STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

C & S CHEMICAL COMPANY, )

)

Petitioner, )

)

vs. ) CASE NO. 87-0012BID

) DEPARTMENT OF TRANSPORTATION, )

)

Respondent, )

and )

)

FLORIDA ASSOCIATION OF ) REHABILITATIVE FACILITIES, INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

This matter came on for hearing in Tallahassee, Florida, before Robert T. Benton, II, Bearing Officer of the Division of Administrative Hearings, on January 21, 1987. The Division of Administrative Hearings received a transcript of the proceedings on February 6, 1987. Intervenor's proposed findings of fact and conclusions of law were filed on February 12, 1987. Respondent filed its proposed recommended order on February 23, 1987. The attached appendix addresses the parties' proposed findings of fact by number.

Petitioner appeared through its owner and president, Tom R. Sperring. See Magnolias Nursing and Convalescent Center v. Department of Health and Rehabilitative Services, Office of Licensure and Certification, 428 So.2d 256 (Fla. 1st DCA 1982). The other parties were represented by counsel:

APPEARANCES

For Respondent: Larry D. Scott, Esquire

Haydon Burns Building, Mail Station 58 Tallahassee, Florida 32301

For Intervenor: Ronald G. Meyer, Esquire

Meyer, Brooks and Cooper, P.A. 911 East Park Avenue Tallahassee, Florida 32301

By letter dated December 18, 1986, Mr. Sperring wrote the Department of Transportation on behalf of C & S Chemical Company to protest "the nonposting of" bids submitted in response to invitation to Bid No. 9059-86 on Project No. 37906-9007. In accordance with Section 120.53(5), Florida Statutes (1985), the

Department of Transportation transmitted Mr. Sperring's letter, identifying as issues requiring resolution the following:

1. Whether C & S Chemical Company is the lowest responsible bidder in State Project No. 37906-9007.

   
   

2. Whether Department of Transportation can

reject all bids on State Project No. 37906-9007.

This transmittal reached the Division of Administrative Hearings on January 6, 1987, and notice of hearing issued the following day.

On January 15, 1987, the Florida Association of Rehabilitative Facilities, Inc., filed a petition to intervene pursuant to Rule 28-5.207, Florida Administrative Code. Without objection, and in keeping with Rule 221-6.10, Florida Administrative Code, the petition to intervene was granted at hearing.

ISSUE

Whether the Department of Transportation can reject all bids on State Project No. 37906-9007?

FINDINGS OF FACT

1. In response to an invitation to bid, petitioner C & S Chemical Company (C&S) submitted a bid, No. 9059-86, offering to undertake complete maintenance operations to ensure Rest Area facilities located on State Road 93 (1-75) in Suwannee and Hamilton Counties are maintained in a safe, attractive, clean and sanitary manner." Respondent's Exhibit No. 1. Invitations to bid were mailed in October of last year, (T.9), and bids were to have been opened on December 2, 1987. C&S's bid price was $14,860.76 monthly or $178,329.12 for the year.

   
   

2. By letter dated December 9, 1986, however, the Department of Transportation (DOT) advised C&S that all bids had been rejected, stating that the "Department reserved the right to reject any/or all bids when it is determined to be in the best interest of the Department. Petitioner's Exhibit No. 1. C&S mailed notice of protest the same day it received the Department's advice that all bids had been rejected.

   
   

3. C&S's formal written protest took the form of a letter, dated December 18, 1986, in which C&S inquired:

   
   

   [H]ow can the Department of Transportation offend and deprive legitimate contractors of this work by negotiating a Contract with a non-profit organization after the bid prices have been made public knowledge?

   Petitioner's Exhibit No. 2.

   
   

   In this letter, C&S took the position that DOT should not reject all bids:

   
   

   We feel that if the non-profit organizations are going to get Department of Transportation contracts, they should either bid compet[i]tively with private enterprises, or

   that certain contracts should be set aside for them well advance of the bidding process.

