claims which were pending. The Respondent did not resolve any of these claims notwithstanding the recommendations of its architect, who was consultant on the project. The claim was not abandoned, the proposal is still pending, and the Respondent should pay the claim.
FINDING OF FACT ON CLAIMS FOR DELAY
Section E-4 of the Bid Specifications, DNR Exhibit 1, provides that:
The Contractor (Petitioner) shall prepare and submit to the Consultant (the architect) a construction schedule within 10 days after the Notice to Proceed.
At 10-day intervals, the consultant shall determine whether . . . the progress of the work complies with the contractor's schedule.
. . . . Following development and submittal of the construction schedule, the contractor shall update or revise the construction schedule to show the events which have affected the progress of performance of the work already performed or will affect the progress of performance of the work yet to be performed in contrast with the planned progress of performance of such work depicted on the original construction schedule and all updates or revisions thereto as reflected in the updated or revised construction schedule last submitted prior to submittal of each such monthly update and revision.
Should events occur during performance of the work necessary to complete the subject project which would justify granting to the Contractor an extension of the Agreement period, the contractor shall be entitled to received only such extension as determined by the Consultant to be due the Contractor as follows . . . the time between the original ending completion date and the new ending date of the agreement . . . determined by the consultant as the portion of delay time directly affecting the critical path of the currently approved construction schedule.
Section 3.2 of the Bid Specifications, DNR Exhibit 1, provides for liquidated damages of $500.00/day if the project is not substantially completed, as substantially completed is defined by Article 8.2, or within such further time, if any, which the contract shall allow for substantial completion. The liquidated damages for failure to finally complete the project would be assessed at $250.00 per day. (Joint Exhibit 4)
Substantial completion is defined by Section B-1 as sufficiently complete so that the owner can occupy or utilize the work or portions thereof for the use intended; but not inclusion of minor alterations and patching as final inspection shall disclose. Final completion is when all deficiencies, patching, alteration, and punch list have been completed.
The Respondent relied upon submissions from the architect to set the damages for delay in completion. (T.139,209, Respondent's Exhibit 2) The Petitioner was deemed 15 days delinquent in completing the project for a total of $3750.00 in liquidated damages. (Respondent's Exhibit 2)
The Petitioner was not asked to do any substantial amount of work after the substantial completion date. (T.166) However, the Petitioner did install the HVAC drain after the completion inspection which took three days.
In addition, manufacturer/suppliers of the air-conditioning fixtures were unable to supply the air conditioning room vent within the period of time they had originally estimated. The absence of these vents did not prevent use of the lodge (substantial completion), but did delay "final completion."
The installation of the HVAC drain was not patching, alteration or working on the punch list. Flooding of the HVAC room had the potential for making the facility unusable. The period of time during which the HVAC drain was installed should not be included in the 15 days, but added to the time for substantial completion for which there is no claim. This would reduce the 15 days to 12 days, and the penalty to $3,000.00.
CONCLUSIONS OF LAW ON LIQUIDATED DAMAGES
The Respondent is entitled to damages for delay in completing the project under the provisions of the agreement. The Respondent withheld
$3,750.00 as part of the damages claimed asserting that the Petitioner was 15 days late in completing the project. The agency had not considered installation of the HVAC drain discussed above. This would have extended the substantial incompletion phase by three days, and similarly reduced the "uncompleted" phase by three days. The damages due to delay are, therefore, reduced by $750.00 which the Respondent must pay to the Petitioner.
FINDINGS OF FACT ON PREJUDGMENT INTEREST
The Respondent retained $47,707.75 due on the total contract.
The Petitioner claims:
These conclusions are based upon all of the Findings of Fact made heretofore.
The standard upon which the award of prejudgment interest is the definability of the amount in controversy. In Bergen Brunswig Corporation v. State Department of Health and Rehabilitative Services, 415 So.2d 765, the First District Court of Appeal said, " in Florida there has evolved a principle that prejudgment interest may be awarded when damages are a fixed sum or an amount readily ascertainable by simple calculation . . . . However, we now determine that the better view is expressed in the case of Tech Corp. v. Permutit Co., 321 So.2d 562 (Fla. 4DCA 1975), where the court held that, for the purpose of assessing prejudgment interest, a claim becomes liquidated and susceptible of prejudgment interest when a verdict has the effect of fixing damages as of a prior date."
