vs. ) CASE NO. 93-2822BID
Intervenor. )
Pursuant to notice, a formal hearing was conducted in this case on June 11, 1993, in West Palm Beach, Florida, before Stuart M. Lerner, a duly designated Hearing Officer of the Division of Administrative Hearings.
For Petitioner: John W. Foster, Sr., Esquire
For Respondent: Robert A. Rosillo, Esquire
For Intervenor: Thomas F. Munroe, II, Esquire
Whether the Palm Beach County School Board (hereinafter referred to as the "School Board") should sustain Petitioner's challenge to the preliminary determination made with respect to School Board Project No. 349661 to reject all bids submitted and to readvertise.
By letter dated May 19, 1993, Petitioner filed a formal written protest contesting the preliminary determination made with respect to School Board Project No. 349661 to reject all bids submitted and to readvertise. In its letter, Petitioner claimed that it "was the lowest, responsive and responsible bidder and must be awarded the subject contract." On May 24, 1993, the matter was referred to the Division of Administrative Hearings for the assignment of a hearing officer to conduct a formal hearing.
On June 1, 1993, Milne & Nicholls, Inc., (hereinafter referred to as "Intervenor") filed a petition for leave to intervene in the matter. By order issued by the Hearing Officer on June 4, 1993, the petition was granted.
At the final hearing held in this case, a total of eight witnesses testified: Albert Paglia, a contract administrator with the School Board; Joseph Pirrotta, Petitioner's chief operating officer; Francis Mojo, Jr., the president of Intervenor; Ron Wengatz, a plan review specialist with the School Board; Brian Idle, the project architect for the project which is the subject of the instant bid protest; Lawrence Zabik, the School Board's assistant superintendent for support services; Michael Reich, a licensed Palm Beach County general contractor; and David Floyd, a certified professional estimator and construction industry consultant. In addition to the testimony of these eight witnesses, a total of 11 exhibits (Joint Exhibit 1, Petitioner's Exhibits 2-7 and Respondent's Exhibits 1-4) were offered and received into evidence.
At the close of the evidentiary portion of the hearing on June, 11, 1993, the Hearing Officer announced on the record that post-hearing submittals had to be filed no later than ten days following the Hearing Officer's receipt of the transcript of the hearing. The Hearing Officer received the hearing transcript on June 18, 1993. Petitioner, Intervenor, and Respondent filed separate post- hearing submittals on June 23, 1993, June 25, 1993, and June 28, 1993, respectively.
The parties' post-hearing submittals contain what are labelled as proposed "findings of fact." These proposed "findings of fact" have been carefully considered and are specifically addressed in the Appendix to this Recommended Order.
Based upon the evidence adduced at hearing, and the record as a whole, the following Findings of Fact are made:
In March of 1993, the School Board issued an Advertisement for Bid (hereinafter referred to as the "Advertisement") through which it solicited the submission of bids on a construction project (School Board Project No. 349661, which is hereinafter referred to as the "Project") involving HVAC replacement, reroofing and other renovation work at Jupiter High School's Building No. 2. The School Board indicated in the Advertisement, among other things, that it "reserv[ed] the right to waive informalities in the Bids, or to reject all Bids."
The Advertisement, along with the other bid documents issued in conjunction with the Advertisement, including, but not limited to, the Instructions to Bidders (hereinafter referred to as the "Instructions") and the Proposal Form, were compiled in a Project Manual that was made available for public inspection.
Section 00100 of the Project Manual contained the Instructions, which provided, in pertinent part, as follows:
Definitions
Bidding Documents include the Advertisement for Bid, Notice to Prospective Bidders, Policies of the School Board, Instructions to Bidders, Contract, General Conditions, Supplementary General Conditions, Special Conditions, Bid Bond, Performance and Payment Bond, Proposal Form, and the proposed Contract Documents including all drawings, specifications and addenda issued prior to bid opening.
Addenda are written or graphic instruments issued prior to the execution of the Contract which modify or interpret the Bidding Documents, including Drawings and Specifications, by additions, deletions, clarifications or corrections. Addenda will become part of the Contract Documents when the Construction Contract is executed.