   
   

   At hearing, Mr. Sperring narrowed or clarified the grounds of the protest when he stated, "I have no objection to the concept of the nonprofit organizations as long as they are set aside," (T.12) before bids are invited.

   
   

4. The parties agree that, after bids were solicited, DOT decided to award the contract for Project No. 37906-9007 to intervenor Florida Association of Rehabilitative Facilities, Inc. (FARF), even though FARF never bid on the project.

   
   

5. By agreement dated August 21, 1985, the Commission for Purchase for the Blind and other Severely Handicapped designated FARF "the central nonprofit agency of the Commission . . . [and its] sole agent." Intervenor's Exhibit No. 2.

   
   

6. The day before, DOT Secretary Thomas E. Drawdy had signed a policy statement proclaiming DOT's intention "to procure commodities or services from qualified nonprofit agencies for the blind or other severely handicapped when feasible unless otherwise restricted by budgetary constraints." Intervenor's Exhibit No. 1.

   
   

   CONCLUSIONS OF LAW

   
   

7. Although petitioner's claim to be low bidder was not established by the evidence, Respondent's Exhibit No. 1 demonstrated that petitioner did submit a bid, and the record is clear that DOT failed even to evaluate the bids. At hearing, moreover, respondent conceded that petitioner was low bidder. (T.5). Petitioner's right to a hearing on DOT's rejection of all bids is at least as strong as that of the second low bidder in International Medical Centers, H.M.O

   v. Department of Health and Rehabilitative Services, 417 So.2d. 734 (Fla. 1st DCA 1982).

   
   

   Competitive Bids the Norm

   
   

8. If rest area facilities located on State Road 93 are viewed as "part of the State Highway System," Section 337.11, Florida Statutes (1985), a contract for their maintenance as large as the one in dispute here, see Section 337.02(1), Florida Statutes (1985), must be competitively bid. Since Section 337.11, Florida Statutes (1985), applied, in terms only to "contracts for the construction and maintenance of all roads however, Chapter 287 rather than Chapter 337 may apply. Section 337.02(1), Florida Statutes (1985). In that case, too, the law requires:

   
   

   Unless otherwise authorized by law, all contracts for contractual services shall be awarded by competitive sealed bidding.

   Section 287.057(2), Florida Statutes (1985).

   
   

9. DOT contends that authorization to dispense with competitive bidding for this contract may be found in Section 413.032, Florida Statutes (1985). FARF argues that Section 413.036, Florida Statutes (1985), authorizes DOT to reject all bids in favor of negotiating with FARF.

   
   

10. In its proposed recommended order, DOT cites Section 413.032, Florida Statutes (1985), which provides:

    The purpose of this act is to further the policy of the state to encourage and assist blind and other severely handicapped individuals to achieve maximum personal independence through useful, productive, and gainful employment by assuring an expanded and constant market for their products and services, thereby enhancing their dignity and capacity for self-support and minimizing their dependence on welfare and need for costly institutionalization.

    
    

11. DOT also alludes to its written policy adopted August 20, 1986, which, however, makes reference only to Section 413.036, Florida Statutes (1985), the provision on which FARF relies. That section reads:

    
    

    If any agency intends to procure any product or service on the procurement list, that agency shall, in accordance with rules and regulations of the commission, procure such product or service at the price established by the commission from a qualified nonprofit agency for the blind or for the other severely handicapped if the product or service is available within a reasonable delivery time. This act shall not apply in any case in which products or services are available for procurement from any agency of the state and procurement therefrom is required under the provision of any law currently in effect.

    Section 413.036, Florida Statutes (1985).

    
    

12. Intervenor's Exhibit No. 2 shows FARF to be the designated "central, non-profit agency," Rule 130-1.003, Florida Administrative Code, called for by Rule 130-1.003(1), Florida Administrative Code. Perhaps a "central non-profit agency" is the same as "a qualified nonprofit agency for the blind or for the other severely handicapped." Section 413.036, Florida Statutes (1985). But the record is silent about the contents of any "procurement list." Section 413.036, Florida Statutes (1985).

