STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

G.A.P. ENTERPRISES, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 92-6805

) LEON COUNTY SCHOOL BOARD, )

)

Respondent, )

)

and )

)

WATKINS ENGINEERS & )

CONSTRUCTORS, INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, this cause came on for formal hearing before P. Michael Ruff, duly designated Hearing Officer of the Division of Administrative Hearings, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Neil H. Butler, Esquire

BUTLER & LONG, P.A.

322 Beard Street Tallahassee, Florida 32303

For Respondent: C. Graham Carothers, Esquire

AUSLEY, MCMULLEN, ET AL.

227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302

For Intervenor: Davisson F. Dunlap, Jr., Esquire

PENNINGTON, WILKINSON, ET AL.

Post Office Box 13527 Tallahassee, Florida 32317-3527

STATEMENT OF THE ISSUES

The issues to be resolved in this proceeding concern whether Section 255.0515, Florida Statutes, which applies to "state contracts", applies to the contract involving school construction in the case at bar. As a part of that consideration, it must be determined whether approval by the Respondent, The Leon County School Board (Board), of the substitution of Petitioner, G.A.P. Enterprises, Inc. (G.A.P.), as a subcontractor was "state agency action" for purposes of Section 120.57(1), Florida Statutes, which can be challenged in a

proceeding before the Division of Administrative Hearings. It follows then that it must be determined whether G.A.P. has standing to challenge such a state agency action, if the Board's approval, indeed, is such. If, indeed, the Petitioner is in the "zone of interests" sought to be protected by the enactment of Section 255.0515, Florida Statutes, then it must be determined whether good cause exists for G.A.P. to have been removed as the site work and underground utility contractor by the general contractor, the Intervenor herein, Watkins Engineers & Constructors, Inc. (Watkins).

PRELIMINARY STATEMENT

This proceeding involves a dispute arising out of a school construction project conducted by the Board. The project was initiated by the Board's issuance of an invitation to bid and receipt of bids from various general contractors. Those general contractors, including Watkins, listed subcontractors on their bids as performing certain portions of the work.

Watkins received pricing information or a "bid" from the subcontractor, G.A.P., which it incorporated in its bid on the school construction project. On August 25, 1992, the contract was awarded to Watkins and later, on September 3, 1992, Watkins informed G.A.P. that it would not use G.A.P. as a subcontractor on the project. Watkins informed the Board's representative that it would not use

G.A.P. because the company was not directly bondable and was not properly licensed. At the recommendation of the Board's architect, Watkins later obtained Board approval of the substitution of the site work subcontractor. On October 13, 1992, the Board unanimously approved the substitution of Crowder Excavating and Land Clearing, Inc. as the site work subcontractor to replace

G.A.P. On October 30, 1992, G.A.P. formally petitioned for an administrative hearing to the Board which petition was duly transferred to the Division of Administrative Hearings and ultimately, the undersigned Hearing Officer. The Petition proceeds under Section 255.0515, Florida Statutes, quoted infra, which contains a provision that subcontractors shall not be substituted without good cause shown.

A Motion to Dismiss was filed by Watkins asserting that this forum lacked subject matter jurisdiction concerning the dispute between the subcontractor and the general contractor regarding substitution of the subcontractor. That motion was denied on the basis that the Board is a "state agency" so that decisions which it makes affecting substantial interests of persons or entities can initiate a Section 120.57(1), Florida Statutes, proceeding before the Division of Administrative Hearings. The Hearing Officer found in ruling upon that motion that the Board is a state agency for purposes of this proceeding and the decision made to approve the substitution of subcontractors, allowing proof concerning whether the contract involved is a "state contract" for purposes of Section 255.0515, Florida Statutes. The Hearing Officer further determined that proof would be required at hearing, assuming that the contract at issue could be proven to be a "state contract", concerning whether G.A.P. has standing to contest the decision concerning "good cause" for the substitution. That is,

1. must show that a substantial injury will be suffered by it which arises within the "zone of interests" protected by the above-cited statute, as opposed to whether only the Board has standing to call into question a substitution decision made by the general contractor. Thus, by the Order entered on January 21, 1993 on the Motion to Dismiss, the motion was denied subject to proof on these matters delineated above to be adduced at hearing and to be treated in the Recommended Order.

   
   

   The cause came on for hearing as noticed. G.A.P. presented the testimony of Thomas Strickland, its chief estimator; Thaddeus (Jack) Chason of Albritton

   Williams, Inc.; Michael Imbler, Chief Estimator for Watkins; Jerry Hicks, the Board architect; Angela Smith, the director of environmental inspection and enforcement for Leon County; and Paul Byrd, the director of construction for the Board. G.A.P. also offered exhibits 1-35, all of which were received into evidence. Additionally, the deposition of Michael Imbler was received into evidence. The Board did not present any testimony or offer any exhibits at the hearing. Watkins presented the testimony of Mark Carrell, the project manager; and Douglas Wright, the vice president of commercial construction for Watkins.

