STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CARLSON CORPORATION/SOUTHEAST, )

)

Petitioner, )

)

vs. ) CASE NO. 88-4078BID

)

THE SCHOOL BOARD OF ORANGE )

COUNTY, FLORIDA, )

)

Respondent, )

and )

)

ABERTHAW CONSTRUCTION )

COMPANY, )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, final hearing in the above-styled case was held on August 31, 1988, in Orlando, Florida, before Robert E. Meale, Hearing Officer of the Division of Administrative Hearings.

The representatives of the parties were as follows: For Petitioner: Joseph G. Thresher, Esquire

Dykema Gossett

Ashley Tower, Suite 1400

100 South Ashley Drive Post Office Box 1050 Tampa, Florida 33601-1050

For Respondent: William M. Rowland, Jr., Esquire

Rowland, Thomas & Jacobs, P.A. 1786 North Mills Avenue Orlando, Florida 32803

For Intervenor: Scott H. Johnson, Esquire

Maguire, Voorhis & Wells, P.A. Two South Orange Avenue Orlando, Florida 32801

BACKGROUND

On August 5, 1988, Petitioner filed a notice of intent to protest any consideration by Respondent of Intervenor's bid on a project known as High School "BB." On August 17, 1988, Petitioner filed a formal bid protest of Respondent's apparent intent to award the contract to Intervenor.

Respondent notified interested parties of the hearing and protest by letters dated August 25 and 29, 1988, a set forth in Respondent's Confirmation of Pre-Hearing Compliance, which was filed at the commencement of the hearing.

Intervenor filed a Motion to Intervene on August 25, 1988. The motion was granted at the beginning of the hearing. Petitioner filed at the beginning of the hearing a Request to Produce that requested Intervenor to produce generally all documents containing bid information. Intervenor objected to the Request to Produce on the grounds, inter alia, that the request was not reasonably calculated to lead to the discovery of admissible evidence. The objection was sustained.

Petitioner presented five witnesses. Intervenor and Respondent presented two witnesses. The parties jointly offered into evidence 20 exhibits. All of these exhibits were admitted. Petitioner offered three additional exhibits, which were also admitted. A portion of the testimony of Morris Bellick was taken with the hearing room cleared of spectators. This portion of the transcript has been sealed. The testimony was sealed in order to limit to the extent possible the disclosure by Mr. Bellick of trade secrets and confidential information of his employer, Petitioner, in connection with the subject bid.

For the same reason, Petitioner's Exhibit 3, which consists of a worksheet showing quotes from various subcontractors, has also been sealed.

All parties filed a proposed recommended order. Treatment accorded the proposed findings of fact is detailed in the Appendix.

FINDINGS OF FACT

1. On five dates in June and July, 1988, Respondent advertised in The Orlando Sentinel newspaper its Invitation to Bid for the project known as High School "BB." The advertisement announced that bids would be received at 2:00

   p.m. on August 4, 1988, at which time all bids would be publicly opened. The advertisement stated that Respondent reserved the right to waive irregularities.

   
   

2. The Invitation to Bid stated that bids received after the deadline "will be returned unopened" and bids "received on time" will be opened publicly. The Invitation to Bid also stated: "The Owner reserves the right to waive any informality or irregularity in any bid received when such a waiver is in the best interest of the Owner. The contract would be awarded, according to the Invitation to Bid, within 45 days after the opening of bids.

   
   

3. The location designated for the opening of the bids was the Facilities Services building located at 6200 Chancellor Drive, Orlando, Florida. The bids were opened in a conference room within the building.

   
   

4. Robert Gallardo, who is Respondent's Director of School Planning and Construction, was in charge of the bidding process. Mr. Gallardo has been in this position for six years. During this time, he has been responsible for the majority of school construction bids for Respondent. He estimates that he has supervised ten such bids.

   
   

5. On August 4, 1988, Mr. Gallardo worked in his office in the Facilities Services building until 1:55 p.m. At that time, he asked his secretary if the bid tabulation forms had been prepared, and, with the forms, he left his office for the conference room where the bids were to be opened.

6. Mr. Gallardo entered the conference room, which was occupied by a number of bidders' representatives, at 1:58 p.m., according to the clock on the wall. At a few seconds before 2:00 p.m., he first spoke, asking that all bids be handed in. He then asked his secretary to call the front desk to see if any bids had been turned in there and needed to be brought down the hall into the conference room. This was a normal procedure. In past bids, some bidders left their bids with the receptionist at the front desk.

   
   

7. Prior to obtaining any response from his secretary who was talking on a phone in the conference room, Mr. Gallardo announced his name and position and announced that he was going to open bids. He then picked up a sealed bid from the pile of sealed bids in front of him.

   
   

8. As he was about to open the envelope, at or about 30 seconds past 2:00 p.m., a man entered the conference room and said that he had a bid to deliver. The man disclosed the bidder which he represented, but Mr. Gallardo did not clearly hear the name and did not know whose bid was being offered to him. Mr. Gallardo accepted the bid and placed it at the bottom of the pile.

