STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

G. H. JOHNSON CONSTRUCTION )

COMPANY, )

)

Petitioner, )

)

vs. )

) PINELLAS COUNTY SCHOOL BOARD, )

) CASE NO. 96-1942BID

Respondent, )

and )

) ELLIS CONSTRUCTION COMPANY, INC., )

)

Intervenor, )

)

RECOMMENDED ORDER

A hearing was held in this case in Largo, Florida on May 2, 1996, before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Jawdet I. Rubaii, Esquire

1345 South Missouri Avenue, Suite 213

Clearwater, Florida 34616

For Respondent: John W. Bowen, Esquire

Pinellas County School Board

301 Fourth Street, South West Largo, Florida 34649-2942

For Intervenor: Dale W. Vash, Esquire

E. A. Mills, Jr., Esquire Fowler, White, Gillen, Boggs,

Villareal and Banker, P.A. Post Office Box 1438

Tampa, Florida 33601 STATEMENT OF THE ISSUE

The issue for consideration in this hearing is whether the contract for John H. Sexton Elementary School's new facility should be awarded to Ellis Construction Company, Inc. or to G. H. Johnson Construction Company.

PRELIMINARY STATEMENT

By Notice of Intended Decision, posted on April 11, 1996, the Pinellas County School Board, (Board), announced its intention to award the contract for

the construction of the John H. Sexton Elementary School new facility in Pinellas County to Ellis Construction Company, Inc., (Ellis). Thereafter, on April 12, 1996, Petitioner, G. H. Johnson Construction Company, (Johnson), filed its formal protest and objection, and the matter was thereafter forwarded to the Division of Administrative Hearings for formal hearing. A Notice of Intervention was filed by Ellis, and this matter ensued.

At the hearing, the Board presented the testimony of Tony Rivas, its director of facilities design and construction, and introduced Board Exhibits 1 and 2. Johnson presented the testimony of John R. Mohme, its Vice-President for estimating; Edward C. Hoffman, Jr., the architect who designed the project in issue; Peter M. Gottschalk, also an architect and an expert in the field of architectural design; and, in rebuttal, James Tippins, a registered professional engineer. Johnson also introduced Johnson's Exhibits 1 through 6. Ellis presented the testimony of Gary A. Boucher, a civil engineer and expert in the area of civil engineering, and introduced Ellis Exhibits 1 through 4.

A transcript of the proceedings was furnished and subsequent to the receipt thereof, only counsel for Ellis submitted Proposed Findings of Fact which have been ruled upon in the Appendix to this Recommended Order. However, counsel for Johnson submitted a proposed Recommended Order which, in paragraphs 1 through 15, contains matter in the form of proposed Findings of Fact, and these have also been ruled upon in the Appendix. Counsel for the Board did not make a post-hearing submittal.

FINDINGS OF FACT

1. During the month of March 1996, the Pinellas County School Board, pursuant to an advertised invitation for bids, (IFB), solicited bids for the construction of a new facility for John H. Sexton Elementary School (Sexton school). Each party submitting a bid was required to do so on a bid proposal form which was contained in the bid documents prepared by the project architect, Mr. Hoffman, and furnished to each prospective bidder who requested the bid package.

   
   

2. One section of the bid proposal form related to "dewatering" potentially required at the construction site, and consistent with that potential two sentences were contained on the bid proposal form relating to dewatering of footings and of utilities, both of which provided for election by checking of an affirmative or a negative, and both of which had been pre-checked in the affirmative by the Board. It was the position of the Board that the pre- checked sentences as to dewatering on the bid proposal form constituted an acknowledgment by each bidder that that bidder's submittal included dewatering in the base bid.

   
   

3. In addition to the check, the dewatering section also included blanks for the insertion by the bidder of figures representing lineal feet of header pipe and unit price per foot which figure would constitute a credit given by the bidder to the Board against the total bid price if dewatering were found not to be necessary, both as to footings and to utilities. Even further, the form also contained blanks to be filled in by the bidder for unit prices to be charged the Board in the event additional dewatering was required by virtue of the Board's later inclusion in the project of additional footings or utilities.

   
   

4. Prior to the time for bid submittal, the Board conducted a meeting of all prospective bidders at which the project was explained and bidders given an

   opportunity to ask questions raised by the bid package. Johnson did not ask any questions regarding dewatering or that portion of the package relating thereto.

   
   

5. Numerous bids were submitted in response to the proposal, including those from Johnson and Ellis. By stipulation at the hearing, the parties agreed that in all ways other than in that section of the bid proposal form for this project relating to dewatering, Johnson was and is a responsive and responsible bidder, as is Ellis.