   Watkins offered exhibits numbered 1-3, 5 and 7-10, all of which were received into evidence.

   
   

   Upon concluding the hearing, the parties elected to order a transcript of the proceeding and avail themselves of the right to submit proposed findings of fact and conclusions of law in the form of Proposed Recommended Orders. Those pleadings and the proposed findings of fact contained therein have been treated in this Recommended Order and the proposed findings of fact have been specifically ruled upon in the Appendix attached hereto and incorporated by reference herein.

   
   

   FINDINGS OF FACT

   
   

   1. The Board formulated final construction plans and specifications for a new school at Fort Braden sometime in July, 1992. Upon the final plans and specifications being prepared and executed, the Board initiated procedures for letting a construction contract to a general contractor through state mandated competitive bidding procedures.

      
      

   2. Watkins is a general contractor engaged in construction of commercial, industrial and other large non-residential construction projects. It became aware of the project proposed by the Board and obtained a copy of the plans and specifications preparatory to preparing and submitting a bid to the Board on the school project. In preparation for submitting a bid for the site work and underground utility work to all of the general contractors bidding on the project, G.A.P. obtained a copy of the plans and specifications, as well, and attended a pre-bid conference.

      
      

   3. On August 11, 1992, G.A.P. sent, by facsimile, a preliminary "scope sheet" to all of the general contractors, including Watkins. That scope sheet was sent for the purpose of informing the general contractors that G.A.P. would be submitting a bid to them for the site work package and to generally describe the components of the project that would be included in the G.A.P. bid.

      
      

   4. On August 17, 1992, G.A.P. sent by facsimile a more detailed scope sheet which specified the precise work to be included in the G.A.P. bid to be submitted the next day. This sheet was sent to Watkins and to the other general contractors who were preparing a bid on the project. On August 18, 1992, at approximately 10:00 a.m., the bid day, G.A.P. maintains that it sent a facsimile bid for the site work described in the detailed scope sheet to Watkins and the other general contractors. G.A.P.'s price for this work was $1,286,276.00. The

      G.A.P. bid stated: "At this time, we are not bondable. We can acquire a bond through a company for a 6 percent increase in our price. This increase would include the bond." Watkins' testimony is to the effect that it did not actually receive that facsimile transmission, although it was received by the other general contractors to whom it was sent. In any event, on August 18, 1992, Watkins submitted its bid to the Board for the school project. Pursuant to the bidding requirements, it listed G.A.P. as a major subcontractor to perform the site work, paving, well work, and sewage treatment plant work.

   5. On the morning of the August 18th bid day, Michael Imbler of Watkins had called the various prospective site work subcontractors to verify the scope of the work they proposed and to confirm that their prices included certain specific items of work. As he spoke to the subcontractors, he made checkmarks on a spread sheet in order to confirm the items that were included in the proposals from the subcontractors. He had telephone conversations with Mr. Strickland of G.A.P. on that day. He first discussed with him the scope of the work to be submitted by G.A.P. and during that conversation, was told by Mr. Strickland that G.A.P. was bondable but that Strickland was unsure of the rate. The second conversation with Strickland later that morning was to get further clarification concerning the scope of the work proposed by G.A.P. In the final conversation that morning, Mr. Strickland gave Mr. Imbler G.A.P.'s bid price and he wrote that price down on the proposal sheet he had received from G.A.P., later transferring that bid price to his own spread sheet.

      
      

   6. On bid day, Douglas Wright, a vice-president of Watkins, read the list of proposed subcontractors. Being unfamiliar with G.A.P., he asked Mr. Imbler about them and whether they were bondable. Mr. Imbler told him that G.A.P. had submitted a comprehensive bid proposal and was bondable.

      
      

   7. Mr. Strickland insisted that he transmitted the information relating to his bid to Watkins, via a facsimile letter, containing the bid price, as well as the above-quoted statement that G.A.P. was not bondable, except through a third party at a 6 percent premium. Watkins maintains that it did not receive that facsimile. In any event, on August 19, 1992, Mr. Strickland met with Mr. Imbler and Mr. Johnson of Watkins. In addition to getting information relating to

      G.A.P. and their business references, Watkins was, at that point at least, told that G.A.P. was not bondable but that it could acquire a bond through a third party at a rate of 6 percent added to the price. Mr. Imbler reported that information to Mr. Wright.

