STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

RANGER CONSTRUCTION )

INDUSTRIES, INC., )

)

Petitioner, )

vs. )

FLORIDA DEPARTMENT OF )

TRANSPORTATION, ) CASE NO. 92-1538BID

)

Respondent, )

and )

)

COMMUNITY ASPHALT COMPANY, )

)

Intervenor. )

)

RECOMMENDED ORDER

A hearing was held in this case in Tallahassee, Florida

on March 16, 1992, before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings.

APPEARANCES

For the Petitioner: Mary M. Piccard, Esquire

Cummings, Lawrence & Vezina, P.A. 1004 DeSoto Park Drive

Post Office Box 589 Tallahassee, Florida 32302-0589

For the Respondent: Susan P. Stephens, Esquire

Florida Department of Transportation 605 Suwannee Street

Tallahassee, Florida 32399-0450

For the Intervenor: Douglas S. Roberts, Esquire

P.O. Box 6526

Tallahassee, Florida 32314 STATEMENT OF THE ISSUES

The issue for consideration in this case is whether the Department of Transportation should issue an award of contract in

highway construction projects 93110-3539, 3543, and 3525, on State Road 80, (Avenue E), in West Palm Beach, Florida to Community Asphalt Corporation.

PRELIMINARY MATTERS

By Formal Protest and Request For Section 120.57(1) Hearing dated January 27, 1992, Ranger Construction Industries, Inc., (Ranger) protests the Florida Department of Transportation's, (Department), intent to award contracts for the highway construction contracts mentioned above to Community Asphalt Corporation,

(Community), on the basis that the Department's rejection of its bid, because of the failure of the president of the Petitioner to sign the bid bond, and on the basis of an alleged unbalanced bid, was arbitrary and capricious and a violation of its right to the award as the lowest responsive bidder. Petitioner amended its protest on March 5, 1992 and by letter of even date, the Department forwarded the file to the Division of Administrative Hearings for appointment of a Hearing Officer.

On March 9, 1992, the undersigned set the case for hearing in Tallahassee on March 16, 1992, and on March 10, 1992, Community, the successful bidder, filed its Petition to Intervene. The undersigned granted the Intervenor's Petition at the hearing which was held as scheduled.

At the hearing, Petitioner presented the testimony of Kenneth N. Morefield, a state highway engineer with the Department and chairman of its Contract Awards Committee, (CAC), and James M. Slade, Ranger's Executive Vice President.

Petitioner also introduced Petitioner's Exhibits 1, 2, 4 and 5. Petitioner's Exhibit 3 for Identification was not admitted.

Respondent presented the testimony of Paul S. Newell, public transportation manager for the Department, and Robert C.

Griner, preliminary estimates engineer for the Department. Respondent also introduced Respondent's Exhibits A through E. The parties together introduced Stipulated Exhibits 1 through 6. Counsel for Intervenor presented no witnesses and introduced no documentary evidence choosing to adopt and incorporate Respondent's case.

A transcript was provided and all parties submitted

proposed Findings of Fact which have been ruled upon in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. On December 4, 1991, both Petitioner, Ranger, and Intervenor, Community, submitted bids for job numbers 93110-3539,

   93110-3542, and 93110-3525, for a construction project on State Road 80, (Avenue E), in Palm Beach County. Petitioner's bid was in the total amount of $2,554,390.37, and Intervenor's was in the total amount of $2,557,071.42. On the basis of those figures, Petitioner was the apparent low bidder.

   
   

2. Bid specifications incorporated in all this agency's bids indicate that a bid may be rejected for irregularities. The term, "material" is not used in that specification. When bids are opened, agency procurement officials look at each bid to insure that any award is based on balanced bids containing all appropriate signatures and other requirements, and in the event of an irregularity, a decision is made on the question of whether any irregularity is material in that specific contract. This decision, made by the Awards Committee, is whether the irregularity is material enough to declare the questioned bid unresponsive and award the contract to the next lower bidder.

   
   

3. When bids are first opened at the Department auditorium, they are checked to see if the bid bond or a cash or cash equivalent alternative is present. Then the figures are read off and recorded. The bids are then taken back to the contracts office and safeguarded until the minority business enterprise office looks at them. When this is done, the bids are then passed out to the checkers for examination.

4. This more detailed review of the bids submitted revealed that Ranger's bid bond form, though attested to by the corporate secretary, and executed by George H. Friedlander, Agent for the bonding company, United States Fidelity and Guaranty Company, did not bear the signature of either Ranger's president or vice president. This is considered by Department representatives as being a requirement of a responsive bid. Community's bid bond was properly signed and attested to, and bore the signature of the agent for Reliant Insurance Company, the surety. Community failed to put the company name on the certificate of non- collusion, but in light of the fact that the certificate was signed by the president and was attached to other Community documents, it was identifiable as a part of that bid.