   
   

6. The bid proposals were opened by the Board at 2:00 PM on April 11, 1996 and the base bid prices on each proposal were read aloud to all in attendance by a Board representative. The project architect was present at the opening and tabulated and reviewed the bid proposals as opened. Johnson submitted the lowest base bid with a price of $7,965,000. The next lowest bid was that of Ellis, whose base bid price was $7,945,200. At the time of opening, no Board representative indicated anything was wrong with Johnson's bid

   
   

7. Mr. Hoffman, the project architect, immediately noticed that Johnson had altered the Board's pre-checked bid proposal form by striking out the pre- checked "is" space regarding inclusion of dewatering in the base price of the two dewaterings, and making an X in each of the "is not" spaces. Mr. Hoffman considered that alteration by Johnson as a material alteration of the Board's solicitation which rendered Johnson's bid non-responsive. It must be noted that each change bears the initials, R. Y. Reza Yazdani is Johnson's president who initialed the changes and signed the bid proposal form for the company.

   
   

8. In addition, Johnson also inserted a "0" in those spaces which dealt with amount of credit and cost of additional dewatering in the event additional work is required by the Board. In that regard, Hoffman opined that had Johnson not changed the check marks, but inserted the "0" figures as it did, the bid would have been responsive and Johnson would still have been lowest responsive bidder. The reason for this is that the bid form specifically notes that "the unit costs described in A & B above shall in no manner influence the School Board's selection of a firm to whom to award the Contract." The Board now recognizes that there is no part "B", as referenced in the proposal form. Since the "0's" would not influence the selection, use of an unmodified Board form, along with the lowest submitted base price would, in Hoffman's opinion, probably have meant that Johnson would have been awarded the contract.

   
   

9. Johnson's representative, Mr. Mohme, who drafted the company proposal, specifically indicated he did not believe dewatering was a potential in this project. He recognized that such dewatering as was necessary was required by other provisions in the project specifications and he could not figure any way to recognize this and yet accurately reflect his belief that dewatering would not be necessary, other than to strike the pre-checked block and insert the check in the alternative block. He felt that by doing so, he was more accurately reflecting Johnson's bid. This reasoning is rather obscure.

   
   

10. By letter dated April 12, 1996, written to the Board after the bids were opened, Mr. Mohme reiterated Johnson's position that dewatering is not necessary on this project, but further stated that if dewatering were to be necessary, Johnson would do so solely at its own risk and without any risk of additional cost to the Board. Bids may be clarified by a bidder, but such clarification must take place before the bids are opened. Bids may not be modified after bid opening.

11. Before that letter was written, however, when the bids were opened and Mr. Hoffman observed what he considered was Johnson's alteration of the bid form, Hoffman consulted with a representative of the Board's purchasing department, Ms. Maas, who also reviewed Johnson's bid. Ms. Mass was of the opinion that Johnson may have attempted to qualify its bid, and she and Mr. Hoffman thereafter met with Mr. Rivas, the Board's director of facilities design and construction, to explain the problem. Mr. Rivas took the problem to two other Board personnel to see if there were some way Johnson's bid could be deemed responsive so that the Board could benefit by Johnson's low bid price.

    
    

12. Within the context of those aforementioned discussions, Hoffman took the position that the alteration might leave the Board open to a possible change order and additional liability if dewatering were to be required and the Board had accepted Johnson's bid indicating that process was not included in the base price. Mr. Rivas, after consulting with the Board's attorney, also concluded that Johnson's alteration expressly excluded dewatering as an included factor and its exclusion constituted a serious and material deviation from the Board's solicitation. It was deemed material in that the deviation apparently gave Johnson a competitive advantage over other bidders who did not amend the form. This appears to be a valid conclusion and is adopted herein.

    
    

13. The decision to recommend rejection of Johnson's bid and acceptance of Ellis's as the lowest responsive bid was ultimately reached by the Board's administrative staff. The Ellis bid was responsive to the solicitation whereas the determination was made that Johnson's was not responsive because of the alteration. It was not the actual act of alteration that caused that determination but rather the potential effect of the alteration. This was consistent with long standing Board policy not to accept a bid which does not conform to a bid solicitation and not to accept bids from bidders who alter the Board's bid proposal form or otherwise attempt to qualify their bids. It is the opinion of the Board personnel that such consistency in bidding procedure has resulted over time in more qualified bidders submitting bids for Board work which, in turn, has resulted in more competitive prices for the work let for bid. This is a reasonable policy.

    
    

14. Mr. Gottschalk, Johnson's expert architect, who has designed schools for the Board, offered an alternative disposition to this dilemma. While admitting that Johnson's shifting of the risk of loss as a result of possible dewatering was a material matter, he suggested the Board could have disregarded the dewatering clause on every submittal and thereafter awarded the contract to Johnson, the lowest bidder, whose bid was responsive to the solicitation except for the dewatering provision. Recognizing this solution would have placed each bidder on an equal footing and allowed award to the lowest bidder at a substantial savings to the Board, he nonetheless also understood the decision made by Mr. Hoffman and the Board staff here and could not fault it. He agreed that reasonable men could differ on the issue of responsiveness here and how to deal with it. It is so found.

    
    

15. After a review of the evidence submitted, including the testimony indicating the remoteness of the likelihood that extensive dewatering would be required, there appears to be no evidence that the Board, or its staff, acted dishonestly, fraudulently, illegally or arbitrarily in rejecting Johnson's bid on this project and recommending award to Ellis.

