STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE CONTRACTING AND ) ENGINEERING CORPORATION, )

)

Petitioner, )

)

vs. )

)

DEPARTMENT OF TRANSPORTATION, ) CASE NO. 96-4856BID

)

Respondent, )

and )

) GILBERT SOUTHERN CORPORATION, )

)

Intervenor. )

)

RECOMMENDED ORDER

A hearing was held in the above style cause pursuant to notice by Stephen F. Dean, the assigned Administrative Law Judge, on November 15, 20, and 21, 1996 in Tallahassee, Florida.

APPEARANCES

Petitioner: Brant G. Hargrove, Esquire

1026 East Park Avenue Tallahassee, Florida 32301

Donna H. Stinson, Esquire Broad and Cassel

Post Office Drawer 11300 Tallahassee, Florida 32301

Respondent: Paul Sexton, Esquire

Department of Transportation

Haydon Burns Building, Mail Station 58 605 Suwannee Street

Tallahassee, Florida 32399-0458

Intervenor: John Radey, Esquire

Jeffrey Frehn, Esquire Radey McArthur & Frehn Post Office Drawer 11307

Tallahassee, Florida 32302 PRELIMINARY STATEMENT

State Contracting and Engineering Corporation (State) and Gilbert Southern Corporation (Gilbert), among other prequalified bidders, submitted timely bids for State Project No. 86075- 3423/03175-3426, which involves the replacement of toll plazas on State Road 93 (also known as Alligator Alley) in Collier and Broward Counties. The project has been referred to in this proceeding as “the Alligator Alley project.”

State and Gilbert submitted their sealed bid packages to the Department before the advertised deadline for bids, 10:30 a.m., August 28, 1996. A Department review of the bids showed that Gilbert was the apparent low bidder submitting a bid totaling

$9,153,215.07, and State was the apparent second-low bidder submitting a bid totaling $9,566,051.25.

Consistent with Rule 14-78.003(2)(b)3., Florida Administrative Code, and the bid specifications, bidders were permitted to submit DBE Utilization Summary Forms and DBE Utilization Forms within 72 hours after submittal of their bid packages. State and Gilbert timely submitted DBE Utilization Summary Forms, showing the total amount committed to be subcontracted to DBE’s in order to meet each of the DBE goals set for the contract. The two companies also timely submitted DBE

Utilization Forms that purported to commit each bidder to subcontract with DBE’s in amounts that totaled those shown in the DBE Utilization Summary Forms. The Department announced it was awarding the contract to Gilbert.

State gave timely notice of its intent to protest the bid, and filed its formal written protest in accordance with the statutes. The Department forwarded the case to the Division of Administrative Hearings, where the case was set for hearing.

Gilbert intervened in the proceedings, and participated in discovery and prehearing motion practice. Gilbert moved to strike all evidence relating to the bids of Jayalden and Precision as being beyond the scope of the written protest. Ruling on this motion was reserved. This motion is denied. See discussion on page 15.

Because of the complexity of the case, the hearing was extended for an additional two days. At hearing, the parties presented the testimony of six witnesses, and introduced 25 exhibits, including six deposition transcripts, were received into evidence. The parties submitted proposed recommended orders containing proposed findings of facts. The proposed findings were read and considered. The first eleven paragraphs were agreed to by the parties. Paragraphs 7 and 8 were expanded and reformatted for greater clarity.

STATEMENT OF THE ISSUES

The issues in this proceeding are whether Gilbert’s bid proposal was responsive to the Department of Transportation’s bid proposal, and whether the Department of Transportation (Department) erred in accepting the bid of Gilbert. State alleged that Gilbert failed to comply with the DBE bid information submittal requirements of Rule 14-78.003(2)(b)3.a., Florida Administrative Code, in filing the DBE forms for the project.

FINDINGS OF FACT

1. State and Gilbert, among other prequalified bidders, submitted timely bids for State Project No. 86075-3423/03175- 3426, which involves the replacement of toll plazas on State Road

   93 (also known as Alligator Alley) in Collier and Broward Counties. The project has been referred to in this proceeding as “the Alligator Alley project.” (Agreed Facts)

2. The Department has adopted Rule Chapter 14-78, F.A.C., to govern utilization of DBE’s on state and federally funded construction projects. The specifications for the Alligator Alley project also include Special Provisions for Disadvantaged Business Enterprises, which incorporate many of the requirements of Rule 14-78.003, Florida Administrative Code. Consistent with Chapter 14-78, Florida Administrative Code, and the Special Provisions, the Department assigned Disadvantaged Business Enterprise (DBE) goals to the Alligator Alley project requiring

   bidders to subcontract 4% of the work to black DBE’s and 8% of the work to non-minority women DBE’s. (Agreed Facts)