   
   

5. In addition, further review of Ranger's bid revealed that on item 630-1-

   12 of the computerized price breakdown, certain

   conduit was listed with a unit price of $621.00 per linear foot.

   The computer disc furnished to the bidders by the Department, which was used to compute the pricing breakout, reflected 38 linear feet of this conduit would be required. The price of $621.00 per foot on the bid form was in error, however. It should have been $6.21 per linear foot. The error occurred when Ranger's representative punched in the typographically incorrect figure, a clearly clerical error, at the time the bid forms were being completed. This was done, according to Mr. Slade, Ranger's vice president and the person responsible for the bid preparation, in the press of last minute preparation in a motel room in Tallahassee, under less than optimum circumstances.

   
   

6. Notwithstanding the fact that this was a clerical error which was not caught by any Ranger official on review of its bid prior to submittal, Department officials considered the use of that large figure made Ranger's bid "unbalanced." This defect, plus the failure of the bid bond to be signed by Ranger's president or vice-president, were both considered to be material deviations by the members of the Department's technical review committee which, based on those deviations, recommended to the Department's Contract Award Committee that Ranger's bid be declared unresponsive. This was notwithstanding the fact that even with the incorrect pricing for the amount of the conduit stated on the Department's discs, Ranger's bid was still low.

   
   

7. It must be noted, however, that the 38 linear foot quantity of conduit listed in the Department's discs was an

   incorrect amount. The project plans, furnished to all bidders prior to the bid process, reflected, in the breakdown of specifications, that the correct amount was 97 linear feet of conduit required. When Ranger's incorrect price of $621.00 per foot was applied to the actual footage required, the result was a bid figure for Ranger which was substantially higher than that submitted by Community and, therefore, caused a reversal in the order of the bidders.

   
   

8. The Department applies a deviation standard of 7% to flag bids for more careful scrutiny. Here, the $621.00 item price was clearly in excess of that standard. As will be seen below, Ranger was not the only party to make a mistake in this procurement. The Department's discs erroneously reflected the quantity of conduit required at 38 feet when the actual amount

   called for was 97 feet. There is a difference, however, between the Department changing its specifications, as would be the case here, and the bidder correcting a unit price after opening. The

   Department can but the bidder can't. The bid documents, furnished to each prospective bidder, reserve the Department's right to make changes.

   
   

9. Though the evidence indicates that it was not unknown in the past for Department officials to call a bidder for clarification of an unclear point in its bid, prior to bid award in this case, even though the pricing of the conduit was, at a figure almost 100 times the average/estimate of $7.30 per foot, no call was made to Ranger by any Department official to insure that the stated figure was the intended figure for inclusion. Mr. Griner, upon inquiry by the Hearing Officer, indicated that though while not usual, such an intentional inflation was not unknown to happen in bidding on Department contracts. No specific cases were cited, however.

   
   

10. The evidence also indicates that this particular item was not the only item the Department considered to be unbalanced. There were three others in Ranger's bid, but this one was the only one which was felt to be inappropriate. By the same token, Community's bid also contained several items considered to be unbalanced, but they were not considered to be in the disqualifying category that the conduit price in Ranger's bid was in.

    
    

11. Unbalanced bids are considered bad by the Department because, if successful, they allow the contractor to recoup or receive a larger portion of the contract price at the beginning of the contract term thereby making it less disadvantageous for him to walk away from the contract and making agency control over the contractor more difficult. Here, Mr. Slade unequivocally denies it was Ranger's intention to unbalance its contract for any purpose and claims it was no more than a clerical error in inserting the decimal point in the unit price when entered into the computer which resulted in the error. He claims that if he had been contacted by the Department when the obvious error was discovered, as he asserts, has been done in the past, he would have corrected it. It is clear that while query calls may have been made by the Department to bidders in the past, they were of a nature which did not affect the price of the contract.

    
    

12. Ranger never received any notice from the Department about any problem with its bid. The first information Mr. Slade had of any problem with Ranger's bid came when his estimator made a routine call to the Department and was told of the problem with the unbalance. Thereafter Mr. Slade spoke with Mr. Newell to determine what route the subsequent proceedings would take.

    
    

13. The Department contends, through the testimony of Mr. Newell and Mr. Griner, that it is Department policy to consider the failure to have a required signature on a relevant document to be grounds for declaring a bid non- responsive. Their testimony further reflects, however, that while the recommendations of the Technical Review Committee, (TRC), and the Contract Award Committee, (CAC), are uniformly to that effect, the Department Secretary has, on occasion, rejected such a recommendation and awarded a contract to a bidder whose bid did not contain a "required" signature. Consequently, it cannot be said to be Department policy to reject all bids containing an unsigned document since the Secretary, who as the agency head, sets agency policy, has acted inconsistent with such a "policy." Further, Mr. Morefield indicated that the Awards Committee could waive a failure of signature if it felt to do so was appropriate. To the best of his knowledge, however, that has not been done on this type of contract documents.

