STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SYNERGY GAS CORPORATION, )

)

Petitioner, )

)

vs. )

)

SCHOOL BOARD OF BROWARD COUNTY, ) CASE NO. 91-7494 BID

)

Respondent, )

)

and )

)

PEOPLES GAS COMPANY, )

)

Intervenor, )

)

RECOMMENDED ORDER

A hearing was held in this case in Fort Lauderdale, Florida on December 4, 1991, before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Joel Garey, Pers. Rep.

Synergy Gas Corporation 23102 Sandalfoot Plaza Drive Boca Raton, Florida 33428

and

175 Price Parkway Farmingdale, N.Y. 11735

For Respondent: Edward J. Marko, Esquire

Edward G. Stephany, Esquire Marko & Stephany

Suite 201, Victoria Park Centre 1401 East Broward Blvd.

Post Office Box 4369

Fort lauderdale, Florida 33338

For Intervenor: Jeffrey R. Sonn, Esquire

Mishan, Sloto, Hoffman & Greenberg Suite 2350 Southeast Financial Center

200 South Biscayne Blvd. Miami, Florida 33131

STATEMENT OF THE ISSUES

The issue for consideration in this matter is whether the School Board of Broward County properly awarded Bid 92-143T for the procurement of propane gas for the school system for three years.

PRELIMINARY MATTERS

By letter of October 11, 1991, Jeffrey K. Vogel, on behalf of Petitioner, Synergy Gas Corporation, (Synergy), protested the award of Broward County School Board, (Board), Bid 92-143T, for the purchase of the system's need for propane gas for three years, to Intervenor herein, Peoples Gas Company, (Peoples). In a follow- up letter dated October 16, 1991, Mr. Vogel submitted additional matters in support of its protest, and by letter dated November 15, 1991, Mr. Marko, counsel for the Board, forwarded the file to the Division of Administrative Hearings for appointment of a Hearing Officer.

By Notice of Hearing dated November 21, 1991, the undersigned set the case for hearing in Fort Lauderdale on December 4, 1991, at which time it was heard as scheduled. At the hearing, Peoples filed its Motion to Intervene which was granted by the undersigned without objection by any party. Also at the hearing, Peoples submitted its Motion To Dismiss And For Attorneys Fees And Costs. The Motion to dismiss was based on Peoples' urging that Synergy's failure to file objections to the bid specifications within 72 hours of receiving the Invitation to Bid, (ITB), constituted a waiver of proceedings under Section 120, Florida Statutes. It bases its claim for attorneys fees and costs on what it considers Synergy's frivolous action because of the waiver and its failure to take any action to submit alternative proposals in a timely manner. Having heard the evidence presented on the motions and the argument of the parties, the motions are denied.

The parties filed a Pre-Hearing Stipulation of fact which was accepted and utilized in the preparation of this Recommended Order. At the hearing, Petitioner presented the testimony of Joel Garey, an employee of Petitioners marketing department and introduced Petitioner's Exhibits 1 through 7.

Intervenor presented the testimony of Arthur S. Hanby Jr., Director of Purchasing and Warehousing for the Board and Peggy Good, General Manager for Propane Operations for Peoples Gas Corporation. Intervenor also introduced its Exhibit A. Respondent adopted as its own the evidence presented by Intervenor.

A transcript was not provided. All parties submitted Proposed Findings of Fact which have been ruled upon in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. In August, 1991, the School Board of Broward County issued ITB's to various potential suppliers to supply it with liquid propane gas, (LP gas), for the next three years, under ITB number 92-143T. The current supplier under the contract let in 1989 is the Petitioner herein, Synergy. Synergy was one of the potential suppliers to receive a copy of the Board's new ITB.

   
   

2. Paragraph 12 of the Special Bid Conditions required any protest of the specifications or conditions of the ITB to be filed within 72 hours of its receipt. Paragraph 15 of the Special Conditions allowed prospective bidders to address questions concerning the ITB to the Board's purchasing department. That agency's activity was limited to referring the inquirer to bid provisions which they could read and interpret for themselves. No Board employee was authorized

   to interpret any portion of the ITB or to release any information regarding requirements other than was contained in the written bid document. That Special Condition also notified prospective bidders that any official interpretations of the bid documents or its requirements, if necessary, would be communicated to the bidders in writing.

   
   

3. The ITB was mailed on August 19, 1991 and bid opening was noticed therein to be at 2:00 pm on October 2, 1991 at the Board's purchasing department. The ITB was mailed to Synergy's Hollywood, Florida office and was, from there sent to the head office in New York. Mr. Garey, the responsible individual in Synergy's marketing department believes he received it on or about August 25, 1991.

