STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HUBBARD CONSTRUCTION COMPANY, )

)

Petitioner, )

)

vs. ) CASE NO. 86-0O24BID

) STATE OF FLORIDA, DEPARTMENT ) OF TRANSPORTATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted in this case on January 23, 1986, at Tallahassee, Florida, before Michael M. Parrish, a duly designated Hearing Officer of the Division of Administrative Hearings. The parties were represented at the hearing by the following counsel:

For Petitioner: John E. Beck, Esquire

1026 East Park Avenue Tallahassee, Florida 32301

For Respondent: Larry D. Scott, Esquire

Haydon Burns Building 605 Suwannee Street

Tallahassee, Florida 32301-8064 ISSUES AND BACKGROUND

By notice issued December 6, 1985, the Florida Department of Transportation advised all bidders that it proposed to reject all bids on a project identified as Budget Item No. 2142326; Federal Aid Project No. ACIR-10-5(76)358 (Job No.

72270-3431) in Duval County. Hubbard Construction Company protested the proposed rejection of all bids and filed a Formal Written Protest in which it asserts that it is the lowest responsive bidder and that it should be awarded a contract for the subject project. The issues in this case are:

1. Whether Hubbard Construction Company is the lowest responsive bidder on the subject project; and

   
   

2. Whether the Florida Department of Trans- portation should reject all bids on the subject project for one or more of the reasons set forth in its December 6,

1985, notice of bid rejection.

Following the hearing, a transcript of the proceedings at hearing was filed on February 4, 1986. Pursuant to agreement of the parties, their post-hearing submissions were due to be filed 15 days following the filing of the transcript.

Both parties filed proposed recommended orders which have been carefully considered in the preparation of this Recommended order. Specific rulings on the findings of fact proposed by both parties are contained in the Appendix which is attached to and incorporated into this Recommended order.

FINDINGS OF FACT

Based on the stipulations of the parties, on the exhibits received in evidence, on the testimony of the witnesses at the hearing, and on the deposition testimony received in evidence, I make the following findings of fact:

1. On October 30, 1985, the Florida Department of Transportation ("FDOT") received and opened sealed bids on State Project Number 72270-3431, in Duval County, Florida. Five bids were submitted for this project. The lowest bid, in the amount of $6,235,948.35, was submitted by Hubbard Construction Company ("Hubbard"). The amounts of the other bids were as follows: the second low bidder, $6,490,796.91; the third low bidder, $6,519,447.90; the fourth low bidder, $7,470,941.74; and the fifth low bidder, $7,477,038.49. All bids submitted were more than seven per cent over FDOT's estimate of the project price. The two lowest bids also appeared to be unbalanced and, as set forth in more detail below, the Hubbard bid was in fact unbalanced in several particulars.

   
   

2. It is FDOT policy to give special review to bids that are more than seven per cent above the estimated price of the project. All bidders were made aware of this policy by the following language on the first page of the Notice To Contractors:

   
   

   Bidders are hereby notified that all bids on any of the following projects are likely to be rejected if the lowest responsive bid received exceeds the engineer's estimate by more than seven per cent (7 percent). In the event any of the bids are rejected for this reason, the project may be deferred

   for readvertising for bids until such time that a more competitive situation exists.

   
   

3. Upon review of the bids submitted on the subject project, FDOT decided to reject all bids. By notices dated December 6, 1985, all bidders were advised that all bids were rejected. The stated reasons for the rejection of all bids were as follows:

   
   

   All bids were too high; the apparent first and second low bidder's bids were unbalanced and the apparent first low bidder failed to meet the WBE Requirements.

   
   

4. Hubbard submitted its formal written protest to the FDOT regarding the proposed rejection of its bid on the subject project on January 3, 1986. This protest was made pursuant to Section 120.53, Florida Statutes (1985), the instructions to bidders and bid information provided by the Department, and rules of the Department, including Rules 14-25.04 and 14-25.05, Florida Administrative Code.

5. Unbalancing occurs when a contractor puts a higher price on a particular item of work in the project in anticipation of using more of that item than the FDOT has estimated will be required. Unbalancing can also occur when a lower than estimated price is placed upon a particular item. When a bid appears to be unbalanced, the bid is submitted to the Technical Awards and Contract Awards committees for review. In this case, the FDOT's preliminary estimate personnel discovered six items that were unbalanced within Hubbard's bid. The first item of concern was an asphalt base item for which the FDOT's estimate was $4.00 per square yard and the Hubbard bid was $19.29 per square yard. The second item was clearing and grubbing for which FD0T's estimate was

   $50,000 and Hubbard's bid was $200,000. The third item was removal of existing structures for which FDOT's estimate was $190,762 and Hubbard's bid was $38,000. The fourth item was installing new conductors for which FDOT's estimate was

   $251,000 and Hubbard's bid was $141,000. The fifth item was removal of existing pavement for which FDOT's estimate was $78,000 and Hubbard's bid was $153,000.

