Judges: R. T. CARPENTER
Agency: Department of Transportation
Latest Update: May 17, 1984
Summary: Bids should be rejected where corrections and confusion occurred.
83-3499.PDFSTATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
CAPITAL ASPHALT, INC., )
)
Petitioner, )
)
vs. ) CASE NO. 83-3499BID
) DEPARTMENT OF TRANSPORTATION, )
)
Respondent. )
and )
)
MITCHELL BROTHERS, INC., )
)
Intervenor. )
)
RECOMMENDED ORDER
This matter came on for hearing on January 5, 1984, in Tallahassee, Florida, before the Division of Administrative Hearings and its duly appointed Hearing Officer, R. T. Carpenter. The parties were represented by:
For Petitioner: Carl Pennington, Jr., Esquire
Pennington, Wilkinson & Dunlap
325 John Knox Road, Suite L-101 Tallahassee, Florida 32303
For Respondent: Mark A. Linsky, Esquire
Department of Transportation Haydon Burns Building
605 Suwannee Street
Tallahassee, Florida 32301
For Intervenor: Ronald W. Brooks, Esquire
Brooks, Callahan & Phillips 863 West Park Avenue Tallahassee, Florida 32301
This case arose from the bidding process in State Project, Job No. 55080- 3529, which involves a road widening and resurfacing project in Leon County.
Respondent announced its intent to award the contract to Mitchell Brothers, Inc., after which Capital Asphalt, Inc. protested the proposed award. The matter was thereafter referred to this division for hearing pursuant to Subsections 120.53(5) and 120.57(1), Florida Statutes (F.S.)
Subsequent to hearing, the parties submitted proposed findings of fact and conclusions of law. To the extent these proposed findings have not been adopted or otherwise incorporated herein, they are found to be subordinate, cumulative, immaterial, unnecessary or not supported by the evidence.
FINDINGS OF FACT
After its initial review of the bids, Respondent determined that Petitioner was the apparent low bidder, with a total bid of $344,971.53. Subsequently, however, it found an inconsistency in one of Petitioner's item prices and recomputed the subtotal which had the effect of increasing Petitioner's bid to $346,851.53.
As a result of this recomputation, Intervenor became the apparent low bidder with its bid of $346,371.06. Respondent discovered that Intervenor had also made a similar error in one of its item prices which, had the subtotal been recalculated, would have increased Intervenor's bid by over $12,000. However, Respondent waived the error and allowed Intervenor's bid to stand.
Respondent's bid forms specify various quantities of material required. Each quantity listed is followed by three columns which the bidder must complete. The first column is the unit bid in words (e.g. five dollars and no cents). The second column is the unit bid in numbers (e.g. $5.00). The final column, referred to as the "extension" is the total bid on the item in numbers (e.g. 30 units required times $5.00 per unit equals $150.00)
Respondent's item number 10275 specified 1,890 construction signs. Petitioner entered one dollar and fifty cents in the unit bid (words) column, followed by $1.50 in the unit bid (numbers) column. Petitioner's extension column entry was $945.00. Respondent determined that 1,890 signs times one dollar and fifty cents each totalled $2,835.00, rather than $945.00, and raised Petitioner's bid accordingly.
Respondent's item number 285710367 specified 7,070 square yards of material. Intervenor entered twelve dollars and no cents in the unit bid (words) column followed by $12.00 and $10.25 in the unit bid (numbers) column. A black line was drawn through the number $12.00, but was not initialed. Intervenor's extension column entry was $72,467.50. Here, Respondent determined that the $10.25 unit price should be permitted since 7,070 square yards times
$10.25 did, if fact, equal the stated extension price.
Using red ink, Respondent drew a second line through the number $12.00, and initialed this change. Respondent also drew lines through the words twelve (dollars) and no (cents), and wrote the words ten (dollars) and twenty-five (cents) and initialed this correction.
Respondent's published policy on bid procedures is contained in its Standard Specifications Manual. Section 3-1 provides in part:
In the event of any discrepancy in the three entries for the price for any item.
the unit price as shown in words shall govern unless the extension and the unit price shown in figures are in agreement with each other, in which case they shall govern over the unit price shown in words.
Respondent applied the above procedure to reject Petitioner's extension price on the signs since it did not agree with the unit price in figures or in words.
Respondent applied the above procedure to accept Intervenor's extension price on the material since the $10.25 unit price in figures agreed with the extension. Acceptance of the $10.25 unit price figure (rather than the other entry of $12.00) was essential since no attempt had been made to change the twelve dollar unit price in words.
