STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

LAKE PLUMBING, INC. )

)

Petitioner, )

)

vs. ) CASE NO. 91-2423BID

) ORANGE COUNTY SCHOOL BOARD, )

)

Respondent. )

)

FLORIDA MECHANICAL, INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, final hearing in the above-styled case was held in Orlando, Florida, on June 3, 1991, before Robert E. Meale, Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

The parties were represented at the hearing as follows: For Petitioner: Lawrence J. Phalin

Mateer, Harbert & Bates, P.A.

P.O. Box 2854

Orlando, Florida 32802-2854

For Respondent: William M. Rowland

Rowland, Thomas & Jacobs, P.A. 1786 N. Mills Ave.

Orlando, Florida 32803

For Intervenor: Thomas H. Justice III

Shutts & Bowen

20 North Orange Ave., Ste. 1000 Orlando, Florida 32801

STATEMENT OF THE ISSUES

The Issue in this case is whether the subject bid protest should be sustained.

PRELIMINARY STATEMENT

On February 25, 1991, Respondent issued a Notice of Intended Decision to accept the bid of Intervenor for the replacement of air conditioning at Apopka High School. Petitioner filed a Notice of Protest and Formal Written Protest challenging the decision and requesting a formal hearing.

At the hearing, Petitioner called four witnesses and offered into evidence seven exhibits. Respondent and Intervenor each called one witness, and Intervenor offered into evidence two exhibits. The parties were given additional time within which to file the drawings that accompanied the invitation to bid. These drawings were filed June 12, 1991. All exhibits were admitted into evidence.

The transcript was filed June 25, 1991. Each party filed a proposed recommended order. Treatment of the proposed findings is detailed in the appendix.

FINDINGS OF FACT

1. On January 22, 1991, Respondent issued Specifications for Replacement of Air Conditioning, Apopka School, Apopka, Florida. The specifications were contained in a spiral-bound book, which contained bidding and contract requirements and technical descriptions of mechanical systems and electrical systems. A set of drawings dated January 22, 1991, accompanied the spiral-bound book. Collectively, these documents constitute the invitation to bid (ITB). 1/

   
   

2. The ITB announced that Respondent would receive bids for the replacement of air conditioning and related systems until February 11, 1991, which evidently was later extended to February 19. The ITB scheduled a pre-bid conference on January 31, 1991.

   
   

3. Section A-3.6 of the ITB provides:

   
   

   For clarity of description and as a

   of comparison, certain equipment, materials, etc., have been specified by trade names or manufacturers. To insure a uniform basis for bidding, the Bidder shall base his Proposal on the particular system, equipment or material specified. After the contract is let, other equipment, materials, etc., as manufactured by other manufacturers may be accepted only if, in the opinion of the Engineer, same is equivalent in quality and workmanship and will perform satisfactorily in its intended purpose.

   
   

4. Section A-3.8 of the ITB states:

   
   

   Except as provided in Paragraph A3.(3, above each bidder represents that his bid is based upon the materials and equipment described in the [ITB]. Prior approval of substitution of other materials and equipment will be considered if written request is submitted to the Engineer for approval at least twelve days prior to the date for receipt of bids.

   
   

   If the Engineer approves any such proposed substitution, such approval will be set forth in an Addendum and will be forwarded to all bidders . . .. If any bidder is unable to

   procure written approval of any substitution from the Engineer prior to the opening of bids, he shall base his bid on the Exact items specified; if said bidder wishes to bid substitutes, he must then do so as alternates to the base bid, and so note.

   Each such alternate submitted shall include a complete description of the proposed substitute, the material or equipment for which it is to be substituted, drawings, cut sheets, performance or test data

   other data or information necessary for a complete evaluation. If additional information is required by the engineer for a complete evaluation, in his sole judgment, the Contractor shall submit such additional information as required within five (5) days of such notification, or the Alternate will not be considered.

