STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

THE MIDDLESEX CORPORATION AND )

AFFILITATES, a Massachusetts )

corporation, )

)

Petitioner, )

)

vs. ) CASE NO. 92-4858BID

) DEPARTMENT OF TRANSPORTATION, )

)

Respondent, )

and )

)

1. COXWELL CONTRACTING, INC., )

   )

   Intervenor. )

   )

   
   

   RECOMMENDED ORDER

   
   

   Pursuant to written notice, a formal hearing was held in this case before Diane Cleavinger, a duly designated Hearing Officer of the Division of Administrative Hearings, on August 28, 1992, in Tallahassee, Florida.

   
   

   APPEARANCES

   
   

   For Petitioner: Ronald W. Brooks, Esquire

   BROOKS & LEBOEUF, P.A.

   863 East Park Avenue Tallahassee, Florida 32301

   
   

   For Respondent: Susan P. Stephens, Esquire and

   Carolyn S. Holifield, Esquire Office of the General Counsel Department of Transportation 605 Suwannee Street, MS-58

   Tallahassee, Florida 32399-0458

   
   

   For Intervenor: James W. Anderson, Esquire

   SAVLOV & ANDERSON, P.A.

   Building A, Suite 200 820 East Park Avenue Tallahassee, FL 32302

   
   

   STATEMENT OF THE ISSUES

   
   

   The issue in this proceeding is whether Petitioner, The Middlesex Corporation and Affiliates (Middlesex) or Intevenor, J. B. Coxwell Contracting, Inc. (J. B. Coxwell), submitted the lowest and best responsive bid for State Project No. 55040-3521 let by the Florida Department of Transportation (FDOT).

   PRELIMINARY STATEMENT

   
   

   By formal protest dated July 20, 1992, Petitioner, Middlesex, protested FDOT's intent to award the contract for State Project No. 55040-3521 to J. B. Coxwell.1 Specifically, Middlesex challenged FDOT's treatment of the embankment/fill portion of this project as a payable item in the total bid because embankment/fill had been listed as a no-pay item in the plans and as a pay item in the bid proposal.

   
   

   On August 10, 1992, J. B. Coxwell, the successful bidder, filed its Petition to Intervene in the bid protest. The Petition to Intervene was granted.

   
   

   At the final hearing, Anderson-Columbia Company, Inc., who was then a Petitioner, presented the testimony of Terrel McRae, Noidrei Moses, Adolphus B. Lynch, and Kenneth Morefield and introduced Anderson-Columbia's exhibits 1 through 6, which were admitted into evidence. Petitioner, Middlesex, presented the testimony of Kenneth Morefield and Robert Griner and introduced Middlesex's exhibits 1 through 7, which were admitted into evidence. Respondent, Florida Department of Transportation, presented the testimony of Paul Newell, Robert Griner and Kenneth Morefield and introduced FDOT's exhibits 1 through 4, which were admitted into evidence. Intervenor J. B. Coxwell presented the testimony of John Coxwell and one exhibit which was admitted into evidence.

   
   

   After the hearing, Middlesex's Proposed Recommended Order was filed on October 6, 1992, FDOT's Proposed Recommended Order was filed on October 7, 1992, and J. B. Coxwell's Proposed Recommended Order was filed on October 6, 1992.

   The parties' proposed findings of fact have been considered and utilized in the preparation of this Recommended Order except where such proposals were not supported by the weight of the evidence or were immaterial, cumulative or subordinate. Specific rulings on the parties' proposals are contained in the Appendix to this Recommended Order.

   
   

   FINDINGS OF FACT

   
   

   1. The Florida Department of Transportation issued an invitation to bid (ITB) for a contract to construct road improvements on State Road 363 in Tallahassee, Leon County, Florida; Project No. 55040-3521.

      
      

   2. The ITB incorporated the plans and specifications for the proposed highway improvements. The specifications stated in pertinent part:

      
      

      Article 1-3. . . . for the purpose of award, after the proposals are opened and read, the correct summation of the products of the approximate quantities shown in the proposal, by the unit prices, will be considered the bid. . . . . Until the actual award of the contract, however, the right will be reserved to reject any or all proposals and to waive technical errors as may be deemed in the best interest of the State. . . . .(emphasis supplied)

      
      

      Article 2-6. A proposal will be subject to being considered irregular and may be rejected if it shows omissions, alterations of form, additions not called for, conditional or unauthorized alternate bids, or irregularities of any kind; also if the unit prices are obviously unbalanced, either in excess of or below the reasonable costs analysis values.

      
      

   3. In addition to the specifications, a part of the plans for the project required the successful bidder to perform substantial excavation work on the

      project site. The excavation work would more likely than not yield enough fill material to complete any fill or embankments required in the project.

