STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

POWER SWEEPING SERVICES, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 91-7592 BID

) DEPARTMENT OF TRANSPORTATION, )

)

Respondent, )

)

and )

) CERTIFIED PROPERTY MAINTENANCE, )

)

Intervenor. )

)

RECOMMENDED ORDER

A hearing was held in this case in Fort Lauderdale, Florida on December 10, 1991, before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Bruce M. Cease, Esquire

2720 W. Flagler Street Miami, Florida 33135

For Respondent: Susan P. Stephens, Esquire

Department of Transportation 605 Suwannee Street, MS 58

Tallahassee, Florida 32399-0458

For Intervenor: Ray Hanousek pro se

President

Certified Property Maintenance 3202 Robbins Road

Pompano Beach, Florida 33062 STATEMENT OF THE ISSUES

The issue for consideration in this case is whether the Department of Transportation can properly award state contract No. E4450, Job No. 869069108, to Certified Property Maintenance.

PRELIMINARY MATTERS

By letter dated November 13, 1991, Joseph Caplano, Jr., President of Petitioner, Power Sweeping Services, Inc., (Power), indicated his intention to formally protest the award of Contract No. E-4550, a road sweeping contract in Broward County, Florida to Certified Property Maintenance, (Certified), the low

bidder, on the basis that the bond commitment letter submitted by Certified's bonding company was not notarized as was required by the bid specifications. Thereafter, by letter dated November 26, 1991, the file was forwarded to the Division of Administrative Hearings for appointment of a Hearing Officer, and by Notice of Hearing dated December 2, 1991, Hearing Officer Linda M. Rigot set the case for hearing in Fort Lauderdale on December 11, 1991. However, by Supplemental Order Rescheduling Hearing dated December 4, 1991, as a result of the Department's Motion to Reset Formal Hearing for a time within the 15 day period provided by Section 120.53(5), Florida Statutes, the hearing was rescheduled for December 10, 1991 at which time it was held as scheduled by the undersigned to whom the case had been transferred in the interim.

At the hearing, Petitioner presented the testimony of Joseph Caplano, Jr., President and General Manager of Power Sweeping Services, Inc.; and Raymond R. Hanousek, President of Certified Property Maintenance. The Department presented the testimony of Teresa Martin, assistant director of contract administration for the Department's District 4; and Joseph M. Yesbeck, director of Planning and Programs for the Department's District 4. Respondent also introduced Respondent's Exhibit 1. The parties together submitted Joint Exhibits 1 through 5.

No transcript was provided. Subsequent to the hearing, only Respondent submitted Proposed Findings of Fact which have been ruled upon in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. By Joint Prehearing Stipulation filed at the time of hearing, the parties agree that bids for contract No. E-4450, the contract in issue here, were opened by the Respondent in Fort Lauderdale on October 11, 1991. Bids were received from five bidders including the Petitioner, Power, and the low bidder, Certified. Based on its evaluation of the bids submitted, on October 18, 1991, Respondent posted an intent to award the contract to Power Sweeping Services, Inc., Petitioner herein. However, thereafter, on October 22, 1991, the Department received a formal protest from the low bidder, Certified, challenging the intent to award.

   
   

2. After review of the substance of Certified's protest, Respondent notified all bidders that it would be reposting its intent to award on November 5, 1991, and on that date, did repost, indicating an intent to award the contract in question to Certified, the low bidder. Thereafter, on November 14, 1991, Petitioner timely filed its formal protest, having filed its initial intent to protest on November 6, 1991.

   
   

3. The bid blank, which was issued to all prospective bidders at the pre- bid conference held in this matter for a contract to involve mechanical sweeping on Interstate Highway 595 from its eastern terminus to Southwest 136th Avenue, including interchange ramps at I-95, I-595, and State Road 84, contained as a part thereof a notice to contractors which, at page 1 of 4, (page 1 of the 36 page bid package), contained a notation that for contracts of $150,000.00 or less, the bidder would be required to submit, as proof of ability to acquire a performance and payments bond:

   
   

   a notarized letter from a bonding company, bank or other financial institution stating they intend to issue a performance and payment bond in the amount of your bid,

   should your firm be awarded the project; in lieu of a notarized letter the following may be substituted:

   
   

   1. a bid guarantee of five percent (5%); or

      
      

   2. a copy of the contractor's certificate of qualification issued by the Department.

   
   

   This note specifically states that "failure to provide the following required evidence of bonding", as indicated above, with the bid proposal would result in rejection of the contractor's bid.

   
   

4. Petitioner submitted a notarized "letter of commitment to issue bond" dated October 8, 1991, by Burton Harris, attorney in fact and resident agent for American Bonding Company. Certified submitted with its bid an un-notarized letter from Mark A. Latini, bond manager with Bonina - McCutchen - Bradshaw Insurance to the effect that "Amwest Surety Insurance Company is the surety for the above referenced contractor and stands ready to provide the necessary performance and payment bond for the referenced bid should CPM be low and awarded the referenced contract."