   Finally, the sixth item was surface asphalt items for which FDOT's estimate was

   $98,000 and Hubbard's bid was $169,000.

   
   

6. The FDOT has a policy that any bid that is seven per cent or more over the estimate will go before the Awards Committee for review. Further, the FDOT has a policy that whenever the bids are more than seven per cent higher than the estimate, the FDOT's Bureau of Estimates will then review their estimate and the apparent low bidder's bid to determine whether the original estimate was correct.

   
   

7. The FDOT maintains a Women's Business Enterprises ("WBE") program. The FDOT's program requires that successful bidders provide for participation of women owned and controlled business in FDOT contracts. The program is implemented by the setting of so-called "goals" for certain projects. The goal is stated as a percentage of the total dollar bid for each project. Thus, the WBE goal for a project requires that the bidder utilize FDOT certified WBE's in constructing the project to the extent that the FDOT's goal is a percentage of the total bid.

   
   

8. The FDOT has implemented rules to effectuate its WBE program. Rule 14- 78, Florida Administrative Code (amended effective May 23, 1984). In submitting a bid, the rules offer the bidder the option of meeting the WBE goals or submitting proof of a good faith effort to meet the goal and if a good faith effort is sufficient, the FDOT may waive the goal.

   
   

9. The FDOT's bid package and specifications, as furnished to contractors, in no place referred to the Department's rule providing that only 20 percent of the amount of subcontracts with WBE suppliers shall count toward the goals on Federal aid projects. The specifications clearly state that WBE suppliers may be counted toward the goals. The specifications as furnished by the Department also imply that the 20 percent rule applies only to non-federal aid jobs. The project in question in this case is a Federal aid project. There is a conflict between the rule and the language of the specifications which creates an ambiguity in the specifications, as well as a trap for the unwary bidder who overlooks the requirements of the rule. The FDOT is in the process of amending the specifications to make them conform to the rule.

   
   

10. The Special Provisions contained within the bid specifications established certain minority participation goals for this project--ten per cent for Disadvantaged Business Enterprises (DBE) and three per cent for Women Business Enterprises (WBE). FDOT personnel analyzed the bid documents submitted by Hubbard according to the criteria set forth at Rule 14-78, Florida

    Administrative Code, and determined that Hubbard exceeded the DBE goal but failed to meet the WBE goal. Hubbard's WBE participation was two per cent. All other bidders on the project met both of the DBE and WBE goals.

    
    

11. When Hubbard submitted its bid on this project, Hubbard thought that it had complied with the three per cent WBE goal by subcontracting 3.5 per cent of the contract price to WBE certified firms. However, 2 per cent of the contract price was to be subcontracted to a WBE for supplies to be furnished by a WBE who was not a manufacturer. Accordingly, when the 20 per cent rule discussed above was applied to that 2 per cent, the total amount of WBE participation which could be counted toward Hubbard's compliance with the rule was approximately 2 per cent, which was less than the 3 per cent goal.

    
    

12. Once it was determined that Hubbard had failed to meet the WBE goal, FDOT personnel analyzed Hubbard's good faith efforts package pursuant to Rule

    14-78, Florida Administrative Code. Hubbard's good faith efforts package failed to demonstrate that Hubbard had taken sufficient action in seeking WBE's to excuse its failure to meet the WBE goal for this project. Similarly, Hubbard's evidence at the hearing in this case was insufficient to demonstrate that Hubbard had taken sufficient action in seeking WBE's to excuse its failure to meet the WBE goal for this project. Most telling in this regard is that all four of the other bidders on this project were successful in meeting or exceeding the DBE and WBE goals.

    
    

    CONCLUSIONS OF LAW

    
    

    Based on the foregoing findings of fact and on the applicable legal principles, I make the following conclusions of law.

    
    

13. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. Sections 120.53 and 120.57, Florida Statutes.

    
    

14. Section 337.11(3), Florida Statutes, states:

    
    

    The department may award the proposed work to the lowest responsible bidder, or it may reject all bids and proceed to readvertise the work or otherwise perform the work.

