STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MARTIN EBY CONSTRUCTION COMPANY, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 93-5703BID

)

STATE OF FLORIDA, )

DEPARTMENT OF TRANSPORTATION, )

)

Respondent, )

and )

)

PCL CIVIL CONSTRUCTORS, INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to written notice, a formal hearing was held in this case before Errol H. Powell, a duly designated Hearing Officer of the Division of Administrative Hearings, on November 3-4, 1993, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Mike Piscitelli, Esquire

Mary M. Piccard, Esquire Cummings, Lawrence & Vezina, P.A. Post Office Box 589

Tallahassee, Florida 32302

For Respondent: Pamela S. Leslie, Esquire

Deputy General Counsel

Florida Department of Transportation Haydon Burns Building, Mail Station 58 605 Suwannee Street

Tallahassee, Florida 32399-0458

For Intervenor: Nathan E. Minear, Esquire

Moye, O'Brian, O'Rourke, Hogan & Pickert

201 East Pine Street, Suite 710 Orlando, Florida 32801

STATEMENT OF THE ISSUE

The ultimate issue for determination at formal hearing was whether the intended decision by the Florida Department of Transportation to award the bid on State Project No. 79002-3429, for construction of a highway project, SRI- 95/11th Interchange, in Volusia County, Florida, to PCL Civil Constructors, Inc., departs from the essential requirements of law.

PRELIMINARY STATEMENT

On July 28, 1993, Florida Department of Transportation (Respondent) received bids for State Project No. 79002-3429 (Project). On September 3, 1993, Respondent posted its intent to award the contract for the Project to PCL Civil Constructors, Inc. (PCL), the apparent second lowest bidder, and to declare Martin K. Eby Construction Co., Inc. (Petitioner), the apparent lowest bidder, nonresponsive for not achieving the Disadvantaged Business Enterprise (DBE) goal. In its DBE submission, Petitioner included a business, Gearing Engineering (Gearing), that had not been certified as a DBE by Respondent.

Since Gearing was not a certified DBE, Respondent did not calculate it into Petitioner's DBE goal, so Petitioner fell short of the goal.

Petitioner filed a notice of protest on September 3, 1993, and filed its written protest with Respondent. Petitioner alleged that its use of Gearing as a DBE was a technical, harmless error and that Respondent's rejection of its bid was arbitrary and capricious and contrary to Florida's bidding law and requested a formal hearing.

On October 5, 1993, this matter was referred to the Division of Administrative Hearings. The parties stipulated to waiving the statutory time limits for holding a final hearing and submitted October 27, 1993, as an agreed hearing date. The hearing was noticed for October 27, 1993, but was continued and noticed for November 3-4, 1993. Subsequently, PCL (Intervenor) intervened.

At the hearing, Petitioner and Respondent filed an amended prehearing stipulation in which Intervenor joined, ore tenus. Respondent filed a motion in limine which was argued at the hearing and was denied. Petitioner presented the testimony of six witnesses, Respondent presented the testimony of six witnesses, and Petitioner also presented the testimony of one rebuttal witness. Intervenor called no witnesses. Petitioner entered eight exhibits into evidence and proffered one exhibit. Respondent entered five exhibits into evidence and one exhibit was rejected. Intervenor entered two exhibits into evidence. The parties jointly presented three exhibits into evidence.

A transcript of the formal proceeding was ordered. At the request of the parties, post-hearing submissions were due within ten days after filing of the transcript. Petitioner and Intervenor timely filed proposed findings of fact and conclusions of law. Respondent failed to timely file proposed findings of fact and conclusions of law; however, neither Petitioner nor Intervenor filed an objection. The appendix to this recommended order addresses all proposals submitted by the parties.

FINDINGS OF FACT

1. The Florida Department of Transportation (Respondent) issued an Invitation To Bid (ITB) on State Project No. 79002-3429 (Project), construction of a highway project--SRI-95/11th Interchange in Volusia County, Florida. The project is 100 percent federally funded.

   
   

2. On July 28, 1993, the bid letting was held. The apparent lowest bidder was Martin K. Eby Construction Co., Inc. (Petitioner), with a bid of

   $10,480,685.71, and the apparent second lowest bidder was PCL Civil Constructors, Inc. (Intervenor), with a bid of $10,794,968.22 1/

3. Included as a requirement of the bid by Respondent was a Disadvantaged Business Enterprise (DBE) goal of 12 percent. On its face, Petitioner's bid met and exceeded the DBE goal with an intended DBE utilization of 12.2 percent. However, one of Petitioner's DBEs, Gearing Engineering (Gearing), was not certified by Respondent as a DBE. Without Gearing, Petitioner fell short of the DBE goal.