3. State and Gilbert submitted their sealed bid packages to the Department before the advertised deadline for bids, 10:30

   a.m. on August 28, 1996. A Department review of the amounts bid showed that Gilbert was the apparent low bidder, submitting a bid totaling $9,153,215.07, while State was the apparent second-low bidder, submitted a bid totaling $9,566,051.25. (Agreed Facts)

4. Consistent with Rule 14-78.003(2)(b)3., Florida Administrative Code, and the bid specifications, bidders were permitted to submit DBE Utilization Summary Forms and DBE Utilization Forms within 72 hours after submittal of their bid packages. State and Gilbert timely submitted DBE Utilization Summary Forms, showing the total amount committed to be subcontracted to DBE’s in order to meet each of the DBE goals set for the contract. The two companies also timely submitted DBE Utilization Forms that purported to commit each bidder to subcontract with DBE’s in amounts that totaled those shown in the DBE Utilization Summary Forms. (Agreed Facts)

5. Gilbert’s DBE Utilization Summary Form stated that Gilbert would subcontract $369,000 (or 4% of its total bid) to black DBE’s and $734,600 (or 8% of its total bid) to non-minority women DBE’s. State’s DBE Utilization Summary Form stated that

   State would subcontract $400,000 (or 4% of its total bid) to black DBE’s and $800,000 (or 8% of its total bid) to non-minority women DBE’s. (Agreed Facts)

6. The Special Provisions of the bid specifications that address the DBE Forms provide as follows:

   The contractor’s submission shall include the following information (submitted on Form Nos. 275-020-003 Utilization Summary and 275-020-

   004 Utilization Form):

   1. The names, addresses of certified DBE firms that will participate in the contract. Only DBEs certified by the Department at the time of the bid may be counted toward DBE goals.

   2. A description of the work each named DBE firm will perform.

   3. The dollar amount of participation by each named DBE firm.

   4. If the DBE goal is not met, sufficient information to demonstrate that the contractor made good faith efforts to meet the goals. (Agreed Facts) [Emphasis Supplied]

1. Gilbert submitted DBE Utilization Forms for each of its DBEs stating the DBE’s name, address, telephone number, the signature of the DBE or authorized individual.

2. Gilbert submitted a DBE form for Alco Trucking, a firm owned by a Black male, which stated the value of the subcontracting work to be done as $369,000 without reduction or qualification, and stated regarding the work to be done as follows:

   Item No. Description of Work

   (Note if item qualifies for supplier) Various Hauling, aggregates, fill, on site trucking

3. Gilbert submitted a DBE form for Swiftline Trucking, a firm owned by a non-minority female, which stated the value of the subcontracting work to be done as $82,200, without reduction or qualification, and stated regarding the work to be done as follows:

   Item No. Description of Work

   (Note if item qualifies for supplier) Various Hauling, aggregates, fill, on site trucking

4. Gilbert submitted a DBE form for Jayalden Enterprises, a firm owned by a non-minority female, which stated the value of the subcontracting work to be done as $264,000, without reduction or qualification, and stated regarding the work to be done as follows:

   Item No. Description of Work

   (Note if item qualifies for supplier)

   
   

   735-74-A Toll Plaza (Partial) 735-74-B Toll Plaza (Partial)

   
   

5. Gilbert submitted a DBE form for Precision Contracting, a firm owned by a non-minority female, which stated the value of the subcontracting work to be done as $305,000, without reduction or qualification, and stated regarding the work to be done as follows:

   Item No. Description of Work

   (Note if item qualifies for supplier)

   
   

   544-75-5 Impact Attenuator Vehicular (Partial) 102-1-A MOT (Partial)

   
   

6. On each DBE form, Gilbert filled in the line for an “amount to be paid to DBE Subcontractor” and the total committed “toward the DBE goal,” but did not fill in the line for “Amount to be paid to DBE Supplier.” (Agreed Facts)

1. State submitted DBE Utilization Forms for each of its DBEs stating the DBE’s name, address, telephone number, the signature of the DBE or authorized individual.