    CONCLUSIONS OF LAW

    
    

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

    
    

15. 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 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); Liberty County, supra. The issue is whether the purpose of the competitive bid process has been subverted, and the Hearing Officer has the responsibility to determine whether the agency acted fraudulently, arbitrarily, illegally or dishonestly. Department of Transportation v. Groves-Watkins Constructors, 530 So.2d 912, 914 (Fla. 1988).

    
    

16. 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 the agency's but may insure only that the agency has used reason rather than whim in arriving at its decision. Id. at 1273.

    
    

17. Here, the Department rejected Petitioner's bid on the basis of two major faults. The first relates to Ranger's failure

    to have its President or Vice President sign the bid bond, and the second relates to Ranger's use of an incorrect and inappropriate unit price for conduit which, the Department felt, unbalanced its bid.

    
    

18. The Department's review committee, which discovered both irregularities, considered them both to be material. Generally, a bid which contains a material variance from the specifications is not acceptable. A variance is material if it affords a bidder a substantial advantage over other bidders and thereby restricts the competitive process. Tropabest Foods, Inc. v. Department of General Services, 493 So.2d 50 (Fla. 1 DCA 1986). Not all deviations from specifications are material, however. If the variance would "deprive [the agency] of its assurance that the contract will be entered into, performed and guaranteed according

    to its specified requirements ..." it is substantial. By the same token, a variance which would adversely affect the competitive bidding process by providing a bidder a substantial advantage is also material. Robinson Electrical Co. v. Dade County, 417 So.2d 1032 (Fla. 3 DCA 1982).

    
    

19. As to the absence of signature of an appropriate corporate officer on the bid bond, a surety bond, that can hardly be said to be a material variance. Surety bonds are, in this state, construed liberally in favor of the obligee,

    (Department), and strictly against the surety. Gulf Power Co. v. Insurance Co. of North America, 445 So.2d 1141 (Fla. 1 DCA 1984); General Ins. Co. of America

    v. Sentry Indemnity Co., 384 So.2d 1305 (Fla. 5 DCA 1980). A surety bond is like a contract and the law of contracts generally applies. Here, the bond was properly signed by every required signatory of the bonding company, the surety, and was, in addition, signed by the Petitioner's corporate secretary. Clearly, it was the intent of Petitioner to provide an appropriate bond and of the surety to be bound on behalf of the Petitioner. Where, as here, the document reflects the surety's intent to be bound, it is binding and the Department would be protected. Gateway Cable T.V., Inc. v. Vikoa Const., 253 So.2d 461 (Fla. 1 DCA 1971). It cannot reasonable be said that the failure to have Ranger's President or Vice-President's signature on the bond, when, either way, it was legally binding on the surety and protected the Department, in any way gave Ranger a competitive edge over other bidders. It is not the formal act of signature that is important but the effect of the document without the signature. Here, the absence of the signature had no effect on the efficacy of the document and it cannot be considered a material variance especially since the evidence establishes that the Secretary has waived that disqualification in the past.

    
    

20. As to the other cited variance, the use of an improper unit price, the picture is not so clear. Here the evidence shows

    that the Petitioner, in the last minute press of preparing its bid for submittal, incorrectly placed the decimal point in the bid price of electrical conduit in a quantity set forth on the computer disc furnished all prospective bidders by the Department. This resulted in an incorrect price for that element which, initially, did not effect Petitioner's place in the award rating.

    However, it subsequently became evidence that the quantity stipulated by the Department was also in error, and when the change to the correct quantity was made, Petitioner was no longer the apparent low bidder. Petitioner requested the Department correct its unit price on the theory that its quoted unit price was obviously in error. It now claims that the Department's refusal to correct that error is arbitrary and capricious and otherwise inappropriate.

    
    

21. However, the Department's evidence indicated that in so refusing, it followed its established procedures in reviewing its bids for unbalancing and it has consistently refused to make any changes to a bid price once the bids have been opened. To change what Ranger claims is an obvious error would violate that

    continuing policy and could establish a totally inappropriate precedent.

    
    

22. It is the bidder who is responsible for the accuracy of its bid. Petitioner has not shown that the Department's refusal to change or permit change of its bid to correct the conduit unit price is arbitrary, capricious, illegal, fraudulent or dishonest.

Though others might treat the matter differently, the Department's actions here were reasonable and consistent with past practice. It acted properly in finding Ranger's bid non-responsive as to the conduit unit pricing, and cannot be faulted for indicating its intent to award the contract in issue to Community Asphalt Corporation, the low responsive bidder.

RECOMMENDATION

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

RECOMMENDED that the Department of Transportation enter a Final Order in this case dismissing the protest of Ranger

Construction Industries, Inc., in regard to project Nos. 93110- 3539, 3543, and 3525 in West Palm Beach, Florida.