   
   

4. The bid specifications in the ITB provided in a section entitled "Special Provisions for Disadvantaged Business Enterprises" that only DBEs certified by Respondent at the time that the bid is submitted will be counted toward the DBE goal.

   
   

5. At the time Petitioner submitted its bid, Gearing had for the first time filed an application with Respondent to be certified as a DBE. At no time prior to this had Gearing been certified as a DBE by Respondent even though it had received certification as a minority business from local government. By the bid letting, Gearing had not been certified as a DBE by Respondent.

   
   

6. On July 29, 1993, representatives of Respondent contacted Petitioner to inform it of the DBE problem and to inquire about its good faith efforts to meet the DBE goal. Petitioner responded the same day by written communication indicating, among other things, that it had contacted Gearing about its DBE status and that Gearing informed Petitioner that Respondent's DBE office had informed Gearing that it was appropriate for Gearing to submit a proposal and that certification was required, not at the time of submitting the proposal, but at the time work began. In the communication, Petitioner offered to substitute two certified DBEs for Gearing if Respondent determined Gearing could not be used. Also, Petitioner included with its response a letter from Gearing outlining the communication it (Gearing) had had with Respondent.

   
   

7. Petitioner is no stranger to Respondent's bid process as it has prequalified to contract with Respondent and has been doing business within the State of Florida full-time for approximately five and one-half years. 2/

   
   

8. At no time prior to submitting its bid, did Petitioner contact Respondent's DBE office to determine Gearing's DBE status. Petitioner depended wholly upon the representation made by Gearing.

   
   

9. Petitioner's division manager, who approved Petitioner's bid proposal for submission, directed his subordinates to only use DBEs certified by Respondent and appearing in Respondent's DBE Directory (Directory) when Petitioner was attempting to reach a DBE goal set by Respondent in a bid. The subordinates knew that Gearing was not in the Directory but failed to inform the division manager of Geary's non-certificate, deciding instead to depend on the representation made by Gearing. Had the division manager known of Geary's non- certification, he would have chosen another DBE from the list of DBEs on his selection list that were certified.

   
   

10. Once a business becomes certified by Respondent as a DBE, it is added to a list of certified DBEs maintained by Respondent. A printed list of Respondent certified DBEs--DBE Directory--is provided to bidders, prior to the submitting of bids, so that bidders will know what businesses are certified and when their current certification expires.

11. If a business appears in the DBE Directory for a bid, even though its certification may be listed as expiring before the bid letting date, the business can be included as a DBE on the bid. This procedure is used by Respondent because a renewal application may have been timely filed by a certified DBE, but Respondent may not have completed its renewal process at the time of printing of the Directory or that Respondent may not have timely furnished a certified DBE with a renewal notice or may not have received notification by return receipt that the DBE had received the renewal notice. Therefore, the DBE is retained on the list during Respondent's review process. 3/ Even if a DBE is found by Respondent to no longer meet the DBE requirements, if that DBE was on the DBE Directory at the time of a bid submission and used by a bidder for a project, the bidder would not be penalized.

    
    

12. Furthermore, a business not appearing on the DBE Directory may become certified after the list is printed, but before bid submission deadline, and, therefore, be eligible to submit a proposal to a bidder for the particular project named. The DBE Directory also contemplates this situation by directing bidders on the first page of the Directory to contact Respondent directly if the status of a business, as a certified DBE, is in question, whether the business is listed or not.

    
    

13. Moreover, Respondent informs bidders in the front of the Directory, printed in noticeable type, i.e., all capitalizations and boldtype, that only DBEs certified by Respondent will be counted towards meeting Respondent's DBE goals.

    
    

14. At no time did Respondent's DBE office inform Gearing that it could submit a proposal on the Project without first receiving certification from Respondent as a DBE. The testimony of Respondent's operations and management consultant in its DBE office, who is the individual with whom Gearing communicated, is credible that anyone inquiring about a business submitting a proposal as a DBE to a bidder must first be certified by Respondent as a DBE in order to submit proposals on Respondent's contracts. Further, Respondent's continuous practice and procedure is to require DBE certification before a business can submit a qualified proposal as a DBE.

    
    

15. Moreover, it is readily apparent that there was a miscommunication between the principals (husband and wife) of Gearing, causing a misinterpretation of what Gearing could or could not do before being certified. The subordinate principal (husband) who directly communicated telephonically with the DBE office denied that the DBE office informed him that Gearing could submit a proposal as a DBE before it was certified; whereas, the majority principal (wife) believed that he (husband) had informed her that Gearing could submit a proposal as a DBE during the pendency of its DBE application and she so informed Petitioner.