   
   

   Alternates requested on the Bid Proposal Form which are approved for construction will be incorporated into the contract with the successful bidder. Alternates offered by the Bidder may be accepted and incorporated into the contract with the successful bidder. Any Substitutions which are felt by the Bidder to offer significant additional value and advantage to the Owner are encouraged to be submitted as Alternates with the Bid Proposals.

   
   

5. Section A-14.1 contains the bid form. The first blanks are reserved for the Base Bid. Alternate #1 is for the installation of a variable air volume system, which permits localized control of air flow and temperature. Alternate #2 is for reciprocating chillers. The remaining alternates are irrelevant to this case. The bid form states that Respondent may "award such alternates that in its judgment will be for the best interest of [Respondent]."

   
   

6. Section 1.01 of the General Requirements, which are part of the ITB, describe the work of the contract as Installing "nominal 200 ton air cooled reciprocating chillers" and related equipment. Section 1.03 A. of the Basic Mechanical Requirements, which are part of the ITB, states that the "plans and specifications are a general description of the work to be performed."

   
   

7. Sections 2.01 under "Pumps" and "Motor," which are parts of the ITB, list several "acceptable manufactuiers" for pumps and motors. Elsewhere the ITB also lists varibus acceptable manufacturers for different types of equipment. Sometimes, as in the case of motors, the specifications describing the particular item of equipment expressly allow substitutions upon "prior approval of required submittal data by Engineer." Sometimes, as in the case of pumps, the specifications describing the particular item of eguipment are silent as to substitutes.

   
   

8. Section 2.01 of Air Cooled Water Chillers, which is part of the ITB, describes "acceptable manufacturers" as follows:

   1. Base Bid: Bohn Heat Transfer/Wickes Manufacturing Co., air cooled screw chilled.

   2. Alternate Bid: Carrier Corp, air cooled reciprocating chiller.

   3. Other Alternates: Only as approved by Engineer.

      
      

9. Section 2.02 B. requires that the contractor provide "three (3) nominal

   200 ton air cooled water chillers" meeting certain technical specifications not relevant to this case. Section 2.03 A. sets forth requirements for reciprocating chillers, and Section 2.03 B. sets forth requirements for screw chillers.

   
   

10. On page M-8 of the drawings included in the ITB, the "air cooled chiller schedule" notes "Bohn" as the manufacturer and provides a model number for the Bohn chiller. The schedule states that the cooling capacity of the chiller is 194.7 tons.

    
    

11. The cooling capacity stated in the schedule was intended to describe the cooling capacity of the Bohn model air chiller noted in the schedule. The capacity of a chiller depends upon various factors, including ambient air temperature. Under certain operating conditions, the Bohn chiller noted IA the schedule operates at a 200 ton capacity, and no evidence suggests that this model chiller was not a nominal 200 ton chiller.

    
    

12. General Note 13 on page M-7 of the drawings states:

    
    

    This contractor shall base his proposal upon the equipment as scheduled or specified, using the manufacturers and model numbers as called for in the specification and scheduled on the drawings. (Add alternate design is separate). If more than one manufacturer of equipment is specified, any one of the manufacturers of equipment may be used in this contractor's proposal. If this contractor wishes to use equipment not specified he must, at the time of bidding, submit separately on letterhead stationery of the bidder, the equipment he would substitute and the cost to be added or deducted from his proposal.

    
    

13. On February 11, 1991, Respondent issued Addendum #2 to the ITB. 2/ Among other things, Addendum #2 adds to Section 2.01 A. of Air Cooled Water Chillers: "ADD Trane Co. Model No. RTAA-200 as an approved Base Bid unit for the air cooled screw chillers.