RECOMMENDED in Tallahassee, Florida this 20th 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 20th day of April, 1992.

APPENDIX TO RECOMMENDED ORDER IN CASE NO. 92-1538 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:

I 1. - 5. Accepted and incorporated herein. II 1. - 6. Accepted and incorporated herein.

1. & 8. Accepted and incorporated herein.

   1. Rejected as contra to the evidence.

   2. Accepted and incorporated herein.

   3. & 12. Accepted.

13. & 14. Accepted and incorporated herein.

1. - 23. Accepted and incorporated herein.

   1. Accepted.

   2. - 31. Accepted.

32. - 41. Accepted and incorporated herein.

42. - 44. Accepted and incorporated herein.

45. - 48. Accepted and incorporated herein.

49. & 50. Accepted.

1. - 53. Accepted.

   1. Accepted and incorporated herein.

   2. Accepted.

   3. Accepted and incorporated herein.

   4. Accepted.

   5. Rejected as not supported by the evidence.

   6. - 61. Accepted.

1. & 63. Accepted.

   1. Accepted.

   2. & 66. Accepted.

67. & 68. Accepted.

80. Accepted as to the Bond defect; rejected as to the pricing error.

FOR THE RESPONDENT AND INTERVENOR:

1. & 2. Accepted and incorporated herein.

1. - 6. Accepted and incorporated herein.

   1. Accepted.

   2. Accepted.

   3. Accepted and incorporated herein.

      10.	&	11.	Accepted.
      12.	-	14.	Accepted.
      		15.	Accepted and	incorporated	herein.
      16.	-	19.	Accepted and	incorporated	herein.
      20.	-	22.	Accepted.
      23.	-	26.	Accepted and	incorporated	herein.
      27.	-	30.	Accepted.
      31.	-	33.	Accepted and	incorporated	herein.
      34.	&	35.	Accepted and	incorporated	herein.

      1. Not a Finding of Fact but a summary of testimony.

      2. & 38. Accepted.

         1. Irrelevant and not related to basis for denial.

         2. - 42. Accepted and incorporated herein.

1. & 44. Accepted and incorporated herein.

   1. First and Second sentences accepted. Balance accepted and incorporated herein.

   2. & 47. Accepted and incorporated herein.

48. Accepted and incorporated herein.

COPIES FURNISHED:

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

Tallahassee, Florida 32399-0450

Douglas S. Roberts, Esquire

123 S. Calhoun Street Tallahassee, Florida 32314

Mary M. Piccard, Esquire 1004 DeSoto Park Drive

Tallahassee, Florida 32302-0589

Ben G. Watts Secretary

Department of Transportation Haydon Burns Building

605 Suwannee Street

Tallahassee, Florida 32399-0450

Thornton J. Williams General Counsel

Department of Transportation Haydon Burns Building

605 Suwannee Street

Tallahassee, Florida 32399-0450

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.

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA DEPARTMENT OF TRANSPORTATION

RANGER CONSTRUCTION INDUSTRIES, INC.,

Petitioner,

vs.

FLORIDA DEPARTMENT OF

TRANSPORTATION, CASE NO: 92-1538BID DOT CASE NO.: 92-0030

Respondent,

and

COMMUNITY ASPHALT COMPANY,

Intervenor.

/

FINAL ORDER

A hearing was held in the case in Tallahassee, Florida on March 16, 1992, before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings.

APPEARANCES

For the Petitioner: Mary M. Piccard

Attorney at Law

Cummings, Lawrence & Vezina, P.A. 1004 DeSoto Park Drive

Post Office Box 589 Tallahassee, Florida 32302-0589

For the Respondent: Susan P. Stephens

Assistant General Counsel Office of the General Counsel Department of Transportation 605 Suwannee Street, MS - 58

Tallahassee, Florida 32399-0458

For the Intervenor: Douglas S. Roberts, Esquire

Post Office Box 6526 Tallahassee, Florida 32314

STATEMENT OF THE ISSUES

The issue for consideration in this case is whether the Department of Transportation's (hereinafter "Department") declaration that the bid of Ranger Construction, Inc. (hereinafter ("Ranger") was materially irregular and therefore unresponsive to an invitation to bid on contracts in highway construction projects 93110-3539, 3543, 3525, on State Road 80, (Avenue E), in West Palm Beach, Florida.

PRELIMINARY MATTERS

By formal protest and request for a Section 120.57(l) hearing dated January 27, 1992, Ranger protested the Department's intent to award contracts for the highway construction mentioned above to Community Asphalt Company (hereinafter "Community"), on the basis that the Department's rejection of Ranger's bid, for failure of its president to sign the bid bond, and on the basis of an unbalanced bid, was arbitrary and capricious and a violation of Ranger's right to the contract award as the apparent lowest responsive bidder. Ranger amended its protest on March 5, 1992, and the Department forwarded the file to the Division of Administrative Hearings for assignment of a Hearing Officer.