Bidding Procedures
All Bids must be prepared using the forms contained in these specifications and submitted in accordance with the Instructions to Bidders.
A Bid is invalid if it has not been deposited at the designated location prior to the time and date for receipt of Bids indicated in the Advertisement for Bid, or prior to any extension thereof issued to the Bidders.
Unless otherwise provided in any supplement to these Instructions to Bidders, no Bidder shall modify, withdraw or cancel his Bid or any part thereof for sixty (60) days after the time designated for receipt of Bids in the "Advertisement for Bid."
Preparation and Submission of Bid Proposal Form:
Each Bidder shall use Proposal Form contained in these specifications, indicate his Bid prices thereon in proper spaces, for the entire work and for the alternates, if applicable. Any erasures or other corrections in the proposal must be explained or noted over the signature of the Bidder. Proposals containing any conditions, omissions, unexplained erasures, alternates, items not
called for or irregularities of any kind may be rejected by the Owner.
Each proposal shall specify a price written in ink in both words and figures for each of the separate items, as called for, except when the Bid is called for on a lump sum basis. Lump sum Bids shall be shown in both words and figures; where there is a variation between the written amount and figures, the lower amount will be taken as the Bid price.
Bid Modification: Bid Modification will be accepted from Bidders if addressed to the Owners, at the place where Bids are to be received, and if received prior to the opening of Bids. Modifications must be in writing and must be signed. . . . Modifications will be read by Owner or Architect prior to opening formal Bids.
Withdrawal of Bids: Bids may be withdrawn on written request received from Bidders prior to the time fixed for opening.
. . . Negligence on the part of the Bidder in preparing the Bid confers no right for withdrawal of the Bid after it has been opened.
4. Examination of Bidding Documents:
4.01 Each Bidder shall examine the Bidding Documents carefully and, not later than eight
(8) days prior to the receipt of Bids, shall make written request to the Architect for interpretation or correction of any ambiguity, inconsistency or error therein which he may discover. Any interpretation or correction will be issued as an Addendum by the Architect. Only a written interpretation or correction by Addendum shall be binding. No Bidder shall rely upon any interpretation or correction given by any other method. . . .
6. Rejection of Bids
6.01 The Bidder acknowledges the right of the Owner to reject any or all Bids and to waive any informality or irregularity in any Bid received. In addition, the Bidder recognizes the right of the Owner to reject a Bid if the Bidder failed to furnish any required Bid security, or to submit the data required by the Bidding Documents, or if the Bid is in any way incomplete or irregular;
to reject the Bid of a Bidder who is not in a position to perform the Contract; and to readvertise for other or further Bid Proposals.
Award of Contract
The Contract, if awarded by the Owner, will be awarded to the lowest bona fide responsible Bidder; provided the Bid is reasonable and it is in the interest of the Owner to accept the Bid.
The method of determining the lowest bona fide Bid from Bidders shall be the Base Bid price plus or minus Alternate Prices listed on the Bid Proposal Form which are accepted by the Owner. Alternates will be considered for acceptance by the Owner as set forth in the Alternate section of the Specifications, Division One-General Requirements, Section 101030-Alternates.
Section 101030 of the Project Manual, which addressed the subject of "Alternates," provided, in pertinent part, as follows:
1.3 Related Work Described Elsewhere:
Pertinent sections of these specifications describe materials and methods required under the various alternates. . . .
The method for stating the proposed Contract Amount is described on the Proposal Form, Section 00310.
Base Bid:
A. Shall include all HVAC replacement, construction of the building roofing and all items shown on drawings and included in these specifications other than as specifically listed alternates.
Alternate Number One:
Provide an Architect/Owner on-site construction trailer of size and features stipulated below in lieu of such being provided by the Owner.