   
   

4. The general and special conditions and specifications of this ITB were, for the most part and as pertinent here, identical to those set forth in the 1989 ITB except that the current bid calls for delivery of the gas to the Board at specified locations which was not required in the prior contract.

   
   

5. Shortly after receiving the ITB, Joel Garey, a long time employee of Synergy, who has prepared thousands of bids for government procurements, because gas prices were widely fluctuating, began to collect data on the price of LP gas preparatory to formulating Synergy's bid. Shortly before the bid was due, based on the latest available price information, Mr. Garey prepared Synergy's bid for the signature of Jeffrey Vogel, Synergy's vice president.

   
   

6. The first bid prepared by Mr. Garey contained an error on the bid summary sheets. When, on October 1, 1991, one day before the bid was due, he noted what to him was an inconsistency in the bid specifications which, at paragraph 13, called for the bidder to deliver "full 100# tanks [of LP gas]," and to price invoice tickets, "with the conversion rate of 22 gallons per cylinder shown."

   
   

7. The Board also wanted the filling of several 40# tanks for which delivery tickets and invoices, "will be in gallons based on the standard of 4.24 pounds per gallon." The parties agree that the accepted weight of a gallon of liquid propane gas weighs 4.24 pounds.

   
   

8. Extrapolating from that point, Mr. Garey reasoned that if the Board wanted its tanks "filled to capacity", the 100# tanks would take 23.5 gallons of LP gas, (100 divided by 4.24), and the 40# tanks would take 9.43 gallons, (40 divided by 4.24).

   
   

9. As a result, and being somewhat confused, Mr. Garey telephonically contacted the Board's contact point, Mr. Toman, who referred him to Mr. Combs, another Board official. Mr. Combs, notwithstanding the weight of 4.24 lbs/gal for LP gas listed in the Board's specifications, would not accept that figure from Mr. Garey without independent proof. Mr. Combs gave Mr. Garey his fax number so the proof could be sent when available and, in the meantime, said to fill the tanks to capacity. When he hung up from talking with Mr. Combs, Mr. Garey called his local manager and determined that under the 1989 contract which Synergy had with the Board, it had been filling the Board's tanks to capacity. When he called Mr. Tomans back at 4:00 PM that same day, Garey was told that Tomans had not heard from Combs about the problem, but that Garey should submit his bid timely or be out. Tomans also wanted to know why the issue had not been raised during the existing contract. Mr. Garey had no answer to that question.

10. Based on the information he then had, Mr. Garey changed Synergy's bid and submitted one based on full tanks rather than the 22 and 6 gallons, respectively, mentioned in the bid specifications. Coincidentally, the bid as submitted was still in error in that Item C of the bid specs misstated the price per gallon delivered and this error was reflected in Items D, E, and G, and, ultimately, the total. This error was corrected, however, and did not play in the Board's decision to reject the Petitioner's bid.

    
    

11. In arriving at Petitioner's bid based upon the "totally full" basis, Mr. Garey computed using the 23.5 and 9.43 gallon capacity cost divided by the

    22 and 6 gallon conversion figures dictated by the Board.

    
    

12. Mr. Garey was subsequently advised that Synergy was not the successful bidder. He also determined, from a telephone conversation with Mr. Tomans on October 3, 1991, that had the Petitioner's bid price not been raised to accommodate the larger volume, it's bid price would have been lower than that submitted by the successful bidder, Peoples Gas. During that conversation, Mr. Tomans advised Mr. Garey that ordinarily a bidder had 72 hours from receipt of the ITB to protest the specifications, but since there was some merit to Petitioner's contentions of an inconsistency regarding volume, he, Tomans, felt there should be an exception. However, Special Condition 15 specifically cautions prospective bidders it could not rely on any information given orally by Respondent and must submit any questions as to the bid consistent with the terms of General Condition 7.

    
    

13. Mr. Garey admits he was remiss in not reading the fine print of paragraph 7 of the ITB and the protest provisions but on the afternoon of October 1, 1991, when he discovered the discrepancy, he immediately called the school board. If at that time they had told him he was too late to protest the specifications, this would have satisfied him and he would not have filed an appeal or protest. Instead, he was told that due to the merit of his argument he could protest, and he did so. His letter of protest was accepted even though not timely and the matter was brought to a hearing before the school board which ruled against Synergy on grounds other than time. He contends that the executive summary prepared for the school bard misled it into rejecting his protest.

    
    

14. Mr. Garey also asserts that the bids were so close, if the margin had been greater than the discrepancy in the number of gallons to go into the cylinders he would have accepted the loss. Here, however, the total discrepancy is accounted for by the 3,770 gallons difference out of over 300,000 gallons.