   
   

9. The late bid was from Intervenor. A few seconds after it was accepted Mr. Gallardo opened the first bid. A few seconds after that, another man entered the conference room and attempted to deliver a bid. Mr. Gallardo refused to accept the bid because, as he explained, the first bid had already been opened.

   
   

10. Mr. Gallardo's practice has consistently been to accept late bids, provided they are delivered prior to the opening of the first bid. Mr. Gallardo had not previously known of Intervenor, which had never previously even submitted a bid on a school job being let for bid by Respondent. Mr. Gallardo's only prior contact with Intervenor's representative who delivered the bid was seeing the man in the building, along with other bidders' representatives, prior to the opening of the bids; however, Mr. Gallardo did not know who the man represented.

    
    

11. There was no fraud or collusion in the acceptance of the late bid. There was no evidence that, under the facts of this case, Respondent abused its discretion in accepting Intervenor's late bid.

    
    

12. Petitioner's bid was lowest among the bids delivered prior to 2:00

    p.m. However, Intervenor's bid was over $500,000 lower than Petitioner's bid on a project costing in excess of $25 million.

    
    

13. Respondent has confirmed Mr. Gallardo's decision not to reject Intervenor's bid as late. On August 16, 1988, Respondent published the agenda for the next school board meeting, which was scheduled for August 23, 1988. One of the items to be taken up was the award of the contract for High School "BB."

    
    

14. By letter dated August 18, 1988, Petitioner declined Respondent's invitation to participate in what the parties referred to as an informal hearing at the August 23 school board meeting. Threatening unspecified sanctions under state and federal law if Respondent awarded the contract at the August 23 meeting, Petitioner demanded a formal hearing and asserted that the bidding process should be stayed until resolution of the protest, under Section 120.5361 [sic -- apparently referring to Section 120.53(5)(c)].

    
    

15. By memorandum dated August 23, 1988, Respondent's attorney opined that Rule 6A-2.016(7) did not require Respondent to utilize the Section 120.53(5) bid

    protest procedures, but, out of an abundance of caution and in the interest of expediting resolution of the dispute, recommended the referral of Petitioner's protest to the Division of Administrative Hearings. By letter dated August 23, 1988, Respondent referred the protest to the Division of Administrative Hearings for a formal hearing.

    
    

    CONCLUSIONS OF LAW

    
    

16. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties. Sections 120.53(5) and 120.57(1), Florida Statutes. The construction of public schools in Florida falls under Chapter 235, Florida Statutes. Pursuant to Section 235.01(2), the State Board of Education is empowered to promulgate rules to implement the provisions of Chapter 35. Rule 6A-2.016(7), Florida Administrative Code, expressly incorporates Section 120.53(5) for the resolution of protests arising from the contract bidding process.

    
    

17. As the low bidder among those bidders timely submitting bids, Petitioner clearly is "adversely affected," within the meaning of Section 120.53(5)(b), if there in fact has been an "agency decision or intended decision." The agency decision probably would have taken place on August 23 a the school board meeting. The record does not reveal any express notice of an intended decision or certainly any Section 120.53(5)(a) warning concerning the consequences of a failure to file a timely notice of intent to protest and protest. Although this warning must accompany all notices of decision or intended decision, Respondent did not provide such notice due to its position that Rule 6A-2.016(7) was inapplicable to the subject bid. Under the circumstances, including Respondent's active defense of its acceptance of Intervenor's late bid, it is evident that, if a contract is awarded, Intervenor will be the successful bidder. The failure of Respondent to provide the Section 120.53(5)(a) warning is inconsequential. No one has suggested that Petitioner filed its notice of intent to protest and protest too late; if anything, they filed too early. Also, other bidders were given notice of the present case and their right to intervene. Petitioner therefore has standing and this bid protest is ripe for resolution.

    
    

18. In Hewitt Contracting Company, Inc. v. Melbourne Regional Airport Authority, So.2d , 13 Fla. Lw. Wkly. 1653 (Fla. 5th DCA 1988), decided on July 18, 1988, the court affirmed the trial court's holding that the agency had the authority to award a contract to a bidder whose bid was delivered anywhere from one to ten minutes late, but prior to the opening of the first bid. The court stated that the agency had the "discretion" to waive the irregularity of the late bid under these circumstances.

1. In Department of Transportation v. Groves-Watkins Constructors, So.2d , 13 Fla. Lw. Wkly. 463 (Fla. 1988) decided on August 18, 1988, rev'g Groves-Watkins Constructors v. Department of Transportation, 511 So.2d 323 (Fla. 1st DCA 1987), the Florida Supreme Court held that the agency lawfully rejected all bids. In reaching its decision, the court stated that the scope of the inquiry, under a Chapter 120 bid protest proceeding, "is limited to whether the purpose of competitive bidding has been subverted." Thus, the hearing officer's "sole responsibility is to ascertain whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly." 13 Fla. Lw. Wkly. at 463.