Section 00310 of the Project Manual contained the Proposal Form that all bidders were required to use. It provided, in pertinent part, as follows:
DATE SUBMITTED:
TO: The School Board of Palm Beach County, Florida
3326 Forest Hill Boulevard West Palm Beach Florida 33406
PROPOSAL FOR:
JUPITER HIGH SCHOOL BUILDING NO.2-
HVAC REPLACEMENT/REFOOF/RENOVATIONS
500 NORTH MILITARY TRAIL JUPITER, FLORIDA 33458
PROJECT NO. 349661
Having become familiar with conditions at the Project Site and having carefully examined the Bidding Documents, including the Advertisement, Instructions to Bidders, and the Contract Documents, including but not limited to the General Conditions, Supplementary Conditions, Specifications, Details, Schedules, Addenda and Drawings, the Undersigned proposes to furnish all materials, labor equipment and anything else required for the entire Project in accordance with the Documents for the following sum:
BASE BID: STATE PRICE IN WORDS AND FIGURES:
($ ) (PRICE IN WORDS) (FIGURES)
ALL ALTERNATES MUST BE BID FOR BID TO BE
RESPONSIVE. State price in words and figures.
ADDITIVE ALTERNATE NO. 1: (Owner/Architect On-Site Construction Trailer)
($ ) (PRICE IN WORDS) (FIGURES)
* * *
If he is notified of the acceptance of this Bid within sixty (60) days of the time set for the opening of Bids, the Undersigned agrees to execute a Contract for the above Work within eight (8) Owner business days after notice that his Bid has been accepted for the above stated compensation minus or plus any accepted Alternates in the form of a contract presented by the Owner. . . .
On March 30, 1993, the School Board issued Addendum No. 1, which added a fire protection system to the Project's scope of work and provided as follows:
RE: Jupiter Community High School Building No. 2
HVAC Replacement, Reroof, Renovations The School Board of Palm Beach County,
Florida
School Project No. 349661 OEF Project No. 50-005625 P&L Project No. 92-061
To all bidders on the above project:
Please note contents hereon and insert into the bidding documents that were issued to you on the above entitled project.
The following supersede and supplant corresponding items in the specifications, drawings and details.
It will be required that each Contractor- Builder/Developer, upon submitting his proposal for this project, indicate on the proposal form in the space provided that all addenda are included in his proposal.
Failure to do so may cause rejection of a company's bid or proposal.
The School Board of Palm Beach County, Peacock & Lewis Architects and Planners, Inc. and their consultants assume no liability or responsibility for the information on printed materials for this project that were not
distributed from the office of Peacock & Lewis Architects and Planners, Inc.
GENERAL:
AD1-1: FIRE PROTECTION SYSTEM
Contractor shall include within his bid and itemize on the proposal form the cost for a complete and functioning fire protection system as described by the attached specification Section 15500- Fire Protection dated 3/30/93, Addendum No. 1.
Paragraph 1.2 A.6 of Section 15500, which was attached to Addendum No. 1, provided as follows:
Contractor shall identify the cost associated with this scope of work on the proposal form as an itemized price which shall be included within the total bid price. Refer to proposal form.
On April 5, 1993, the School Board issued Addendum No. 2, which revised the Proposal Form to reflect the additional pricing requirements imposed by Addendum No. 1.
Addendum No. 2 added to the Proposal Form, immediately under the space provided for "Additive Alternative No. 1," the following:
UNIT PRICE NO. 1: (Fire Protection System)
Contractor shall include within his bid and itemize on the proposal form the cost for a complete and functioning fire protection system as described by the attached specification Section 15500- Fire Protection dated 3/30/93, Addendum No. 1.
($ ) (PRICE IN WORDS) (FIGURES)
No other changes material to the instant case were made to the Proposal Form or to any of the other bid documents.
It was the intention of those who were responsible for the preparation and issuance of Addenda Nos. 1 and 2 to require bidders to include the price of the fire protection system in their "Base Bid;" 1/ however, they failed to clearly and unambiguously express their intention in these addenda or any of the other bid documents.
No other bid document aside from the revised Proposal Form made any reference to a "unit price."
Unit prices are typically used in the construction industry to price work added to the initial scope of work, as was the fire protection system in the instant case.
In interpreting the bid documents, Joseph Pirrotta, Petitioner's chief executive officer, relied upon his many years of experience in the construction industry. Based upon his reading of these documents, he reasonably believed that the "Unit Price No. 1 (Fire Protection System)" was a separate and distinct component of the "total bid price" and that, although it was to be included in the "bid" he submitted, it was not to be a part of the "Base Bid." While the bid documents were also susceptible to a contrary construction, Pirrotta's was the more reasonable of the two interpretations.
