STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ANDERSON COLUMBIA COMPANY, INC., )

)

Petitioner, )

)

vs. ) Case No. 99-0740BID

) DEPARTMENT OF TRANSPORTATION, )

)

Respondent, )

)

and )

)

COUCH CONSTRUCTION, L.P., )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, a final hearing was conducted in this case on March 15, 1999, at Tallahassee, Florida, before Administrative Law Judge Michael M. Parrish, of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Mary M. Piccard, Esquire

Vezina, Lawrence & Piscitelli, P.A.

318 North Calhoun Street Tallahassee, Florida 32301

For Respondent: Brian F. McGrail, Esquire

Department of Transportation

Haydon Burns Building, Mail Station 58 605 Suwannee Street

Tallahassee, Florida 32399-0458

For Intervenor: Donna H. Stinson, Esquire

Broad and Cassel

Post Office Drawer 11300 Tallahassee, Florida 32302

STATEMENT OF THE ISSUE

The issue in this case concerns whether the Florida Department of Transportation's (FDOT's or Department's) proposed action to award a contract to Couch Construction, L.P., is contrary to the agency's governing statutes, the agency's rules or policies, or the bid or proposal specifications.

PRELIMINARY STATEMENT

Following the Department's announcement of its intention to award the subject contract to Couch Construction, L.P. (Couch), Anderson Columbia Company, Inc. (Anderson), filed a timely formal protest challenging that proposed agency action. On December 9, 1998, prior to the referral of this matter to the Division of Administrative Hearings, Couch filed with the Department a Motion to Intervene in this administrative proceeding. The Department referred this matter to the Division of Administrative Hearings on February 17, 1999, for assignment to an administrative law judge. On February 19, 1999, an order was issued granting Intervenor status to Couch. A final hearing was scheduled for March 15, 1999.

At the final hearing on March 15, 1999, each party presented the testimony of one witness. The Petitioner offered nine exhibits, all of which were received in evidence. The Department offered four exhibits, three of which were received in evidence.1 The Intervenor did not offer any exhibits.

At the conclusion of the hearing, the parties were allowed ten days from the filing of the transcript within which to file their respective proposed recommended orders. The transcript of the hearing was filed on March 18, 1999. Thereafter, all parties filed timely proposed recommended orders containing proposed findings of fact and conclusions of law. The parties' proposals have been carefully considered during the preparation of this Recommended Order.

FINDINGS OF FACT

1. The Florida Department of Transportation (Department) issued an Invitation to Bid (ITB) for road resurfacing on State Road 10/US 90 in Columbia County, Florida; Financial Project No. 208406-1-52-01 (The Project).

2. Four companies submitted responses to the ITB. Couch was low bidder at $2,271,354.81, and Petitioner was second low at $2,278,263.07.

3. The ITB incorporated the plans and specifications for the proposed highway resurfacing. The price proposal specifications stated in pertinent part:

   Item Number 2102-10. . .Approximate Quantity. . . 4,320.00 hours Item Number 2102-74-1 . Approximate Quantity . . .75,780.00 each day Item Number 2102-99 . . Approximate Quantity . . . 720.00 each day

4. None of the bidders filed a timely objection to the price proposal specifications.

5. Article 2-6, of the Florida Department of Transportation Standard Specifications for Road and Bridge Construction states:

   A proposal will be subject to being considered irregular and may be rejected if it shows omissions, alternations of form, additions not called for, conditional or unauthorized alternate bids, or irregularities of any kind; also if the unit prices are obviously unbalanced, either in excess of or below the reasonable cost analysis values.

