STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MARK C. ARNOLD CONSTRUCTION CO., )

)

Petitioner, )

)

vs. ) CASE NO. 92-2855BID

)

ORANGE COUNTY SCHOOL BOARD, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Mary Clark, held a formal hearing in the above- styled case on May 29, 1992, in Orlando, Florida.

APPEARANCES

For Petitioner: Charles Evans Davis, Esquire

170 East Washington Street Orlando, Florida 32801

For Respondent: William M. Rowland, Jr., Esquire

Rowland, Thomas & Jacobs, P.A. 1786 North Mills Avenue Orlando, Florida 32803

STATEMENT OF THE ISSUES

This proceeding concerns the Respondent's rejection of all bids for construction of its new middle school "FF". Petitioner has challenged that intended action, arguing that it was arbitrary and capricious and contrary to the law.

The parties disagree as to the basis for the intended action. Initially the School Board considered rejecting all bids for failure to meet MBE/WBE goals, and Petitioner protested. Later, the Respondent determined that significant revisions to the construction documents were required, and the bids were all rejected on that basis. Petitioner protested again, but contends that the original basis for intended action is still at issue. For reasons set forth in the following recommended order, the MBE/WBE goal issue is moot.

The central issue for determination, therefore, is whether Respondent properly rejected all bids based on its determination that substantial changes are required, and Petitioner's motion to consolidate its two protests is DENIED.

PRELIMINARY STATEMENT

On April 15, 1992 Petitioner filed its notice of protest of the Respondent's April 14, 1992 action rejecting all bids. A formal protest and request for hearing was timely filed on April 23, 1992 and the matter was

referred to the Division of Administrative Hearings for conduct of formal proceedings.

The parties stipulated to the scheduling of the hearing for a day shortly beyond the statutory 15-day deadline. In a notice dated May 22, 1992 Respondent evidenced its compliance with a prehearing order requiring that all bidders be notified of the protest and formal hearing.

No petitions to intervene were filed, and the parties proceeded to hearing as set forth above.

At hearing, Petitioner presented the testimony of Douglas Yovaish, P.E.; William Leonard Gabriel; Mark Holder; Mark Arnold; and R.D. "Bob" Dawson.

Petitioner's exhibits, identified as #1-7 were received in evidence.

Respondent presented the testimony of Charles Cunningham and Derek Burke, and no unilateral exhibits.

Twenty joint exhibits, identified as exhibits #1-18 and 20-21 were received in evidence by stipulation.

No transcript was prepared, and the parties agreed to file post hearing briefs and proposed recommended orders by June 12, 1992. The evidence at hearing, the stipulations of the parties as to certain facts, the parties' various memoranda of law and their proposed recommended orders have been carefully considered in the preparation of this recommended order. The findings of fact proposed by Respondent are substantially adopted herein.

Petitioner's proposed findings of fact include the parties' stipulated facts and three additional paragraphs #3(a)(b) and (c). Those additional paragraphs are rejected as generally contrary to the weight of evidence, or (as to the MBE/WBE goal compliance) irrelevant.

FINDINGS OF FACT

1. Petitioner, Mark C. Arnold Construction Co., (Arnold), is a commercial general contracting firm located in Orange County, Florida, but well-experienced in building public facilities throughout the state.

   
   

   Arnold currently is engaged in constructing school "EE" for Respondent, Orange County School Board (School Board, or Board).

   
   

2. In January 1992, the school board promulgated an advertisement for bid soliciting bids for the construction of a new school project known as Middle School "FF". The advertisement for bid was published five (5) times in the Orlando Sentinel on January 7, 14 and 28 and on February 4 and 1, 1992.

   
   

3. The board also compiled a project manual which among other things contained a copy of the advertisement for bid and instructions to bidders which governed the bidding process.

