STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

COBO COMPANY, INC. )

)

Petitioner, )

)

vs. ) CASE NO. 80-2220BID

) STATE OF FLORIDA, DEPARTMENT OF ) GENERAL SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

A hearing was held in the above captioned matter, after due notice, at Tallahassee, Florida, on December 16, 1980.

APPEARANCES

For Petitioner: Ronald C. LaFace, Esquire

Roberts, Miller, Baggett, LaFace and Wiser

Post Office Drawer 1838 Tallahassee, Florida 32302

For Respondent: Sprio Kypreos, Esquire

Department of General Services Room 457 Larson Building Tallahassee, Florida 32301

For Sam L. Lewis M. Kanner, Esquire Hamilton, Inc.: Williams, Salomon, Kanner,

Damian, Weissler and Brooks 1000 DuPont Building

Miami, Florida 33131

For SAC Henry P. Trawick, Jr., Esquire Construction Co., Trawick and Griffis, P.A.

et al: 2051 Main Street Post Office Box 4019

Sarasota, Florida 33578

This case involves a petition filed by Cobo Company, Inc., pursuant to Section 120.57(1), Florida Statutes, requesting that rejection of Petitioner's bid on a state construction project be invalidated and that the Petitioner be awarded the contract as low bidder.

Prior to referral of the Petition to this Division by Respondent, a Petition had been filed with the Division by Petitioner for an administrative determination of the validity of an alleged rule of Respondent under Section 120.56, Florida Statutes. (DOAH Case No. 80-2220R) Notice of Hearing in that

case was issued on November 18, 1980, for hearing to be held on December 16, 1980. On November 24, Respondent referred the instant Petition for Formal Hearing and Objection to Intended Action to this Division. Respondent had denied Petitioner's request for a formal hearing due to its determination that the petition failed to raise a disputed issue of material fact. Respondent had issued a Notice of Proposed Final Agency Action and Hearing wherein it proposed to affirm its prior rejection of Petitioner's low bid on the project, and make the award to the next lowest bidder. The Notice stated that an informal proceeding pursuant to Section 120.57(2), Florida Statutes, and Rule 13-4.14, Florida Administrative Code, would be convened on November 17, 1980, before a departmental hearing officer. The Notice was provided to all bidders on the state project. The informal hearing conducted by the agency led to the issuance of an order by the hearing officer, dated November 20, 1980, which stated that there appeared to be an issue of material fact for resolution and therefore recommended that the petition be transferred to this Division.

Motion for Consolidation of the two petitions was filed by Petitioner.

Thereafter, the successful bidder, Sam L. Hamilton, inc., petitioned to intervene in both proceedings. In addition, intervention was sought by SAC Construction Company, Hardrives of Delray, Inc., Fred M. Cox Company, Inc., Glen

1. Hunt Inc., Whitesell-Green Inc., Mathews Corporation, Inc., Biltmore Construction Company, Inc., Hawkins and Mouw Construction, Sessoms-Grice Construction Company, Inc., and Florida Associated General Contractors Council.

   
   

   Due to the imminence of final hearing in Case No. 80-2099R, the Hearing Officer, on December 8, 1980, requested agency counsel to informally contact each of the bidders on the state project to determine if any others wished to intervene in Case No. 80-2220 and, if so, whether objection would be raised to holding a consolidated hearing on December 16, 1980. Said counsel advised the Hearing Officer by letter of December 15, 1980 that all bidders had been contacted and that only the proposed intervenor, Sam L. Hamilton, Inc. had indicated that it might petition to intervene in the proceedings. Although one bidder, Poole and Kent Company, advised the Hearing Officer subsequent to the hearing that it had not been so contacted, Respondent asserts that such claim is erroneous. No objection to the procedure followed in this case has been filed by any bidder.

   
   

   Accordingly, at the commencement of the hearing on December 16, 1980, the motion for consolidation of the two cases was granted. No objection was raised to the intervention of Sam L. Hamilton, Inc. and it was therefore accorded the status of an intervenor in both cases.

   
   

   Respondent objected to intervention by SAC Construction Company, et al., on the ground that they were not substantially affected in the proceedings and therefore lacked standing. Intervention was provisionally granted to afford the proposed intervenors an opportunity to establish such a substantial interest during the course of the hearing. No evidence was presented by the petitioning firms and organization at the hearing and consequently, they have failed to establish a substantial interest in the proceedings. Their petitions for leave to intervene are therefore denied.