      
      

   8. On August 21, 1992, Watkins submitted a more detailed listing of subcontractors and suppliers to the Board. G.A.P. was listed as the subcontractor to perform the building layout, clearing, and general site work. Watkins issued a certification to the Board concerning each subcontractor to the effect that its determination was to its complete satisfaction that such contractors maintained fully-equipped organizations, capable of technically and financially performing all pertinent work and that they had made similar installations in a satisfactory manner. Thereafter, on August 26, 1992, the Board awarded the Fort Braden school contract to Watkins for a contract price of approximately $7.4 million.

      
      

   9. Watkins had a standing policy to the effect that major subcontractors had to be bonded unless Watkins had previously done work with them or unless the requirement was waived by the appropriate corporate officer of Watkins. Watkins had never done business with G.A.P. in the past, which is why Watkins had required that G.A.P. provide it with references so that it could check with prior entities or firms with whom G.A.P. had done business to ascertain G.A.P.'s qualifications. Mr. Douglas Wright was one of the corporate officers assigned the authority to accept or reject a subcontractor for a job based upon its bonding capacity or other circumstance. Mr. Wright was concerned about the lack of bonding capacity in G.A.P. but decided to delay action to ascertain if the Board was actually going to re-bid the contract or go through with the award. This was because Watkins, although low bidder, had exceeded the construction budget of the Board for the project. Mr. Wright also wanted to determine, upon

      further inquiry, who the third party supplying the performance bond would be and to get further information about G.A.P. as to its general performance capabilities.

      
      

   10. After awarding the contract to Watkins, the Board requested that Watkins agree to engage in "value engineering" in order to ascertain if the project could be reduced in scope and in price in some areas of work so that the entire project could be constructed and finished within the Board's construction budget. A "value engineering" committee was thus appointed consisting of the project architect, engineers, Board staff, Watkins' staff, and PTA members. The Watkins' representatives on the value engineering committee were Michael Imbler and Mark Carrell. Mr. Wright, after initially committing Watkins to the value engineering process at the request of Mr. Byrd of the Board staff, did not attend any value engineering meetings or actively participate in that phase of the pre-construction process.

       
       

   11. In discussions with the Board in the value engineering process, it was agreed that when an item was changed, in order to confirm prices quoted by the subcontractors on the job as accurate ones, additional subcontractors, other than the listed low bidder, would be called upon to verify price information. None of the subcontractors being used for verification purposes were told that there was potential for them to be awarded the contract. They were being used to insure that the Board was receiving good value for the changes and reductions that were being made in the scope of the project. No subcontractor, including G.A.P., was asked to re-compute its original price submitted for the job.

       
       

   12. In April, 1992, G.A.P. had been cited by the Leon County Code Enforcement Board for violating the excavating, grading and site work code provisions by clearing several residential lots without being licensed as an excavating, grading and site work licensed contractor. Ms. Angela Smith informed Mr. Paramore of G.A.P., in her capacity as enforcement officer for environmental regulations, that his state license as an underground utility contractor would not authorize him doing site work which was not directly related to underground utility installation work. In view of this circumstance,

       G.A.P. applied to the Leon County Licensing and Examination Board to become licensed as an excavation, grading and site work contractor on the day after Watkins was awarded the contract, August 26, 1993. Watkins was unaware (not being informed by G.A.P. or by any other means) that G.A.P. lacked a local excavating, grading and site work contractor's license or that it was filing an application to become so licensed. Watkins, at the time of the bid award, was unaware also that G.A.P. had been cited for performing such work without proper licensure in April of 1992.

       
       

   13. Jerry Hicks, the project architect, is also a member of the licensing board. He noted on September 3, 1992 that Mr. Paramore of G.A.P. had applied to take the licensing examination to become qualified as a licensed excavating, grading and site work subcontractor and noted that his application was agendaed for the meeting of September 3, 1992. Mr. Hicks thus realized that G.A.P. was not properly licensed to do the site work at the Fort Braden school project. He therefore telephoned Mark Carrell of Watkins to inform him of that fact and that the licensing board meeting that evening would involve a determination of whether or not Mr. Paramore of G.A.P. would be permitted to sit for the examination to become properly licensed. Mr. Carrell immediately told Mr. Imbler of Watkins and both then informed Mr. Wright.

       
       

   14. Mr. Wright, at that point, had not yet decided how to resolve the question of G.A.P.'s lack of bonding capacity. On or about September 1, 1992,

       Watkins had received a company memorandum from its parent corporation directing a change in the company policy concerning how Watkins could approve the use of subcontractors who were not bondable. That directive stated as follows:

       
       

       Doug/Eddie: While we have not had the problem yet in our industrial work, subcontractor failure has cost us dearly on the commercial side. The decision has been yours [Doug Wright], but now I am asking that you talk to me before contracting with unbonded subs so I have the chance to agree or disagree. Better stated, it would give me a chance to understand and concur with a no bond decision.