    
    

14. Petitioner picked up the ITB on February 18, 1991. Petitioner and Intervenor submitted timely bids by the deadline of February 19. Each bidder was qualified and each bid was responsive. 3/

    
    

15. Petitioner's base bid was $1,539,000. Alternate #1, which was the variable air volume system, added $120,307. Alternate #2, which was the reciprocating chiller, subtracted $41,424. Next to Alternate #2 on the form, Petitioner wrote in, "Carrier." With Alternate #1 only, Petitioner's bid was

    $1,659,307. Alternate #1 and 2 were $1,617,883. With Alternate #2 only, Petitioner's bid was $1,497,576.

    
    

16. Intervenor's base bid was $1,547,300. Alternate #1 added $109,000. Alternate #2 subtracted $25,000. With Alternate #1 only, Intervenor's bid was

    $1,656,300. Alternate - 1 and 2 were $1,631,300. With Alternate #2 only, Intervenor's bid was $1,522,300.

    
    

17. Following review of the bids, Respondent's Engineer sent a letter dated February 25, 1991, to Respondent's director of construction. The letter recommends the acceptance of Alternate #1 because the cost is within Respondent's budget and the benefit of increased comfort is worth the cost.

    
    

18. The Engineer's letter also recommends that Alternate #2 (as well as Alternate #3 regarding a certain type of dampers) be rejected. The letter explains: "Discussions with [Respondent's] personnel in the days prior to bid time indicate that the use of these chillers has liabilities attached (principally noise and maintenance requirements) in excess of the savings in first cost.

    
    

19. The Engineer's letter concludes that Respondent should award the contract to Intervenor because of its apparent low bid of $1,656,300 on the Base Bid with Alternate #1. The Engineer notes that the award would result in the installation of an "essentially identical system" as that installed in another high school in the district, which would save costs in training and parts inventory.

    
    

20. Following Respondent's decision to award the contract to Intervenor, Petitioner timely filed a written protest and formal written protest concerning Respondent's intended decision to award the contract to Intervenor. Although the record is not entirely clear, it does not appear that Petitioner filed, within three days of receipt of the ITB, a written protest of the specifications.

    
    

21. A chiller cools water used for air conditioning. An important part of the chiller is the compressor. The reciprocating compressor operates with pistons in a back-and- forth movement. The screw compressor operates with a screw that churns continually in one direction.

    
    

22. Reciprocating compressors, which are the older technology, contain more components, including motors, than the screw compressors, which have been available for abort ten years. The life expectancy of the screw compressor is about three to four years longer than that of the reciprocating compressor.

    
    

23. Evidently, little data are yet available comparing the life cycle costs of the reciprocating and screw air chillers. Given the mechanical actions and numbers of parts of the compressors, as well as Respondent's experience with, screw compressors, Respondent's projection of lower costs with the screw chiller is not unreasonable.

    
    

24. Respondent included the reciprocating chiller alternate in the ITB because of concerns that the project would cost more than Respondent had available to spend. The same motivation prompted the inclusion of Alternate #1 for the variable air volume system. Once the bids were received, Respondent determined that it could afford the enhancements of a screw chiller and variable air volume system and consequently selected the lowest bid for this package.

    CONCLUSIONS OF LAW

    
    

25. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties. Sections 120.53(5) and 120.57(1), Florida Statutes. (All references to Sections are to Florida Statutes.)

    
    

26. In Liberty County v. Baxter's Asphalt & Concrete, Inc., 421 So. 2d 505 (Fla. 1982), an invitation to bid solicited bids for two mutually exclusive types of asphalt. Alternate A required asphaltic concrete and Alternate B required sand asphalt. The invitation to bid directed each bidder to bid each alternate, but the package sent to Gulf Asphalt omitted the page containing this requirement. Baxter's Asphalt submitted the low bid for Alternate A and the second lowest bid for Alternate B. Gulf submitted the lowest bid for Alternate B, but failed to bid Alternate A. Gulf's bid for Alternate B was lower than Baxter's bid for Alternate A.

    
    

27. The County elected Gulf's bid and waived the minor irregularity of the omission of a bid for Alternate A. Baxter's was denied an injunction in circuit court, but this decision was reversed by the district court of appeal.