   
   

   FINDINGS OF FACT

   
   

   1. Petitioner Cobo Company, Inc., is a mechanical contractor located in Miami, Florida, whose qualifying agent, Jose Cobo, is certified in that capacity pursuant to Chapter 489, Florida Statutes. By letter of August 18, 1980, Respondent Department of General Services confirmed Petitioner's annual

      prequalification as a potential bidder for building construction contracts pursuant to Section 255.29, Florida Statutes, for the "type or class as defined in your license." (Testimony of Cobo, Exhibit 1)

      
      

   2. At an undisclosed date, Respondent published an advertisement for bids for Project No. DGS-7969-C, "Major Repairs-Chiller Replacement, Graham Building, Miami, Florida." The advertisement required all bidders to submit prequalification data of their eligibility to submit proposals if not previously qualified for the current fiscal year. The advertisement an invitation for bids stated that bids must be submitted in full in accordance with the requirements of the drawings, specifications, bidding conditions, contractual conditions, and that sealed bids would be opened on September 30, 1980. Section B-2 of the specifications required that the bidder present evidence that he was "authorized to perform the work required on these documents in accordance with the applicable provisions of Florida Statutes governing contractors." (Exhibit 4)

      
      

   3. Respondent's Instructions to Bidders further required that bidders submit evidence of ability to provide necessary performance and labor and material payment bonds, and that bids would be accompanied by a bid guarantee of not less than 5 percent of the amount of the bid. The instructions required bidders to submit a list of previous contracts involving similar work which had been satisfactorily completed, and to list those qualified subcontractors which the bidder intended to be employed on the contract. They further required a bidder to indicate bid prices on the proposal form for the entire work and for any alternates on which he bids. The instructions stated that if the base bid was within the amount of funds available to finance the contract and the owner (Respondent) wished to accept alternate additive bids, contract award would be made to that responsible bidder submitting the low combined bid, consisting of the base bid plus alternate additive bids. Section B-24 of the contract document reads in part as follows:

      
      

      B-24 CONTRACT AWARD

      The Contract will be awarded by the Executive Director, Department of General Services, as soon as possible, to the lowest qualified bidder provided in his bid is reasonable and it is in the best interest of the owner to accept it.

      The Owner reserves the right to waive any informality on bids received when such waiver is in the interest of the Owner.

      The Agreement will only be entered into with reasonable contractors, found to be satisfactory by the Owner, qualified by experience and in a financial position to do the work specified.

      Section 01010 of the specifications provides in part as follows: SECTION 01010 - SUMMARY OF WORK

      1. GENERAL DESCRIPTION

      The project in general consists of construction of the contract entitled Major Repairs-Chiller Replacement, Graham Building, Miami, Florida,

      State Project No. DGS-7969-C. A general Description of the project and its scope includes the following: Replacement of chiller for central air

      conditioning system.

      Install new cooling towers and pump.

      
      

      The contract drawings and specifications provided for the removal of a portion of an interior wall, and removal of an exterior wall window and masonry work below the window to provide access for removal of the existing chiller and its replacement with new equipment. In addition, the contract included electrical work incident to the installation of the chiller, removal of an existing hand rail for clear access to the equipment and later replacement, installation of pitch pans for pipes and other openings on the roof, and the erection and installation of structural steel cooling towers. The specifications call for painting, plaster work, replacement of flooring and ceiling, and installation of a window wall panel, as required in restoring the demolished area. They further called for a replacement demountable interior wall partition to provide future access to the air conditioning equipment, as an alternate portion of the project. Section 01021 of the specifications described the bid items as a Base bid, Additive Alternate No. 1 for using a higher efficiency chiller, and Additive Alternate No. 2 for installation of the demountable partition.

      However, the specifications had been altered prior to the issuance of the bid invitation to provide for the higher efficiency chiller as part of the Base bid, but Section 01021 had not been changed accordingly. Respondent's proposal form for use by bidders, however, had provisions for entry of only a Base bid and Alternate No. 1 for the installation of the demountable partition. (Testimony of Karagianis, Exhibits 4-6)

      
      

   4. Petitioner submitted its bid for the project on September 30, 1980. Its base bid was $225,440. It also bid on the alternate for installation of demountable partitions in the sum of $1,170, and added to the bid form an alternate for the use of a higher efficiency chiller in the amount of $1,150. Seven other bids were submitted on the proposal ranging from $239,300 by Sam L. Hamilton, Inc. to a high bid of $403,624. Hamilton's additive bid for the alternate partitions was in the amount of $1,950. Petitioner enclosed with its proposal the required contractor's qualification statement showing previous

      experience as a mechanical contractor, bid bond, and other required information. It listed L. Milton Construction, Inc. as a general construction subcontractor and Sparta Insulation as an insulation contractor. Although Petitioner intended that Lloyd N. Jones perform the electrical work on the project, he was not listed as a subcontractor because Petitioner did not know at that time whether he would be a subcontractor of Milton or of his own firm. Petitioner included the alternate bid for the higher efficiency chiller because it was required under Section 01021 of the specifications. Milton's bid to Petitioner for the construction work on the contract was in the sum of $7,000. (Testimony of Cobo, Exhibits 2-3)