   
   

   The advertisement for bid reserved the school board's "right to reject any or all bids and to waive any informality or irregularity in any bid received". (Joint Exhibits 1 and 2)

   
   

   The instructions to bidders also reserved the school board's "right to reject any and all bids when such rejection is in the interest of the school

   board of Orange County, Florida...". (Joint Exhibit 5) The project manual also contained a bid form to be used by bidders. In it the bidder agrees "that the Owner reserves the right to reject this bid, or to waive informalities in any bid,...". Such language was contained in the bid submitted by Arnold. (Joint Exhibits 7 and 9)

   
   

4. By addendum dated February 5, 1992 the school board amended and replaced Section A-12 of its project manual and instructions to bidders. Such amendment, among other things, established goals for minority/womens business enterprise (MBE/WBE) subcontractor and supplier participation in the project, and it required any bidder who failed to attain the goals to demonstrate a good faith effort to do so; otherwise, the bid of such bidder would be rejected. (Joint Exhibit 8)

   
   

5. Arnold's bid showed that Arnold had no MBE/WBE subcontractor or supplier participation. (Joint Exhibit 9) Arnold's bid was the lowest of eleven bids received by the school board. Arnold's bid was in the amount of

   $10,977,000.00. The next lowest bid was in the amount of $11,075,000.00.

   
   

6. After bids were opened, Arnold promptly contacted the MBE/WBE manager of the school board, and was advised by her to try to obtain MBE/WBE participation to meet the goals; within several days after bid opening Arnold was able to get a total of about 13.5% MBE/WBE subcontractor/supplier participation. Contrary to the MBE/WBE manager's instruction, the addendum to the project manual and bid instructions proscribed any effort after bid opening to attain the MBE/WBE goals and to thereby make a bid responsive.

   
   

7. In spite of Arnold's attempt to demonstrate to the MBE/WBE manager that it had made a good faith effort to attain the goals prior to bid opening, the MBE/WBE Manager determined that no sufficient good faith effort was shown by Arnold.

   
   

8. On March 5, 1992 the school board furnished to Arnold a written notice of its intended decision to reject all bids because of the failure of all contractors (bidders) to attain the MBE/WBE goals and/or to show compliance with the good faith effort requirement of the contract documents. (Joint Exhibit 11)

   
   

   On March 10, 1992 Arnold and its attorney attended a meeting of the school board for the purpose of appealing the MBE/WBE manager's decision that Arnold had not demonstrated a good faith effort to meet the goals. Mark C. Arnold spoke at length to the school board itemizing actions which Arnold contended showed its requisite good faith effort to solicit MBE/WBE participation.

   Arnold's attorney also made a presentation at the meeting. By a 6 to 1 vote, the board initially sustained the findings of the MBE/WBE manager that a good faith effort was not shown by Arnold, and rejected all bids because of the failure of all contractors (bidders) to meet the minority participation goal and/or to show compliance with the good faith effort requirements of the contract documents. (Joint Exhibits 12 and 15)

   
   

9. Following a work session after its initial meeting on March 10, the board convened again in regular session on March 10, at which time it unanimously voted to reconsider its earlier action of rejecting all bids, and it voted to postpone action of the award of a contract for the construction of Middle School "FF". The effect of that action was to rescind its earlier action rejecting all bids and determining that Arnold had not shown a good faith effort to solicit MBE/WBE participation; and also to postpone action on the entire matter to a future time. (Joint Exhibit 13). On March 20, Arnold filed Formal

   Protest directed to the board's March 5th Notice of Intended Decision and directed to the March 10 action rejecting Arnold's bid.

   
   

10. During or about the first week in April, engineers for the school board met with the school board's attorney, William M. Rowland, Jr., to inform him that significant revisions needed to be made in the site work and sewer plant plans for the Middle School "FF" project. The engineers recommended that because of the need to make such revisions all bids for the project should be rejected and the project should be rebid after the plans were revised.

    
    

11. As a result of the early April meeting with the engineers, the board's attorney prepared and delivered a memorandum dated April 7th advising the school board of its engineers' recommendations. The attorney also submitted a resolution which, if adopted, would serve to reject all bids and require a rebidding of the project. (Joint Exhibit 16)

    
    

12. On April 10th the school board furnished to Arnold an amended notice of intended decision, which by its express terms replaced, amended and superseded its prior notice of intended decision dated March 5th, and notified Arnold of its intent to reject all bids on the project because of the need to make significant revisions in the construction documents. (Joint Exhibit 17) Said amended notice rendered moot the March 20 formal protest filed by Arnold.