      Therefore, the plans contemplated that the soils obtained from the excavation work would be used for the construction of an estimated 44,000 cubic yards of embankment in the project.

      
      

   4. In order to achieve this goal, page seven of the plans entitled "The Summary of Quantities" indicated that embankment was to be a "no-pay item". However, the bid proposal, the form which constitutes the actual bid of the contractor, contained a line item for a price quotation for embankment/fill, Item No. 120-6. By including such a line item in the bid proposal, bidders were required to submit some figure for this item or risk their bid being declared irregular under the specifications for this project.

      
      

   5. There was no timely objection filed by any bidder indicating that the bidder would be prejudiced by treatment of the embankment/fill item as a no-pay or as a pay item. Likewise, there was no timely challenge to the apparently conflicting plans and pay item sheet or that the conflicting plans and pay item sheet created a stiutaion which prohibited a bidder from submitting a responsive bid.

      
      

   6. Seven bids for the contract were submitted and opened on May 27, 1992. The three apparent lowest bids at the opening were: Anderson-Columbia at

      $4,251,147.89; J. B. Coxwell at $4,964,327.81; and Middlesex at $4,977,371.48.

      
      

   7. After the bids were opened, each bid was reviewed by FDOT's Technical Review Committee (TRC) to determine whether the bid was mathematically and materially unbalanced, contained all appropriate signatures, contained all appropriate documents and otherwise met the technical requirements of the ITB. In essence, the TRC reviews each bid to determine whether it is responsive to the bid proposal and, if not responsive whether the bid's lack of responsiveness is immaterial and waivable by FDOT. After its review of all the bids, the TRC then makes a recommendation to FDOT's Contract Awards Committee on whether a bid should be rejected for material nonresponsiveness to the ITB.

      
      

   8. In this case, the TRC recommended to the Contract Awards Committee that Anderson-Columbia's bid be rejected as nonresponsive to the ITB. On June 16, 1992, FDOT's Contract Awards Committee adopted the recommendation of the Technical Review Committee and declared Anderson-Columbia's bid nonresponsive. The awards committee also voted to award the bid to J. B. Coxwell as the second responsive low bidder and on July 6, 1992, FDOT posted a notice of intent to award the contract to J. B. Coxwell.

      
      

   9. In making the award, FDOT looked at the impact of the conflict between the plans and the bid proposal sheet. FDOT's practice is to add all the unit prices listed on the bid proposal sheet to determine the total amount of the bid. FDOT has never deleted an item from the unit price list to determine the amount of a bid. Following these policies and Consistent with Article 3-1 of the specifications, FDOT determined that a bidder's price quote for the enbankment/fill item would be included as a pay item in the total bid despite the plan's indication that embankment/fill would be a no-pay item and despite the fact that the embankment item probably will not be paid as long as the fill required is less than the excavation. However, at the time of bidding, no bidder could be certain that FDOT would choose to pay or not pay item 120-6.

      
      

   10. In this case, a review of the bids demonstrates that bidders were not uniform in their application of the conflict between the plans and bid proposal

       sheet in developing their specific bids. Some bidder's, like J. B. Coxwell, bid very low prices for the embankment/fill in their bid. Some bidder's, like Middlesex, bid prices for the embankment/fill item closer to the average unit price for embankment/fill. In any event, no bidder received any advantage over another bidder due to the conflicting designation of the embankment/fill item and no bidder was favored or discriminated against because of the conflict. In short, all bidders received the same plans and bid proposal, reacted to them in the normal course of their businesses and prepared their bids according to those dictates. The evidence did not demonstrate that the conflict between the plans and bid proposal sheet or FDOT's handling of the conflict was so unfair or confusing that the conflict completely impeded or subverted the purpose or fairness of the competitive bidding process. J. B. Coxwell.

       
       

   11. Finally, as indicated, the TRC reviews bids to determine whether they are materially unbalanced. In general, unbalanced bids are discouraged by the Department because an unbalanced bid has the potential to 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 the contractor to walk away from the contract and making agency control over the contractor more difficult. However, not all unbalanced bids will be rejected by FDOT because mathematically unbalanced bids often will have no material impact on the order of the bidders or the interests of the state in the timely and orderly performance of a given road project. Additionally, because of the nature of a given project, there may be a very good reason for a contractor to submit a mathematicallly unbalanced bid. In fact, approximately 80% of all the bids submitted to FDOT contain some form of mathematical unbalancing. Given these facts, FDOT will only reject an unbalanced bid if the unbalancing is material to the project and its award.

       
       

   12. In evaluating unbalanced bids, FDOT follows the guidance in a May, 1988, memorandum from the Federal Highway Administration (FHWA), which addresses bid analysis and unbalanced bids. The memorandum provides that where unit prices for items bid are either unusually high or low in relation to the engineer's estimate of the price (or mathematically unbalanced), the accuracy of the estimated quantities of the items are to be checked. If the quantities are reasonably accurate, the bid is to be further evaluated to determine whether the mathematical imbalance is "materially unbalanced" such that there is "reasonable doubt that award to the bidder submitting the mathematically unbalanced bid will result in the lowest ultimate cost to the Government."