    Reversing the district court, the supreme court held that the County could not be enjoined from entering into a contract with Gulf. The court stated:

    
    

    a public body has wide discretion in soliciting and accepting bids for public improvements and its decision, when based oh 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.

    
    

    421 So. 2d at 507. The Court stressed that there was no evidence of "illegality, fraud, oppression or misconduct" on the part of the County or Gulf. Id.

    
    

28. In Department of Transportation v. Groves-Watkins Constructors, 530 So. 2d 912 (Fla., 1988), the court reapplied Liberty County to a case in which the agency had rejected all bids, rather than selected one, and the fact-finding took place in an administrative proceeding before the Division of Administrative Hearings, rather than a circuit court, injunction action.

    
    

29. Restating the "strong judicial deference accorded an agency's decision in competitive bidding situations," 530 So. 2d at 913, the court addressed the "procedural mechanism [in Section 120.53(5)] for challenging an agency's decision to award or reject all bids." 530 So. 2d at 914. The court stated:

    
    

    the scope of the inquiry is limited to whether the purpose of competitive bidding has been subverted. In short, the hearing officer's sole responsibility is to ascertain whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly. Id.

    
    

30. There is no evidence that Respondent acted fraudulently, arbitrarily, illegally, or dishonestly.

    
    

31. The Bohn screw chiller is a "nominal 200 ton air cooled chiller." On its face, Intervenor's bid does not even indicate whether it employs the Bohn or

    Trane screw chiller, and nothing in the ITB requires such identification. Even if Intervenor's bid named the Bohn chiller by model, the chiller meets the specifications of the ITB. If a bid does not deviate from the specifications, there can be no question that the agency may have illegally misconstrued a material variance as a minor irregularity. No variance or irregularity exists as to the Bohn

    model in question. 4/

    
    

32. There is no evidence that Respondent interpreted the ITB in a manner that was arbitrary, illegal, or beyond the realm of fair debate. To the contrary, Respondents interpretation of the ITB and selection of Intervenors bid were entirely reasonable.

    
    

33. The ITB provides for two types of alternates. The first type represents system enhancements or variations Specified by Respondent. The two relevant examples of this type are the air volume system, which is Alternate #1, and the reciprocating chiller, which is Alternate #2.

    
    

34. The second type of alternate represents equipment substitutes that a bidder may offer in its bid in place of the equipment identified by the ITB by manufacturer and sometimes model. A bidder may obtain Respondent's advance approval to a substitute; in such cases, such as with the Trane screw chiller, Respondent issued an addendum. A bidder unable to secure advance approval may nonetheless bid substitute equipment by use of this second type of alternate. The ITB describes how and when Respondent would determine if the substitute equipment were satisfactory. /5

    
    

35. Any confusion experienced by Petitioner as to the two types of alternates is not attributable to the ITB. The presence of Alternate #2 notifies bidders that Respondent may select a screw chiller or a reciprocating chiller, regardless whether one class of chiller is less expensive than the other class. Nothing in the ITB allows a bidder, offering different equipment by means of the second type of alternate, to deprive Respondent of the right to make this choice between systems. In other words, nothing in the ITB suggest that a bidder may "substitute" a reciprocating chiller for a screw chiller on the Base Bid.

    
    

36. Moreover, nothing in the record suggests that Petitioner was precluded from bidding any screw chiller or the Bohn chiller in particular or that Respondent tried in any way to restrict the bidding to particular manufacturers or bidders. The approval processes available before and after bid submittals ensured the widest possible participation of manufacturers while still giving bidders the security of knowing in advance of bidding that certain equipment was acceptable to Respondent.

    
    

37. Petitioner complains that Respondent failed to disclose in the ITB its preference for a screw chiller, provided budgetary constraints did not prevent such a purchase. But Petitioner had a chance to bid a screw chiller and did so. Nothing in the record implies that Petitioner would have prepared a more competitive Base Bid had it known Respondent's preference for the screw chiller.