       Don 9/1/92

       
       

       (See G.A.P. exhibit 8 in evidence). Construction was due to start on the school project on September 8, 1992, including a meeting between the environmental department of the county and the site work subcontractor. The problem of G.A.P.'s licensure and bonding capacity was a complicating factor in the circumstance of the necessity to avoid any significant delays in the construction start. Any significant delay during the course of the job could jeopardize the project and expose either the contractor or the Board to damages potentially amounting to $5,000.00 per day. Mr. Wright thus had to make a decision without further delay as of September 3, 1992. The bidding documents contained a requirement that all subcontractors be properly licensed. The contract with the Board stated at section 5.2.2 that: "The contractor shall not contract with a proposed person or entity to whom the owner or architect has made reasonable and timely objection." (See Watkins exhibit 6 in evidence).

       Mr. Wright interpreted the telephone call from Mr. Hicks, the project architect, to constitute an objection in accordance with this contractual provision, to the use of G.A.P. as the site work subcontractor based upon G.A.P.'s lack of proper licensure status. He felt, therefore, that in view of this circumstance, coupled with the bonding capacity problem, he had to immediately replace G.A.P.

       
       

   15. Mr. Wright thus instructed Mr. Carrell and Mr. Imbler of his firm to personally visit and inform Mr. Strickland of G.A.P. of the decision not to use them as the subcontractor. Mr. Imbler and Mr. Carrell personally visited Mr. Strickland and informed him of that fact, stating as the reason the problem of bonding capacity and the licensure status.

       
       

   16. Mr. Wright had not been involved in the value engineering effort before making the decision to replace G.A.P. At that time, he was not aware of any of the results in terms of money involved or scope of work of the value engineering price reduction efforts. No one from Watkins at that point had made any attempt to discuss with Crowder, Eubanks Excavating, Inc., or any of the other potential site work subcontractors what their price might be to undertake the overall site work for the job. In making the decision to not use G.A.P., Mr. Wright thus did not already have a suitable alternative site work subcontractor arranged-for. He was taking a risk at finding one on short notice who would be willing to negotiate a price for the required work at a competitive level, given the bid price and Board construction budget that Watkins was required to accommodate.

       
       

   17. Angela Smith, the director of environmental inspection and enforcement for the county, who had cited G.A.P. on April 17, 1992 for violation of the Environmental Management Act of Leon County because of clearing lots without being properly licensed, testified at hearing that in her opinion, G.A.P. could

       not legally perform the site work at the Fort Braden school with its underground utilities contractor's license. This opinion was shared by Paul Byrd, the director of construction for the Board. He concurred with the decision to replace G.A.P. and was considering requiring Watkins to do it on account of the improper licensure circumstance.

       
       

   18. In any event, on September 16, 1992, Mr. Carrell wrote to Mr. Hicks, the project architect, informing him that G.A.P. had been replaced due to the bonding and licensing problem. On September 29, 1992, Mr. Wright, in response to a suggestion from Mr. Hicks, wrote to Graham Carothers, the Board's attorney, requesting that the Board approve the change of site work subcontractors. On October 13, 1992, after notice to both Watkins and G.A.P., the Board unanimously approved Watkins' request to change subcontractors from G.A.P. to Crowder.

       
       

   19. In order for Watkins to have undertaken the site work utilizing the general contractor's license and the hiring of G.A.P. to do the actual work, Ms. Smith, in her testimony, established that it would be necessary, under the county ordinance involved, for Watkins to provide her office with a letter in which Watkins would assume responsibility for G.A.P.'s site work and agree to direct and supervise it. Because Watkins did not have any in-house expertise in site work or in compliance with environmental regulations involved with site work, it needed a firm which had those qualifications in its own right, so that responsibility and related liability could be passed on to such a site work subcontractor. Under the county ordinance interpreted by Ms. Smith, G.A.P. did not have proper licensure to allow it to assume that responsibility and liability. Thus, in order for Watkins to avoid assuming that responsibility and liability directly, it would have to hire a subcontractor who was properly licensed to do the site work. A subcontractor properly licensed to do the site work would have the primary responsibility for complying with environmental ordinances and coordinating the work with the local environmental authorities charged by ordinance with regulating the work. When Mr. Wright made the decision to replace G.A.P., he was not aware that G.A.P. could be hired as a subcontractor if the requisite letter assuming responsibility was provided by Watkins to the Environmental Inspection and Enforcement Department. When later confronted with the availability of that option, Mr. Wright stated that he never would have agreed to handle the situation in that manner, since he was looking for a site work contractor to assume primary responsibility in complying with local codes applicable to that phase of the work.

