STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GREENHUT CONSTRUCTION COMPANY, )

)

Petitioner, )

vs. )

) DEPARTMENT OF GENERAL SERVICES, )

) CASE NO. 92-1297 BID

Respondent, )

and )

) DUNN CONSTRUCTION COMPANY, INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

A hearing was held in this case in Tallahassee, Florida

on March 11, 1992, before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings.

APPEARANCES

For the Petitioner: Robert A. Emmanuel, Esquire

Emmanuel, Sheppard & Condon

30 Spring Street

P. O. Drawer 1271 Pensacola, Florida 32596

For the Respondent: Sylvan Strickland, Esquire

Staff Attorney

Department of General Services

309 Knight Building, Suite 110 2737 Centerview Drive Tallahassee, Florida 32399-0950

For the Intervenor: Harry R. Detwiler, Jr., Esquire

Holland & Knight

P. O. Drawer 810 Tallahassee, Florida 32302

STATEMENT OF THE ISSUES

The issue for consideration herein is whether the Respondent's proposed award on BID No. HSMV - 90022010 to Dunn Construction Company, Inc., should be upheld.

PRELIMINARY MATTERS

By Petition For Hearing, filed with the Department of General Services on February 9, 1992, Petitioner herein, Greenhut Construction Company, (Greenhut), protests the Respondent,

Department of General Services's, (Department), proposed award of

a construction contract to the Intervenor herein, Dunn Construction Company, Inc., (Dunn), alleging that Dunn's bid on the project was not responsive, having been filed on the wrong bid form, and that, therefore, it, Greenhut, is entitled to the award.

By letter dated February 24, 1992, the Department forwarded the file to the Division of Administrative Hearings for appointment of a Hearing Officer, and by Notice of Hearing dated February 28, 1992, Hearing Officer Stephen Menton set the case for hearing in Tallahassee on March 11, 1992, at which time it was held as scheduled by the undersigned to whom the matter was transferred in the interim.

Before hearing, however, on February 28, 1992, the successful bidder, Dunn, filed its Petition for Leave to Intervene which was not opposed by either other party, and by Order dated March 9, 1992, the undersigned granted intervention.

At the hearing, Petitioner presented the testimony of Dudley H. Greenhut, President and Chief Executive Officer of Greenhut Construction Company; Mathew J. Fleck, Greenhut's

estimator on this project; Lewis G. Everline, Jr., the Department's project manager for this project; and Sam M. Marshall, an architect. Petitioner also introduced Petitioner's Exhibits 1 through 8 and 10 through 14. Petitioner's Exhibit 9 for Identification was not admitted.

Intervenor presented the testimony of William D. Rutherford, the architect hired by the Department to design and supervise this project; Matthew J. Lukens, Assistant Vice President of Dunn and general manager of its Orlando office; and Harrel F. Boldin, the individual employed by the Department of Highway Safety and Motor Vehicles, (DHSMV), responsible for all its fixed capital outlay construction. Intervenor also introduced Intervenor's Exhibit A. The Department presented the testimony of William C. Snuggs, DHSMV's Assistant Director of Administrative Services, and William A. Scaringe, its Director of the Division of Building Construction. The Department also introduced DGS Exhibits A through D.

Without objection, and at the request of the parties, the undersigned officially recognized Rules 13-1.015(26);

13D-11.002(9), (11), and (18); and 13D-11.0072.

A transcript was provided and subsequent to the filing

thereof, all parties submitted Proposed Findings of Fact which have been ruled upon in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. At all times pertinent to the issues herein, the Department was the state agency responsible for the solicitation of bids for and award of contracts for the construction of state

   buildings in Florida. Both Greenhut and Dunn are qualified contractors who are certified to bid on state construction contracts in general and this procurement in particular.

   
   

2. In December, 1991, the Department issued an advertisement for bids for the project in issue herein, the

   construction of the Kirkman Complex Addition Data Center in

   Tallahassee, Florida. According to the Advertisement for Bids, all bids "must be submitted in full accordance with the requirements of the Drawings, Specifications, Bidding Conditions and Contractual Conditions, which may be examined and obtained ..." from the Department's designated architect/engineer, Clemons, Rutherford and Associates, Inc. in Tallahassee. Section B-21 of the request for proposals (invitation to bid) reads, in pertinent part:

   
   

   The recommendation for contract award will be for the bidder qualified in accordance with Section B-2 and submitting the lowest bid provided his bid is responsible and it is in the best interest of the Owner to accept it.