2. State submitted a DBE form for Metro Engineering Constractors, Inc., a Black owned business, which stated the value of the subcontracting work to be done as $400,000 without reduction or qualification, and stated as follows:

   Item No. Description of Work

   (Note if item qualifies for supplier)

   
   

   120-6 Embankment and

   
   

   285-701 Limerock Base and

   Haul & Supply Materials 285-709 Limerock Base and Earthwork

   
   

3. State submitted a DBE form for Freedom Pipeline Corporation, a non-minority female owned business, which stated the value of the subcontracting work to be done as $800,000 without reduction or qualification, and stated as follows:

   Item No. Description of Work

   (Note if item qualifies for supplier)

   
   

   121-70 Flowable Fill

   400-1-2 Class I Concrete Endwalls

   through Storm Drainage

   514-71-3 Plastic Filter Baric (Riprap)

   and

   1513120-118 Pipe Ductile Iron Pusyh on Joint 8” and

   415-1-3 Reinforcing Steel Retaining Walls Retaining

   Walls

   and

   635-1-11 Pull & Junction Boxes

   through Sewer & Water

   1648100-7 Misc Water Fixt Blow Off Assy 285-701 Limerock Base and

   Haul & Supply Materials 285-709 Limerock Base and Earthwork

   
   

4. State indicated on its DBE forms that both contractors were suppliers of materials and indicated that the total amount of the contract in both cases was to go to the DBE contractor.

1. The Department’s Minority Programs Office is responsible for the implementation of the Department’s DBE program and reviews the DBE Utilization Forms submitted with bids. Kenneth Sweet, who is employed in the Minority Programs Office, had responsibility for reviewing Gilbert’s DBE Utilization Forms and determined that they complied with Rule 14-78.003(2)(b)3.a., Florida Administrative Code, and the Special Provisions of the bid specifications addressing DBE’s. The Department did not contact Gilbert or any of the DBE’s listed on Gilbert’s forms to confirm or obtain clarification of the information stated thereon. (Agreed Facts)

2. The Department posted the bid tabulations for the Alligator Alley project, showing an award to Gilbert as the lowest responsive bidder. State filed its Notice of Protest with the Department’s Clerk of Agency Proceedings on September 23, 1996, 1996, and filed its Formal Protest on October 2, 1996. After this matter was referred to the Division, Gilbert filed its Petition to Intervene on October 22, 1996, which was granted on October 25, 1996. (Agreed Facts)

3. It was stipulated that all of the DBE’s reflected in the DBE Utilization Forms submitted by Gilbert and State were certified DBE’s. (Agreed Facts)

4. Gilbert’s DBE Utilization Forms were submitted to the Minority Programs Office within 72 hours after the project letting and the forms were signed by DBE representatives.

5. The Department is dependent upon the accuracy of the information provided by the bidders to assess DBE participation.

6. Gilbert and one of its DBE’s did not have the identical understanding of the exact scope of the work to be performed by the DBE which might impact how much of the value of the contract would be credited for DBE participation; however, there is no evidence of collusion or fraud in any of the quotes.

7. The Department credits 60% of the value of a contract when the DBE contractor is a supplier of materials, and 100% of the value of the contract when the DBE Contractor furnishes and installs the materials designated as furnish and install items in

   the specifications. The toll booths and attenuators were not furnish and install items.

8. Gilbert included 100% of the value of the contracts with Alco, Swiftline, Precision and Jayalden as DBE participation. The Department accepted Gilbert’s representations as presented in its DBE forms without questioning what services were being performed or provided by these DBE Contractors.

9. Ken Sweet of the Department’s DBE programs office testified. The Department's justification for not examining the DBE proposals more closely was that the Department requires the prime contractor to adhere to the amount of the DBE work as presented in the forms. While this may be sufficient to maintain the integrity of the DBE program, it is insufficient review to insure that the contractor has complied with the rules for crediting DBE participation and to insure the competitiveness of the bid process.

10. Although Gilbert asserted at hearing that its subcontractors, Swiftline and Alco, would be supplying and placing the materials, it did not so state in its forms. The forms for Alco and Swiftline said, "hauling, aggregates, fill, and on site trucking." There was no basis for the Department to conclude that the contractors were supplying and placing the materials. Further, there was no evidence that Alco and Swiftline were "regular dealers" in fill or aggregates, or identification of their sources of aggregate and fill.

11. Gilbert indicated no item numbers with regard to Alco and Swiftline. If item numbers had been provided, the status of the work as furnish and install items could have been determined.

12. Only two verb forms were used in the "Description of Work" portion of form: “hauling” and “trucking”.

13. Petitioner showed that the value of the contract exceeded the reasonable value of the trucking and hauling to be done on the project. At hearing, Gilbert asserted that Swiftline and Alco were suppliers. This evidence may not be considered.

14. The Department should have limited Gilbert's DBE credit to the value of the hauling and trucking. This was the only work described in the DBE utilization forms. Although the value of the trucking and hauling alone was not proven, it obviously was less than the full contract amount. Gilbert had stated the DBE participation amounts at the minimum required amount. Any reduction of amount creditable to a Black minority contractor would have placed Gilbert below the four percent goal stated in the specifications.