       
       

       State Contract Issue

       
       

   20. The Department of Education (DOE) regulates many aspects of the construction of school facilities by local school boards pursuant to its authority under Chapter 235, Florida Statutes, and Chapter 6A-2, Florida Administrative Code. It should be noted, parenthetically, that in order for Section 255.0515, Florida Statutes, to apply in this proceeding and to get to the issue of whether G.A.P. has standing to call into question the substitution of subcontractors and the "good cause" issue, it must first be established if this is a "state contract" under Chapter 235, Florida Statutes, related to educational facilities.

       
       

   21. It has already been held in this proceeding that the Board is a "state agency" so that decisions it makes affecting substantial interests can initiate a Section 120.57(1), Florida Statutes, proceeding (see the Hearing Officer's Order entered on January 21, 1993 and cases cited therein). It is also established that the subject contract was entered into pursuant to the competitive bidding provisions of Chapter 235, Florida Statutes, related to

       educational facilities. Such contracts and facility projects are regulated pursuant to a related body of rules enacted and administered for such contracting by the DOE at Chapter 6A-2, Florida Administrative Code. Thus, the subject contract involved in this proceeding is under the regulatory authority of the DOE. The DOE, for instance, requires each school project such as this to be submitted to the DOE for approval in terms of its concept, plans and specifications. The DOE requires that an educational facility such as this be publicly advertised and competitively bid. It requires the local Board to file a contract with the DOE and to submit all change orders as to the project to the DOE. The design of the project is subject to DOE review and approval, and all building specifications and inspections are administered or regulated by the DOE.

       
       

   22. However, the evidence shows that no state funds are involved or to be expended in furtherance of this contract and project. Rather, local funds, apparently consisting largely of a bank loan in favor of the Board, are funding the project. Further, the overall tenor of the evidence shows that the project, the project site, and the improvements to be constructed thereon are and will be wholly owned by the Board itself, which is not a state agency in terms of actions it takes beyond the scope of Chapter 120, Florida Statutes, such as taking title to property, entering into contracts for construction of improvements on that property, and the like.

       
       

       CONCLUSIONS OF LAW

       
       

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

       
       

   24. It has already been held in this proceeding, in the Hearing Officer's Order of January 21, 1993, that the Board is a state agency for Chapter 120, Florida Statutes, purposes so that decisions it makes affecting substantial interests can initiate a Section 120.57(1), Florida Statutes, proceeding before the Division of Administrative Hearings. Thus, if it makes a decision concerning approval or disapproval of the substitution of subcontractors and is involved in a "state contract", as envisioned by Section 255.0515, Florida Statutes, then such a dispute is properly heard by the Division of Administrative Hearings. It would remain to be determined whether the subcontractor has standing to dispute such an agency decision under that statute before the Division of Administrative Hearings. Thus, it must first be established that a "state contract" is involved in this proceeding and then that

       G.A.P. has the standing to call into question the existence of the element of "good cause" for the subcontractor substitution at issue, as opposed to that being a standing right only possessed by the Board.

       
       

   25. In this regard, it has been established for purposes of this proceeding that the Board is a state agency. It also appears that the subject contract was entered into pursuant to the competitive bidding provisions of Chapter 235, Florida Statutes, related to educational facilities and referenced in Section 255.0515, Florida Statutes. The contract was also entered into and is regulated by a body of rules enacted and administered for such contracting by DOE at Chapter 6A-2, Florida Administrative Code, the relevant provisions of which are referenced in more detail in the above Findings of Fact. While this would seem to militate in favor of the relevant contract being a "state contract", it is also true that the evidence establishes that no state funds were expended in furtherance of the contract and related project. The evidence shows that the project in question is financed solely from local, fund sources.

       The owner of the project, the Board, in terms of its land ownership capacity and its contracting capacity, is not a state agency, even though it is a state agency for the purpose, as delineated above, of decisions affecting substantial interests, pursuant to Chapter 120, Florida Statutes. The land and improvements to be constructed are not owned by a state agency or state political subdivision.

       
       

   26. The fact that the building of schools is regulated by state statute and DOE rules which prescribe things such as building size, bidding procedures, a method by which schools will be built and incorporates oversight of planning, design and specifications and the like for school facilities does not convert a contract between a local school board and a contractor into a state contract. Such rules and regulations merely serve, instead, as the framework by which the contract is drafted, interpreted, and carried out, in the absence of any monies for the project emanating from a state government agency. See, Prelude Construction Company and Lincoln Construction Company v. School Board of Pinellas County and Bandes Construction Company, (DOAH Case Number 89-1468BID; Recommended Order filed April 20, 1989). Thus, it is not deemed to be a "state contract" and G.A.P. is not entitled to relief under authority of Section 255.0515, Florida Statutes, because that provision does not apply to such a local government contract and a subcontractor substitution situation arising out of such a contract.