    
    

15. In Liberty County v. Baxter's Asphalt & Concrete, 421 So.2d 505 (Fla. 1982), the court described the nature of a public body's discretion in these types of matters at page 507:

    
    

    In Florida, on the other hand, a public body has wide discretion in soliciting and accept- ing bids for public improvements and its decision, when based on an honest exercise of this discretion, will not be overturned by a court even if it may appear erroneous and even if reasonable persons may disagree.

    
    

16. Similarly, the court in Couch Construction Company, Inc. v. Department of Transportation, 361 So.2d 172 (Fla. 1st DCA 1978) stated:

    
    

    We affirm that the Department has wide dis- cretion to reject all bids and to call for

    new bids for public contracts. Section 337.11(3), Florida Statutes (1977); Willis v.

    Hathaway, 95 Fla. 608, 117 So. 89 (Fla. 1928); Berry v. Okaloosa County, 334 So.2d

    349 (Fla. 1st DCA 1976); Wood-Hopkins Contracting Co. v. Roger J. Au & Son, Inc.,

    354 So.2d 446 (Fla. 1st DCA 1978). In making such a determination, the Department cannot act arbitrarily.

    
    

17. Pursuant to the requirements of Section 339.08(1) and 339.0805(1), Florida Statutes (1984 Supp.), the Respondent has promulgated Chapter 14-78, Florida Administrative Code. In particular, the Respondent has promulgated Section 14-78.03(2)(b), Florida Administrative Code, which provides, in pertinent part:

    
    

    (2) To implement its DBE and WBE goal program the Department may:

    * * *

    (b) establish contract goals on each contract with subcontracting opportunities for certified DBEs and WBEs.

    1. The Department shall establish sepa- rate contract goals for firms owned and controlled by socially and economically

    disadvantaged individuals and for firms owned and controlled by women.

    * * *

    1. For all contracts for which DBE and WBE contract goals have been established, each bidder shall meet or exceed or

       demonstrate that it could not meet, despite its good faith efforts, the contract goals set by the Department. The DBE and WBE participation information shall be submitted with the contractors' bid proposal. Award of the contract shall be conditioned upon submission of the DBE and WBE participation information with the bid proposal and upon satisfaction of the contract goals or, if the goals are not met, upon demonstrating that good faith efforts were made to meet the goals. Failure to satisfy these requirements shall result in a contractor's bid being deemed nonresponsive and the bid being rejected. [Emphasis added]

       1. The contractor's bid submission shall include the following information:

          1. The names and addresses of certified DBE and WBE firms that will participate in the contract;

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

          3. The dollar amount of participation by each DBE and WBE firm;

             * * *

          4. If the DBE or WBE goal is not met, sufficient information to demonstrate that the contractor made good faith efforts to meet the goals.

    
    

18. And Rule 14-78.03(2)(b)7.g. contains the following provision with respect to counting DBE and WBE participation toward the applicable goals:

    
    

    Twenty per cent of the contractor's expen- ditures to DBE or WBE suppliers that are not manufactures, may be counted toward the DBE or WBE goal, provided that the DBE or WBE supplier performs a commercially useful function in the supply process.

    
    

19. The facts in this case demonstrate that Hubbard failed to submit its bid in full compliance with the clearly established WBE goals for the project and failed to comply with the requirements of Rule 14-78.03(2)(b), Florida Administrative Code. The FDOT established a 3 per cent WBE goal for this project and the bid submitted by Hubbard failed to demonstrate achievement of this goal. Hubbard also failed to provide sufficient information to the Respondent to demonstrate that it had made good faith efforts to meet the WBE goal. Pursuant to Rule 14-78.03(2)(b), Florida Administrative Code, Hubbard's failure to meet these requirements resulted in Hubbard's bid being deemed nonresponsive and was one of the reasons for which the bid was rejected.

    
    

20. Hubbard argues that it should not be held to strict compliance with the foregoing rule because of the language in the specifications upon which Hubbard relied, to its detriment. It cannot be doubted that FDOT erroneously included some conflicting language in the specifications, but that erroneous language should not be used as a basis for ignoring the important public policies set forth in Section 339.0805, Florida Statutes, and Rule 14- 78.03(2)(b), Florida Administrative Code. Rather, the best cure for the erroneous language in the specifications is to reject all bids and rebid this project with corrected specifications. Finally, although Hubbard asserts that it relied solely upon the erroneous language in the specifications, it is most unlikely that a contractor of Hubbard's experience and sophistication was unaware of the conflicting rule provision. Hubbard could have protected its interests by complying with the rule or by seeking some pre-bid clarification as to the effect of the rule in light of the erroneous language in the specifications.