   
   

   The Owner reserves the right to waive any informality in bids received when such waiver is in the interest of the owner.

   
   

3. Bids received on this project were originally

   scheduled to be opened and read aloud on January 15, 1992 with the tabulation and Bid Award Recommendation to be posted the following days at the location where the bids were opened.

   
   

4. The proposal as originally issued called for the submittal of a Base Bid with four Alternates, 1a, 1b, 2, and 3.

   Alternate 1a was a deduct for merely extending the existing Johnson Controls System to incorporate the new work instead of providing a totally new and independent control system. Alternate 1b called for adding furniture and landscaping for certain of the rooms shown on the drawings; Alternate 2 called for adding a "shelled" fourth floor as described in the proposal; and Alternate 3, as originally issued, called for:

   
   

   Add a complete fourth floor as indicated in drawings including the finished interior partitions with full HVAC, Plumbing and Electrical Service. Include furniture and landscaping for rooms 414 and 419. (Includes items in Alternate No. 2)

   
   

5. As a result of questions received from prospective bidders at the pre-bid conference which indicated some confusion

   as to the meaning and intent of the Department regarding Alternate No. 3, by letter to all prospective bidders, dated January 8, 1992 the Department's architect indicated:

   
   

   Alternate #3 shall be the fourth floor complete, as shown on drawings, which includes items in Alternate #2.

   
   

6. Addendum #1 to the request for bids, dated January 10, 1992, clarified Item 1-3.6), PROPOSAL FORM, of the PROJECT

   MANUAL to ADD to "Alternate #3", "(Include items in Alternate #2)". Item #2-1 of Addendum #2, dated January 16, 1992, deleted the sentence changed by Item #1- 3.6, and revised the sentence to read as follows:

   
   

   This includes any items required in addition to Alternate #2 to complete the remainder of the work for the Fourth Floor.

   Information contained at the beginning of each Addendum calls the bidders' attention to the change and indicates that failure to incorporate it may result in disqualification.

   
   

7. The due date for bids was extended at the instance of the Department.

   Both Petitioner and Intervenor submitted bids

   for this project as did several other concerns on January 23, 1992. Greenhut's base bid was $4,139,000 with a deduct of $63,600 for Alternate 1a, and additions for Alternates 1b, 2, and 3 of $69,500, $239,000, and $209,000 respectively.

   Greenhut's total bid, therefore, through Alternate 3, was $4,592,900. Dunn's base bid was $4,079,000 with a zero deduct for Alternate 1a, and additions for Alternates 1b through 3 of $67,000, and $428,000. Dunn's total bid, therefore, was $4,574,000 for a difference of $18,900.

   
   

8. Greenhut's bid was submitted on a form which provided for the base bid, the deduct for 1a, and the additions for 1b. 2

and 3 with the figure for 3 being those costs in addition to those identified in

1. Dunn's bid was submitted on a prior form which provided for a base bid, a 1a deduction if any, (there was none), and additions for 1b, 2, and 3 with the figure for 3 including the figure listed for 2. An initial review of Dunn's bid form, then, showed a base bid of $4,079,000, no 1a deduction, a 1b addition of

   $67,000, a 2 addition of $311,000, and a 3 addition of $428,000. This letter figure included the $311,000 figure for Alternate 2, which should have been deducted from the bid during tabulation.

   
   

   1. When the bids were opened on January 23, 1992 by Mr. Everline, each figure on each bid was read off and listed on the bid tabulation form in the appropriate area. No attention was given at that time to the appropriateness or correctness of the

      figures listed on each bid form, nor was any attention paid to any other technical requirement of the procurement. This was merely a transfer of figures from the bid form to the tabulation form, and when this was done, Mr. Everline announced to all in attendance, including many contractor representatives, that the "apparent low bidder" was Greenhut. In arriving at that conclusion, Mr.

      Everline added all of Dunn's figures together without deducting the $311,000 listed for Alternate 2, a figure which was included in the $428,000 figure listed for Alternate 3. This resulted in an incorrectly large total bid for Dunn.

      
      

   2. Sometime later that day, a representative of Dunn

      contacted Mr. Everline to indicate that Dunn had inadvertently bid on the wrong form which precipitated its misleading presentation. Mr. Everline properly declined to discuss the matter and referred the Dunn representative to the Department's legal counsel.