Respondent's policy on bid procedures as set forth in its Standards Specification manual requires initialling of all changes made by the bidder. Section 2-5.1 provides in part:
In case a change is made in a word or figure after it has been written in ink or typewritten,
the bidder shall write his initials by the change.
Intervenor failed to initial the change in its unit price figure. However, Respondent did not consider this to be a significant error and accepted the uninitialed change.
Respondent's Standards Specifications Manual, Section 3-1, provides in part:
Until the actual award of the contract, however, the right will be reserved to reject any or all proposals and to waive technical errors as may be deemed best for the interest of the State.
This policy permits Respondent to reject either or both of these bids because of the errors discussed herein. Conversely, Respondent could consider either or both errors to be merely technical errors and waive them.
Respondent's testimony and documentary evidence demonstrated that it does not enforce the policy requiring initialling of corrections. Additionally, Respondent's evidence established that it rigorously applies the procedure in Section 3-1 requiring the unit price in words to prevail where there are discrepancies except when the unit price in numbers and the extension agree.
Respondent argues that the unit price figure is critical since the State may wish to order more of a given item and would not want to be bound by an erroneously high unit price. However, a stated unit price would not be binding where there is an error. Rather, the presumably correct extension price could be divided by the bid quantity to determine the correct unit price.
The primary purpose of the policy which requires agreement of numbers and initialling of corrections is the prevention of conspiracy between bidders and State employees to alter bids. A further policy consideration, which is the stated basis for waiver of technical errors, is the furtherance of State interest. See Section 3-1, quoted above. In this regard, it should be noted that since Petitioner's original bid is the lowest, acceptance thereof would be in the interest of the State.
CONCLUSIONS OF LAW
Subsection 337.11(1), F.S., provides that Respondent has the authority to enter into contracts for construction and maintenance of certain roads. Subsection 337.11(2), F.S., requires the advertisement for bids on all such work. Subsection 337.11(3) F.S., provides that Respondent may award the
proposed work to the lowest responsible bidder or it may reject all bids and readvertise or perform the work with convict or free labor.
The basic principles of the competitive bidding system are stated in Hotel China & Glassware Co. v. Board of Public Instruction, 130 So.2d 78, 81 (Fla. 1st DCA 1961):
Competitive bidding statutes are enacted for the protection of the public .... The bidder is assured fair consideration of his offer, and is guaranteed the contract if his is the lowest and best bid received. The principal benefit flowing to the public authority is the opportunity of purchasing the goods and services required by it at the best price obtainable. Under this system, the public authority may not arbitrarily or capriciously discriminate between bidders, or make the award on the basis of personal preference.
The Florida Supreme Court has ruled that "... a public body has wide discretion in soliciting and accepting bids for public improvement and its decision, when based on an honest exercise of this discretion, will not be overturned by a court even if reasonable persons may disagree. Liberty County
v. Baxter's Asphalt and Concrete, 421 So.2d 505, 507 (Fla. 1982)
Although Respondent has discretion under the above quoted authority, it must act objectively and in the best interest of the State in the processing of bids. The rejection and recomputation of Petitioner's extension price is consistent with Respondent's published procedures, although it is not in the State's best interest since a higher cost will result.
Acceptance of Intervenor's bid as the low bid depends on a determination that failure to initial the attempted lowering of the unit price figure was a mere technical error which can be waived. However, such a change cannot be deemed technical or insubstantial since this entry has the effect of altering the entire bid. Only where an uninitialed change would not affect total bid price could such error be deemed technical. For example, had Intervenor entered "ten and twenty-five hundreds' in the unit price words column, instead of "twelve," then its failure to initial the change to $10.25 in the unit price figures column would have been inconsequential. No change in the extension price or overall bid would have resulted whether the unit price in numbers was $10.25 or $12.00, since the word "twelve" would have governed. Section 3-1, Standards Specification Manual.
Respondent's published policy on the requirement for initialling changes is couched in mandatory language, the bidder shall write his initials by the change." Section 2-5.1, Standards Specification Manual. Thus, Respondent's own objective standard mandates that the correction to $10.25 be held incomplete and ineffective.
This determination will result in Intervenor's bid being raised above Petitioner's (which was also raised by a recomputation). However, it is not in the best interest of the State to accept Petitioner's bid which was increased as a result of error. In view of the confusion and bid raising which have occurred, Respondent should reject all bids and submit this project for rebidding.
RECOMMENDATION
Based on the foregoing, it is RECOMMENDED:
That Respondent enter a Final Order rejecting existing bids and reissuing its bid proposal.
DONE and ENTERED this 16th day of February, 1984, in Tallahassee, Florida.