      
      

   5. By letter of October 7, 1980, Respondent informed Petitioner that it intended to contract with Sam L. Hamilton, Inc. which had been determined the qualified low bidder meeting the requirements of the specifications. The letter advised the Petitioner that its bid was rejected because it was not a certified or registered general or building contractor as required by Section 489.105, Florida Statutes. Attached to the letter was a copy of a letter of William J. Roberts, attorney for the Florida Construction Industry Licensing board to Respondent, dated October 18, 1977, setting forth a legal opinion that a mechanical contractor could not be the prime contractor on a state contract in which the bulk of the work is mechanical in nature, but the remaining portion is to be subcontracted to a general contractor. Roberts testified at the hearing that he had drafted legislation which changed the definition of "contractor" previously found in subsection 478.102(1), and in his view, under such

      definition, a mechanical contractor would not be authorized to become a prime contractor if it were necessary for him to subcontract any non-mechanical work called for under the contract provisions which he was not qualified to perform. (Testimony of Roberts, Exhibit 7)

      
      

   6. Respondent's project director estimates that the chiller replacement project was approximately 90 to 93 percent mechanical in nature, and 7 to 10 percent requiring general construction and electrical work. It was his understanding of departmental policy that if any portion of a contract involved general construction work, only a general contractor would be eligible to receive the award and that, in this case, Petitioner could not therefore be accepted as a prime contractor. Respondent's chief of the Bureau of Construction has instructed Bureau personnel not to award contracts to mechanical contractors which involve non-mechanical work unless the contractor is certified in the non-mechanical area for which the work is required. Two contracts awarded by Respondent to mechanical contractors in 1980 which involved non-mechanical work were "incorrect" awards, in the view of the Chief of the Bureau of Construction. (Testimony of Karagianis, Scaringe, Composite Exhibit 8)

      
      

   7. General contractors and mechanical contractors are required to be licensed under Chapter 489, Florida Statutes. Any person who desires to be certified statewide in a particular contracting area must establish his competency and qualifications by a combination of education and experience, plus the successful completion of an appropriate examination. The general contractor's examination and mechanical contractor's examination have similar portions relating to applicable federal state laws and regulations in the contracting field. The remaining and major portion of the mechanical contractor's examination deals with subjects of that specialty such as air conditioning, refrigeration, heating, and the like. The general contractor's examination primarily covers matters relative to construction, such as site work, excavation, structural shell, masonry walls, piles, columns, and form work. (Testimony of Allen, Composite Exhibits 9-10)

      
      

   8. In the opinion of an expert in the field of architecture, there are no parts of the chiller replacement project which require the services of a general contractor. The demolition of the interior partition and the window wall properly may be accomplished by a mechanical contractor and installation of demountable partitions in lieu thereof can be obtained from specialty suppliers. Other aspects of the project, such as concrete pads, installation of cooling tower, pitch pans, and painting similarly are all considered to be incidental work to a project that is basically mechanical in nature. Certain large mechanical contractors customarily employ qualified individuals to perform specialty tasks such as painting and demolition work, but smaller contractors accomplish such portions of a job by subcontract. (Testimony of Coxen)

      
      

   9. A recent contract award was made by Dade County to a mechanical contractor for a project similar to the one here in controversy. In that case, the mechanical contractor had listed a general contractor as a subcontractor for the project. (Exhibit 11)

      
      

      CONCLUSIONS OF LAW

      
      

   10. Petitioner seeks to set aside Respondent's bid rejection and to be awarded the contract in question, claiming that Respondent's policy of disqualifying mechanical contractors who propose to subcontract part of the work to a general contractor or to other trades constitutes a rule which is invalid

       because it was not promulgated in accordance with Chapter 120, Florida Statutes, and because it is otherwise inconsistent with Chapters 255 and 489, Florida Statutes.