    
    

16. On August 4, 1993, Respondent's Good Faith Efforts Review Committee reviewed the bids, including Petitioner's documents submitted on July 29, 1993. Its recommendation was (a) to declare Petitioner's bid nonresponsive due to Petitioner not meeting the DBE goal and not being able to document a good faith effort in attempting to meet the goal and (b) to award the bid to Intervenor.

    
    

17. When the DBE goal is not met, the bid specifications in the section entitled "Special Provisions for Disadvantaged Business Enterprises" provide that awarding the contract is conditioned upon the bidder demonstrating that good faith efforts were made to meet the goal, with the documentation being submitted with the bid. Furthermore, the said section enumerates what

    information will be considered in evaluating good faith efforts and provides that failure to show good faith efforts will result in disqualification of the bidder.

    
    

18. The bid documents contain a DBE Utilization Summary form which displays a notice providing that, if the DBE goal is not met, documentation must be included with the bid to demonstrate good faith efforts to meet the DBE goal, and if they are not included, the bid may be considered nonresponsive. Although good faith effort documents are to be submitted with the bids, generally, they are not because a bidder believes the goal has been met, as evidenced by its DBE percentage. Consequently, no bidder has been able to document good faith efforts when a good faith effort question arises after bid submission.

    
    

19. Petitioner did not submit good faith effort documents with its bid because it believed that it had met, and even exceeded, Respondent's DBE goal.

    
    

20. On August 11, 1993, Respondent's Technical Review Committee reviewed the bids and the accompanying recommendation. It concurred with the recommendation of the Good Faith Efforts Review Committee.

    
    

21. On August 17, 1993, Respondent's Contract Award Committee reviewed the bids and the recommendations. It concurred with the recommendation of the Technical Review Committee, i.e., declaring Petitioner's bid nonresponsive for failure to meet the DBE goal and awarding the contract to Intervenor.

    
    

22. On September 3, 1993, Respondent posted its notice of intent to award the contract for the Project to Intervenor.

    
    

23. Petitioner timely filed a protest to the intended action.

    
    

24. Respondent has filed a proposed rule change which would change the way it handles bidders attempting to meet DBE requirements.

    
    

    CONCLUSIONS OF LAW

    
    

25. The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and the parties thereto pursuant to Subsections 120.57(1) and 120.53(5), Florida Statutes. The parties were duly noticed for the formal hearing.

    
    

26. The case of Department of Transportation v. Groves-Watkins Constructors, 530 So.2d 912 (Fla. 1988), sets the parameters for review of a bid protest matter by a hearing officer:

    
    

    1. lthough the APA provides the procedural mechanism for challenging an agency's decision to award or reject all bids, the scope of inquiry is limited to whether the purpose of competitive bidding has been subverted. In short, the hearing officer's sole responsibility is to ascertain whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly.

       
       

       Id., at 914.

27. Petitioner, as challenger, to Respondent's intended action must prove by a preponderance of the evidence that Respondent's action is arbitrary or capricious, and not based upon facts reasonably tending to support its action. Baxter's Asphalt and Concrete, Inc. v. Department of Transposition, 475 So.2d 1284, 1286-87 (Fla. 1st DCA 1985); Capeletti Brothers, Inc. v. Department of General Services, 432 So.2d 1359 (Fla. 1st DCA 1983).

    
    

28. First, the threshold issue in the case at hand is a factual determination whether, contrary to bid specifications, Respondent's DBE office informed Gearing Engineering that it could submit a proposal as a DBE to a bidder on one of Respondent's project even though it (Gearing) had not been certified by Respondent as a DBE.

    
    

29. Circumstantial evidence is proof of certain facts and circumstances from which the trier of fact may infer that the ultimate facts in dispute existed or did not exist. Davis v. State, 90 So.2d 629 (Fla. 1956); Lake County Sheriff's Department v. Unemployment Appeals Commission, 478 So.2d 880 (Fla. 5th DCA 1985). Both circumstantial and direct evidence support a finding that Respondent's DBE office did not inform Gearing that it could submit a proposal as a DBE on any of Respondent's projects before it was certified by Respondent as a DBE. The testimony of Respondent's witnesses was convincing and unequivocal and was supported by the testimony of Gearing's subordinate principal (husband).

    
    

30. Next, the issue is whether Petitioner could reasonably rely upon the representation made by Gearing that Respondent had informed it (Gearing) that it could make a legitimate and qualified proposal on the Project before it (Gearing) had been certified by Respondent as a DBE, estopping Respondent from not counting Gearing toward the DBE goal. Crucial to this issue is whether Respondent's DBE office made the representation to Gearing which was communicated to Petitioner by Gearing. It has been shown that the representation was not made to Gearing, so there can be no reliance upon a representation not made. Hence, estoppel is inapplicable to the case sub judice.