      
      

   3. Sometime thereafter, when the bids had been

      tabulated and reviewed for responsiveness and legal qualification

      of bidders, Mr. Everline suggested to representatives of DHSMV that in order to forestall a protest, only so much of the project as extended through Alternate 2 be awarded. DHSMV officials, however, had sufficient funds available for the entire project, including some additional funds, if necessary, for cabling, and insisted they wanted the entire project awarded. The Department's legal counsel, upon review of the situation, concluded that the Dunn's actual bid intent was clear to include the amount listed for Alternate 2 within that listed for Alternate 3, and not to consider the two as additives to each other. It further concluded that Dunn's use of the improper form on which to submit its bid was

      immaterial and afforded it no improper competitive edge over other bidders. Therefore, it was concluded that Dunn was the low responsive bidder and, on February 4, 1992, the Department issued a Notice of Award to Dunn. Thereafter, Greenhut filed its Petition For Hearing taken as a protest to the award. Both the Department and Dunn agreed that Greenhut had standing to protest the award and that the protest was timely filed. It is so found.

      
      

      CONCLUSIONS OF LAW

      
      

   4. The Division of Administrative Hearings has jurisdiction

      over the parties and the subject matter of these proceedings. Section 120.57(1), Florida Statutes.

      
      

   5. The burden of proof in this case is upon the unsuccessful bidder which seeks to establish its entitlement to an award. Florida Department of Transportation v. J.W.C. Company Inc., 396 So.2d 778 (Fla. 1 DCA 1981). Here, therefore, Petitioner has the burden to establish by a preponderance of the evidence that the Department's decision to award this contract to Dunn Construction Company, Inc. 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).

      
      

   6. An agency has wide discretion is soliciting and accepting

      bids and a decision based on an honest exercise of that discretion may not be overturned by a Hearing Officer even if reasonable persons disagree with the outcome. C. H. Barco Contracting Co. v. State, Department of Transportation, 483 So.2d 796 (Fla. 1 DCA 1986). The issue is whether the purpose of the competitive bid process has been subverted, and the Hearing Officer's sole responsibility is to ascertain whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly. Department of Transportation v. Groves- Watkins Constructors, 530 So.2d 912, 914 (Fla. 1988).

      
      

   7. While an agency has wide discretion in evaluating bids

      and awarding contracts, it may not act arbitrarily or capriciously, nor can its decision be based on bias or favoritism. An agency action has been held to be arbitrary where it is not supported by facts or logic or is despotic. Agrico Chemical Company v. Department of Environmental Regulation, 565 So.2d 759, 763 (Fla. 1 DCA 1989). The review for arbitrariness is limited, however. An agency's action needs to show only a rudimentary rationality to be supportable. Adam Smith Enterprises. Inc. v. Department of Environmental Regulation, 553 So.2d 1260, 1273 (Fla. 1 DCA 1989). The Hearing Officer's review may not substitute his or her judgement for that of the agency but may insure only that the agency has used reason rather than whim in arriving at its decision. Id. at 1273.

      
      

   8. Here, the agency determined that Dunn's bid was the lowest responsive bid. To do so, it had to interpret the bid in Dunn's favor and disregard one of the figure elements contained therein (the figure for Alternate 2, determining that it was included in and not in addition to the figure for Alternate 3). It is this action, which resulted in Dunn's bid being the lowest,

      which Petitioner claims is arbitrary and unlawful. Petitioner claims that Dunn's bid is not a "valid bid" and, as submitted, is not responsive to the terms of the solicitation as amended. It cites well established principles of law that the responsiveness of a bid is determined as of the time the bid is

      made public, and a bidder may not change his bid after that opening, except to cure minor irregularities. Harry Pepper & Associates. Inc. v. The City of Cape Coral, 352 So.2d 1190 (Fla. 2 DCA 1977).

      
      

   9. Petitioner also argues that a "non-material bid

      deviation" under Rule 13D-11.002(9), F.A.C. means a variation from the terms of the solicitation which does not affect the price of the bid or give the bidder an advantage or benefit not enjoyed by other bidders. See also Harry Pepper, supra.

      
      

   10. The evidence of record here clearly demonstrates that

       Dunn submitted its bid on a bid form that had been supplemented and which, as submitted, caused the bid to be unartfully phrased so as to give an artificial picture of the actual price bid by the bidder. When it became obvious what had happened, a communication between Dunn and the agency quickly confirmed what appeared to be obvious, and the accurate bid price was entered for Dunn's bid. No change to the price was made. The forms, when considered by any reasonable individual, showed, as submitted, an obviously unrealistic price quotation which would put anyone familiar with the project on notice as to what had happened.