       
       

   11. By Final Order, this date in DOAH Case No. 80-2099R involving the same parties, the undersigned Hearing Officer agreed with Petitioner's contentions and determined pursuant to Section 120.56, F.S., that Respondent's policy constituted a "rule" and was therefore an invalid exercise of delegated legislative authority because it had not been promulgated pursuant to Chapter 120, Florida Statutes. In that decision, it also was determined that Respondent's policy was not warranted under the pertinent provisions of Chapter

       489 relative to licensing and qualifications of various types of contractors regulated by the Florida Construction Industry Licensing Board. Specifically, it was found that no legal impediment exists to subcontracting by a mechanical contractor if the particular contract work is purely incidental to such contractor's scope of work under subsection 489.105(3)(i), F.S. Even though the mechanical contractor may not be licensed itself for such incidental work, that statutory provision provides that a mechanical contractor may perform "unlimited" services in the execution of contracts requiring the experience, common knowledge and skill to install, maintain, repair, fabricate, alter, extend, or design various mechanical systems. In order to determine if work which is not solely "mechanical" in nature is nevertheless incidental to a mechanical contractor's performance of work within its expertise, consideration must be given to the individual facts of each case.

       
       

   12. It readily can be seen that the instant contract is one whose purpose is simply to remove and replace an existing chiller for a central air- conditioning system and to install new cooling towers and pump for the system. The evidence shows that over 90 percent of the work is purely mechanical for which Petitioner is fully licensed and qualified. The remaining work is required only to create sufficient space by the demolition of a portion of an interior wall and of an exterior window and the wall below to enable the mechanical contractor to remove the old equipment and install the new items. Additionally, it is necessary that certain electrical work be accomplished, and that some specialty work may be required incident to installation of the new cooling towers. No evidence was presented that the structural members of the building where the work is to be performed would be materially affected in carrying out the provisions of the contract. All of the work, therefore, is considered to be incidental to the installation of the chiller and therefore clearly falls within the scope of work authorized to be accomplished by a mechanical contractor.

       
       

   13. The mere fact that Petitioner is obliged to subcontract the electrical work and the minimal demolition work to a general contractor cannot serve to bar it from obtaining the award and serving as the prime contractor for the project. Petitioner is bonded to ensure proper performance and any subcontractors must be appropriately qualified and licensed in their particular fields. Under such circumstances, Respondent can be assured that the work will be carried out in a competent and safe manner.

       
       

   14. In the instant case, it is apparent that award of the contract to the Petitioner will result in substantial savings to the state in total contract costs. However, in future situations of this type, Respondent can always determine if the interests of the state are best served by issuing more than one contract for various aspects of a project.

   15. Respondent's Notice of Proposed Final Agency Action and Hearing raised an additional ground for rejection of Petitioner's bid in that Petitioner had added a bid for Alternate No. 1 to the sample proposal form. It having been previously found that Respondent failed to change Section 01021 of the specifications, which caused Petitioner reasonably to believe that an alternate bid for the higher efficiency chiller was still required, it is determined that Petitioner should not be charged with submitting a non-responsive bid. This problem can be resolved adequately by waiver of the minor bid informality by Respondent pursuant to Article B-24 of the specifications.

       
       

   16. Posthearing submissions by the parties have been fully considered and those portions not adopted herein are considered to be either unnecessary, irrelevant, or unsupported in law and fact and are specifically rejected. Respondent's reliance on Greenhut Construction Co. v. Henry A .Knott, Inc., 247 So.2d 517 (Fla. 1st DCA 1971) is misplaced. There, the Court was considering a bid submitted to Respondent by an out of state contractor who was not licensed in Florida. Such is not the case here.

RECOMMENDATION

That Petitioner Cobo Company, Inc. be awarded contract for Project No. DGS- 7969-C, as the qualified low bidder meeting the requirements of the specifications.

DONE and ORDERED this 30th day of January, 1981, in Tallahassee, Florida.

THOMAS C. OLDHAM

Hearing Officer

Division of Administrative Hearings Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 30th day of January, 1981.

COPIES FURNISHED:

Ronald C. Laface, Esquire Roberts, Miller, Baggett,

LaFace and Wiser

Post Office Drawer 1838 Tallahassee, Florida 32302

Sprio Kypreos, Esquire Department of General Services Room 457 Larson Building Tallahassee, Florida 32301

Lewis M. Kanner, Esquire Williams, Salomon, Kanner,

Damian, Weissler and Brooks 1000 DuPont Building

Miami, Florida 33131

Henry P. Trawick, Jr., Esquire Trawick and Griffis, P.S.

2051 Main Street Post Office Box 4019

Sarasota, Florida 33578

Thomas R. Brown Executive Director

Department of General Services

115 Larson Building Tallahassee, Florida 32301

Docket for Case No: 80-002220

Orders for Case No: 80-002220