    
    

21. The foregoing is consistent with the recent decision in C. H. Barco Contracting Company vs. State of Florida, Department of Transportation, 11 FLW

    393 (Fla. 1st DCA 1986), in which the court held:

    
    

    While there was some testimony indicating some members of the Department felt the interpretation of the good faith effort criteria was stricter than in the past, we find the criteria enunciated in the rule to be of such a nature that a case-by-case adjudication is clearly contemplated by the rule. Thus, the fact that the interpretation of the criteria as applied to the facts of the instant case may have varied from a previous interpretation is not dispositive.

    The interpretation of the good faith standard applied by the Department in this case is clearly a permissible one and is consistent with the clear and unambiguous language of the rule.

    
    

22. The record in this case also supports the rejection of all bids on the basis of the FDOT policies regarding bids that are more than 7 per cent in excess of the estimated project price and bids that are unbalanced. Although there is some evidence that in the past FDOT has awarded contracts when bids were more than 7 per cent above the estimate, and has also awarded contracts when bids were unbalanced, the record contains no details about any such bids sufficient to show whether they involved factual circumstances similar to or different from the facts in this case. And in any event, decisions on such matters, like decisions on the matters before the court in Barco Contracting, supra, almost of necessity involve case-by-case adjudication in the exercise of the FDOT's discretion. Where, as here, the evidence indicates that there has been an honest exercise of agency discretion in deciding to reject all bids, the agency's chosen course of action should be implemented. See Liberty County v. Baxter's Asphalt & Concrete, supra.

RECOMMENDATION

For all of the foregoing reasons, it is recommended that the Florida Department of Transportation issue a Final Order rejecting all bids on Federal Aid Project No. ACIR-10-5 (76) 358 (Job No. 72270-3431).

DONE AND ORDERED this 24th day of March 1986, at Tallahassee, Florida.

MICHAEL M. PARRISH

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

FILED with the Clerk of the Division of Administrative Hearings this 24th day of March 1986.

APPENDIX TO RECOMMENDED ORDER IN DOAH CASE NO. 86-0O24BID

The following are my specific rulings on each of the proposed findings of fact submitted by each of the parties.

Rulings on findings proposed by the Petitioner, Hubbard Construction Company

The substance of the findings of fact proposed by the Petitioner in the following paragraphs of its proposed findings have been accepted and incorporated into the findings of fact in this Recommended Order: 1, 2, 3, 4, 5, and 8.

The substance of the first sentence of paragraph 6 is accepted. The remainder of paragraph 6 is rejected as an unintelligible incomplete statement.

Paragraph 7 is rejected as not supported by competent substantial evidence. (The Standard Specifications for Road and Bridge Construction were not offered in evidence.)

Paragraph 9 is rejected for a number of reasons, including not being supported by competent substantial evidence, being to a large part irrelevant, being predicated in part on an erroneous notion of which party bears the burden of proof, and constituting in part legal argument rather than proposed findings of fact.

The first and third sentences of paragraph 10 are accepted in substance.

The second and fourth sentences of paragraph 10 are rejected as irrelevant. The last sentence of paragraph 10 is rejected as irrelevant and as not supported by competent substantial evidence.

Paragraph 11 is rejected as irrelevant and as including speculations which are not warranted by the evidence.

Paragraph 12 is rejected as irrelevant and as including speculations which are not warranted by the evidence.

Paragraph 13 is rejected as not supported by competent substantial evidence and as being contrary to the greater weight of the evidence.

Rulings on findings proposed by the Respondent, Department of Transportation

The substance of the findings of fact proposed by the Respondent in the following paragraphs of its proposed findings have been accepted and incorporated into the findings of fact in this Recommended Order: 1, 2, 3, 4, 5, 6, 7, and 8.

Paragraph 9 is rejected as irrelevant.

COPIES FURNISHED:

John E. Beck, Esquire 1026 East Park Avenue

Tallahassee, Florida 32301

Larry D. Scott, Esquire Haydon Burns Building 605 Suwannee Street

Tallahassee, Florida 32301-8064

Thomas Drawdy, Secretary Department of Transportation Mail Station 57

605 Suwannee Street

Tallahassee, Florida 32301-8064

Docket for Case No: 86-000024BID

Orders for Case No: 86-000024BID