The Intervenor's Petition to Intervene was granted at the hearing which was held in this matter.

At the hearing, Ranger presented the testimony of Kenneth N. Morefield, State Highway Engineer with the Department and chairman of its Contract Awards Committee, (CAC) , and James M. Slade, Ranger's Executive Vice President. Ranger also introduced Petitioner's Exhibits 1, 2, 4, and 5. Ranger's Exhibit 3 for Identification was not admitted. The Department presented the testimony of Paul S. Newell, public transportation manager for the Department, and Robert C.

Griner, preliminary estimates engineer for the Department. The Department also introduced Respondent's Exhibits A through E. The parties together introduced Stipulated Exhibits 1 through 6. Counsel for Community presented no witnesses and introduced no documentary evidence choosing to adopt and incorporate Respondent's case.

Both the Department and Ranger filed exceptions to the Hearing Officer's findings. Those exceptions are addressed below. References to the hearing transcript will be noted by page and line number. (Tr. P. , L.).

Ranger's exception as to the committee not using the actual term "material" is rejected. It is apparent from the testimony that the committee's function was to determine whether any irregularity was serious enough to warrant that a bid be deemed non-responsive, i.e., whether the irregularity was material.

Department's employee Kenneth N. Morefield responded to the question, "Did the Department make the determination that the irregularities found in Ranger's bid were material irregularities?," by stating, "The unit price irregularity due to the fact that there was an error in the plans, should be a material irregularity, yes, material unbalance." (Tr. P. 19, L. 24 - P. 20, L. 4).

Therefore, although the Department's employee used the term "irregularity" in his testimony, as to the missing signature, the Hearing Officer's findings as to "materiality" are deemed correct in Findings of Fact 2, 6 and 8.

Ranger's exception to Finding of Fact No. 8 is accepted to the extent that the Hearing Officer found that specifications may be changed after a bid opening. The error was in the Department's cost estimating system which it uses to develop the official projected cost of the project. The plans and specifications in fact contained the correct amount of conduit. (Tr. P. 122, l. 10-25; p. 123,1. 1-3). The Department did not change the specifications because the record shows that the plans reflected the appropriate amount of conduit necessary for the job. Quantities are specifically noted as approximations and the error only appeared on the item summary disc. Further, all bidders' submissions were similarly adjusted as to price extension to account for the disc error, but no bid item price was altered. No correction in bid specifications was made by The Department. (Tr. P. 26, L. 9-15).

The remainder of Ranger's exceptions are in the nature of argument rather than specific record exceptions to the Hearing Officer's order.

Respondent's exception to Finding of Fact No. 4 is accepted to the extent it reflects the Department's reading of the Hearing Officer's finding. The Hearing Officer noted in the same finding of fact that Community's bid bond was both signed and attested to and it must be presumed the Hearing Officer knew and noted the distinction.

Respondent's exception to Finding of Fact No. 8 is addressed above in the discussion of Petitioner's exception to the same finding.

Respondent's exception to Finding of Fact No. 11 is accepted in part. The uncontroverted testimony of the Department's employee Kenneth Morefield demonstrates the Department's concern was in particular with materially unbalanced bids rather than a mathematically unbalanced bid. (Tr. P. 24, L. 8- 25; P. 25, L. 1-25; P. 26, L. 1-15).

As to Respondent's exception to Finding of Fact No. 13, the testimony at hearing does not reflect a policy on the part of the Department's secretary to accept unsigned relevant documents. The testimony of Mr. Morefield (Tr. P. 22,

L. 13-25; P. 23, L. 1-6; P. 23, L. 1-6) and of Mr. Newell (Tr. P. 90, L. 17-24;

P. 92, L. 1-7; P. 103, L. 14-25; P. 104, L. 1-25; P. 105, L. 1-7), in addition

to the Department's Composite Exhibit A, overwhelmingly and incontrovertibly support a finding that the Department's policy of not accepting unsigned documents has been consistently adhered to. See discussion in Conclusions of Law, paragraph 17 below.

Respondent's exception to the Hearing Officer's conclusion of law relating to Petitioner's burden of proof is accepted. The correct standard is whether the agency acted fraudulently, arbitrarily, illegally or dishonestly in its decision. Department ofTransportation v. Groves-Watkins Constructors, 530 So.2d 912 (Fla. 1988); Scientific Games v. Dittler Brothers, 586 So.2d 1128 (Fla. 1st DCA 1991; Devoe L. Moore d/b/a Fort Knox Center v. Department of Health and Rehabilitative Services. et al., 17 F.L.W. D878 (Fla. 1st DCA April 2, 1992).

The Hearing Officer's findings of fact are adopted and incorporated herein except as specifically noted.