    
    

    Burden of Proof

    
    

13. Because the record on this point has not been developed, disposition of the present case turns on procedural requirements. In Couch Construction Co.

    v. Department of Transportation, 361 So.2d 172 (Fla. 1st DCA 1978), the court said:

    
    

    We affirm that the Department has wide discretion 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-Hopkin 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. The Administrative Procedure Act requires that the Department's decision be by a final order that takes account of Countervailing evidence and argument. When as here there are no rules which define the circumstances in which the Department will reject all bids and readvertise, the Department's order in Section 120.57 proceedings must provide visible proof that the Department is proceeding rationally within the bounds of its discretion and not arbitrarily. In McDonald v. Department of Banking & Finance,

    346 So.2d 569 (Fla. 1st DCA 1977), we pointed to the legislative history:

    
    

    "Three due process checks to prevent arbitrary agency action are the requirements that reasons be stated for all action taken or omitted, that reasons be supported by `the record', and that specific judicial review procedures allow the courts to remedy defect of substance."

    [346 So.2d at 584.]

    Couch Construction Co. v. Department of Transportation, 361 So.2d 172, 175 (Fla. 1st

    DCA 1978).

    
    

14. Because the procurement list is in evidence, the closest thing to "visible proof that the Department is proceeding . . . within the bounds of its discretion," 361 So.2d at 175, is FARF's contention that DOT acted pursuant to Section 413.036, Florida Statutes (1985), in rejecting all bids. The only evidence to this effect is DOT's policy statement of last summer and FARF's agreement with the Commission for Purchase from the Blind and Other Severely Handicapped. Intervenor's Exhibits Nos. 1 and 2.

    
    

15. Bidders whose bids an agency rejected (along with all others it had received for the project) were held entitled "under Chapter 120 to have a hearing wherein they have an opportunity to change the agency's mind." International Medical Center, H.M.O. v. Department of Health and Rehabilitative Services, 417 So.2d 734, 737 (Fla. 1st DCA 1982). In ordering a hearing concerning the rejection of all bids, the International Medical Center court quoted State, Department of Administration, Division of Personnel v. Harvey, 356 So.2d 323 (Fla. 1st DCA 1978), as follows:

    
    

    To the extent Division policy is not incorporated in regularly adopted rules, the Division may be required by any disappointed applicant to defend its policy in a Section

    120.57 proceeding where the Division will be required to present evidence and argument to expose and elucidate its reasons for discretionary action." (Emphasis supplied.)

16. The present case poses the question whether and to what extent DOT must expose and elucidate its reasons, when a disappointed bidder proves nothing more than the fact of the agency's decision to reject all bids, in favor of a negotiated contract with a non-bidder.

    
    

17. The court addressed issues concerning the parties' burden of proof in Capeletti Brothers, Inc. v. State Department of General Services, 432 So.2d 1359 (Fla. 1st DCA 1983). There Bergeron Land Development, Inc. (Bergeron), and Capeletti Brothers, Inc. (Capeletti), were among twelve bidders for a contract the Department of General Services (DGS) proposed to let for construction of a prison. DOS' notice of intent to award to Bergeron evoked a protest from Capeletti. DOS then gave notice of its intention to reject all bids, which occasioned a protest by Bergeron. As in the present case, the dispute went to the hearing officer before final agency action, with the agency in the posture of proposing to reject all bids.

    
    

18. DGS, adopting the recommended order, ultimately awarded to Bergeron. On appeal, Capeletti complained of the hearing officer's treatment of the burden of proof issue:

    
    

    Capeletti also contends that the hearing officer erred in not imposing upon Bergeron the burden at hearing to prove that DGS' previously announced intention to reject all bids was arbitrary, capricious and unreasonable. Capeletti misconceives the purpose of the s. 120.57 hearing. The rejection of the bids never became final agency action. As we have previously held, APA hearing requirements are designed to give affected par ties an opportunity to change the agency's mind. Couch Const. Co., v.