       
       

   13. The analysis of a mathematically unbalanced bid to determine if it is materially unbalanced considers the effect of the unbalanced bid on the total contract amount; the increase, if any, in the contract cost when quantities are corrected; whether the low bidder will remain as the low bidder; and whether the unbalanced bid would have a potential detrimental effect upon the competitive process or cause contract administration problems later.

       
       

   14. In this case, FDOT compared the unit prices (line item prices) by each bidder on the bid proposal sheet to the average unit price for that item. The average unit price is based upon an average of the bidders' unit prices bid for a given pay item and the Department's estimated unit price for that item. If an individual bidder's unit price is significantly greater or less than the average price, FDOT's computer flags the item as mathematically unbalanced. Such a bid then receives further evaluation by FDOT to ensure the accuracy of the original estimates of the quantities of those items for which an unbalanced unit price has been submitted. FDOT also reviews the project plans for accuracy. The more in-depth review is performed to determine if there is a

       potential for a cost overrun or if there is an error in FDOT's estimated quantities which would result in an increased cost to the State for the project.

       
       

   15. In this case, J. B. Coxwell and Middlesex submitted bid proposals for each of the individual line item prices contained on FDOT's form. J. B. Coxwell's unit price for the embankment/fill item was $.10 per cubic yard of fill. FDOT's average price for the embankment/fill item was $3.20. The Middlesex quotation for embankment/fill was $2.25 per cubic yard of fill.

       FDOT's computer analysis of J. B. Coxwell's bid flagged the embankment/fill item as mathematically unbalanced. The quote by Middlesex for the embankment/fill item was not unbalanced and therefore was not flagged for furhter review by FDOT. However, the Middlesex bid was flagged as unbalanced for other line item quotations contained in its bid proposal.

       
       

   16. FDOT then made a more in-depth review of the bid of J. B. Coxwell and determined that although the bid was mathematically unbalanced, it was not materially unbalanced and did not result in a change in the bidding order. This determination was primarily based on the fact that the excavation portion of the project would yield enough fill to perform the embankment portion of the contract. Thus, a lower than average price in that item was not detrimental to the state, but, in fact, was in its best interest since a quote closer to FDOT's average would cause the state to be double billed for the fill FDOT's site would supply. There is no question that this was a reasonable analysis of the project in this case.

       
       

   17. Similarly, FDOT, utilizing the same analysis for unbalanced bids, also determined that the mathematically unbalanced unit prices submitted in the Middlesex bid were not materially unbalanced. Given the fact that Middlesex also had a mathematically unbalanced bid, which received the same analysis, Petitioner's argument that Coxwell's mathematically unbalanced bid should be rejected for such imbalance is rejected. Therefore, Middlesex has failed to demonstrate that it submitted the best responsive bid for State Project No. 55040-3521 and its protest should be dismissed.

       
       

       CONCLUSIONS OF LAW

       
       

   18. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. Sections 120.53 and 120.57(1), Florida Statutes (1991).

       
       

   19. Section 337.11, Florida Statutes, requires FDOT to award contracts to the lowest responsive bidder in a competitively bid process. The overriding purpose of the competitive procurement law, is to maintain the integrity of the competitive bidding process and protect against collusion, favoritism and fraud in the award of public contracts. Liberty County v. Baxter's Asphalt and Concrete, Inc., 421 So.2d 505 (Fla. 1982); and Moore v. State Department of Health and Rehabilitative Services, 596 So.2d 759 (Fla. 1st DCA 1992).

       
       

   20. The integrity of the bidding process is guaranteed by adherence to objective award criteria which eliminate the potential for favoritism. In general, an agency's inquiry regarding a bid is whether a bid is low and materially responds to the requirements of the invitation to bid. If the bid is materially responsive and is the lowest, the contractor is guaranteed the award of the contract. Hotel China & Glassware Co. v. Board of Public Instruction,

130. So.2d 78 (Fla. 1st DCA 1961). Additionally, a bid which is low and

contains a nonmaterial irregularity is responsive and entitles the contractor to the award. Robinson Electric Co., Inc. v. Dade County, 417 So.2d 1032, 1034 (Fla. 3d DCA 1982).

1. An irregularity or variance in a bid 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); Liberty County v. Baxter's Asphalt Concrete, Inc., 421 So.2d 505 (Fla. 1982). 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 considered material." Ranger v. FDOT, Recommended Order, at 10.