       
       

   27. Watkins contends, in essence, that there is no requirement in Section 255.0515, Florida Statutes, that the general contractor seek approval of a substitution of subcontractors nor that the Board approve such a substitution. Thus Watkins contends, in effect, that Board approval cannot truly constitute "agency action" for purposes of triggering standing in a challenger to that action in a Chapter 120, Florida Statutes, proceeding. Rather, Watkins takes the position that the Board's "approval" was rather an informal perfunctory decision sought from the Board by Watkins merely in the interest of preserving and promoting a good working relationship with the Board throughout the contracting and construction process.

       
       

   28. As discussed in the opinion in E.M. Watkins and Company v. Board of Regents, 414 So.2d 583 (Fla. 1st DCA 1992), the legislative history and intent behind the enactment of this statutory provision seems to show, at least implicitly, that the showing of good cause the contractor must make to the agency or owner of the project (the Board) involves giving the agency the opportunity to approve or deny that substitution, thus protecting its and the public's interest in fair and competitive bidding and contracting, the retention of competent subcontractors so that construction projects are efficiently and expeditiously started and completed, as well as the avoidance of "bid shopping" or other unfair competitive practices referenced in the Watkins opinion. It would seem that a fair reading of Section 255.0515, Florida Statute, in light of the legislative intent enunciated through the Watkins opinion, would indicate that the agency, the Board, as the arbiter of the public interest in the sanctity of open, fair, competitive bidding and resulting contracting, the retention of qualified, competent subcontractors who can construct their portions of the project without delay or poor performance should and does have the authority to approve or contest the general contractor's decision concerning the replacement of a subcontractor. It is the arbiter of whether that general contractor has good cause for doing so.

       
       

   29. The Watkins opinion, construing Section 255.0515, Florida Statutes, would not seem, however, to give the subcontractor any standing to contest the decision of the general contractor in replacing that subcontractor because the

       subcontractor clearly is not within the zone of interest occupied by the agency. The agency alone is the arbiter of the public interest in the sanctity of open, fair, competitive bidding and contracting and the public's interest in the employment of competent contractors and subcontractors. Section 255.0515, Florida Statutes, as interpreted by the Watkins decision, shows clearly that that statutory area of regulation or "zone of interest" is the sole province of the Board or other public agency involved in "state contracting" to protect.

       Only such an agency would have standing to contest the decision by the general contractor, not a subcontractor situated as is G.A.P. While it is true that there is dicta in the opinion indicating that one of a number of reasons for the adoption of the statutory provision is for the protection of subcontractors, it cannot be concluded that the court intended by that phrase that subcontractors should have standing to contest a general contractor's decision to substitute another subcontractor, as opposed to the agency having that standing, as owner of the project. The agency/owner has an interest in protecting the public by insuring fair, competitive bidding and contracting practices, the prevention of bid shopping, and protecting the other elements of public interest in competent contracting and subcontracting for a fair, competitive price. That interest in protecting the public does not render the court's assertion concerning "protection of subcontractors", as one of many other factors underlying the court's enunciated state policy regarding public contracts, to be more than an incidental benefit that subcontractors derive from the state agencies' standing to object to the substitution of listed subcontractors because of the public interests expressed above. Accordingly, it cannot be concluded that G.A.P. has standing in its own right, protected by the zone of interest which may be carved out on behalf of the Board, pursuant to Section 255.0515, Florida Statutes, if, indeed, the contract at issue were a state contract, which it is not.

       
       

   30. On bid day, September 3rd, G.A.P. was listed as the site work subcontractor for Watkins. G.A.P. did not notify Watkins that they were not bondable until after Watkins was declared the low bidder. Watkins had never done business with G.A.P. and the lack of bonding capacity was a justifiable area of concern to Watkins. Watkins did not reject G.A.P. out of hand for that reason, however. Instead, Mr. Wright requested additional information be gathered on G.A.P. intending to make a decision after he found out more about the company, which company G.A.P. could be bonded through and satisfied himself that it was capable of performing the work adequately. Additionally, Mr. Wright had been cautioned by his parent company concerning the use, without prior approval, of non-bonded subcontractors and this was a concern in evaluating whether or not to contract with G.A.P. in view of their lack of bonding capacity.