    Department of Transp., 361 So.2d 172, 176 (Fla. 1st DCA 1978); McDonald v. Department of Banking and Finance, 346 So.2d 569, 584 (Fla. 1st DCA 1979).

    Section 120.57 proceedings are intended to formulate final agency action, not to review action taken earlier and preliminarily.

    McDonald, supra at 584.

    Finally, Capeletti says that the hearing officer departed from the parties' stipulation announced at the commencement of the hearing that although both Capeletti and Bergeron had filed s 120.57 petitions, Bergeron "would occupy the position of petitioner" and would "bear the ultimate burden of persuasion." We do not agree that the hearing was conducted in such a way as to violate such stipulation.

    432 So.2d 1363-64.

19. In the Capeletti court's view, therefore, Bergeron, the disappointed bidder who challenged the agency's rejection of all bids, bore "the ultimate burden of persuasion" at hearing, and the court apparently approved of this procedure.

    
    

20. In the present case, therefore, although the matter is not entirely free from doubt, the ultimate burden of persuasion must be said to rest on C&S. It follows that C&S had the burden to prove that no procurement list existed; or that, if one did, services of the kind DOT contracted with FARF for were not listed. Since neither circumstance was proven, C&S has failed to carry its burden. Nor did C&S prove noncompliance with Chapter 13G-1, Florida Administrative Code. If the services are duly listed, and if Chapter 130-1, Florida Administrative Code, has been followed, DOT has acted in accordance with Section 413.036, Florida Statutes (1985), and, therefore, as "otherwise authorized by law," Section 287.057(2), Florida Statutes (1985), in negotiating with FARF, instead of accepting the low bid.

It is, accordingly, RECOMMENDED:

That DOT reject all bids submitted for Project No. 37906-9007.

DONE and ENTERED this 3rd day of March, 1987, at Tallahassee, Florida.

ROBERT T. BENTON, II

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 3rd day of March, 1987.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 0623A5

Petitioner submitted no proposed findings of fact.

Respondent's proposed findings of fact Nos. 1, 2, 5, 6 and 7 have been adopted, in substance, insofar as material.

Respondent's proposed finding of fact No. 3, like intervenor's proposed finding of fact No. 2, although not formally proven, was conceded by respondent.

With respect to proposed finding of fact No. 4, the award to Respect of Florida and the relationship between Respect of Florida and FARF were not proven.

Intervenor's proposed findings of fact Nos. 1, 6, 8, 9, and 10 have been adopted, in substance, insofar as material.

Intervenor's proposed finding of fact No. 4 deals with Intervenor's Exhibit No. 1. The pertinent language is "when feasible unless otherwise restricted by budgetary constraints."

Intervenor's proposed finding of fact No. 5 reflects counsel's representations, rather than formal proof.

With respect to intervenor's proposed finding of fact No. 7, DOT, not C&S, gave notice of bid rejection.

With respect to intervenor's proposed findings of fact Nos. 11 and 14, the evidence was insufficient to establish these findings.

The substance of intervenor's proposed finding of fact No. 12 is treated in paragraph five of the findings of fact, and in the conclusions of law.

COPIES FURNISHED:

Kaye Henderson, Secretary Department of Transportation Heydon Burns Building Tallahassee, Florida 32301

Larry D. Scott, Esquire Department of Transportation Haydon Burns Building, MS-58 Tallahassee, Florida 32301

Tom R. Sperring, President C & S Chemical Company Post Office Box 476

Gainesville, Florida 32602

Ronald G. Meyer, Esquire Meyer, Brooks and Cooper, P.A. 911 East Park Avenue Tallahassee, Florida 32301

Docket for Case No: 87-000012BID

Orders for Case No: 87-000012BID