15. The Department credited Gilbert with 100% of the value of the contract with Jayalden towards DBE participation.

16. The DBE Utilization Form for Jayalden does not indicate Jayalden is a supplier or regular dealer. The form does not state Jayalden would install the toll booths.

17. A contractor may obtain 100 percent credit for DBE participation for materials provided by a DBE manufacturer, a DBE

    regular dealer or a DBE who furnishes and installs items designated furnish and install items in the specifications.

18. The Department knew there were only two approved manufacturers of toll booths. Jayalden was not one of the manufacturers. Neither of the manufacturers were DBE certified.

19. Gilbert's DBE forms did not identify Jayalden as a "regular dealer," and the toll booths were not designated furnish and install items in the specifications

20. The Department must approve additional items as furnish and install items if not designated in the specifications. The Department did not add the toll booths as furnish and install items.

21. The evidence shows that the manufacturer offered to provide the toll booths and install the toll booths for $75,000 each.

22. Jayalden agreed to acquire, ship and install the booths for $76,000 each.

23. A question arises regarding the commercially useful function Jayalden was performing if the manufacturer would furnish and install the nine booths for $75,000 each.

24. In response to the question regarding the commercially useful function Jayalden performed, evidence was presented that Jayalden assumed responsibility for this acquisition and installation of the booths and Jayalden relieved the contractor of "managing" that part of the project.

25. The rules required the Department's approval of the commission or fee paid for management services of this type. The rules do not permit credit for DBE participation of the value of the toll booths. This would reduce the credit for minority non- Black participation by Jayalden from $684,000 to $9,000, less than the required non-Black minority DBE participation.

26. The evidence regarding Precision established Precision was a regular dealer in traffic control devices, and contracted to supply, service and install these devices on the project. The DBE Utilization Form for Precision indicates the Item No. and indicates "Impact Attentuator Vehicular (Partial)" and "MOT (Partial)". Precision's form provided sufficient data to justify being given 100% credit. Gilbert's other DBE forms did not present any special condition warranting increasing DBE credit.

27. The DBE Utilization Forms as submitted by Gilbert failed to mention or identify any special conditions or circumstances affecting the amount of credit Gilbert received for DBE participation. The facts submitted at hearing reveal that at least one special condition or circumstance was applicable to each subcontractor in order to justify crediting Gilbert with 100% of the value of the contract with the DBE toward DBE participation. With exception of Precision, the information was provided only after the bid opening and improperly supplemented the original proposal.

28. The Department had previously approved DBE Utilization Forms providing the same type of information as contained on Gilbert’s DBE Utilization Forms.

29. Had the Department reviewed the proposals as required, Gilbert would have been determined not to have met the DBE specifications. Gilbert did not justify its failure to meet the DBE participation because it facially had met the DBE criteria under the Department's existing policies.

30. In contrast, the DBE form submitted by State for Metro indicates the items numbers involved, and that Metro will “Haul & supply materials and earthwork.” Similarly, the work to be performed by Freedom Pipeline was clearly identified and sufficient information provided to advise the Department of any special conditions affecting the credit to be awarded for DBE participation. One can readily ascertain that the subcontractor is a hauler, supplier and installer of the limestone, and that the contractor should receive 100% credit for minority participation of the contract's value.

31. State was able to meet the DBE participation specification.

    CONCLUSIONS OF LAW

    
    

    Jurisdiction

    
    

32. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this case pursuant to Section 120.57(3), Florida Statutes.

33. Section 120.57(3), Florida Statutes, as amended during the last session of the legislative, provides in pertinent part as follows:

    (b) . . . The formal written protest shall state with particularity the facts and law upon which the protest is based.

    
    

    Gilbert's Motion To Strike

    
    

34. Gilbert moved to strike the evidence related to Jayalden and Precision on the basis that State's administrative complaint did not plead with particularity the basis for its protest regarding to these two DBEs. Gilbert had objected and preserved its objections during the course of the hearing with regard to testimony and evidence related to Precision and Jayalden. These objections had been overruled, and the hearing officer reserved his ruling on Gilbert's motion to strike pending publication of this recommended order.

35. State's formal written protest states in pertinent part as follows:

    1. State is a properly licensed contractor officially prequalified with FDOT to bid on and perform work for FDOT. State’s business address is 4300 Ravenswood Road, Ft. Lauderdale, Florida.

    2. State was the apparent second low bidder for State Project No. 86075- 3423/03175-3426, a project which was let by the Florida Department of Transportation (FDOT).

    3. State submitted a bid for $9,566,051.25 to the FDOT for performance of the referenced project.

    4. The apparent low bid was submitted by Gilbert Southern Corporation (Gilbert) and

       was for an amount of $9,153,215.07.