Using either test, Petitioner is entitled to prejudgment interest because the amount of money at issue was defined by the contract or by the proposed change order. All parties were always aware of the exact amounts in the change order claims, and all parties knew that the money was due Petitioner after the contract was completed on August 20, 1990. The parties even stipulated to the amounts in controversy: the amount withheld by the Respondent for unit price work is stipulated to be $33,444.60, and the amount due and unpaid on the claim for the HVAC drain was $1,014.85. Therefore, the Petitioner is entitled to prejudgment interest on certain amounts owed him by the Respondent at the statutory rate of 12 percent. The computation of the amount of interest due is ministerial.
The damages per day for each day of delay were fixed by the contract at $250.00 per day; however, the number of days involved was subject to evidentiary determination. The excess amount withheld for damages for not finishing on time is $750.00. See "Delay" above. The $750.00 is not subject to prejudgment interest.
Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is therefore recommended that the Respondent pay the Petitioner $750.00, plus $34,459.45, and prejudgment interest on the
$34,459.45 in the amount of 12 percent per annum since August 20, 1990.
RECOMMENDED this 16th_ day of September, 1991, in Tallahassee, Leon County, Florida.
STEPHEN F. DEAN
Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, FL 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 16th day of September, 1991.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 91-0257
Petitioner's Proposed Findings of Fact
Rejected; not a fact.
Subsumed in paragraph 12 of the Recommended Order.
3-4. Rejected as irrelevant.
Rejected as a conclusion of law.
Adopted as paragraph 15 of the Recommended Order.
Rejected as irrelevant.
Subsumed in finding on substantial completion in paragraph 46 of the Recommended Order.
Respondent's Proposed Findings of Fact
Adopted.
Subsumed in paragraphs 6, 8, and 11 of the Recommended Order.
Adopted as paragraph 11 of the Recommended Order.
Adopted as paragraph 14 of the Recommended Order.
Adopted as part of paragraph 14 of the Recommended Order.
Rejected as irrelevant.
Rejected as irrelevant.
Rejected as unnecessary.
Rejected as unnecessary.
Adopted.
The facts on the amounts of the total contract were unnecessary because the amount in controversy and the amount withheld were stipulated to or presented as facts.
Adopted as paragraph 8 of the Recommended Order.
Adopted as paragraph 8 of the Recommended Order.
Adopted as paragraph 9 of the Recommended Order.
Adopted as paragraph 5 of the Recommended Order.
Adopted as paragraph 5 of the Recommended Order.
Adopted as paragraph 17 of the Recommended Order.
18-19. Subsumed in paragraphs 17 and 18 of the Recommended Order.
20. Adopted as paragraph 19 of the Recommended Order.
21-22. Subsumed in paragraphs 19 and 20 of the Recommended Order. 23-26. Subsumed in paragraph 47 of the Recommended Order.
27-28. Adopted as paragraphs 18 and 21 of the Recommended Order.
29. Rejected as unnecessary. Paragraph 28 states the amount in controversy.
30-31. Adopted as paragraph 12 of the Recommended Order.
32. Rejected as irrelevant.
33-34. Adopted as paragraphs 4 and 12 of the Recommended Order.
35. Rejected as irrelevant.
36-38. Adopted as paragraphs 4 and 12 of the Recommended Order.
Adopted as paragraph 26 of the Recommended Order.
Adopted as paragraph 13 of the Recommended Order.
41-43. Adopted as paragraph 24 of the Recommended Order.
Adopted as paragraph 25 of the Recommended Order.
Rejected as contrary to facts.
Adopted as paragraph 26 of the Recommended Order.
Adopted as paragraph 27 of the Recommended Order.
Adopted as paragraph 26 of the Recommended Order.
Rejected as contrary to facts.
Rejected as irrelevant.