FINDINGS OF FACT

1. On December 4, 1991, both Ranger and Community submitted bids for job numbers 93110-3539, 93110-3542, and 93110-3525, for a construction project on State Road 80, (Avenue E), in Palm Beach County. Ranger's bid was in the total amount of $2,554,390.37, and Community's bid was in the total amount of

   $2,557,071.42. On the basis of those figures Ranger was the apparent low bidder.

   
   

2. Bid specifications incorporated in all the Department's bids indicate that a bid may be rejected for irregularities. The term, "material" is not used in that specification. When bids are opened, agency procurement officials look at each bid to insure that any award is based on balanced bids containing all appropriate signatures and other requirements, and in the event of an irregularity, a decision is made on the question of whether any irregularity is material in that specific contract. This decision, made by the Awards Committee, is whether the irregularity is material enough to declare the questioned bid unresponsive and award the contract to the next low bidder.

   
   

3. When bids are first opened at the Department's auditorium, they are checked to see if the bid bond or a cash or cash equivalent alternative is present. Then the figures are read off and recorded. The bids are then taken back to the contracts office and safeguarded until the minority business enterprise office looks at them. When this is done, the bids are then passed out to the checkers for examination.

   
   

4. This more detailed review of the bids submitted revealed that Ranger's bid bond form, though attested to by the corporate secretary, and executed by George H. Friedlander, Agent for the bonding company, United States Fidelity and Guaranty Company, did not bear the signature of either Ranger's president or vice president. This is considered by Department representatives as being a requirement of a responsive bid. Community's bid bond was properly signed and attested to, and bore the signature of the agent for Reliant Insurance Company, the surety. Community failed to put the company name on the certificate of non- collusion, but in light of the fact that the certificate was signed by the president and was attached to other Community documents, it was identifiable as a part of that bid.

   
   

5. In addition, further review of Ranger's bid revealed that on item 630- 1-12 of the computerized price breakdown, certain conduit was listed with a unit

   price of $621.00 per linear foot. The computer disc furnished to the bidders by the Department, which was used to compute the pricing break out, reflected 38 linear feet of this conduit would be required. The price of $621.00 per foot on the bid form was in error, however. It would have been $6.21 per linear foot.

   The error occurred when Ranger's representative punched in the typographically incorrect figure, a clearly clerical error, at the time the bid forms were being completed. This was done, according to Mr. Slade, Ranger's vice president and the person responsible for the bid preparation, in the press of last minute preparation in a motel room in Tallahassee, under less than optimum circumstances.

   
   

6. Notwithstanding the fact that this was a clerical error which was not caught by any Ranger official on review of its bid prior to submittal, Department officials considered the use of that large figure made Ranger's bid "unbalanced." This defect, plus the failure of the bid bond to be signed by Ranger's president or vice-president, were both considered to be material deviations by the members of the Department's technical review committee which, based on those deviations, recommended to the Department's Contract Award Committee that Ranger's bid be declared unresponsive. This was notwithstanding the fact that even with the incorrect pricing for the amount of the conduit stated on the Department's discs, Ranger's bid was still low.

   
   

7. It must be noted, however, that the 38 linear foot quantity of conduit listed in the Department's discs was an incorrect amount. The project plans, furnished to all bidders prior to the bid process, reflected, in the breakdown of specifications, that the correct amount was 97 linear feet of conduit required. When Ranger's incorrect price of $621.00 per foot was applied to the actual footage required, the result was a bid figure for Ranger which was substantially higher than that submitted by Community and, therefore, caused a reversal in the order of the bidders.

   
   

8. The Department applies a deviation standard of 7% to flag bids for more careful scrutiny. Here, the $621.00 item price was clearly in excess of that standard. As will be seen below, Ranger was not the only party to make a mistake in this procurement. The Department's discs erroneously reflected the quantity of conduit required at 38 feet when the actual amount called for was 97 feet.

   
   

   The remainder of the Hearing Officer's finding is not supported by competent substantial evidence and is a misstatement of competitive bid law. This finding is amended to correctly reflect the record on this issue. There is a difference, however, between the Department correcting the extension total on a particular pay item where the approximated amount required was correctly noted in the specifications, and the bidder correcting a unit price alter opening. The contract estimating system disc is not a specification. Specifications are noted in the project plans and bid documents, none of which were changed, by the Department. (Tr. P. 26, L. 9-15). Both parties correctly excepted this finding by the Hearing Officer. The Petitioner as to the legal conclusion contained in the factual Finding and Respondent as to the factual incorrectness. The bid documents, furnished to each prospective bidder (Joint Exhibit 6, Standard Specification 2-3) expressly note that quantities are approximations only.

   
   

9. Though the evidence indicates that it was not unknown in the past for the Department officials to call a bidder for clarification of an unclear point in its bid, prior to bid award, in this case, even though the pricing of the conduit was at a figure almost 100 times the average/estimate of $7.30 per foot, no call was made to Ranger by the Department Official to insure that the stated figure was the intended figure for inclusion. Mr. Griner, upon inquiry by the

   Hearing Officer, indicated that though while not unusual, such an intentional inflation was not unknown to happen in bidding on Department contracts. No specific cases were cited, however.