    
    

15. Mr. Arthur Hanby is the Director of Purchasing for the Broward County School Board and is familiar with this procurement and Synergy's bid. The provision in the ITB which provides for questioning of specifications was designed to comply with the requirements of Florida Statutes and the school board's policy. It is put in to equalize the opportunity for all prospective bidders to protest on an equal basis. It has been used by others in the past and when invoked, the bid solicitation process has been suspended until resolution of the matter in question.

    
    

16. Mr. Hanby was also employed by the school board when the prior contract for propane was let with essentially the same specifications as are in issue here. The conversion rate was changed this year to more accurately reflect the market place. Even then no challenge was filed to the bid specifications. No written inquiry was received as to how to interpret them

    either, and at no time since Synergy, the winner then, has had the contract has it shown any confusion at to what it was to provide.

    
    

17. Penny Good, General Manager for Peoples Gas, and the individual who prepared that company's bid read the bid solicitation thoroughly before preparing her company's bid. She was also employed with Peoples Gas when the prior contract was bid but had nothing to do with the bid at that time. She claims to have had no confusion as to what the school board wanted on this solicitation. She asked no questions of the school board because it was clear to her and she was satisfied the board wanted 22 gallons in a 100 # tank and 6 gallons in a 40 # tank, less than a tank filled to capacity.

    
    

18. As she understands the business, there is no such thing as a "legal limit" on a tank. Admitting that an empty 100# tank would hold 23.5 gallons, which, practically, would be the maximum amount it could hold, it is easy to put less than 22 gallons in a 100# tank and less than 6 gallons in a 40 # tank. Under the terms of the agreement, tanks would not be filled on site. Empty tanks would be picked up and replaced with other tanks filled with either 22 gallons or 6 gallons as pertinent.

    
    

19. From a review of all the evidence, it is clear that Synergy and Peoples Gas were not bidding the same thing. The quantity's to be provided were different and this accounts for the difference in bid price.

    
    

    CONCLUSIONS OF LAW

    
    

20. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this proceeding. Section 120.57(1), Florida Statutes.

    
    

21. The burden of proof in this case is upon the unsuccessful bidder which seeks to establilsh that it is entitled to an award. Florida Department of Transportation v. J. W. C. Company, Inc., 396 So.2d 778 (Fla. 1DCA 1981). Here, Petitioners have the burden to establish that the Board's decision to award the contract to Peoples Gas Company was not the result of a fair, full and honest exercise of its discretion. Liberty County v. Baxter's Asphalt and Concrete, 421 So.2d 505 (Fla.1982).

    
    

22. An agency has wide discretion in soliciting and accepting bids and a decision based on an honest exercise of that discretion may not be overturned even if reasonable persons disagree with the outcome. C. H. Barco Contracting Co. v. State, Department of Transportation, 483 So.2d 796 (Fla. 1DCA 1986); Liberty County, supra.

    
    

23. While an agency has wide discretion in evaluating bids and awarding contracts, it may not act arbitrarily or capriciously,nor can it subvert the award process through any element of bias, fraud, favoritism, illegality or dishonesty. Department of Transportation v. Groves-Watkins Constructors, 530 So.2d 912 (Fla. 1980).

    
    

24. Ordinarily, since the Petitioner did not submit its protest to the terms of the bid conditions within the 72 hours from receipt of the ITB, as was required, any objections would be waived and the Division of Administrative Hearings would have no jurisdiction . However, Mr. Tomans, an official representative of the Board with the power to speak for and commit it, clearly indicated to Mr. Geary that in his opinion, Synergy's confusion regarding the amount of the propane gas to be placed in the cylinders was valid, and his

    actions constituted a waiver of the disqualification of not protesting within 72 hours.

    
    

25. Turning to the issue of whether the bid conditions were confusing, the evidence of record is clear that Petitioner has failed to sustain its burden to establish, by a preponderance of the evidence, that either the specifications were faulty of that it was misled thereby.

    
    

26. To the contrary, the evidence demonstrates that Petitioner was the current supplier under a 3 year contract the specifications of which are almost identical to those in the procurement in issue. It seems to have had no problem complying with the terms of that contract for 3 years, and in fact, Mr. Garey's testimony indicates that his call to the local manager indicated they were fulfilling the terms of the existing contract the same way the instant contract was bid.

    
    

27. It must also be noted that Petitioner did not raise any question as to the bid specifications or requirements until after the bids were opened and it was determined not to be the low bidder. Had it won, there is little doubt no confusion would have been alleged.