R. T. CARPENTER Hearing Officer
Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32301
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 16th day of February, 1984.
COPIES FURNISHED:
Carl R. Pennington, Jr., Esquire
325 John Knox Road, Suite L-101 Tallahassee, Florida 32303
Mark A. Linsky, Esquire Department of Transportation Haydon Burns Building
605 Suwannee Street
Tallahassee, Florida 32301
Ronald W. Brooks, Esquire 863 West Park Avenue Tallahassee, Florida 32301
Paul Pappas, Secretary Department of Transportation Haydon Burns Building Tallahassee, Florida 32301
=================================================================
AGENCY FINAL ORDER
=================================================================
STATE OF FLORIDA DEPARTMENT OF TRANSPORTATION
CAPITAL ASPHALT, INC.,
Petitioner,
vs. CASE NO. 83-3499BID
DEPARTMENT OF TRANSPORATION,
Respondent.
and
MITCHELL BROTHERS, INC.,
Intervenor.
/
FINAL ORDER
The record in this proceeding has been reviewed along with the Recommended Order of the Hearing Officer. The exceptions to the Recommended Order filed by the Parties have been considered.
The introductory material and Findings of Fact made by the Hearing Officer are adopted and made a part of this Final Order except for the finding on page 2 of the Recommended Order that the Department waived an error in Mitchell Brothers bid similar to the error made by Capital Asphalt and the finding on page 4 of the Recommended Order that, "Rather, the presumably correct extension price could be divided by the bid quantity to determine the correct unit price." Neither finding of fact is supported by competent substantial evidence.
Both bids contained discrepancies between a unit price in words, the unit price in numbers, and the extension or total bid amount for the item at issue. Section 3-1 of the Standard Specifications for Road and Bridge Construction (1982) specifies which unit price is controlling when such discrepancies occur. That provision provides in pertinent part:
In the event of any discrepancy in the three entries for the price for any item, the unit price as shown in words shall govern unless the extension and the unit price shown in figures are in agreement with each other, in which case they shall govern over the unit price shown in words.
It was uncontroverted at the hearing and in fact stipulated to by Capital Asphalt that Section 3-1 of the Standard Specifications for Road and Bridge Construction (1982) addresses discrepancies between the unit price in words, the
unit price in numbers and the extension price, and further that the specification was properly applied to both bids. (T: 55; 95-98) Additionally, all Department employees testified that a unit price was never derived by assuming a correct extension price and dividing that price by the total number of units required (T: 107) and no evidence to the contrary was offered by the party. In fact, the record is clear that this practice would violate the Standard Specifications.
Having stipulated that the Department correctly and uniformly applied Section 3-1 of the Standard Specifications, Capital Asphalt protested only the Department's waiver of Mitchell Brothers' failure to initial the change in numbers of a unit price.
Section 2-5.1 of the Standard Specifications for Road and Bridge Construction provides in pertinent part:
Unit or lump sum prices for all bid items shall be shown in both words and figures and all extensions shall be carried out. The prices and amounts shall be filled in with ink or typewriter. In case a change is made in a word or figure after it has been written in ink or typewritten, the bidder shall write his initials by the change.
Capital Asphalt bases its protest upon this provision. However, Section 3-1 of the Standard Specifications reserves:
.the right... to reject any or all proposals and to waive technical errors as may be deemed best for the interest of the State.
The record reflects that the Department has consistently viewed the failure to initial changes in unit prices as a technical error.
It is the law in Florida that a public body has wide discretion in soliciting and accepting bids for public improvements and this decision, when based on an honest exercise of discretion, should not be overturned even if it may appear erroneous and even if reasonable persons may disagree. In a situation of minor irregularity in technical bidding requirements, the bid should be rejected only upon finding of fraud, bad faith, or by a showing of an economic advantage occurring by waiver of the irregularity. See: Liberty County
v. Baxter's Asphalt and Concrete, Inc., 423 So.2d 505 (Fla. 1982). The Department has followed this standard in Section 3-1 of the Standard Specifications, by reserving the right to waive technical errors in the bid proposals. The Final Order must be entered in accordance with those standards.
The Department accepts the Hearing Officer's conclusions in paragraphs 1 and 2 on pages 4 and 5 of the Recommended Order which recognize the wide discretion vested in the Department and the Department's general contracting authority.
The Department specifically rejects the Hearing Officer's conclusions that its application of Section 3-1 of the Standard Specifications to Capital Asphalt's bid was not in the state's best interests and that Mitchell Brothers'
failure to initial its change in a unit price number was material and requires rejection of Mitchell Brothers' bid proposal.