   
   

2. There is no evidence whatsoever that Respondent abused its discretion in accepting Intervenor's late bid. Intervenor and Respondent had not previously done business. Respondent's representative did not even know whose

bid he was accepting late. Respondent and Mr. Gallardo have consistently allowed late bids to be submitted until the first bid is opened. This practice does not impair the competitiveness of the bidding process. As long as no bids are accepted after the first bid is opened, the tardy bidder runs the risk that the first bid will be opened at the announced time, and he will lose his opportunity to bid. There was no evidence whatsoever of any fraud, arbitrariness, illegality, or dishonesty on the part of Respondent or Mr.

Gallardo in accepting Intervenor's late bid.

RECOMMENDATION

Based on the foregoing, it is hereby RECOMMENDED that a Final Order be entered dismissing the bid protest of Petitioner.

DONE and RECOMMENDED this 15th day of September, 1988, in Tallahassee, Florida.

ROBERT E. MEALE

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 15th day of September, 1988.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-4078BID

Treatment Accorded Petitioner's Proposed Findings of Fact

1. Adopted except to the extent that "timely" implies that Intervenor's bid was improperly accepted. Such an implication is rejected as legal argument.

2 and 4. Adopted in substance.

3. Rejected as irrelevant.

5-7. Rejected as not findings of fact except that the inference of Intervenor's efficient utilization of time following the deadline is rejected as unsupported by the evidence and irrelevant.

8-9. Adopted to the extent relevant. 10-11. Rejected as irrelevant.

12-15. Rejected as subordinate to the procedures set forth in the Invitation to Bid and advertisement, especially concerning the waiver of irregularities.

1. First sentence adopted. Second sentence rejected as recitation of testimony through semicolon and irrelevant as to remainder except that the basis for Mr. Gallardo's decision is adopted and modified to add that he accepted the late bid in accordance win his past practice.

2. Petitioner proved all of the facts in this proposed finding except that it could have used effectively any additional time. In any event, all of the facts in this paragraph are irrelevant and are rejected for this reason.

The theory of Petitioner's case, as well as the evidence that it offered, was that in this and every other major bid, the last minutes before the deadline are

critical due to the unwillingness or inability of subcontractors to supply critical numbers substantially before the deadline. This theory proves too much because, if true, the Hewitt court would have been constrained to consider such a universal fact and thereby would have prevented the agency in that case from accepting the late bid. The Hewitt case stands for the proposition that, in general, an agency may accept late bids before the first bid is opened. It is incumbent upon a frustrated bidder to show that the agency abused its discretion, under the circumstances of the individual case. Petitioner has in essence suggested that the burden is upon the agency to show that it did not abuse its discretion, at least once the frustrated bidder shows that it spent a lot of time and money in preparing its bid and could have used more time. To the contrary, Hewitt tells the frustrated bidder that it must find evidence of impropriety, such as fraud or collusion, in the agency's acceptance of the late bid. This mandate is especially clear in light of the recent Groves-Watkins decision.

18-19 and 22. Rejected as irrelevant. See Paragraph 17.

1. Adopted.

   20A-20F. Rejected as legal argument.

2. First sentence rejected as subordinate and recitation of testimony. Second sentence rejected as speculative.

1. Rejected as speculative and unsupported by the evidence.

2. Rejected as irrelevant and unsupported by the evidence. 24A-27. Rejected as legal argument.

1. Adopted in substance.

2. Rejected as not finding of fact.

Treatment Accorded Respondent/Intervenor's Joint Proposed Findings of Fact 1-2. Adopted.

3-4. Rejected as not finding of fact.

5-6. Adopted in substance. Rejected as irrelevant.

8. Adopted in substance.

9-12. Adopted in substance except that Mr. Gallardo did not arrive in the conference room "several minutes" before 2:00 p.m. and Intervenor's representative arrived about 30 seconds after 2:00 p.m.

13. Rejected as irrelevant. 14-15. Adopted in substance.

1. Rejected as unnecessary.

2. Adopted.

3. Rejected as irrelevant. See Paragraph 17 in Petitioner's proposed findings.

COPIES FURNISHED:

Joseph G. Thresher, Esquire Dykema Gossett

Ashley Tower Suite 1400

100 South Ashley Drive Post Office Box 1050 Tampa, Florida 33601-1050

William M. Rowland, Jr., Esquire Rowland, Thomas & Jacobs, P.A.

1786 North Mills Avenue Orlando, Florida 32803

Scott H. Johnson, Esquire Maguire, Voorhis & Wells, P.A. Two South Orange Avenue Orlando, Florida 32801

James L. Schott Superintendent

Orange County Public Schools Post Office Box 271

434 North Tampa Avenue Orlando, Florida 32802

Honorable Betty Castor Commissioner of Education The Capitol

Tallahassee, Florida 32399

Docket for Case No: 88-004078BID

Orders for Case No: 88-004078BID