    CONCLUSIONS OF LAW

    
    

16. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter in this case. Section 120.57(1), Florida Statutes.

    
    

17. Public agencies have wide discretion in soliciting and accepting bids for public improvements, and their decision, when based on an honest exercise of this discretion, will not be overturned even if it may appear erroneous and even if it is a decision upon which reasonable persons may disagree. Department of Transportation v. Groves Watkins Constructors, 530 So.2d 912, 913 (Fla. 1988).

    
    

18. When an agency's decision to reject a bid is administratively challenged, the scope of the inquiry is limited to whether the purpose of competitive bidding has been subverted. The sole responsibility of the hearing officer is to ascertain whether the agency acted fraudulently, illegally, dishonestly or arbitrarily. Asphalt Pavers, Inc. v. State of Florida, Department of Transportation, 602 So.2d 558, 560 (Fla. 1st DCA 1992). This standard for review also applies when an agency decides to reject the lowest bid from a responsible bidder because that bid is considered non-responsive because of a technical deviation. Overstreet Paving Company v. State of Florida, Department of Transportation, 602 So.2d 851, 853 (Fla. 2nd DCA 1992). In that regard, an arbitrary act is one not supported by facts or logic, or one which is despotic. Agrico Chemical Company v. Department of Environmental Regulation, 365 So.2d 759, 763 (Fla. 1st DCA 1979).

    
    

19. In the instant case Johnson altered a pre-printed bid proposal form which contained the agency's desires regarding a particular point. Making the unauthorized change had the effect of changing the solicitation as prepared and distributed by the Board and was non-responsive to the solicitation as distributed. The deviation was material in that it may have given Johnson a competitive advantage over other bidders, all of whom accepted and submitted the bid proposal form without alteration.

    
    

20. The letter submitted by Johnson the day after the bid opening, in which it purported to offer the dewatering service, if required, without additional charge to the Board, was properly rejected by the Board as a post- opening modification of Johnson's bid.

    
    

21. Taken together, the evidence fails to show in any way that the Board's rejection of Johnson's bid because of Johnson's change to the bid proposal form, and the determination that Johnson's bid was, thereby, non-responsive, was fraudulent, illegal, dishonest or arbitrary. That that decision may now result in the Board paying an additional sum for the project is unfortunate, and though that result might have been avoided if Mr. Gottschalk's suggestion to disregard the dewatering section of the form in all submittals had been implemented, the ultimate thrust of the competitive bid process, to procure the lowest and best responsive price for the agency, has been achieved, and in doing so, the integrity of the process has been maintained.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Pinellas County School Board enter a final order denying and dismissing G. H. Johnson Construction Company's protest and awarding a contract for the construction of Sexton Elementary School to Ellis Construction Company, Inc.

DONE and ENTERED this 8th day of May, 1996, in Tallahassee, Florida.

ARNOLD H. POLLOCK, 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 8th day of May, 1996.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 96-1942BID

To comply with the requirements of Section 120.59(2), Florida Statutes (1993), the following rulings are made on the parties' proposed findings of fact:

Johnson's Proposed Findings of Fact.

1.-5. Accepted and incorporated herein.

1. Accepted.

2. Accepted but not a proper Finding of Fact.

   More a restatement of and comment on testimony.

3. Rejected.

4. Accepted but not a proper Findings of Fact. More a restatement of and comment on testimony.

5. &11. Accepted.

1. Accepted and incorporated herein.

2. First sentence accepted as a literal statement of what appears in the specifications. Second and third sentences accepted but not probative of any material issue of fact.

3. Accepted and incorporated herein.

4. First sentence accepted. Balance not Finding of fact but argument.

Ellis' Proposed Findings of Fact.

1.&2. Accepted and incorporated herein. 3.-6. Accepted.

7.-10. Accepted and incorporated herein. 11.-15. Accepted and incorporated herein.

16. Accepted but word "certain" is changed to read "likely."

17.-21. Accepted and incorporated herein.

22. Accepted and incorporated herein. 23.&24. Accepted.

25.&26. Accepted and incorporated herein. 27.-29. Accepted.

1. Accepted and incorporated herein.

2. Not relevant to any material issue of fact.

COPIES FURNISHED:

Jawdet I. Rubaii, Esquire

Clearwater Executive Suites, No. 213 1345 South Missouri Avenue Clearwater, Florida 34616

John W. Bowen, Esquire Pinellas County School Board

301 4th Street S.W.

Largo, Florida 34649-2942

E. A. Mills, Jr. Esquire Dale W. Vash, Esquire

Fowler, White, Gillen, Boggs, Villareal and Banker, P.A.

501 East Kennedy Boulevard Post Office Box 1438 Tampa, Florida 33601

Pinellas County School Board

301 4th Avenue, S.W. Largo, Florida 34649-2942

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: 96-001942BID

Orders for Case No: 96-001942BID