Pirrotta completed the revised Proposal Form accordingly.
Petitioner was one of three bidders to submit bids in response to the Advertisement. The other two bidders were Intervenor and Janus & Hill Corporation (hereinafter referred to as "Janus").
Petitioner quoted the following prices on the completed revised Proposal Form it submitted: "Base Bid"- $1,672,000.00; "Additive Alternate No.1"- $3,400.00; and "Unit Price No. 1"- $80,000.00. As noted above, Petitioner's "Base Bid" did not include the price of the fire protection system.
Intervenor quoted the following prices on the completed revised Proposal Form it submitted: "Base Bid"- $1,947,000.00; "Additive Alternate No.1"- $6,000.00; and "Unit Price No. 1"- $36,484.00. Unlike Petitioner, Intervenor included in its "Base Bid" the price of the fire protection system; however, even if it had not done so, its "total bid price" would still have been substantially higher than Petitioner's.
Janus quoted the following prices on the completed revised Proposal Form it submitted: "Base Bid"- $1,970,000.00; "Additive Alternate No.1"-
$2,020.00; and "Unit Price No. 1"- $90,000.00. 2/
After bid opening, the School Board's contract administrator for the Project, Albert Paglia, correctly determined that Petitioner was the lowest responsive bidder.
Thereafter, he telephoned Pirrotta to congratulate him on his company's successful bid.
Before his telephone conversation with Pirrotta, Paglia assumed that Petitioner's "Base Bid" included the price of the fire protection system. He learned otherwise, however, after speaking with Pirrotta, who informed him that Petitioner's "total bid price," excluding "Additive Alternate No. 1," was its "Base Bid" of $1,672,000.00, plus the $80,000.00 for the fire protection system reflected as "Unit Price No. 1" on its completed revised Proposal Form.
Paglia and others with whom he was working on the Project perceived this as a problem. They therefore brought the matter to the attention of Lawrence Zabik, the School Board's assistant superintendent for support services.
Zabik's initial reaction was to award the contract for the Project, including the fire protection system, to Petitioner for $1,672,00.00, Petitioner's "Base Bid."
Pirrotta was unwilling to undertake the Project for that amount.
By letter to Zabik dated May 5, 1993, Intervenor gave notice to the School Board of its intent to protest any award made to Petitioner. The letter provided as follows:
Based on our review of the Bid Documents submitted by J.D. Pirrotta on April 20, 1992, we are notifying you of our intent to protest the award of the above referenced project to any firm other than Milne & Nicholls, Inc.
We will base our protest on the non- responsiveness of J.D. Pirrotta's bid. As you are aware, Mr. Pirrotta requested an additional $80,000 to compensate him for his misinterpretation of Unit Price #1 as an additive alternate. It is now apparent that his bid is incomplete and therefore non- responsive.
Please advise us of the Owner's intention with regard to the Award on this project.
Zabik referred the letter to the School Board's Office of the General Counsel.
By letter dated May 13, 1993, authored by one of the School Board's attorneys, the School Board announced that it intended to reject all bids and readvertise, giving the following explanation:
In the instant case, since the bid is susceptible to two interpretations, one of which would be that the Fire Protection System was included in the base bid, and the other that it was not leads to an unfair economic advantage by one bidder over others. The example would be that the low bidder in the instant case is permitted to add the Fire Protection System on as an alternate when it was not intended.
Given the ambiguity, the bid should be rejected and the specifications rewritten and readvertised. [Citations omitted.]
In the instant case, rejection of all bids is the only reasonable solution so that all parties are given a fair playing field. The School Board has not acted arbitrarily or capriciously in arriving at this decision to readvertise, given the parties place a different interpretation on the bid proposal form.
The concerns expressed in the letter that Pirrotta obtained an "unfair economic advantage" over the other bidders as a result of the "ambiguity" in the bid documents are unwarranted.