       The subsequent inquiry confirmed what everyone knew and the exclusion of the independent figure, for Alternate 2 on Dunn's bid resulted in a clear statement of their asking price. As it turned out, this was the low bid.

       
       

   11. The purpose of competitive bidding is to obtain the

       lowest responsible offer for the project and irregularities in the bid process may be waived in furtherance of that purpose if to do so does not give the successful bidder an unfair competitive advantage. Here, it is clear that Dunn intended to bid a total of $428,000.00 for both Alternates 2 and 3, inclusive. To clarify an otherwise unclear submission to make the party's intent clear does not give that party a competitive advantage. Simple comparison of the

       $428,000.00 figure with the total of the submissions by Petitioner for Alternates 2 and 3, separately, ($448,000.00), shows they are not far apart and supports that conclusion. To hold Dunn to the obviously erroneous inclusion of

       $311,000.00 for Alternate 2 in addition to the $428,000.00 for Alternate 3 would clearly be arbitrary.

       
       

   12. Considering the evidence as a whole, it is clear that Petitioner has failed to show, by a preponderance of the evidence

that the Department's decision to clarify Dunn's bid to reflect the actual amount bid, and to disregard the clearly minor irregularity of utilizing the wrong bid form, when the intent of the bidder was obvious, was illegal, unfair, fraudulent, dishonest or arbitrary.

RECOMMENDATION

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

RECOMMENDED that the Department of General Services enter a Final Order in this case dismissing the protest of Greenhut

Construction Company, Inc., in regard to the proposed award of

contact in bid number HSMV - 90022010 to Dunn Construction Company, Inc.

RECOMMENDED in Tallahassee, Florida this 21st day of April, 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 21st day of April, 1992.

APPENDIX TO RECOMMENDED ORDER IN CASE NO. 92-1297 BID

The following constitutes my specific rulings pursuant

to Section 120.59(2), Florida Statutes, on all of the Proposed Findings of fact submitted by the parties to this case.

FOR THE PETITIONER:

1. - 6. Accepted and incorporated herein.

7. - 9. Accepted.

1. Accepted.

2. & 12. Accepted and incorporated herein.

1. Accepted.

2. Accepted.

3. & 16. Accepted and incorporated herein.

1. Accepted and incorporated herein.

2. & 19. Accepted and incorporated herein.

1. Accepted.

2. & 22. Accepted and incorporated herein.

1. Argument and not Finding of Fact except for 1st sentence which is accepted.

2. & 25. Accepted and incorporated herein.

FOR THE RESPONDENT:

1. - 3. Accepted.

4. - 6. Accepted and incorporated herein.

7. & 8. Accepted.

9. - 12. Accepted and incorporated herein.

1. Accepted.

2. Accepted and incorporated herein.

3. Accepted and incorporated herein.

4. & 17. Accepted and incorporated herein.

1. Irrelevant but accepted as true.

2. Accepted.

3. Accepted and incorporated herein.

4. Accepted.

5. Accepted.

6. Irrelevant but accepted as true.

7. Accepted.

8. Accepted and incorporated herein.

9. Irrelevant.

10. Accepted and incorporated herein.

11. Accepted.

FOR THE INTERVENOR:

1. Accepted.

2. - 5. Accepted and incorporated herein.

1. Accepted and incorporated herein.

2. & 8. Accepted and incorporated herein.

1. Accepted and incorporated herein.

2. Accepted and incorporated herein.

3. Accepted and incorporated herein.

4. - 15. Accepted.

16. - 19. Accepted.

20. & 21. Accepted.

1. Accepted and incorporated herein.

2. & 24. Accepted.

COPIES FURNISHED:

Robert A. Emmanuel, Esquire

30 South Spring Street Post Office Drawer 1271 Pensacola, Florida 32596

Sylvan Strickland, Esquire Suite 309, Knight Building 2737 Centerview Drive

Tallahassee, Florida 32399-0950

Harry R. Detwiler, Jr., Esquire

315 S. Calhoun Street, Suite 600 Tallahassee, Florida 32301

Ronald W. Thomas Executive Director

Department of General Services Suite 307, Knight Building 2737 Centerview Drive

Tallahassee, Florida 32399-0950

Susan Kirkland General Counsel

Department of General Services Suite 309, knight Building 2737 Centerview Drive

Tallahassee, Florida 32399-0950

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 be filed with the agency which will issue the Final Order in this case.

Docket for Case No: 92-001297BID

Orders for Case No: 92-001297BID