6. After the bids were opened, each bid was reviewed by the Department to determine whether the bid was mathematically and/or materially unbalanced. The Department's Preliminary Estimates Engineer conducts an unbalanced review of the bids to determine if the bids are mathematically unbalanced. A bid is considered to be mathematically unbalanced if the prices quoted are significantly different from the approximate cost of the item to the contractor. It is very common for bids on construction projects to contain some item prices that are mathematically unbalanced. Bid prices that are mathematically unbalanced are considered by the Department to be non-material irregularities if they do not affect the order of the bidders. In determining whether a mathematically unbalanced price is material, the Department follows a policy set out by the Federal Highway Administration (FHWA). The Department has been following the same policy since at least 1992.

7. The FHWA does not allow for materially unbalanced bids to be accepted by the Department on projects that are federally funded. A materially unbalanced bid is one in which there is a reasonable doubt as to whether award to the bidder submitting the

   mathematically unbalanced bid will result in the ultimately lowest cost to the Department.

8. The Department has developed an Unbalanced Program Logic for its computer analysis of the bids. The program flags the items that are mathematically unbalanced. It flags the item with an "A" for those items that are above the tolerance window, "U" for under the tolerance window, and "F" as front-loaded items.

9. The flagged items which are short-listed by the computer program are sent to the designer of record to verify the quantities and to verify whether the correct pay item was used. The designer of record verified that the quantities were correct for this Project.

10. As part of the bid review, the Department does a statistical average or mean average for each of the bid items. A standard and a-half deviation either side of the mean is established. The bid items outside that standard and a-half deviation, positive or minus, are discarded. The remaining bid items are re-averaged and this second average is referred to as the "serious average."

11. A front-end loaded item is an item for which work is performed early in the contract. Mobilization is considered a front-end loaded item. Couch's Mobilization item 2101-1B was flagged by the computer analysis. The Department did an analysis of the Mobilization item. The Department started with the difference between Couch's bid and the Petitioner's bid on this

    item, $18,0000.00. That amount was multiplied by the current interest rate, 10 per cent, and then multiplied by a factor of .5, which spread it over half the contract, times 180-day

    contract period divided by 365, one calendar year. The result was $434.84, which represents the potential advantage that could result from paying the $18,000.00 amount early in the contract. That amount, $434.84, did not materially unbalance Couch's bid.

12. The three items identified by Petitioner as unbalanced (paragraph 3, above) were low and did not present any detriment to the Department. If those three items overran at the rate established, it would be an advantage to the Department.

13. In evaluating unbalanced bids, the Department follows the guidance in a May 1988 memorandum from the FHWA, which addresses bid analysis and unbalanced bids. The memorandum provides that where unit prices for items bid are either unusually high or low in relation to the engineer's estimate of the price, the accuracy of the estimated quantities of the items are to be checked. If the quantities are reasonably accurate, the bid is to be further evaluated to determine whether the mathematical imbalance is materially unbalanced such that there is "reasonable doubt that award to the bidder submitting the mathematically unbalanced bid will result in the lowest ultimate cost to the Government."

14. The analysis of a mathematically unbalanced bid to determine if it is materially unbalanced considers the effect of

    the unbalanced bid on the total contract amount; the increase, if any, in the contract cost when quantities are corrected; whether the low bidder will remain as the low bidder; and whether the unbalanced bid would have a potential detrimental effect upon the competitive process or cause contract administration problems later.

15. In this case, the Department compared the unit prices (line item prices) by each bidder on the bid proposal sheet to the average unit price for that item. The average unit price is based upon an average of the bidders' unit prices bid for a given pay item and the Department's estimated unit price for that item. If an individual bidder's unit price is significantly greater or less than the average price, the Department's computer flags the item as mathematically unbalanced.

16. Such a bid then receives further evaluation by the Department to ensure the accuracy of the original estimates of the quantities of those items for which an unbalanced unit price has been submitted.

17. The Department also reviews the project plans for accuracy. The more in-depth review is performed to determine if there is a potential for a cost overrun or if there is an error in the Department's estimated quantities which would result in an increased cost to the Department for the project.