Adopted as paragraph 29 of the Recommended Order.
Adopted as paragraph 30 of the Recommended Order.
Adopted as paragraph 31 of the Recommended Order.
Adopted as paragraph 32 of the Recommended Order.
Adopted as paragraph 33 of the Recommended Order.
Adopted.
Adopted as paragraph 36 of the Recommended Order.
Adopted as paragraph 35 of the Recommended Order.
Rejected as a conclusion of law.
Adopted as paragraph 38 of the Recommended Order.
Adopted as paragraph 39 of the Recommended Order.
Adopted as paragraph 40 of the Recommended Order.
Rejected as contrary to facts.
Adopted as paragraph 40 of the Recommended Order.
Rejected as contrary to facts.
Adopted as paragraph 44 of the Recommended Order.
Rejected as irrelevant.
Rejected as irrelevant.
69-70. Adopted as paragraph 47 of the Recommended Order.
Adopted as paragraph 48 of the Recommended Order.
Rejected as contrary to facts regarding HVAC.
COPIES FURNISHED:
Mr. Tom Gardner Executive Director
Department of Natural Resources 3900 Commonwealth Boulevard
Mail Station #10
Tallahassee, FL 32399-0300
Ken Plante, Esq.
General Counsel
Department of Natural Resources 3900 Commonwealth Boulevard
Mail Station #10
Tallahassee, FL 32399-0300
Michael F. Coppins, Esq. DOUGLASS, COOPER, ET AL.
211 East Call Street
Box 1674
Tallahassee, FL 32302-1674
Lynne Chapman, Esq.
Kelly Brewton, Esq.
Department of Natural Resources 3900 Commonwealth Boulevard
MS-35, Douglas Building Tallahassee, FL 32399-2400
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS:
All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.
=================================================================
AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA DEPARTMENT OF NATURAL RESOURCES
GRAY CONTRACTING, INC.,
Petitioner, DOAH Case No: 91-000257
vs.
DEPARTMENT OF NATURAL RESOURCES,
Respondent.
/
FINAL ORDER
This cause came before the Governor and Members of the Cabinet of the State of Florida, sitting as the head of the Department of Natural Resources (the "Department"), at the regularly scheduled Cabinet Meeting on November 14, 1991, for consideration and final agency action.
The Hearing Officer assigned by the Division of Administrative Hearings, Stephen F. Dean, served the Recommended Order on the Executive Director of the Department of Natural Resources on September 16, 1991, a copy of which is attached as Exhibit A. Pursuant to Rule 16-5.001, Florida Administrative Code, each party was given twenty-five (25) days from the date of service of the Recommended Order to submit written exceptions thereto, including legal memoranda and proposed substituted orders. Respondent timely filed its exceptions to the Recommended Order on October 11, 1991. No exceptions were filed by the Petitioner nor did Petitioner file a response to Respondent's exceptions.
Having considered the Recommended Order, the complete record in this matter, and the arguments of the parties, and being otherwise fully advised in the premises, the Governor and members of the Cabinet make the following findings and conclusions:
FINDINGS OF FACT
Jurisdiction
Findings of fact 1 and 2 are approved, adopted, and incorporated herein by reference in their entirety.
Credit for Unit Prices
The findings of fact 3 through 28 contained in the Recommended Order are approved, adopted, and incorporated herein by reference except for the following:
That portion of finding of fact number 15 which states "Such a bid process does not enhance the competitive bidding process or benefit the public." This sentence is rejected in that it is not supported by competent substantial evidence.
The Hearing Office erroneously concluded that the inclusion of section 01026 in the bid specifications used by DNR for the Wakulla Springs Project was not in the best interest of the public. This section required that the unit price allowances be included in the base bid.
The only evidence regarding the purpose of including the unit price allowances in the base bid was the testimony of Jerry Hicks. Mr. Hicks is a professional architect who has extensive experience in developing bid specifications for governmental contracts. [T. 170-171] Mr. Hicks was retained by DNR to develop the plans and specifications for the Wakulla Springs Project. [T. 173) Mr. Hicks testified that he placed the requirement that the unit price allowances be included in the base bid because the Department had a limited budget and he wanted to ensure that the Department would not be "caught at the end of the project short of funds." [T. 174] The purpose of the provision was to protect the state. [T. 174)
The only evidence at the hearing indicated that the bid process used by the Department was to enhance the competitive bidding process and benefit the public by protecting the Department and ensuring the project would not go over budget.