    5. FDOT has posted its intent to award said project to Gilbert.

    6. State has complied with all conditions precedent to the filing of this Formal Written Protest.

    7. The disputed issues of material fact include:

       WHETHER Gilbert has met DBE bid submittal information requirements of Rule 14-78 FAC, and the DBE bid forms for the project.

    8. Low bidder on an FDOT project is required under Rule 14-78.003(2)(b) Florida Administrative Code, and bid documents to submit, prior to FDOT posting its intent to award, Disadvantaged Business Enterprise (DBE) information which obligates a low bidder to hire DBE subcontractors for performance of specific work items for specific amounts of money.

    9. FDOT, in response to the incorporation of these requirements into the contract between FDOT and the low bidder, is required under Rule 14-78.003(2)(b) to monitor the obligations previously identified by the low bidder in order to insure that not more than 49% of previously identified DBE work is subcontracted to others; that material suppliers are identified so that only 60% of that work can be counted towards fulfillment of a particular contract goal; that commercially useful functions for the contract are performed by the DBE subcontractor previously identified; that prime contractor personnel and/or equipment are separate and distinct from DBE personnel and/or equipment.

    10. Gilbert, as the low bidder on this

        particular contract was required to submit the information required in Rule 14-78(2)(b) within three business days of the letting of this project.

    11. DBE submittals therefore not only serve to bind Gilbert but also allow FDOT to monitor DBE contract compliance which FDOT must do in order to comply with its obligations it has under Rule 14-78.

    12. Gilbert submitted DBE information which is so vague and indescript that it

        fails to meet the bid and rule requirements for the project.

    13. Rule 14-78.003(2)(b) provides in pertinent part that:

        “ . . . The failure to include in the bid submission of all other information required in 14-78.003(2)(b)3a above shall result in a determination that the bid is non- responsive.”

    14. Gilbert’s bid therefore should be declared non-responsive in accordance with Rule 14-78.003 FAC.

    15. Additionally, Gilbert has indicated in its DBE utilization information submitted to FDOT that it intends to pay DBE subcontracting companies amounts of money for performance of work that is not described in Gilbert’s utilization information or that should not reasonably command such payments for work performance.

    16. These work items include but are not limited to:

        120-4 Excavation subsoil

        120-6 Embankment

        160-4 Stabilization Type B 162-2 Topsoil

        285-701 Base optional 01

        285-709 Base optional 09

    17. Gilbert, therefore, has not provided to FDOT the accurate information required or anticipated by FDOT and as a result Gilbert’s bid should be declared non-responsive.

    18. State has submitted the lowest responsive bid and should therefore be awarded the referenced project.

36. Having considered the pleadings as set forth above, it is concluded that State did plead with particularity that the DBE information submitted by Gilbert was so vague and indescript that it failed to meet the requirements of the bid specifications and the Department's rules, and that this failure was a violation of Rule 14-78.003(2)(b), Florida Administrative Code.

37. Further, the written protest alleges that the DBE Utilization Form submitted by Gilbert to the Department reflected that Gilbert intended to pay the DBE companies amounts of money for the performance of work that was not described in Gilbert's utilization information or intended to pay the DBE's companies amounts of money for the performance of work that should not reasonably command such as a payment for work performance. State alleges that Gilbert did not provide to the Department of Transportation accurate information required by the Department's rules, and, therefore, Gilbert's bid should be declared nonresponsive.

38. The formal written protest fairly apprises the Department and Gilbert of the allegations the Petitioner was making. Gilbert fully participated in discovery and was not surprised by the evidence presented on Jayalden or Precision. The evidence presented was within the scope of the pleadings. Therefore, Gilbert's motion to strike is denied.

    Competitive Procurement Protest

    
    

39. Section 120.57(3), Florida Statutes, was amended further to provide:

    (f) In a competitive/procurement protest, no submissions made after the bid or proposal opening amending or supplementing the bid or proposal shall be considered. Unless otherwise provided by statute, the burden of proof shall rest with the party protesting the proposed Agency action. In a competitive/procurement protest, other than a rejection of all bids, the administrative law

    judge shall conduct a de novo proceeding to determine whether the Agency's proposed action is contrary to the Agency's governing statutes, the Agency's rules or policies, or the bid or proposal specifications. The standard of proof for such proceedings shall be whether the proposed Agency action was clearly erroneous, contrary to competition, arbitrary or capricious. [Emphasis supplied.]

    Submissions After Bid Openings

    
    

40. In a competitive/procurement protest, no submissions made after the bid or proposal opening amending or supplementing the bid or proposal shall be considered.