       
       

   31. The contract, in Section 5.2.2, specifically states that Watkins will not enter into a contract with a proposed subcontractor to whom the owner or architect has made a reasonable and timely objection. The project architect, Jerry Hicks, telephoned Mr. Carrell of Watkins and told him that G.A.P. was not properly licensed to do the site work and that Mr. Paramore of G.A.P. had just made an application to take the test to be properly licensed. Watkins, quite understandably, interpreted that message from the project architect as a reasonable and timely objection.

       
       

   32. When Mr. Wright learned that G.A.P. was not properly licensed, the site work was already scheduled to begin on September 8, 1992. There was a meeting scheduled at the job site with the environmental management representatives at which meeting the site work subcontractor was required to be present. The job itself was on a very compressed time schedule and any delay in commencement would have serious economic consequences to the Board and to

       Watkins. Mr. Wright was justified in relying on Mr. Hicks' opinion as the project architect and also as a member of the Leon County Licensing Board. Angela Smith, the director of code enforcement, whose office had the responsibility for evaluating licensure status and the ability of a site work subcontractor to work on the project, established that G.A.P. was not properly licensed to do the site work on the job. This opinion was corroborated by that of Paul Byrd, the director of construction for the Board. He is familiar with the licensing requirements and established, through his testimony in corroboration of Ms. Smith's, that G.A.P. was not properly licensed to do the site work at the Fort Braden school.

       
       

   33. The Hearing Officer is aware of the position of G.A.P. to the effect that Watkins had the overall responsibility for the job, as general contractor, including the site work, and that it could have solved G.A.P.'s licensing problem by merely writing a letter to the Code Enforcement Board, assuming responsibility for the site work and overseeing G.A.P. in performing the work. Watkins, however, did not have any expertise in the field of excavating, site work, and compliance with the Environmental Management Act. Watkins was seeking a subcontractor who was fully licensed and experienced in such matters. It wanted a subcontractor to assume primary responsibility, as between Watkins and that subcontractor, to make sure that the work was done in a timely, efficient manner and consistent with environmental regulation. Watkins was not interested in taking primary liability and responsibility, as between themselves and a subcontractor, to insure compliance with environmental regulations. Watkins had solicited bids on the site work from no less than five separate site-work contractors and was entitled to insist that the work was done by a subcontractor who was fully licensed and qualified to do it, as the bid documents required.

       
       

   34. G.A.P. argues that both Ms. Smith and Mr. Byrd were wrong in their opinion that G.A.P. could not perform the site work with its statewide underground utility contractor's license. The fact remains, however, that Watkins was justified in relying on the opinions of Ms. Smith, Mr. Byrd and Mr. Hicks. Those persons had a duty to interpret and enforce the local Environmental Management Act and licensing code and they felt that G.A.P. needed a local excavating and grading site work license in order to do the excavation and site work at Fort Braden school. Watkins, as the general contractor, was not in a position to challenge the opinions of Mr. Hicks, Ms. Smith or Mr. Byrd and risk potentially-disastrous delays if G.A.P. was later challenged on the job as to its qualifications and legal ability to perform. Further, although G.A.P. contends that such a license was unnecessary, that contention is belied somewhat by the fact that Mr. Paramore, with G.A.P., initiated action to make application for a license to the local licensing board just days after the award of the contract to Watkins, so as to take the test to obtain an excavation, grading and site work license. G.A.P. never alerted Watkins to the fact that it had once been cited by Ms. Smith for violation of the licensure requirement, that Ms. Smith's office took the position that it had to have a license under the Environmental Management Act to do the site work not directly related to underground utility work, nor did it inform Watkins that it was preparing to apply for a site-work license but did not have one as yet. If Watkins had known of these facts, it would have had more time to consider its options and explore possible solutions with G.A.P. as the subcontractor. By learning of the licensing and bonding problem belatedly, however, a situation arose where Watkins had to make a rapid decision about which subcontractor to use because of the time constraints with which Watkins was faced involving an immediate start- up of the project, the site work of which was the first operation to be performed. Watkins was thus left with no prudent option other than to swiftly substitute subcontractors.

   35. G.A.P. maintains that Watkins was actually engaged in bid shopping in the subcontractor substitution situation that arose in this case. The court in the Watkins, supra., decision states that one of the purposes of Section 255.0515, Florida Statutes, is to prevent bid shopping. Bid shopping is an attempt to have a competing subcontractor and/or the listed subcontractor re- compute their prices and give a general contractor a lower price than existed in the bid of the listed subcontractor on bid day. That is not the situation in the instant case, however. The effort to reduce the cost of the project, including the site work, was initiated by the Board and not by Watkins. Watkins did not request any subcontractor, which originally gave it a bid, to go back and re-compute the original price in an attempt to get a lower price. Watkins did use subcontractors other than the listed subcontractor to verify prices on items being changed by the value engineering committee set up at the behest of the Board. There is no evidence that any subcontractor participating in the value engineering effort was told that if its price, including value engineering, was lower than a listed subcontractor, it would be awarded the contract. When Mr. Wright made the decision not to use G.A.P., he had no information about who would replace G.A.P. as a site-work subcontractor or what the contract price with a replacement subcontractor would be. His decision was not based on the results of any value engineering or bid shopping.