CONCLUSIONS OF LAW
District school boards in this State, with certain limited exceptions not applicable to the instant case, are required to purchase commodities and services through the process of competitive bidding. Section 237.02(2), Fla. Stat.; Rule 6A-1.012, Fla. Admin. Code.
It has been said on more than one occasion that competitive bidding requirements, such as those imposed upon district school boards, have as their purpose and object the following:
[T]o protect the public against collusive contracts; to secure fair competition upon equal terms to all bidders; to remove not only collusion but temptation for collusion and opportunity for gain at public expense; to close all avenues to favoritism and fraud in various forms; to secure the best values for the [public] at the lowest possible expense; and to afford an equal advantage
to all desiring to do business with the [government], by affording an opportunity for an exact comparison of bids.
Wester v. Belote, 103 Fla. 976, 138 So. 721, 723-24 (Fla. 1931); Harry Pepper & Associates, Inc. v. City of Cape Coral, 352 So.2d 1190, 1192 (Fla. 2d DCA 1977).
In soliciting and accepting competitive bids, a district school board has wide discretion. See D.O.T. v. Groves-Watkins Constructors, 530 So.2d 912, 913 (Fla. 1988); Liberty County v. Baxter's Asphalt & Concrete, Inc., 421 So.2d 505, 507 (Fla. 1982). It has "the authority to reject any or all bids" and to accept, what it deems to be, "the lowest and best bid." Rule 6A-1.012, Fla. Admin. Code.
A school board's discretion with respect to these matters, while broad, is not unbridled. Such discretion may not be exercised in a manner that is illegal, dishonest, fraudulent, arbitrary, unreasonable, capricious or in any other way that would subvert or undermine the purpose and object of competitive bidding. See D.O.T. v. Groves-Watkins Constructors, 530 So.2d 912, 913-14 (Fla. 1988); Caber Systems v. Department of General Services, 530 So.2d 325, 336 (Fla. 1st DCA 1988); Couch Construction Company, Inc. v. Department of Transportation, 361 So.2d 172, 175 (Fla. 1st DCA 1978); Wood-Hopkins Contracting Company v. Roger J. Au & Son, Inc., 354 So.2d 446, 450 (Fla. 1st DCA 1978).
In the instant case, the School Board has announced its intention to reject all bids, including Petitioner's, and to readvertise the Project because the bid documents it issued did not clearly and unambiguously indicate to prospective bidders whether the price of the fire protection system should be included in the "Base Bid," resulting in one of the bidders, Intervenor, determining that it should be included and another bidder, Petitioner, concluding that it should be excluded. The existence of an ambiguity constitutes a rational basis upon which a district school board may lawfully reject all bids and readvertise, but only if such ambiguity has given one bidder an unfair advantage over his competitors or has otherwise tainted the outcome of the competitive bidding process. See Caber Systems v. Department of General Services, 530 So.2d 325 (Fla. 1st DCA 1988); Tropabest Foods, Inc. v. Department of General Services, 493 So.2d 50, 52 (Fla. 1st DCA 1986); Robinson Electrical Co., Inc. v. Dade County, 417 So.2d 1032, 1034 (Fla. 3d DCA 1982).
The lack of clarity that the School Board has found in the bid documents in the instant case has had no such adverse impact on the competitive bidding process. The evidence clearly and unmistakably demonstrates that even if all three bidders had been under the same understanding regarding whether the "Base Bid" should include the price of the fire protection system, Petitioner would still have submitted the lowest and best bid. Moreover, Petitioner's interpretation of the bid documents, more so than the contrary interpretation urged by Intervenor, gives the words used by the School Board in these documents their natural and most commonly understood meaning and therefore should prevail over Intervenor's interpretation and be utilized by the School Board in determining the amount of the contract award. See Tropabest Foods, Inc. v. Department of General Services, 493 So.2d 50, 51-52 (Fla. 1st DCA 1986).
In light of the foregoing, the School Board, rather than rejecting all bids and readvertising, should award the contract for the Project to Petitioner, the lowest and best responsive bidder, for $1,752,000.00, plus the price for "Additive Alternate No. 1" should the School Board choose to include this alternate within the Project's scope of work.