    
    

31. Furthermore, the evidence is uncontroverted that Gearing, at the time it submitted its proposal, was not listed on Respondent's DBE Directory which was included in the bid documents. Respondent contemplated that some certified DBEs would not be included in the Directory, e.g., certified subsequent to printing of the Directory, and included a provision directing bidders to contact it (Respondent) if there was a question regarding the certification of a business not listed. Petitioner knew that Gearing did not appear in the Directory. Instead of contacting Respondent, as directed to by the Directory, Petitioner depended upon the representation made by Gearing. Petitioner unreasonably relied upon Gearing's representation. Respondent bears no responsibility for Petitioner's misguided, although well-meaning, course of action.

33. Further, Petitioner contends that, even if Gearing could not be counted toward the DBE goal, the irregularity of it including Gearing as a DBE, in essence, should be waived as a technical, harmless error and that it (Petitioner) should be permitted, after the bid letting, to substitute certified DBEs from its list of certified DBEs which were chosen and compiled by it for the bid.

1. Respondent's Rule 14-78.003(3), Florida Administrative Code, provides in pertinent part:

   
   

   The Department shall compile and make available a directory to contractors . . . listing all DBEs certified by the Department. Only those DBE firms certified on the date of the letting will be eligible for use as a DBE to meet DBE contract goals.

   
   

2. It is uncontroverted that Gearing was not certified by Respondent as a DBE at the time of Gearing's proposal or the bid letting. The bid specifications, Respondent's DBE Directory and its Rule clearly provided that only DBEs certified by Respondent would be counted toward the DBE goal. Moreover, Petitioner was no stranger to Respondent's bid process and its (Petitioner's) practice was to use only DBEs certified by Respondent for its (Petitioner's) bids. Consequently, Gearing could not be counted toward Petitioner meeting the DBE goal.

   
   

3. Unless the variance from specifications frustrates governmental requirements, it "is only material if it gives the bidder a substantial advantage over the bidders and thereby restricts or stifles competition." Tropabest Foods, Inc. v. State Department of General Services, 493 So.2d 50, 52 (Fla. 1st DCA 1986); Harry Pepper and Associates, Inc. v. City of Cape Coral,

   352 So.2d 1190, 1193 (Fla. 2nd DCA 1977). A deviation in a bid is "sufficiently material to destroy its competitive character" if the variation gives "the bidder an advantage or benefit not enjoyed by the other bidders." Harry Pepper, supra. To allow Petitioner to substitute certified DBEs for an uncertified DBE in its bid after the bid letting would give Petitioner a substantial advantage over the other bidders or an advantage or benefit not enjoyed by the other bidders, or both. Hence, the irregularity in Petitioner's bid is material and not waiveable; Petitioner cannot be permitted to substitute certified DBEs for Gearing, an uncertified DBE, after bid letting.

   
   

4. Based upon the foregoing, Petitioner has failed to meet its burden. The evidence shows that Respondent has not acted arbitrarily or capriciously and that its action is based upon facts reasonably tending to support its action.

   
   

5. Petitioner also contends that Respondent's position of requiring bidders to demonstrate good faith efforts at bid submission is unreasonable. Respondent's Rule 14-78.003(2)(b)3., Florida Administrative Code, provides in pertinent part:

   
   

   For all contracts for which DBE contract goals have been established, each bidder shall meet or exceed or demonstrate that it could not meet, despite its good faith efforts, the contract goals set by the Department. The DBE participation informa- tion shall be submitted with the contractor's bid proposal. Award of the contract shall be

   conditioned upon submission of the DBE partici- pation information with the bid proposal and upon satisfaction of the contract goals or,

   if the goals are not met, upon demonstrating that good faith efforts were made to meet the goals. Failure to satisfy these requirements

   shall result in a contractor's bid being deemed non-responsive and the bid being rejected.

   
   

6. Petitioner has not shown that Respondent's interpretation of the above Rule is unreasonable by requiring bidders to demonstrate good faith efforts at bid submission.

   
   

7. Briefly addressing Respondent's filing of a proposed rule change which would change the way it handles bidders attempting to meet DBE requirements, Respondent is bound by the existing rule until it is amended or is superseded by subsequent legislation. Hulmes v. Division of Retirement, Department of Administration, 418 So.2d 269 (Fla. 1st DCA 1982).