    
    

13. At its meeting held on April 14th, the board considered the April 7th memorandum from its attorney. At that meeting, the board heard from its staff engineer, Chuck Greif, who pointed out the revisions needed to the site plans for the Project. (Joint Exhibit 20, pages 59-62, 77-78) Mark Arnold also spoke, contending that the site revisions could be handled by change orders if Arnold's bid were accepted. (Joint Exhibit 20, pages 76-77) Bob Gallardo, the school board Director of Facilities and Planning, advised of problems encountered in the site work and of the need to make significant revisions in the site plans. (Joint Exhibit 20, pages 87-92) As the geotechnical engineer on the job, Charles Cunningham stressed the significance of the site plan changes. (Joint Exhibit 20, pages 96-97) Derek Burke, engineer on the project, confirmed that major redesign needs to be done. (Joint Exhibit 20, page 64) Attorney Rowland advised that the prior intended decision to reject all bids because of failure of all bidders to comply with the MBE/WBE requirements of the bid documents, was moot and no longer before the board for action, and that the only resolution before the board for action was the resolution to reject all bids because of the need to make significant site plan revisions for the project. (Joint Exhibit 20, pages 72-76) The school board unanimously adopted that resolution. (Joint Exhibit 20, pages 97-99; Joint Exhibit 18)

    
    

14. On April 23rd Arnold timely filed the written formal protest which is the subject of these proceedings.

    
    

15. At the time of the meeting held by on April 14th, there was a need to make significant changes in the site work and sewer plant for the Middle School "FF" project. Such changes formed a valid and legitimate reason for the board to reject all bids. Even at the time of this administrative hearing, some details regarding the site work still needed to be worked out. For example, an outfall is needed for the percolation pond underdrain but it was not included in the project design.

    
    

16. The site work and sewer plant changes and revisions could have been handled by change orders between Arnold and the school board, had the board accepted Arnold's bid, since any changes in a project can be accomplished by

    change orders; however, revising the nature and quantity of construction work by change orders involves the potential for excessive cost to the project owner and change orders always require agreement between the parties. Prudence dictates that when it is known that changes must be made, the bid advertisement should include those changes up front to remove the uncertainty of costs and to put all bidders on equal footing.

    
    

17. There has been no showing of any illegality, fraud, oppression or misconduct in the actions of the school board in rejecting all bids on the Middle School "FF" Project and in opting to seek new bids for the project.

    
    

    There has been no showing in these proceedings that the school board's rejection of all bids had the purpose or effect of defeating the object and integrity of competitive bidding.

    
    

    CONCLUSIONS OF LAW

    
    

18. The Division of Administrative Hearings has jurisdiction in this proceeding pursuant to Sections 120.53(5), and 120.57(1), F.S.

    
    

19. The school board's authority to reject all bids is found in Section 235.31, F.S. and in Department of Education Rule 6A-2.016, F.A.C. The school board expressly reserved that authority in its advertisement for bid and in its instructions to bidders.

    
    

20. A public agency has wide discretion in the bidding process and its decision, when based upon the honest exercise of that discretion, should not be overturned 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 (Fla. 1982).

    
    

    ...[A]lthough the APA provides the procedural mechanism for challenging an agency's decision to award or reject all bids, the scope of the inquiry is limited to whether the purpose of competitive bidding has been subverted. In short, 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)

    
    

21. The weighty burden of proof is on the Petitioner. J.W.C., Inc. v. Department of Transportation, 396 So.2d 778 (Fla. 1st DCA 1981).

Petitioner failed to prove its theory that, but for an illegal MBE/WBE goal policy, it would have been awarded the bid and that the "significant change" basis for rejection was a mere contrivance.

The record in this proceeding fails to establish what the board would have done with Petitioner's and other bids if it had not been confronted with the need for design changes. The record does establish that those changes were significant and that the board acted on the sound advice of its professional

consultants when it determined that the project should be rebid after the changes were worked out.

RECOMMENDATION

Based on the foregoing, it is hereby, RECOMMENDED:

That a Final Order be entered dismissing the bid protests by Petitioner.

DONE AND RECOMMENDED this 10th day of July, 1992, in Tallahassee, Leon County, Florida.

COPIES FURNISHED:

Charles Evans Davis, Esquire

170 East Washington Street Orlando, FL 32801

MARY CLARK

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 10th day of July, 1992.

William M. Rowland, Jr., Esquire 1786 North Mills Avenue

Orlando, FL 32803

Dr. James L. Schott, Superintendent Orange County School Board

P.O. Box 271 Orlando, FL 32802

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 92-002855BID

Orders for Case No: 92-002855BID