    
    

    Burden Of Proof

    
    

41. Pursuant to the statute, the burden of proof rests with the party protesting the proposed agency action.

    Standard of Proof

    
    

42. The statutory standard of proof in the competitive/ procurement protest proceedings is whether the proposed Agency action is clearly erroneous, contrary to competition, arbitrary, or capricious.

    Scope of Inquiry

    
    

43. One of the issues raised at the outset of the hearing was the scope of the proceedings given the amendment of Section 120.57(3), Florida Statutes, during the last session of the legislature which became effective immediately prior to the formal hearing in this case. The emphasized language in the

    statute above alters the formal proceedings pursuant to the statute and expands the scope of inquiry. Contrary to the position taken by the Department and Gilbert that the statute limits proceedings to a review of the agency's action, the new language extends the scope of the inquiry in competitive procurement protests. The inquiry may go behind the facts asserted in the proposal, and the protestant may show by evidence presented at hearing that the facts underlying the representations in the proposal are in error and may show that the action proposed by the Agency is contrary to statute, rule, policy or the specifications of the request for proposal or bid document.

    Issues

    
    

44. Gilbert and the Department of Transportation argue that the basis for rejecting a bid as nonresponsive for failure to comply with DBE utilization documentation requirement is limited to: (1) an authorized representative of the DBE firm, not signing the DBE forms, (2) the failure to submit DBE utilization forms by 5:00 p.m. on the third business day following the letting or if a false quote is submitted, and (3) submission of false bids. While these may be specific reasons for why a proposal may be rejected as unresponsive for failure to comply with DBE utilization documentation requirements, any treatment of the DBE forms demonstrated by Petitioner to be contrary to the Agency's governing statutes, the Agency's rules or policies, or

    the bid or proposal specifications may also be grounds to the Agency to reject the bid proposal.

45. The issue is whether the Department's action in accepting Gilbert's proposal was contrary to statute, rule, policy or the specifications of the request for proposal or bid documents.

46. The facts reveal that the Department did not review the DBE forms beyond a determination that they were signed, timely submitted, and not false quotes. The Department justified this cursory review of the forms prior to letting the contract on the basis of forcing the winning contractor to replace any DBE participation rejected or reduced during execution of the work with qualifying DBE work of value equal to the original commitment. This policy appears on the surface to protect the DBE program; however, it does not consider the adverse impact upon competition when DBE participation is overstated.

47. Petitioner showed at hearing that the DBE forms for Swiftline and Alco did not reflect they were suppliers or regular dealers in aggregates or fill. The forms did not reflect any activity other than "hauling" or "trucking." The forms did not identify the source of their materials. Under the rules, 1/ DBE subcontractors hauling or trucking materials receive DBE credit only for the value of the trucking and not the materials unless they (1) are a regular dealers or suppliers of such materials, and (2) the materials are delivered to or from an off site

    location monitored by DOT project personnel or other persons designated by the Department.

48. The information contained in the DBE forms for Alco and Swiftline was insufficient to support DOT's awarding Gilbert 100% credit for DBE participation. Based upon the information provided, Gilbert was only entitled to the value of the trucking and hauling.

49. Similarly, the DBE forms for Jayalden do not reflect that Jayalden is a regular dealer. There was no credible evidence presented at hearing that Jayalden is a regular dealer and DOT knew it was not a manufacturer; however, assuming it were, the overwhelming weight of the evidence was that the manufacturer of the booths offered to provide and install the booths for $75,000 each. The commercially useful function being provided by Jayalden in this transaction was relieving Gilbert of the responsibility for acquiring and installing the booths by managing their acquisition and installation.

50. Rule 78-14.003(2)(B)6.h.(I), Florida Administrative Code, provides a contractor may count towards DBE credit expenditures to DBE firms, who are not manufacturers or regular dealers, fees or commissions for providing a bona fide service, such as managerial services in procurement of equipment, material or supplies provided the fee is determined to be reasonable by the Department.

51. There was insufficient information provided by Gilbert on Jayalden's DBE form for the Department to make a determination that Jayalden was a service provider and to determine whether Jayalden's fee was reasonable.

52. The rule also limits credit to the amount of the fee and not the value of the materials. Therefore, even if Jayalden performed a useful commercial service and the fee were deemed reasonable, Gilbert was entitled to $9,000 of DBE credit, not

    $684,000 of DBE credit. The other $675,000 was paid to a non-DBE manufacturer.

53. The evidence indicates the Department would have credited Gilbert for the total value of the Jayalden contract; however, the Department's decision to credit 100 percent of the contract was contrary to the rules. If the Department had credited Jayalden for its fee in accordance with the rule, Gilbert would have failed to meet its DBE participation requirements for non-Black minority participation.