   
   

10. The evidence also indicates that this particular item was not the only item the Department considered to be unbalanced. There were three others in Ranger's bid, but this one was the only one which was felt to be inappropriate. By the same token, Community's bid also contained several items considered to be unbalanced, but they were not considered to be in the disqualitying category that the conduit price in Ranger's bid was in.

    
    

11. Portions of the Hearing Officer's findings as to this Finding of Fact are found not to be supported by competent substantial evidence and are amended to correctly reflect the record on this issue. Materially unbalanced bids are considered bad by the Department primarily because an unbalanced bid may result in a change in the -king of the bidders. (Tr. P. 24, L. 8-25; P. 119, L. 5-16). While mathematically unbalanced bids are not prohibited per se, because they allow the contractor to recoup or receive a disproportionate part of the contract price at the beginning of the contract term, they are not preferred. Here, Mr. Slade unequivocally denies it was Ranger's intention to unbalance its contract for any purpose and claims it was no more than a clerical error in inserting the decimal point in the unit price when entered into the computer which resulted in the error. He claims that if he had been contacted by the Department when the obvious error was discovered, as, he asserts, has been done in the past, he would have corrected it. It is clear that while query calls may have been made by the Department to bidders in the past, they were of a nature which did not affect the price of the contract.

    
    

12. Ranger never received any notice from the Department about any problem with its bid. The first information Mr. Slade had on any problem with Ranger's bid came when his estimator made a routine call to the Department and was told of the problem with the unbalance. Thereafter, Mr. Slade spoke with Mr. Newell to determine what route the subsequent proceedings would take.

    
    

13. Portions of this finding of fact by the Hearing Officer were not supported by competent substantial evidence and are therefore amended to correctly reflect the record evidence. The Department contends, through the testimony of Mr. Morefield, Mr. Newell and Mr. Griner, that it is Department policy to consider the failure to have a required signature on a relevant document to be grounds for declaring a bid non-responsive. Their testimony further reflects, however, that while the recommendations of the Technical Review Committee, (TRC), and the Contract Award Committee, (CAC), are uniformly to that effect, the Department Secretary has, on one occasion, rejected such a recommendation and awarded a contract to a bidder only where the bid did not contain a complete signature, but did contain part of the bidder's signature. (Tr. P. 90, L. 17-24; P. 92, L. 1-7; P. 103, L. 14-25; P. 104, L. 1-25; P. 105,

    L. 1-7; Department's Composite Exhibit A). Further, the record does not reflect that Mr. Morefield indicated that the Awards Committee could waive a failure of signature if it felt to do so was appropriate. His testimony (Tr. P. 34, L. 20- 25; P. 35, L. 1-17) when asked to speculate, was that he personally as a single member of the Awards Committee would vote to reject a bid without a signature and that he did not know what the other committee members would do but their prerogative was to vote differently from him if they so chose. To the best of his knowledge, however, that has not been done on this type of contract document.

    CONCLUSIONS OF LAW

    
    

14. The burden of proof in this case is upon the unsuccessful bidder which seeks to establish it is entitled to an award. Florida Department of Transportation vs. J. W. C. Company. Inc., 396 So.2d 778 (Fla. 1st DCA 1981). Here, Ranger has the burden to establish by a preponderance of the evidence that the Department's decision to award this contract to Community Asphalt Corporation was either fraudulent, arbitrary, illegal or dishonest. Department of Transportation v. Groves-Watkins Constructors. 530 So.2d 912, 914 (Fla. 1988); Scientific Games v. Dittler Brothers, 586 So.2d 1128 (Fla. 1st DCA 1991); Devoe L. Moore d/b/a Fort Knox Center v. Department of Health and Rehabilitative Services. et al., 17 F.L.W. D878 (Fla. 1st DCA April 2, 1992). Nothing in the foregoing findings establishes such action on the part of the Department.

    
    

15. Here, the Department rejected Ranger's bid on the basis of two major faults. The first relates to Ranger's failure to have its President or Vice President sign the bid bond, and the second relates to Ranger's use of an inappropriate unit price for conduit which, the Department felt, materially unbalanced its bid.

    
    

16. The Department's review committee, which discovered both irregularities, considered them both to be material. Generally, a bid which contains a material variance from the specifications is not acceptable. A variance is material if it affords a bidder a substantial advantage over other bidders and thereby restricts the competitive process. Tropabest Foods. Inc. v. Department of General Services, 493 So.2d 50 (Fla. 1st DCA 1986). Not all deviations from specifications are material, however. If the variance would "deprive (the agency] of its assurance that the contract will be entered into, performed and guaranteed according to its specified requirements...." it is substantial. By the same token, a variance which would adversely affect the competitive bidding process by providing a bidder a substantial advantage is also material. Robinson Electrical Co. v. Dade County, 417 So.2d 1032 (Fla. 3d DCA 1982).