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Florida Department of Transportation enter its final

order awarding State Project No. 79002-3429, for construction of a highway

project, SRI-95/11th Interchange, in Volusia County, Florida, to PCL Civil Constructors, Inc.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 28th day of December 1993.

ERROL H. POWELL

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 28th day of December 1993.

ENDNOTES

1/ No aspect of PCL Civil Constructors, Inc.'s, bid is being protested.

2/ There was no testimony as to how many of Respondent's projects Petitioner has bid on or worked on.

3/ Petitioner includes in its proposed findings of fact findings regarding a DBE contractor, Dick Burns, Inc., included by Intervenor in its bid. First, see Endnote 1. Second, Dick Burns, Inc. was requesting renewal of its certification, whereas, Gearing had never before been certified by Respondent as a DBE, so it was seeking initial certification. The process for renewal versus initial certification of a DBE is different, as well as the treatment in the bidding process of a renewing DBE versus a non-certified DBE.

APPENDIX

The following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact

Paragraphs 1, 2, 5-8, 10, 12-14, 21, 23, 24, 32 and 33 are accepted in substance.

1. Sentence one accepted in substance. Sentence two partially accepted in substance; and partially rejected.*

2. Sentence one accepted in substance. Remainder rejected.*

9. Sentence one accepted in substance. Sentence two rejected.

11. Partially accepted in substance--sentences one and two partially rejected.*

15. Partially accepted in substance--second sentence; partially rejected.* Paragraphs 16, 17-19, 22, 30, 31 and 35-39 are rejected.*

20. Partially accepted in substance--sentence one; and partially rejected.*

1. Partially accepted in substance--sentence one; and partially rejected.*

2. Partially accepted in substance--sentence one; and partially rejected.*

3. Partially accepted in substance--FDOT has a Good Faith Effort Committee which reviewed EBY's bid using the good faith efforts check list as a guide; and partially rejected.*

4. Partially accepted in substance--sentences one and two; and partially rejected.*

5. Partially accepted in substance--sentences two through four; and partially rejected.*

34. Partially accepted in substance--sentences one, three and four; and partially rejected.*

*Rejected as subordinate to the issues herein, irrelevant to the issues herein, unnecessary, contrary to the proof, contrary to the weight of the evidence, recitation of testimony, argument, or conclusions of law.

Respondent's Proposed Findings of Fact

Paragraphs 1-15, 17-19, 20, 21, 24-26, 30, 34-39, 41-48, 50-52 and 54 are

accepted in substance.

16. Partially accepted in substance--sentence two; and partially rejected.*

22. Partially accepted in substance--regarding application pending; and partially rejected.*

Paragraphs 23, 29, 31-33, 40, 49 and 55-57 rejected.*

27-28. Partially accepted in substance--without quotes of testimony; and partially rejected.*

29. Rejected.*

53. Partially accepted in substance--Project being 100 percent federally funded; and partially rejected.*

58. Partially accepted in substance--sentence one and directory provided to all contractors and no difference in treatment toward bidders in use of DBEs to meet goal; and partially rejected.*

*Rejected as subordinate to the issues herein, irrelevant to the issues herein, unnecessary, contrary to the proof, contrary to the weight of the evidence, recitation of testimony, argument, or conclusions of law.

Intervenor's Proposed Findings of Fact

Paragraphs 1-3, 5-15, 17, 18 and 20-22 are accepted in substance.

4. Partially accepted in substance--sentences one through three and five; partially rejected.*

16. Partially accepted in substance--sentences three and four; and partially rejected.*

19. Partially accepted in substance--all but last sentence; and partially rejected.*

23. Partially accepted in substance--sentences two through four; and partially rejected.*

*Rejected as subordinate to the issues herein, irrelevant to the issues herein, unnecessary, contrary to the proof, contrary to the weight of the evidence, recitation of testimony, argument, or conclusions of law.

COPIES FURNISHED:

Mike Piscitelli, Esquire Mary M. Piccard, Esquire

Cummings, Lawrence & Vezina, P.A. Post Office Box 589

Tallahassee, Florida 32302

Pamela S. Leslie, Esquire Deputy General Counsel

Florida Department of Transportation Haydon Burns Building, M.S. 58

605 Suwannee Street

Tallahassee, Florida 32399-0458

Nathan E. Minear, Esquire HOGAN & PICKERT

Suite 710

201 East Pine Street Orlando, Florida 32801

Ben G. Watts Secretary

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

Tallahassee, Florida 32399-0458 Attn: Eleanor F. Turner

Thornton J. Williams

Florida Department of Transportation Haydon Burns Building, M.S. 58

605 Suwannee Street

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: 93-005703BID

Orders for Case No: 93-005703BID