54. The rules 2/ specifically require that a bidder include on the DBE Utilization forms a description of the work each named DBE certified firm will perform, and any documentation required by the contract or applicable rules as evidence of certified DBE participation.

55. Gilbert was clearly required to provide all the documentation necessary to establish the claimed percentage of DBE participation. Gilbert failed to do this.

56. Gilbert did not meet its DBE requirement for Black participation. If the Department had properly evaluated Gilbert's proposal, it would have had to declare it non- responsive.

57. Because Gilbert submitted its proposal in accordance with the Department's existing policies and it asserted 100 percent DBE credit, Gilbert did not justify its good faith efforts.

58. By awarding full credit for DBE participation by Alco, Swiftline, and Jayalden, the Department failed to follow its own rules and was clearly in error in doing so. By allowing full credit for DBE participation for toll booths manufactured by a non-DBE firm, the Department diminished actual DBE participation. Lastly, when DBE participation is adjusted according to the rules, Gilbert fails to meet its DBE goals.

59. Pursuant to Rule 14-78.003(2)(b)3., Florida Administrative Code, Gilbert's bid would be non-responsive. State's DBE Utilization Forms

60. The DBE Utilization Form filed by State Contracting for Metro Engineering Contractors, Inc., sets forth the item numbers and description of work provided on the DBE Utilization Form. The description of work specifically states "Haul and supply materials and earth work."

61. The DBE Utilization Form submitted by State Contracting for Freedom Pipeline Corporation, a non-minority female owned

    business sets forth the information with regard to item number and description of work provided by State Contracting on the DBE Utilization Form filed for Freedom Pipeline Corporation. Again with regard to the description of a portion of the work, State Contracting indicates that Freedom would "supply materials and earthwork."

62. Rule 14-78.003(2)(b)6.e., Florida Administrative Code, provides that expenditures from materials and supplies obtained from DBE suppliers may be counted towards the DBE goal provided that the DBE's assume the actual and contractual responsibility for the provision of materials and supplies. State's inclusion of the language under the description of the work "haul and supply materials and earth work," is sufficient to put the Department on notice that the DBE contractor is both hauling and supplying materials and earth work to complete the embankment and lime rock bases indicated.

63. State met the specifications for DBE participation.

    
    

64. The Department of Transportation previously determined that both Gilbert and State were responsive bidders. In addition, the Department determined that Gilbert was the lowest bidder and State the next lowest bidder.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is,

RECOMMENDED:

That the Department enter its Final Order finding that Gilbert was non-responsive; however, because Gilbert followed the existing policies of the Department which were erroneous, it is recommended that the Department reject all bids and republish the invitation to bid to afford interested contractors an opportunity to file new proposals.

DONE and ENTERED this 3rd day of February, 1997, in Tallahassee, Florida.

STEPHEN F. DEAN

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 3rd day of February, 1997.

ENDNOTES

1/ Rule 14-78.003(2)(B)6., Florida Administrative Code, provides as follows:

1. The Department shall count DBE participation towards meeting DBE goals, in accordance with 49 C.F.R. Subtitle A, Subpart C, Section 23.47, as follows:

   1. Once a firm is determined to be and eligible certified DBE, in accordance with this rule chapter, the total dollar value of the contract to be awarded to the certified DBE is counted toward the applicable goal.

   2. A portion of the total dollar value of the contract with a joint venture eligible

      under this rule chapter equal to the percentage of ownership and control of the DBE partner in the joint venture may be counted toward the DBE goal.

   3. Only ventures to DBEs that perform a commercially usefully function in which work of a contract maybe counted toward a DBE goal. A DBE is considered to perform a commercially usefully function when it actually performs and manages at least 51% of the work subcontracted to it. A DBE is considered to perform a commercially usefully function when it is responsible for a execution of a distinct element of the work of a contract of carrying out its responsibilities by actually performing, managing, and supervising the work involved. To determine whether a DBE is performing a commercially usefully function, the Department shall evaluate the amount of work subcontracted, industry practices, and other relevant factors.

   4. Consistent with normal industry

      practices, a DBE may enter into subcontracts. A DBE form performing subcontract work which is used by the prime contractor to meet the DBE goals may not subordinate more than 49% of the subcontract work. If the DBE subordinates more than 49% of the subcontract work, none of than DBE subcontract amount may be counted towards the DBE goal. If a DBE contractor subcontracts a significantly greater portion of the work of the contract than would be expected on the basis of the normal industry practices, the DBE shall be presumed not to be performing a commercially useful function. The DBE may present evidence to rebut this presumption to the Department. The Department's decision on the rebuttal of this presumption is subject to review by the US Department of Transportation.