That portion of finding of fact number 26 which states: "Based on what he read, Mr. Gray did not think section 01026 required the unit price allowance to be included in the base bid." This sentence is rejected in that it is not supported by competent substantial evidence.
Section 01026 of the bid specifications states in pertinent part:
The contractor shall provide in his base bid the following work related to unit prices and the separate asbestos abatement contract. A change order will be issued to credit the owner with the difference in cost or charge the owner with additional unit price quantity cost. (emphasis in original)
Gray did not allege that bid specification section 01026 was unclear or that he misinterpreted it. Gray's argument was that he did not carefully read the bid specifications and that he assumed the project was a "turn-key" project. Gray's testimony indicates that when Gray carefully read the bid specifications, he agreed that the unit price allowances were suppose to be part of the base bid. When asked on direct examination if there was any reference in the bid specifications concerning unit price allowances and the inclusion of these figures in the base bid, Gray answered that there was, but "they were stuck back in another section." [T. 224]
During the cross examination of Mr. Gray, the following testimony was elicited:
[T. 266]
Q: That is not the question. When you read [the bid specifications document), you just didn't read it carefully. You missed this section [01026]. The section was in there. Did you dismiss it?
A: I guess I dismissed it.
The evidence clearly indicates that Mr. Gray understood section 01026 of the bid specifications to require unit price allowances in his base bid, but he either did not read the bid specifications or he did not follow them. There is no evidence to the contrary. Gray made a mistake because he did not read the bid specifications carefully and made assumptions about the nature of the project, not because the specifications were unclear. The Hearing Officer erred in concluding that Gray found the bid specifications unclear because it is contrary to the evidence and the assertions of Gray himself.
The following findings of fact are adopted in addition to those delineated by the Hearing Officer:
Section 01026 of the bid specifications clearly states that the unit price allowances are to be included in the base bid.
contract.
Petitioner completed $442,992.00 worth of work on the initial
Stairwell Amendment
Findings of fact 29 through 38 are approved, adopted, and incorporated by reference in their entirety.
The HVAC Drain
Findings of fact 39 through 43 are approved, adopted, and incorporated by reference in their entirety.
Liquidated Damages
Findings of fact 44 through 49 are approved, adopted, and incorporated by reference in their entirety.
Prejudgment Interest
Findings of fact 50 and 51 are approved, adopted, and incorporated by reference in their entirety.
CONCLUSIONS OF LAW
Jurisdiction
The Hearing Officer's Conclusion of Law is approved, adopted, and incorporated herein by reference in its entirety.
Unit Prices
The Hearing Officer's Conclusions of Law are rejected in their entirety in that they fail to apply the existing case law to the circumstances at hand.
The bid specifications for the contract in question clearly state that "The contractor shall provide in his base bid the following work related to unit prices and the separate asbestos contract." (original emphasis) [Recommended Order Finding of Fact #5] No evidence was submitted to indicate that Gray felt that the bid specifications were unclear nor did Gray argue that the bid specifications were unclear. In fact, Gray stated that the bid documents called for the inclusion of the unit price allowances in the base bid [T. 224] and that he had read them but elected to "dismiss" this provision. [T. 266] Although the Hearing Officer found that Gray "thought the project was a `turn-key' project" [Recommended Order Finding of Fact #27; T. 267], Gray admitted that the bid documents did not say the project was turn-key: he just assumed it was. [T. 267]
In Graham v. Clyde, 61 So. 2d 656 (Fla. 1952), the Florida Supreme Court held that negligent errors in bids for public contracts cannot be relieved because:
our system of competitive bidding on such contracts would be placed in jeopardy and there would be no stability whatever to it. It would encourage careless, slipshod bidding in some case and would afford a pretext for the dishonest bidder to prey on the public.