    
    

17. As to the absence of signature of an appropriate corporate officer on the bid bond, a surety bond, it is inappropriate to accept a bid without a facially enforceable bond. Although, the bond was properly signed by every required signatory of the bonding company, it was not signed by Ranger's corporate officer and therefore the purported attestation was without effect. There was insufficient indicia here to reflect Ranger's intent to be bound. Where a bid bond is facially without effect it provides the Department with insufficient assurance that the bond is enforceable. As such it gives Ranger a competitive edge over other bidders. The uncontroverted evidence also demonstrated that the Secretary of the Department of Transportation had consistently rejected low bids where signatures were totally missing from relevant documents. Where a partial signature is reflected on a document there is sufficient indicia to ascertain that a party intended to be bound by the terms of the document. This is distinguished from the situation where a bidder can exercise a choice either to be bound or not by a total lack of a signature. The Department's acceptance of a partial signature is not an indication of abandoning the policy of refusing to accept unsigned documents.

    
    

18. Here the evidence shows that Ranger, in the last minute press of preparing its bid for submittal, incorrectly placed the decimal point in the bid price of electrical conduit in a quantity set forth on the computer disc furnished all prospective bidders by the Department. This error on Ranger's part did not initially affect Ranger's position in the award standings.

    However, it subsequently became evident that the CES quantity was not in conformance with the specifications quantity and when the effect of Ranger's item bid was analyzed, Ranger was no longer the apparent low bidder. Ranger requested the Department correct Ranger's unit price on the theory that its quoted unit price was obvious in error. It now claims that the Department's refusal to correct that error is arbitrary and capricious and otherwise inappropriate. In order to preserve the sanctity of the competitive bid process, such change cannot be allowed. Harry Pepper & Associates v. City of Cape Coral,

    352 So.2d 1190, 1192 (Fla. 2d DCA 1977). The Department's uncontroverted evidence indicated that it followed its established procedures in reviewing its bids to detect a materially unbalanced bid which alters the bid standings. To change what Ranger claims is an obvious error would violate the competitive bid process.

    
    

19. It is the bidder who is responsible for the accuracy of its bid. Ranger has not shown that the Department's refusal to change Ranger's bid to correct the conduit unit priceis arbitrary, capricious, illegal, fraudulent or dishonest. Further, the Department's action in rejecting bids with unsigned documents is consistent with past practice and therefore not arbitrary. The Department's intent to award the contract in issue to Community Asphalt Corporation, the lowest responsive bidder was correct.

WHEREFORE, based on the foregoing Findings of Fact and Conclusions of Law and a review of the record in its entirety, it is ORDERED thatRanger's protest of the Department's intent to award the contract in highway construction projects 93110-3539, 3543, 3525, on State Road 80, Avenue E), in West Palm Beach, Florida to Community Asphalt Corporation, is hereby DISMISSED.

DONE AND ORDERED this 23 day of July, 1992.

BEN G. WATTS

Secretary

Florida Department of Transportation Haydon Burns Building

605 Suwannee Street

Tallahassee, Florida 32399-0450

NOTICE OF RIGHT TO APPEAL

THIS ORDER CONSTITUTES FINAL AGENCY ACTION AND MAY BE APPEALED BY (PETITIONER/RESPONDENT) PURSUANT TO SECTION 120.68, FLORIDA STATUTES, AND RULE 9.110, FLORIDA RULES OF APPELLATE PROCEDURE, BY FILING A NOTICE OF APPEAL CONFORMING TO THE REQUIREMENTS OF RULE 9.110(D), FLORIDA RULES OF APPELLATE PROCEDURE, BOTH WITH THE APPROPRIATE DISTRICT COURT OF APPEAL, ACCOMPANIED BY THE APPROPRIATE FILING FEE, AND WITH THE DEPARTMENT's CLERK OF AGENCY PROCEEDINGS, HAYDON BURNS BUIULING, 605 SUWANNEE STREET, M.S. 58, TALLAASEE, FLORIDA 32399- 0458, WITIIN THIRTY (30) DAYS OF RENDITION OF THIS ORDER.

Copies furnished to:

Arnold H. Pollock Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

Susan P. Stephens Assistant General Counsel

Office of the General Counsel Department of Transportation 605 Suwannee Street, MS - 58

Tallahassee, Florida 32399-0458

Douglas S. Roberts, Esquire

123 S. Calhoun Street Tallahassee, Florida 32314

Mary M. Piccard Attorney at Law

Cummings, Lawrence & Vezina, P.A. 1004 DeSoto Park

Post Office Box 589 Tallahassee, Florida 32302-0589

Docket for Case No: 92-001538BID

Orders for Case No: 92-001538BID