       
       

   36. G.A.P. claims that bid shopping occurred as allegedly indicated by the fact that Watkins hired Crowder for less than it was going to pay G.A.P. Mr. Imbler testified that there were a number of items that were not in Crowder's contract that were originally in the bid that was submitted by G.A.P. Those two contracts thus are not directly comparable. In any event, once Watkins decided not to use G.A.P. on the basis of the bonding and licensing issue, it was free to negotiate a contract with any other subcontractor, including Crowder, Eubanks Excavating, Inc., or any other site-work subcontractor that was available and willing to do the job. Watkins was also free at that point to attempt to negotiate the best price it could get under the circumstances. Even if the price ultimately obtained from Crowder was less than G.A.P.'s, that does not establish that bid shopping occurred, in view of the above-found facts establishing how and why the value engineering effort was engaged in.

       
       

   37. In summary, even if Section 255.0515, Florida Statutes, applies to this proceeding and even if G.A.P. had standing to challenge the substitution, which it does not, the Respondent and the Intervenor must prevail. Given the above-found facts in this case supported by substantial competent evidence of record, it has been established that Watkins had good cause for substituting the subcontractors under the above-referenced and found circumstances. The Board was equally justified in approving that substitution.

RECOMMENDATION

Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is

RECOMMENDED that a Final Order be entered by the Board dismissing the petition of G.A.P. Enterprises, Inc. for lack of standing.

DONE AND ENTERED this 1st day of June, 1993, in Tallahassee, Florida.

P. MICHAEL RUFF 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 1st day of June, 1993.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-6805

Petitioner's Proposed Findings of Fact

1-4. Accepted.

5. Accepted, but irrelevant. 6-8. Accepted.

9. Rejected, as subordinate to the Hearing Officer's findings of fact on this subject matter.

10-13. Accepted, but not in themselves dispositive of the material issues presented.

14. Rejected, as subordinate to the Hearing Officer's findings of fact on this subject matter.

15-16. Accepted.

17-18. Rejected, as subordinate to the Hearing Officer's findings of fact on this subject matter and not entirely supported by the preponderant evidence of record.

19-20. Accepted.

1. Rejected, as subordinate to the Hearing Officer's findings of fact on this subject matter.

2. Rejected, as subordinate to the Hearing Officer's findings of fact on this subject matter and not entirely supported by the preponderant evidence of record.

3. Accepted, in terms of describing Watkins' legal argument. 24-25. Accepted, but not in itself materially dispositive of the

issue of the existence of a "state contract".

1. Rejected, as not constituting a finding of fact but a legal interpretation which is determined to be erroneous.

2. Accepted, but immaterial in this de novo proceeding.

3. Rejected, G.A.P.'s interest is indirect. See, Systems Controls and Services, Inc. v. St. Johns River Water Management District, DOAH Case No. 92-3385BID; Recommended Order entered June 15, 1992).

4. Accepted.

5. Rejected, as subordinate to the Hearing Officer's findings of fact on this subject matter.

6. Accepted, but not itself materially dispositive.

7. Rejected, as subordinate to the Hearing Officer's findings of fact on this subject matter.

8. Rejected, as not supported by preponderant evidence of record.

9. Accepted, but not itself materially dispositive.

10. Accepted.

11. Rejected, as not entirely in accordance with the preponderant evidence of record.

12. Rejected, as subordinate to the Hearing Officer's findings of fact on this subject matter.

Intervenor's Proposed Findings of Fact 1-44. Accepted.

COPIES FURNISHED:

Neil H. Butler, Esquire BUTLER & LONG, P.A.

322 Beard Street Tallahassee, Florida 32303

C. Graham Carothers, Esquire AUSLEY, MCMULLEN, ET AL.

227 South Calhoun Street Post Office Box 391 Tallahassee, Florida 32302

Davisson F. Dunlap, Jr., Esquire PENNINGTON, WILKINSON, ET AL.

Post Office Box 13527 Tallahassee, Florida 32317-3527

Honorable Betty Castor Commissioner of Education Department of Education The Capitol

Tallahassee, Florida 32399-0400

Richard Merrick, Superintendent Leon County School Board

2757 W. Pensacola Street Tallahassee, Florida 32304-2907

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit to the agency written exceptions to this Recommended Order. All agencies allow each party at least ten 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: 92-006805

Orders for Case No: 92-006805