After the did is accepted, the bidder is bound by his error and is expected to bear the consequences of it.
Id. at 658.
Other Florida courts have also held that a unilateral mistake in a public bid does not entitle the bidder to relief from his own mistake. The instant case is similar to Department of Transportation v. Ronlee, Inc., 518 So 2d 1326 (Fla. 3d DCA 1988). Ronlee was the successful bidder for a government road construction contract. After Ronlee was awarded the contract and given the notice to proceed, it discovered that it had made an error in its bid in the amount of $317,463. Even if the contract had been increased $317,463, Ronlee would have been the lowest bidder. The error was due to the erroneous transcription of a phone quote of $525 to $5.25 for concrete culverts by a Ronlee employee. When the mistake was discovered, Ronlee requested that the Department of Transportation (DOT) increase the contract price, but DOT responded that it was unable, as a matter of state policy, to permit an increase in the contract price. The contractor proceeded with the contract and did not attempt to withdraw the bid. When the contract was seventy-five percent complete, Ronlee sued DOT for rescission of the contract.
The Court held that Ronlee was not entitled to relief from its error.
Though there was no allegation of any wrongdoing by Ronlee, the Court found that public contractors are bound by their unilateral mistakes "to prevent collusive schemes between bidders, or between bidders and awarding officials, or multiple claims for contractors asserting mistake and claiming inequity at taxpayers' expense." Id. at 1329.
"Ronlee was obligated to show by clear and convincing evidence that DOT's conduct in not calling Ronlee's attention to a possible error in the bid tabulations was fraudulent or otherwise inequitable." Id. at 1328; citing Robinson v. Wright, 425 So. 2d 589 (Fla. 3d DCA 1982). The Court found that Ronlee did not meet this burden even through DOT knew of the miscalculation before Ronlee. The court explained that:
A government unit is not required to act for the protection of a contractor's interest; it is entitled to the bargain obtained in accepting the lowest responsible bid and is under no obligation to examine bids to ascertain errors and to inform bidders accordingly.
Id. at 1329.
Like Ronlee, Gray made a unilateral mistake in calculating his bid. He negligently failed to carefully read the bid specifications. Indeed, because of the amount of his bid in relation to the other responsive bidders, Gray was contacted by the Department and asked if he had made an error and wanted to withdraw his bid. Gray checked his figures, found them to be correct, and stood by his bid.
As a matter of public policy, as reinforced by pertinent case law, Gray does not have a right to recover the credited unit price allowances.
Stairwell Amendment
he Hearing Officer's Conclusions of Thaw are approved, adopted, and incorporated herein by reference in their entirety.
The HVAC Drain
The Hearing Officer's Conclusions of Law are approved, adopted, and incorporated herein by reference in their entirety.
Liquidated Damages
The Hearing Officer's Conclusions of Law are approved, adopted, and incorporated herein by reference in their entirety.
Prejudgment Interest
The Hearing Officer's argument, as modified to conform to the Findings of Fact and Conclusions of Law contained herein, are approved, adopted, and incorporated herein by reference.
ORDER
Based on the foregoing findings of fact and conclusions of law, it is ORDERED AND ADJUDGED as follows:
Petitioner is entitled to payment of the sum of $750.00 for excess liquidated damages charged plus $34,459.45 as principal, and prejudgment interest on the $34,459.45 in the amount of 12 percent per annum since August 20, 1990. The Executive Director shall immediately apply to the Comptroller for the issuance of a warrant payable to Petitioner in the foregoing amount.
Petitioner is hereby advised of his right to seek judicial review of this Final Order pursuant to Section 120.68, Florida Statutes, and Rules 9.030(b)(c) and 9.110, Florida Rules of Appellate Procedure. To initiate an appeal, a Notice of Appeal must be filed with the Department Clerk, Department of Natural Resources, Douglas Building, 3900 Commonwealth Boulevard, MS - 35, Tallahassee, Florida 32399-3000, and with the appropriate District Court of Appeal within thirty (30) days of the filing of this Final Order with the Department Clerk. A Notice of Appeal filed with the District Court of Appeal must be accompanied by the filing fee specified in Section 35.22(3), Florida Statutes.