    
    

28. Petitioner claims that it made an honest mistake in its analysis of what the agency wanted and that its mistake was occasioned because of the confusing and misleading way in which the bid specifications were drafted. To support such a claim, seeking some sort of equitable relief, places a substantial burden on the one asserting it. Lassiter Construction Company v. School Board of Palm Beach County, 395 So.2d 567 (Fla. 4DCA 1981).

    
    

29. Petitioner's mistake may well have been honest, but the evidence also clearly shows it was a culpable mistake. The courts are reluctant to relieve against the mistake of one guilty of culpable negligence.

    
    

30. Intervenor has sought not only to sustain the award to it but the award of costs and attorneys fees on the basis, it asserts, that Petitioner's protest was frivolous and caused it to unnecessarily incur attorney's fees and costs. Mercedes Lighting and Electrical Supply, Inc. v. Department of General Services, 560 So.2d 272 (Fla. 1DCA 1990). Here, while Petitioner's protest may be found to be insupportable, even Respondent found there might be some merit to its contention. The evidence of record at the hearing herein supports that conclusion, if not the protest, and there is no basis for an award of costs and attorney's fees here against the Petitioner.

    
    

    RECOMMENDATION

    
    

    Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore:

    
    

    RECOMMENDED that a Final Order be entered denying Petitioner's protest of the Board's award of Bid No. 92-143T to Peoples Gas Company, and denying Peoples Gas Company's request for an award of costs and attorney's fees.

    RECOMMENDED in Tallahassee, Florida this 24th day of January, 1992.

    
    

    
    

    ARNOLD H. POLLOCK

    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 24th day of January, 1992.

    
    

    APPENDIX TO RECOMMENDED ORDER IN CASE NO. 91-7494-BID

    
    

    The following constitutes my specific rulings on all Proposed Findings of Fact submitted by the parties to this proceeding under Section 120.59(2), Florida Statutes.

    
    

    FOR THE PETITIONER:

    
    

    1. & 2. Accepted and incorporated herein.

       1. Accepted and incorporated herein.

       2. Accepted and incorporated herein.

       3. & 6. Accepted and incorporated herein.

1. & 8. Accepted and incorporated herein.

   1. Accepted but more a comment on the state of the evidence.

   2. Accepted.

   3. Not a proper Finding of Fact.

   4. & 13. Accepted.

1. & 15. Rejected as not Findings of Fact but more Conclusions of Law.

   1. Accepted but Synergy's bid is not responsive to the Bid specifications.

   2. Rejected. Not a Finding of Fact.

FOR THE RESPONDENT AND INTERVENOR:

1. & 2. Accepted and incorporated herein.

3. & 4. Accepted and incorporated herein.

5. - 8. Accepted and incorporated herein.

1. & 10. Accepted and incorporated herein.

   1. Accepted and incorporated herein.

   2. Accepted and incorporated herein.

   3. - 15. Accepted and incorporated herein.

      1. Not a Finding of Fact but a restatement of the evidence.

      2. Accepted.

      3. Accepted and incorporated herein.

      4. & 20. Not Findings of Fact pertinent to the issues herein.

COPIES FURNISHED:

Joel Garey

Marketing Department Synergy Gas Corporation 23102 Sandalfoot Plaza Drive Boca Raton, Florida 33428

Joel Garey

Synergy Gas Corporation

175 Price Parkway Farmingdale, N.Y. 11735

Edward J. Marko, Esquire Suite 201 Victoria Park Centre 1401 East Broward Blvd.

Post Office Box 4369

Fort Lauderdale, Florida 33338

Arthur S. Hamby, Jr.

Director

Purchasing and Warehousing Broward County School Board 1320 Southwest Fourth Street

Fort Lauderdale, Florida 33312-7535

James L. Brady Director Business Affairs

Broward County School Board 1320 Southwest Fourth Street

Fort Lauderdale, Florida 33312-7535

Peoples Gas Company

2700 Southwest Second Avenue Fort Lauderdale, Florida 33315

Jeffrey R. Sonn, Esquire

Mishan, Sloto, Hoffman & Greenberg Suite 2350 Southeast Financial Center

200 South Biscayne Boulevard Miami, Florida 33131

Virgil L. Morgan, Superintendnet School Board of Broward County 1320 Southwest Fourth Street

Fort Lauderdale, Florida 33312-7535

Sydney H. McKenzie, General Counsel Department of Education

The Capitol, PL-08

Tallahassee, Florida 32399-0400

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 consult with the agency which will issue the Final Order in this case concerning its rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should b e filed with the agency which will issue the Final Order in this case.

Docket for Case No: 91-007494BID

Orders for Case No: 91-007494BID