The unit price figure in any bid proposal is critical since during the course of a contract, more of a given item may be needed and the Department would not want to be bound by an erroneously high unit price. More explicitly, if it is found during the course of a project that a quantity has been underestimated or overestimated, the unit price is used to determine the appropriate adjustment. The purpose of having the unit price written in both words and figures on the bid proposal and double checked by the Department before the contract is awarded is to insure accuracy in the unit price at the outset of a project to avoid later potential and costly debate, negotiation and litigation.
As noted, Section 3-1 of the Standard Specifications allows the Department to waive technical errors. The Department has consistently considered a contractor's failure to initial a change in his bid, such as occurred in Mitchell Brother's bid proposal in this case, a minor technical error and has never rejected a bid because of a failure to initial a change. The face of the bid proposal evidenced a clear intent by Mitchell Brothers to bid a unit price of $10.25 instead of $12.00 and the summation extension confirmed the $10.25 bid. Moreover, it was uncontroverted that the unit price in numbers and the extension which was unchanged was in a Mitchell Brothers' employee's handwriting. (T: 41; 140) It was further uncontroverted that the Department's customary procedure is to review bids using a pen of a different color than that used by the bidder and for the reviewer to initial any change made by him. (T: 130-132; 134-135). Accordingly, the Department's review procedures assured the integrity of the bidding process and properly permitted the Department to view the failure of a bidder to initial a change as merely a technical error.
When a minor irregularity in technical bidding requirements occurs, the bid should be rejected only upon a finding of fraud, bad faith, or because of a showing of an economic advantage resulting from the waiver of the irregularity
The facts clearly evidence no wrongdoing by the Department. There is no evidence to support a finding that the Department was engaged in fraud or misconduct during the review and award of the contract or that it otherwise did not act in good faith. Neither do the facts evidence an economic advantage to Mitchell Brothers. Further, the Hearing Officer made no finding of fraud, misconduct, or economic advantage.
It is in the best interest of the state to waive the purely technical error of Mitchell Brothers since there has clearly been no fraud, collusion or unjust economic advantage. It is further in the state's interest not to incur the further confusion, delay and additional expense of rejecting all existing bids and reissuing its bid proposal.
Capital Asphalt in its Exceptions objects that an express finding was not made that the Department "failed to in any way attempt to defend its non-rule policy of waiving Section 2-5.1 of its specifications." A review of the entire record and Recommended Order indicates that such a characterization of the Department's evidence is inaccurate and self-serving. The Hearing Officer considered and enunciated in his Findings of Fact both the published policy on bid procedure for Section 3-1 and 2-5.1 of the Standard Specifications, the Department's review procedures, and the consistent application of those rules in departmental practice.
The significance of the dissimilarity of bid error by the respective parties and the Department's understanding and application of its rule to substantive versus technical contract bid errors has been addressed above. Capital Asphalt's second and third exceptions amount to objections to the Hearing Officer's failure to make Findings of Fact and to reach Conclusions of Law advocated by Capital Asphalt. After considering both exceptions there is nothing found here which had not previously been submitted to the Hearing Officer and argued at great length in Capital Asphalt's Proposed Findings of Fact and Conclusions of Law, which the Hearing Officer stated that he had considered. Again, for the Department to adopt Findings of Fact and Conclusions of Law considered and rejected by the Hearing Officer, Capital Asphalt must submit compelling argument. This it has failed to do and the exceptions, while considered, are rejected.
Mitchell Brother's Exceptions to the Recommended Order have been specifically considered, addressed, and disposed of by the prior discussion or have been made irrelevant or immaterial because of the Conclusions reached in this Final Order.
The Department concludes that the error in Mitchell Brothers' bid document was technical and properly waived by the Department. It is in the best interest of the State not to have the delay and extra expense of rejecting all existing bids and reissuing its bid proposal. The award of the contract to Mitchell Brothers, Inc., was correct and such award is confirmed.
Done and Entered this 15th day of May, 1984, in Tallahassee Florida.
Paul N. Pappas Secretary
Department of Transportation Hayden Burns Building Tallahassee, Florida 32301
COPIES FURNISHED:
R. T. Carpenter Hearing Officer
Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32301
Mark A. Linsky, Esquire Department of Transportation Hayden Burns Building Tallahassee, Florida 32301-8064
Carl R. Pennington, Jr., Esquire Pennington, Wilkinson, & Dunlap
325 John Knox Road, Suite L-101 Tallahassee, Florida 32303
Ronald W. Brooks, Esquire Callahan & Phillips
863 West Park Avenue Tallahassee, Florida 32301
Docket for Case No: 83-003499
Orders for Case No: 83-003499