   
   

2. However, a public body has wide discretion in soliciting and accepting bids for public improvements and its decision, when based on an honest exercise of its discretion, will not be overturned by a Court even if it may appear erroneous and even if reasonable persons do not agree. Baxter's Asphalt, supra; and Department of Transportation v. Groves-Watkins Constructors, 530 So.2d 912 (Fla. 1988).

1. 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's action is 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). However, an agency's action need 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).

   
   

2. The burden is on the Petitioner to show by a preponderance of the evidence that the action of the FDOT in determining that J. B. Coxwell was the lowest responsive bidder, was fraudulent, arbitrary, illegal or dishonest or subverted the competitive bidding process

   
   

3. In this case, the evidence in the record did not demonstrate that FDOT acted arbitrarily, fraudulently, illegally, or dishonestly, or in any fashion other than with due consideration for the best interest of the State of Florida. FDOT followed its past practices and treated all bidders in the same manner. Moreover, under all the facts of this case, FDOT's treatment of the embankment/fill item as a pay item was not shown to be unreasonable or subvertive of the competitive bidding process.2 Therefore, Middlesex has failed to demonstrate that it submitted the best responsive bid for State Project No. 55040-3521 and its protest should be dismissed.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered awarding the bid to J. B. Coxwell

and dismissing Petitioner's protest.

DONE AND ENTERED this 8th day of December, 1992, in Tallahassee, Leon County, Florida.

DIANNE CLEAVINGER

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 thes 8th day of December, 1992

ENDNOTES

1/ Originally, Anderson-Columbia Company, Inc., also filed a protest of FDOT's intent to award the contract for State Project No. 55040-3521 to J. B. Coxwell. Anderson-Columbia's protest was assigned DOAH Case No. 92-4857BID and was consolidated with the Middlesex protest. After the final hearing, Anderson- Columbia withdrew its bid protest and DOAH Case No. 92-4857BID was dismissed.

2/ That is not to say that in every case of a conflict between the language of various bid documents that the same conclusion will or should be reached. Much depends on the facts of each case and the effect such a conflict has on the bid itself as well as the relation of that conflict to the total bid. Conflicts among various bid documents should be discouraged because such conflicts can create ambiguities in a bid which go to the heart of a given bid or subvert the bid process. In this case, neither infirmity was shown by the evidence.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-4857BID and 92-4858BID

1. The facts contained in paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 9, 12, 31, 32, 35,

37, 38, 41, 42 and 45 of Petitioner's Proposed Findings of Fact are adopted in substance, insofaras material.

1. The facts contained in paragraphs 13, 14, 15, 33, 34, 36, 40, 43, 44 and 46 of Petitioner's Proposed Findings of Fact are subordinate.

   
   

2. The facts contained in paragraph 10 are adopted except that Article 2-6 of the specifications doeas not require all bids to be balanced but is a permissive standard.

   
   

3. The facts contained in paragraph 39 of Petitioner's Proposed Findings of Fact were not shown by the evidence.

5. The facts contained in paragraphs 16, 17, 18, 19, 20, 21, 22, 23, 24, 25,

26, 27, 28, 29, 30 and 31 of Petitioner's Proposed Findings of Fact are irrelevant.

6. The facts contained in paragraphs 1, 2, 3 4, 5, 9, 10, 11, 14, 15, 18, 19, 20. 29, 30, 31, 32, 33, 34, 35, 36, 37, 38, 39, 40, 41, 42, 43, 44, 45, 46, 47,

48 and 49 of Respondent's Proposed Findings of Fact are adopted in substance, insofaras material.

7. The facts contained in paragraphs 6, 7, 8, 11, 12, 13, 16, 17, 21, 22, 23,

24, 25, 26, 27 and 28 of Respondent's Proposed Findings of Fact are irrelevant.

1. The facts contained in paragraphs 2, 3, 4, 8, 9, 10, 11, 12, 13 and 14 of Intervenor's Proposed Findings of Fact are adopted in substance, insofaras material.

   
   

2. The facts contained in paragraphs 1, 5, 6, 7 and 8 of Intervenor's Proposed Finding of Fact are irrelevant.

COPIES FURNISHED:

Ronald W. Brooks, Esquire Brooks & LeBoeuf, P.A.

863 Park Avenue

Tallahassee, Florida 32301

Carolyn Hollified, Esquire Department of Transportation Haydon Burns Building, M.S. 58 605 Suwannee Street

Tallahassee, Florida 32399-0458

James W. Anderson, Esquire Savlov & Anderson

P. O. Drawer 870 Tallahassee, Florida 32302

Ben G. Watts, Secretary Department of Transportation Haydon Burns Building, M.S. 58 605 Suwannee Street

Tallahassee, Florida 32399-0458 ATTN: Eleanor F. Turner, M.S. 58

Thorton J. Williams General Counsel

Department of Transportation

562 Haydon Burns Building 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 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: 92-004858BID

Orders for Case No: 92-004858BID