STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF GENERAL SERVICES )

)

Petitioner, )

)

vs. ) CASE NO. 76-577BID

)

1. A. JONES CONSTRUCTION COMPANY, )

   )

   Respondent, )

   and )

   ) HONEYWELL, INC. and ELECTRIC ) MACHINERY COMPANY, INC., )

   )

   Intervenors. )

   )

   
   

   RECOMMENDED ORDER

   
   

   This matter was brought up for hearing before the undersigned Hearing Officer on August 4, 5, 6 and 27, 1976, in Tallahassee, Florida.

   
   

   APPEARANCES

   
   

   For Petitioner: Bernard S. McLendon, Esquire

   Assistant Attorney General

   For Respondent: Robert R. Feagin, III, Esquire For Intervenors: Patrick G. Emmanuel, Esquire

   For Honeywell, Inc.

   
   

   William J. Terry, Esquire

   For Electric Machinery Company, Inc.

   
   

   ISSUE

   
   

   This dispute concerns the interpretation of the contract for the construction of the new capitol complex for the State of Florida in Tallahassee.

   
   

   1. The Respondent, J. A. Jones Construction Company, is the general contractor. Honeywell, Inc. and Electric Machinery Company, Inc. are Intervenors and subcontractors on the job. At the heart of this dispute is the question of whether certain items were included in the base bid or should be considered to be part of an alternate to the base bid which was not accepted by the owner, Department of General Services. Specifically, the parties differ over the interpretation of Schedule 16707 of the base bid which involves certain fire and security installations and Contract Alternate No. 7 which was not accepted by General Services. The Respondents and Intervenors maintain that Schedule 16707 should be considered to be part of Alternate No. 7 and no longer part of the base bid. The Department of General Services, on the other hand,

      maintains that Alternate No. 7 did not and could not be interpreted to exclude any part of Schedule 16707 and that Jones and the subcontractors are responsible for installing said work and receiving no extra compensation for it. Schedule 16707 of the base contract specifications consists of 16 pages dealing with requirements for installation of the new capitol's sophisticated fire and security control and monitoring system. Alternate No. 7 is found on Schedule 01102-P4 and is entitled Alternate No. 7; ADD CCTV AND SECURITY ITEMS. It states in part:

      
      

      "Under Alternate No. 7 add the following work to the Building Monitoring System for Fire and Security: (c) All remote door locks, actuators, annunciators and alarms for the remote door locks

      for the Governor's suite specified in Section 16707, Paragraph 16707-03f) and scheduled in Paragraph 16707-05."

      
      

   2. The specifications of the contract provided that the base bid would include the entire, completed project except for work included in the alternates. alternate No. 7 was not accepted by the Department of General Services after the bids were opened and the question now remains as to how much work the general contractor is responsible to provide under the base bid. Since Alternate No. 7 is excluded from the project, the contractor is not responsible to provide items described in that schedule, without extra compensation.

      
      

   3. Honeywell, Inc., through its employees, submitted a bid to the Electric Machinery Company, Inc. consisting mostly of a bid on the equipment it would provide under the contract specifications and Electric Machinery Company used that bid to submit a bid to Jones who bid as a general contractor to provide installation of the required components for the Capitol Complex Phase II. Jones used that information and estimate to prepare and submit a bid for the entire Capitol Complex. That bid was submitted on the assumption and interpretation, after studying the entire contract specifications including the alternates, that the base bid consisted of the fire management system and that Alternate No. 7 encompassed the security system. The contractors did not interpret the base bid to include items in the security system as it was their interpretation such work would be performed only if Alternate No. 7 was accepted.

      
      

   4. On the other hand, the Department of General Services states that the fair interpretation of Alternate No. 7 restricts itself not to the entire complex, but only to the Governor's suite. The Department of General Services maintains that Alternate No. 7 cannot be considered to be misleading or ambiguous to anyone experienced in bidding on complex construction projects and that the fair reading of the specifications in Alternate No. 7 and Schedule 16707 requires the contractor to furnish items in the security system under their responsibilities in the base contract.