   5. Expenditures for materials and supplies

      obtained from DBE suppliers and manufacturers may be counted toward the DBE goal, provided that the DBEs assume the actual and contractual responsibility for the provision of the materials and supplies. Supplies on a furnish and install subcontract must be paid

      for by the DBE if the cost of supplies is to be counted as part of the DBE goal. A two- party check, payable to the DBE and suppliers is acceptable, only if discounts for early payment, etc., are paid to the DBE.

   6. The Department or a contractor may count towards its DBE goal 60% of its expenditures for materials and supplies required under a contract and obtained from a DBE regular dealer, and 100% of the expenditures to a DBE manufacturer.

   7. A DBE which is utilized to attain the contract goal may not shift on a temporary basis key personnel or crews from a prime contractor's payroll to the DBE's payroll or shift on a temporary basis key personnel or crews from another subcontractor or contractor's payroll to the DBE's payroll. Violation of this subsection will result in none of the DBE subcontract amount being counted towards the contract goal.

   8. Pursuant to 49 C.F.R. Subtitle A Subpart C, Section 23.47(f) a contractor may count towards DBE goals the following expenditures to DBE firms that are not manufacturers or regular dealers:

1. The fees are or commissions charged for providing a bone fide service, such as: Professional, technical, consultant or managerial services and assistance in the procurement of essential personnel, facilities, equipment, materials, or supplies required for the performance of the contract; provided that the fee or commission is determined by the Department to be reasonable and not excessive as compared to fees customarily allowed for similar services.

2. The fees charged for delivery of materials and supplies required on a job site (but not the cost of the materials and supplies themselves) when the hauler, trucker, or a delivery service is not also the manufacturer or a regular dealer in materials and supplies, provided that the fee is determined by the Department to be reasonable and not excessive as compared with fees customarily allowed for similar services.

3. The fees or commissions charged for providing any bonds or insurance specifically required for the performance of the contract, provided that the fee or commission is determined by the Department to be reasonable and not excessive as compared with fees customarily allowed for similar services.

i. A DBE trucking company being utilized to haul materials as part of the goal must perform at least 51% of the contract by utilizing owned or leased equipment. The DBE may therefore use its own trucks and its company employees, leased trucks operated by its own employees and vehicles owned and operated by owner/operators. The owner/operator must be the owner of one truck, of which he or she is the driver. If independent owners/operators are used, they must be shown on the DBE payroll but as owner/operators and not as employees. The use of leased or rented equipment from leasing companies, rental agencies, or individuals, which comes with operators other than the owners of the vehicles, will not be counted in the mandatory 51 per cent.

j. In fulfilling the DBE goals, a

contractor may not count delivery of materials and supplies as expenditures to DBE firms where such delivery is to or from off- site locations that are not monitored by either the Department project personnel or other personnel designated by the Department.

2/ Rule 14-78.003(2)(b)3.a., Florida Administrative Code, addressing DBE forms, provide as follows:

A. The contractor's bid submission shall include the following information, pursuant to 49 CFR Subtitle A, S Subpart C, 23.45(H)(1)(i), and shall be submitted on a completed Disadvantaged Business Enterprise (DBE) Utilization Form, Form 275-020-004, Rev. 10/95 and Disadvantaged Business Enterprise (DBE) Utilization Summary Form, Form 275-020-003, Rev. 10/95:

1. The names, addresses, and current telephone numbers of the certified DBE firms that will participate in the contract; and

2. A. Description of the work each named DBE certified firm will perform; and

3. The dollar amount of the participation by each named DBE certified firm; and

4. Any documentation required by the contract or applicable rules as evidence of certified DBE participation; and

5. Signature of an authorized representative of the certified DBE firm confirming that the DBE utilization information; and

6. Evidence that the DBE goal for that project has been met. If the DBE goal is not met, sufficient information must be provided to demonstrate that the contractor may made good faith efforts to meet the DBE goals. [Emphasis supplied.]

COPIES FURNISHED:

Brant G. Hargrove, Esquire 1026 East Park Avenue Tallahassee, Florida 32301

Donna H. Stinson, Esquire Broad and Cassel

Post Office Drawer 11300 Tallahassee, Florida 32301

Paul Sexton, Esquire Department of Transportation Haydon Burns Building, MS 58 605 Suwannee Street

Tallahassee, Florida 32399-0458

John Radey, Esquire Jeffrey Frehn, Esquire Radey McArthur & Frehn Post Office Drawer 11307

Tallahassee, Florida 32302

Ben G. Watts, Secretary Department of Transportation Haydon Burns Building

605 Suwannee Street

Tallahassee, Florida 32399-0450

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 15 days from the date of 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: 96-004856BID

Orders for Case No: 96-004856BID