   
   

5. Five bidders submitted bids. Certified was the low bidder with a bid price of $61,474.85. Florida Sweeping, Incorporated was second low bidder with a bid of $67,388.16, but that bid was rejected because an addendum was not noted. Petitioner was third lowest bidder with a bid of $72,290.65.

   
   

6. Because Certified's bid as initially submitted did not contain the required notarized letter from the bonding company, its bid was initially rejected. Thereafter, however, Certified's president, Mr. Hanousek, who prepared Certified's bid, and who attended the pre-bid meeting, called the Department's District office the day the bids were opened and was informed that his company's bid was low, but was rejected because its bond commitment letter was not notarized. As a result, he submitted a notice of protest and a subsequent protest to the denial of Certified's bid. A hearing on Certified's protest was not held.

   
   

7. When Joseph Yesbeck, the District's director of planning and programs, who was at the time serving as acting district secretary in the absence of the appointed secretary, was contacted by Mr. Hanousek. He reviewed the file and met with Ms. Martin, the District's contract administrator for construction and maintenance contracts and the contracting staff to see what was happening. At that point Ms. Martin explained why Certified's bid had been disqualified, and the matter was thereafter discussed with the District and Department attorneys. When the District secretary came back, Mr. Yesbeck briefed him and recommended that based on the information he had received from the District and Department attorneys, the failure to submit the notarized letter should be considered a non-material deviation and the Certified bid be determined the low responsive bidder. The reasons for this were that the absence of the notary did not really give any competitive advantage to Certified and that ordinarily defects of this nature are routinely allowed to be cured.

   
   

8. When the District secretary, on the basis of the information provided by Mr. Yesbeck, decided to repost the contract, Mr. Yesbeck prepared a joint letter of reposting which removed Certified's disqualification and left it as the low bidder. None of the other rejected bidders, including Florida Sweeping and bidder Number 5, which was rejected because its bond proposal was not of a

   proper character, were advised that they could come in and correct the defects with their bond letters.

   
   

9. According to Ms. Martin, the notice to contractors requiring a notarized letter from a bonding company as an alternative to the requirement to post a 5% bid guarantee was designed to promote participation in state contracting by small business and minority business enterprise applicants, so that the bidder does not actually have to post the bond in question. The notarization requirement was put in by the Department but neither Ms. Martin nor any other witness testifying on behalf of the Department was able to indicate why the bond certification had to be notarized.

   
   

10. Historically, when the Department has gotten a bid without a notarized bond letter it has been rejected, and in Ms. Martin's experience, she has never known of a protest based on such a denial since she began working with contracts in July, 1988. When she reviews the bids, she reviews the bonding letter for its content as well as seeing whether it is notarized. Here, her reason for initially rejecting certified's bid was solely that the bond commitment letter was not notarized. The decision to reject was not hers alone, however, since she also checked with the District General Counsel who initially advised her that Certified's bond commitment letter was no good. Apparently, counsel changed his position upon discussion of the matter with Mr. Yesbeck and the Department's General Counsel since, according to Mr. Yesbeck, both counsel recommended subsequently that the absence of the notarization not be a disqualification.

    
    

11. Further, according to Ms. Martin the requirement for the notarization has been utilized by District 4 since 1987 with all bids requiring it notwithstanding Mr. Hanousek's testimony that he has never seen the requirement before in any of the 6 successful contract's he has had with the Department before. In that regard, however, he admits this is the only contract he has had with District 4. Ms. Martin does not know if the notarization requirement is used in other Districts and no evidence as presented by any party to clarify that issue.

    
    

    CONCLUSIONS OF LAW

    
    

12. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties hereto pursuant to Section 120.57(1), Florida Statutes.

    
    

13. The Department of Transportation is authorized to solicit bids for the maintenance of roads designated as part of the State Highway System and any roads placed under its supervision by law and may award contracts pursuant thereto to the lowest responsible bidder. Section 337.11, Florida Statutes.

    
    

14. Consistent therewith, the courts have granted great deference to an agency's decision regarding competitive bidding for its contracts stating:

    
    

    1. public body has wide discretion in soliciting and accepting bids for public improvements and its decision, when based on an honest exercise of this discretion, will not be overturned by a court even if it may appear erroneous and even if reasonable persons may disagree.

       Liberty County v. Baxter's Asphalt and Concrete, Inc., 421 So.2d 505,507 (Fla. 1982). This decision was supported and confirmed by the same court somewhat later in Department of Transportation v. Groves-Watkins Constructors, 530 So.2d 912 (Fla. 1988) wherein the court held that the agency's discretion, properly applied, cannot be overturned absent a showing of illegality, fraud, oppression or misconduct.