      
      

   5. Further, the Department of General Services maintains that under the contract J. A. Jones and the subcontractors had a responsibility to get an interpretation from the architect over any items they now maintain to be ambiguous and that the failure to do so absolves the Department of General Services from any obligation to pay on a quantum meruit basis.

      
      

   6. The contractors when preparing their bid submittals did not consider Alternate No. 7 to be ambiguous at any time, but interpreted it in the manner described above. When it became apparent there was a difference of interpretation over what was included in the base bid, the question was

      submitted to the architect (Reynolds, Smith and Hills) who responded by letter on November 12, 1975 (Honeywell Exhibit No. 3) stating that Alternate No. 7 only excluded remote locking devices for the Governor's suite and gates, gate sensors and remote gate locks specifically referred to in the Alternates And Basis of Bids section.

      
      

   7. Although the central issue during this hearing was the interpretation of these specifications, testimony was taken and argument presented over a period of four days. The contractors presented evidence which tends to show that they acted consistently with their claim that their base bid never included items which are part of the building security system. For example, the contractors submitted shop drawings for door frames to the architect for approval and these show drawings did not have cutouts which would be required for the installation of the security devices. The architect approved the shop drawings and failed to mention the lack of cutouts for these devices. Likewise, the electrical wiring riser diagram submitted by the contractors for approval did not show installation of wiring for the security system.

      
      

   8. The contractors maintain that this indicates that even the architects did not consider the building security subsystem to be part of the base bid until the issue was put before it for resolution under the contract which required an architect's decision before going to hearing. No weight can be given to the architect's denial of relief in this case, particularly since the dispute is about specifications drawn up by the architect.

      
      

   9. On the other hand, the Department of General services maintains that the above examples are minor events which are not conclusive of anything. The Department of General Services points out several items in other parts of the contract specifications which can be interpreted as consistent with their interpretation of Alternate No. 7.

      
      

   10. The only real issue to be determined in this matter is whether Alternate No. 7, above quoted, is ambiguous. If it is, then the contractors may have established a right to recovery. If not, they have no valid basis for a price adjustment.

       
       

   11. After carefully reviewing and evaluating the evidence and testimony at the hearing it is the conclusion of this Hearing Officer that alternate No. 7 is ambiguous. Ambiguity is generally considered to be the use of words which are susceptible of more than one meaning.

       
       

   12. From a fair reading of Alternate No. 7 it is impossible to tell whether it relates only to the Governor's suite or the entire complex. Although the architect and its agents express no difficulties in understanding Alternate No. 7 and although it was their intention to apply said alternate to the Governor's suite, it is susceptible to more than one interpretation.

       
       

   13. The work in question is presently being performed and the parties have agreed that any price adjustment will be determined by the eventual outcome of this proceeding.

       
       

   14. In this case the specifications and contract were drawn up by the architect-engineer, Edward Durell Stone and Reynolds, Smith and Hills, working with the Department of General Services. Their relationship with the Department of General Services was one of agent-principal so that their acts or omissions will bind the Department of General Services.

   15. The wording of Alternate No. 7 had been interpreted differently by the owner and the contractors. Both interpretations appear to be reasonable in light of the ambiguous wording of this specifications. No evidence was presented at this hearing to demonstrate with any degree of certainty that either interpretation is faulty or rest upon an obvious error. In this type situation the law is abundantly clear that the contract specifications will be interpreted against the draftor and in favor of the contractor. WPC Enterprises, Inc. United States, 232 F. 2d 874 (1963) Ct. C1. (1964).

       
       

   16. As stated above, the Department of General Services, it architects, and engineers intended Alternate No. 7 to be applied only to the Governor's suite, however, they did not adequately convey this meaning to the contractors and because of this ambiguity the contract must be interpreted in a fashion least favorable to them. See American Agrinomics Corp. v. Ross, 309 So.2d 584, Tanner v. Equitable Life Ins. Co. of Washington, D.C., 303 So.2d 352.