    
    

38. Ignoring the emphasis placed upon the screw chiller by its inclusion in the Base Bid, the use of system alternates (i.e., alternates of the first type) informs all bidders that an agency may select a bid for one of the alternates, even though a bid for another alternate were lower. Barring bid requirements of the type in Liberty County, a bidder is free not to bid any system alternate or not to bid its most competitive price on one system

    alternate. By so doing, of course, the bidder runs the risk that the system alternate disfavored by the bidder will be the one favored by the agency.

    
    

39. In a straightforward procurement such as here, an agency certainly is not compelled to include in the invitation to bid a complex matrix of costs and benefits concerning various system alternates, so that the selection of a responsive bid, even among different system alternates, is merely a matter of executing an algorithm. Nor is an agency compelled to express its preference for one alternate subject to budgetary limitations.

    
    

40. Although a cost-benefit matrix or simple disclosure of preference would undeniably be useful to bidders, the actions of Respondent must be evaluated by the deferential measures established by the Liberty County and Groves-Watkins decisions. The question is whether an agency has acted dishonestly, fraudulently, illegally, or arbitrarily. If not, its decision may not be disturbed, notwithstanding fair debate concerning the reasonableness of the decision.

    
    

41. For the reasons set forth above, Petitioner's challenge fails on its merits. In addition, Respondent argues that Petitioner's challenge is untimely in any event

    
    

42. Section 120.53(5)(b) states:

Any person who is affected adversely by the agency decision or intended decision shall

file with the agency a notice of protest in writing within 72 hours after the posting of the bid tabulation or after receipt of the notice of the agency decision or intended decision and shall file a formal written protest within 10 days after the date he filed the notice of protest. With respect to a protest of the specifications contained in an invitation to bid or in a request for proposals, the notice of protest shall be filed in writing within 72 hours after the receipt of notice of the project plans and specifications or intended project plans and specifications in an invitation to bid or request for proposals, and the formal written protest shall be filed within 10 days after the date the notice of protest is filed.

Failure to file a notice of protest or failure to file a formal written protest shall constitute a waiver of proceedings under this chapter.

1. Respondent reasons that Petitioner's challenge is directed toward the specifications contained in the ITB and is untimely in the absence of a timely notice of protest. Petitioner responds than it is challenging the ITB as applied and not facially. Thus, according to Petitioner, the deficiencies in the ITB did not emerge until Respondent interpreted it and decided to award the contract to Intervenor.

   
   

2. Any challenge based on the inadvertent and harmless misdescription of the nature of the work contained in the General Requirements, where a

   typographical error in the ITB mistakenly says the work is for the installation of a reciprocating chiller, is a challenge to the specifications. Such a challenge must be filed within 72 hours of receipt of the ITB or else it is waived. The same is true with respect to the challenge to the named Bohn model as failing to meet the specification for a "nominal 200 ton" chiller. These are exactly the types of ambiguities that should be resolved as soon as possible, for everyone's benefit. /7

   
   

3. It is more difficult to characterize the remainder of Petitioner's challenge. However, after careful review of the ITB and other evidence, it appears that Petitioner's challenge more closely resembles a protest of the specifications than a protest to some other intended decision of Respondent, such as the tentative award.

RECOMMENDATION

Based on the foregoing, it is hereby

RECOMMENDED that the Orange County School Board enter a final order dismissing the bid protest of Lake Plumbing, Inc.

ENTERED this 5th day of July, 1991, in Tallahassee, Florida.

ROBERT E. MEALE

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 5th day of July, 1991.

ENDNOTES

1/ Section A-3.7, ITB.

2/ Addendum #1 was irrelevant to the case.

3/ The parties stipulated to the responsiveness of Petitioner's bid.