       
       

15. This is not to state, however, that the agency's discretion is absolute. Quite the contrary. If it can be shown that the agency action is arbitrary, capricious, or beyond the scope of its discretion, that action may be overturned. Capeletti Bros. v. Department of General Services, 432 So.2d 1359 (Fla. 1DCA 1983); Ajax Paving Industries v. DOT, DOAH Case No. 88-1172BID, RO dated April 27, 1988. Regardless of which standard is applied, however, the burden is upon the protestant to show by a preponderance of the evidence that the agency's action is improper.

    
    

16. Here the Department is claiming that it's decision to award the contract to Certified was proper because the defect in it's bid, the failure to have a notarized bond commitment letter, was non-material and gave it no competitive advantage. While the latter may be true, there is some doubt as to the former.

    
    

17. In Harry Pepper & Associates v. City of Cape Coral, 325 So.2d 1190 (Fla. 2DCA 1977),(rehrg. den. 1978, the court set down the test for determining whether a deviation in a bid is sufficiently material to destroy its competitive character. The court held that to be:

    
    

    ...whether the variation affects the amount of the bid by giving the bidder an advantage or benefit not enjoyed by the other bidders.

    
    

18. The attitude of the agency toward the materiality of notarization requirement at the time the procurement was initiated can be seen by the fact that in its bid documents, where the requirements are set out, the notarization requirement was underlined for emphasis. Surely that indicates the agency's feeling that such a requirement was needed. Further, Ms. Martin indicated that in her several years experience with contract administration at the District, it had always taken the position that the notarization was required. Even the District counsel concurred when the matter was initially placed before him.

    From all this it can be clearly seen that, at least until this particular procurement, the notarization issue was material.

    
    

19. The evidence also shows that, consistent with prior practice, Certified's bid, which did not conform to the District's longstanding requirements, was rejected. It was only when Certified filed it's original protest that, after consultation between it's president and the acting District Director and coordination with the Department's General Counsel took place, that the initial determination was overturned and the contract, which had in the interim, been awarded to petitioner, was again withdrawn and reposted showing Certified as the successful bidder.

    
    

20. There is no question that Certified was the low bidder on this procurement and that it's bid was low by a significant amount. However, aside from the claim that the initially disqualifying factor of non-notarization was not material, the Department showed no reason or rational basis for changing its mind.

21. The term "capriciousness" is defined as "one which is taken without thought or reason or irrationality.." The term, "arbitrariness" is defined as "one which is not supported by facts or logic, despotic."

    
    

22. Here, the evidence does not show any legitimate reason or rationality for the Department's reversal of its original position determining that the failure of Certified was a material defect. By the same token it has not been shown to be supported by fact either. Aside from the logic of awarding to the lowest bidder, a determination which must be qualified by the application of the test for responsiveness, there seems to be no other logical basis for the Department's action. Indeed, it borders on the despotic to arbitrarily and without reason change a longstanding policy without any advance notice of or basis for the change.

RECOMMENDATION

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

RECOMMENDED that a Final Order be entered setting aside the determination that Certified Property Maintenance's bid on Contract No. E4450, Job No.

869069108 was the low responsive bid.

RECOMMENDED in Tallahassee, Florida this 28th 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 28th day of January, 1992.

APPENDIX TO RECOMMENDED ORDER IN CASE NO. 91-7592BID

The following constitute my ruling on all Proposed Findings of Fact pursuant to Section 120.59(2), Florida Statutes submitted by the parties hereto.

FOR THE PETITIONER:

None submitted.

FOR THE RESPONDENT:

1. & 2. Accepted and incorporated herein.

1. Accepted and incorporated herein except for the finding that Certified's bid complied in every respect except the notarization. The assurance by the bonding company was not unqualified but conditioned upon Certified being awarded the contract.

2. Accepted and incorporated herein.

   
   

3. & 6. Accepted and incorporated herein.

1. Accepted.

   
   

2. Accepted and incorporated herein.

   
   

3. Accepted and incorporated herein except for last sentence regarding which see 3., supra.

   
   

4. Accepted and incorporated herein.

FOR THE INTERVENOR:

None submitted.

COPIES FURNISHED:

Bruce M. Cease, Esquire 2720 West Flagler Street Miami, Florida 33135

Susan P. Stephens, Esquire Department of Transportation 605 Suwannee Street, MS 58

Tallahassee, Florida 32399-0458

Ray Hanousek President

Certified Property Maintenance 3203 Robbins Road

Pompano Beach, Florida 33062

Ben G. Watts Secretary

Department of Transportation 605 Suwannee Street

Tallahassee, Florida 32399-0458

Thornton J. Williams General Counsel

Department of Transportation 605 Suwannee Street

Tallahassee, Florida 32399-0458

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: 91-007592BID

Orders for Case No: 91-007592BID