       
       

   17. The Department of General Services does not differ as to the possible applicability of the above rules of contract interpretation, however, it maintains that because of other contract provisions such rules of law do not apply in this case. Specifically, the Department refers to Article 4.1 of the contract entitled Instructions To Bidders. This contract section contains an express warning to bidders that they have a legal duty to read the bidding documents carefully and inquire in writing of the architect at least seven days before bids are received for the interpretation or correction of any ambiguity, inconsistency or error in the specifications.

       
       

   18. The Department of General Services cites authority for the proposition that the above contract clause has imposed a duty upon the contractors to have ambiguities clarified before they submitted their bids. Failing to do so they are now barred to present a claim based on a claim of ambiguity.

       
       

       "A prime purpose of these contractual provisions relating to ambiguities and discrepancies is to enable potential contractors (as well as the Government) to clarify the contract's meaning before the die is cast. The bidder who is on notice of an incipient problem, but neglects to solve it as he is directed to do by this form of contractual preventive-hygiene, cannot rely on the principle that ambiguities in contracts written by the Government are held against the drafter (e.g. Peter Kiewit Sons Co. v. United States, 109 Ct. C1. 390, 418 (1957). Even more, the bidder in such a case is under an affirmative obligation... We hold that (when a contractor) is presented with an obvious omission, inconsistency, or discrepancy of signifi- cance, he must consult the Government's representative if he intends to bridge the crevasse in his own favor

       ..." Beacon Construction Company of Massachusetts v. The United States, 314 F. 2d 501 (U.S. Ct. C1. 1963).

       
       

   19. This Hearing Officer finds that the above quote of authority is an accurate interpretation of the applicable law, however, there was no evidence which was presented at this hearing indicating the contractors had any questions regarding the interpretations of Alternate No. 7 at the time they submitted their bid. It is the opinion of this Hearing Officer that the Department of General Services cannot avail itself of the provisions of article 4.1 of the contract unless there was some evidence at this hearing which would indicate the

contractors were aware of the ambiguity at the time they prepared their bid and failed to get a written interpretation from the architect. The evidence in this case clearly indicates that the owner-architect and the contractors proceeded under different interpretations of Alternate No. 7 and were unaware of the other party's position until it became apparent by the work being performed that there was a disagreement among the parties. In the absence of the contractor being aware of a problem and not seeking to solve it, the Department of General Services cannot use Article 4.1 of the contract to hold themselves harmless for defects in its draftsmanship. Were it otherwise the Department could avoid liability for every disagreement involving contract interpretation by using such clause as a blanket defense. Such a result would put bidders at their peril every time a contract became subject to a varying interpretation.

CONCLUSIONS AND RECOMMENDATIONS

It is therefore concluded that the clause in question, Alternate No. 7 is ambiguous and that the contractors were not unreasonable in interpreting it so as to exclude items in the building security subsystem found in Schedule 16707. The ambiguity should be resolved against the owner as it has not demonstrated knowledge or such neglect on the part of the contractors to avail itself of Article 4.1 of the contract. It is therefore RECOMMENDED the contractor be compensated on a quantum meruit basis for the work being performed under dispute.

DONE and ENTERED this 20th day of December, 1976, in Tallahassee, Florida.

KENNETH G. OERTEL, Director

Division of Administrative Hearings Room 530, Carlton Building Tallahassee, Florida 32304

(904) 488-9675

COPIES FURNISHED:

Bernard S. McLendon, Esquire Assistant Attorney General Department of Legal Affairs The Capitol

Tallahassee, FL 32304

Robert R. Feagin, III, Esquire Holland & Knight

P. O. Drawer 810 Tallahassee, Florida 32302

Patrick G. Emmanuel, Esquire Holsberry, Emmanuel, Sheppard & Condon

P. O. Drawer 1271 Pensacola, Florida

William J. Terry, Esquire 2713 First Financial Tower Tampa, Florida 33602

Docket for Case No: 76-000577

Orders for Case No: 76-000577