Prehearing Stipulation filed June 3, 1991, p. 15. By so doing, the parties disposed of any questions concerning Petitioner's failure to attend the bidders' conference and failure to advertise for minority subcontractors.

4/ The reference in Section 1.03 A. of the General Requirements to a reciprocating chiller is a typographical error that neither did nor could have misled any bidders. Numerous references throughout the ITB to the screw chiller alerted even the most casual reader of the document that the nature of the work had been inadvertently misdescribed one time in the General Requirements.

5/ The ITB also permits the substitution of equipment following the award, but this procedure is not relevant to the present case except as evidence of the degree of freedom accorded bidders as to the specific equipment to be used.

6/ This sentence was added by Section 35, Chapter 90-302, Laws of Florida, effective July 3, 1990. Section 37, Chapter 90-302, Laws of Florida.

7/ Unfortunately, it may not be possible to resolve such disputes prior to bid opening. In cases where a bidder does not pick up the invitation to bid until a day before bid such as took place here, the time for filing a specifications protest will not have expired prior to the bid opening or, if the agency immediately announces its intended decision, prior to the tentative award.

APPENDIX TO RECOMMENDED ORDER CASE NO. 91-2423BID

Treatment Accorded Proposed Findings of Petitioner 1: adopted.

2: first two sentences adopted. Remainder rejected as irrelevant.

3: adopted in substance.

4: adopted except for last sentence. Last sentence rejected as unsupported by the greater weight of the evidence.

5: adopted.

6: rejected as subordinate.

7: adopted in substance. Respondent rejected the reciprocating chiller when it elected to choose among bids for the screw chiller.

8: adopted.

9-10: adopted except for last sentence. Although it appears that the Bohn and Trane chillers were the only options, the record does not support such a finding. In addition, given the equal access of Petitioner and Intervenor to the Bohn chiller, it is unclear what legal significance would attach to a finding that the Bohn chiller were the only one available.

11: rejected as legal argument and irrelevant and, to the extent a finding, unsupported by the greater weight of the evidence.

12-13: adopted in substance.

14: rejected as unsupported by the greater weight of the evidence and irrelevant in view of the conclusions as to the untimeliness of the protest of specifications.

15: adopted as to the contents of the Engineer's letter to the director of construction. The Engineer's reasoning was superfluous. The ITB notified bidders that Respondent was free to choose either system. If a system were so deficient as to make it improper for Respondent even to consider it, such a challenge was required to me made within three days of receipt of the ITB. Further, nothing in the present facts suggests that the screw chiller was unreasonably preferred by Respondent.

16-17: rejected as irrelevant. 18: rejected as recitation of testimony. 19: adopted.

20: rejected as recitation of evidence. 21: rejected as irrelevant.

22: rejected as unsupported by the greater weight of the evidence and legal argument.

23-25 (first sentence): adopted.

25 (remainder): rejected as recitation of testimony.

25: first sentence adopted. Remainder adopted in substance. Respondent rejected the reciprocating chiller when it elected to choose among bids for the screw chiller.

Treatment Accorded Proposed Findings of Respondent and Intervenor

1-2: adopted.

3: rejected as irrelevant because Respondent waived these items as minor irregularities.

4: adopted.

5: rejected as irrelevant. 6-10: adopted.

11: rejected as irrelevant. 12-16: adopted in substance.

17: rejected as recitation of evidence. 18-21: adopted in substance.

COPIES FURNISHED:

Lawrence J. Phalin

Mateer, Harbert & Bates, P.A.

P.O. Box 2854

Orlando, FL 32802-2854

William M. Rowland

Rowland, Thomas & Jacobs, P.A. 1786 N. Mills Ave.

Orlando, FL 32803

Thomas H. Justice III Shutts & Bowen

20 N. Orange Ave., Ste. 1000 Orlando, FL 32801

James L. Schott, Superintendent The School Board of Orange County

P.O. Box 271

Orlando, FL 32802-0271

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 91-002423BID

Orders for Case No: 91-002423BID