DONE AND ORDERED this 10 day of December 1991, in Tallahassee, Florida.
VIRGINIA WETHERELL
Executive Director of the Department of Natural Resources and designated agent for the Board of Trustees of the Internal Improvement Trust Fund
Copies furnished to:
STEPHEN F. DEAN
Hearing Officer
Division or Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-1550
MICHAEL F. COPPINS
Douglass, Cooper, Coppins and Powell
211 East Call Street Tallahassee, Florida 32302-1674
KENNETH J. PLANTE
General Counsel
Department of Natural Resources 3900 Commonwealth Boulevard
Tallahassee, Florida 32399-3000
| Issue Date | Proceedings |
|---|---|
| Dec. 12, 1991 | Final Order filed. |
| Nov. 01, 1991 | Petitioner's Motion to Strike Respondent's Exceptions to Recommended Order filed. |
| Oct. 14, 1991 | Respondent, State of Florida Department of Natural Resources Exceptions to Recommended Order filed. |
| Sep. 16, 1991 | Recommended Order sent out. CASE CLOSED. Hearing held 07/09/91. |
| Aug. 14, 1991 | Order sent out. (additional exhibits filed at doah are accepted into evidence) |
| Aug. 09, 1991 | (Respondent) Notice of Filing Supplemental Exhibits w/Exhibits A-G filed. (From C. Lynne Chapman) |
| Aug. 08, 1991 | Letter to SFD from Michael F. Coppins (re: PRO filed by DNR) filed. |
| Aug. 02, 1991 | Respondent's Proposed Recommended Order filed. (From C. Lynne Chapman) |
| Aug. 02, 1991 | Petitioner's Notice of Filing Proposed Recommended Order w/Recommended Order filed. (From Michael F. Coppins) |
| Jul. 30, 1991 | Order sent out. (Re: Recommended Order time frames). |
| Jul. 29, 1991 | Letter to Michael F. Coppins from Kelly Brewton (re: Extension of Time to file PRO) filed. |
| Jul. 19, 1991 | Transcript (2 vols) filed. |
| Jul. 10, 1991 | CASE STATUS: Hearing Held. |
| Jul. 03, 1991 | (Respondent) Notice of Taking Deposition filed. |
| Jul. 02, 1991 | Subpoena Ad Testificandum; Return of Service filed. (from M. Coppins) |
| Jun. 26, 1991 | Stipulated Statement of Issues and Facts filed. (From Michael F. Coppins & Lynne Chapman) |
| Feb. 19, 1991 | Order Granting Continuance and Amended Notice sent out. (hearing rescheduled for July 9-10,1991; 10:00am; Tallahassee) |
| Feb. 19, 1991 | (Petitioner) Stipulated Motion for Continuance and Cover letter from M. Coppins filed. |
| Feb. 18, 1991 | (Petitioner) Stipulated Motion for Continuance filed. |
| Feb. 05, 1991 | Notice of Hearing sent out. (hearing set for Feb. 25, 1991; 10:00am; Tallahassee) |
| Jan. 30, 1991 | Department of Natural Resource's Response to Initial Order filed. (From C. Lynne Chapman) |
| Jan. 30, 1991 | Petitioner`s Response to Scheduling Order; Petitioner`s Response to Order to Show Cause w/exhibit-A filed. (From Michael F. Coppins) |
| Jan. 18, 1991 | Order to Show Cause sent out. |
| Jan. 16, 1991 | Initial Order issued. |
| Jan. 10, 1991 | Agency referral letter; Amended Petition for Formal Administrative Hearing; Agency action letter; Request for Hearing, letter form filed. |
| Issue Date | Document | Summary |
|---|---|---|
| Dec. 10, 1991 | Agency Final Order | |
| Sep. 16, 1991 | Recommended Order | BID case. Recommended Order holds certain work was properly excluded from contract price based upon interpretation of the word "provide". Final Order rejects Recommended Order . |