18. In this case, Couch and Anderson submitted bid proposals for each of the individual line item prices contained

    on FDOT's form. Couch's unit price for the off-duty law enforcement item was $0.25/hour. The Department's average price for the off-duty law enforcement item was $25.22/hour. The Petitioner's quotation for off-duty law enforcement was

    $26.00/hour. The Department's computer analysis of Couch's bid flagged the off-duty law enforcement item as mathematically unbalanced. The quote by Petitioner for the off-duty law enforcement item was not unbalanced, and therefore was not flagged for further review by the Department. The same analysis was applied to the barricades and variable message sign items, with similar results. The Department also did an in-depth review of item 2101-B, Mobilization, for front-end loading. The result of that analysis was that, as a result of front-end loading, there was the probability of increased cost to the Department of

    $443.84. This small increase in the cost to the Department was not large enough to change the order of the bidders. Therefore, it was not a materially unbalanced item.

19. The Department then made a more in-depth review of the three mathematically unbalanced items in Couch's bid and determined that none of those items were materially unbalanced, because none of them had the potential to increase the cost to the Department and none of them had the potential to change the order of the bids.

20. In sum, the Couch bid was not materially unbalanced. The evidence in this case is insufficient to support a basis for rejecting the Couch bid.

    CONCLUSIONS OF LAW

    
    

21. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding, pursuant to Chapter 120, Florida Statutes.

22. The Florida Legislature enacted substantial revisions to Chapter 120, Florida Statutes, in 1996. Bid protest proceedings are now governed by Section 120.57(3)(a)-(f), Florida Statutes. Section 120.57(3)(f), Florida Statutes, provides, in pertinent part:

    (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.

23. The legal principles applicable to a case of this nature were discussed as follows in the Recommended Order in The Middlesex Corporation and Affiliates v. Department of

    Transportation and J.B. Coxwell Contracting, Inc., DOAH Case No. 92-4858BID (Recommended Order issued December 8, 1992):2

    1. Section 337.11, Florida Statutes, requires FDOT to award contracts to the lowest responsive bidder in a competitively bid process. The overriding purpose of the competitive procurement law, is to maintain the integrity of the competitive bidding process and protect against collusion, favoritism and fraud in the award of public contracts. Liberty County v. Baxter's Asphalt and Concrete, Inc., 421 So. 2d 505 (Fla. 1982); and Moore v. State Department of Health and Rehabilitative Services, 596

       So. 2d 759 (Fla. 1st DCA 1992).

       
       

    2. The integrity of the bidding process is guaranteed by adherence to objective award criteria which eliminate the potential for favoritism. In general, an agency's inquiry regarding a bid is whether a bid is low and materially responds to the requirements of the invitation to bid. If the bid is materially responsive and is the lowest, the contractor is guaranteed the award of the contract. Hotel China & Glassware Co. v. Board of Public Instruction, 130 So. 2d 78 (Fla. 1st DCA 1961). Additionally, a bid which is low and contains a nonmaterial irregularity is responsive and entitles the contractor to the award. Robinson Electric Co., Inc. v. Dade County, 417 So. 2d 1032, 1034 (Fla. 3d DCA 1982).

       
       

    3. An irregularity or variance in a bid is material if it affords a bidder a substantial advantage over other bidders and thereby restricts the competitive process. Tropabest Foods, Inc. v. Department of General Services, 493 So. 2d 50 (Fla. 1st DCA 1986); Liberty County v. Baxter's Asphalt Concrete, Inc., 421 So. 2d 505 (Fla. 1982). If the variance would "deprive [the agency] of its assurance that the contract will be entered into, performed and guaranteed according to its specified requirements it is considered material." Ranger v. FDOT, Recommended Order, at 10.

    4. However, a public body has wide discretion in soliciting and accepting bids for public improvements and its decision, when based on an honest exercise of its discretion, will not be overturned by a Court even if it may appear erroneous and even if reasonable persons do not agree. Baxter's Asphalt, supra; and Department of Transportation v. Groves-Watkins Constructors, 530 So. 2d 912 (Fla. 1988).

       
       

    5. While an agency has wide discretion in evaluating bids and awarding contracts, it may not act arbitrarily or capriciously, nor can its decision be based on bias or favoritism. An agency's action is arbitrary where it is not supported by facts or logic or is despotic. Agrico Chemical Company v. Department of Environmental Regulation, 565 So. 2d 759, 763 (Fla. 1 DCA 1989). However, an agency's action need show only a rudimentary rationality to be supportable. Adam Smith Enterprises Inc. v. Department of Environmental Regulation. 553 So. 2d 1260, 1273 (Fla. 1 DCA 1989).

    6. Application of the above-quoted legal principles to the facts in this case leads to the conclusion that the Petitioner has failed to prove that "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." Similarly, the Petitioner's evidence in this case was insufficient to show that "the proposed agency action was clearly erroneous, contrary to competition, arbitrary, or capricious." To the contrary, the greater weight of the evidence supports a conclusion that the proposed agency action is consistent with the agency's governing statutes, its rules and policies, and the bid specifications.

       Such being the case, the Petitioner has failed to prove its entitlement to the relief it seeks.

    7. There is still pending in this case a Motion for Sanctions, Including Costs and Attorneys' Fees, filed by the Intervenor. The motion was filed pursuant to Section 120.569(2)(e), Florida Statutes. At hearing, the parties agreed that the issues raised by that motion would be addressed separately from the issues raised by the underlying bid protest proceeding. Accordingly, the Administrative Law Judge hereby retains jurisdiction for the limited purpose of disposing of the issues raised by the motion seeking sanctions.3 With the issuance of this Recommended Order, jurisdiction over all other issues in this matter is returned to the Department of Transportation.

RECOMMENDATION

On the basis of all of the foregoing, it is RECOMMENDED that the Florida Department of Transportation issue a final order in this case dismissing the Petitioner's Formal Protest and Request for Hearing; denying all relief requested by the Petitioner; and awarding the subject contract to the Intervenor, Couch Construction, L.P.

DONE AND ENTERED this 7th day of May, 1999, in Tallahassee, Leon County, Florida.

MICHAEL M. PARRISH

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 7th day of May, 1999.

ENDNOTES

1/ Department's Exhibits 2, 8, and 9 were received in evidence. Department's Exhibit 5 was included in the record as a rejected exhibit.

2/ To similar effect, see Hubbard Construction Company v. Jacksonville Transportation Authority and Petticoat Contracting, Inc., DOAH Case No. 92-6302BID (Recommended Order issued

January 28, 1993).

3/ By separate order issued at the same time as this Recommended Order, the Administrative Law Judge has ordered that counsel for the Intervenor arrange a telephone conference for the purpose of formulating a schedule and procedure for the disposition of the issues raised by the pending Motion for Sanctions, Including Costs and Attorneys' Fees.

COPIES FURNISHED:

Mary M. Piccard, Esquire

Vezina, Lawrence & Piscitelli, P.A.

318 North Calhoun Street Tallahassee, Florida 32301

Donna H. Stinson, Esquire Broad and Cassel

Post Office Drawer 11300 Tallahassee, Florida 32302

Brian F. McGrail, Esquire Department of Transportation

Haydon Burns Building, Mail Station 58 605 Suwannee Street

Tallahassee, Florida 32399-0458

Thomas F. Barry, Secretary

Attn: James C. Myers, Clerk of Agency Proceedings Department of Transportation

Haydon Burns Building, Mail Station 58 605 Suwannee Street

Tallahassee, Florida 32399-0458

Pamela Leslie, General Counsel Department of Transportation

Haydon Burns Building, Mail Station 58 605 Suwannee Street

Tallahassee, Florida 32399-0458

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 10 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: 99-000740BID

Orders for Case No: 99-000740BID