STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DEPARTMENT OF TRANSPORTATION. )

)

Petitioner, )

)

vs. ) CASE NO. 91-4077

)

TRAYLOR BROTHERS, INC., ) ARCHER-WESTERN CONTRACTORS, LTD., )

)

Respondents. )

)

RECOMMENDED ORDER OF DISMISSAL WITHOUT PREJUDICE

This matter was considered during a telephone conference call on July 17, 1991, by William R. Dorsey, Jr., the Hearing Officer assigned by the Division of Administrative Hearings.

APPEARANCES

For Petitioner: Reynold D. Meyer, Esquire

Assistant General Counsel Department of Transportation

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399-0458

For Respondents: James E. Moye, Esquire

Moye, O'Brien, O'Rourke, Hogan & Pickert

201 East Pine Street, Suite 710 Orlando, Florida 32801

STATEMENT OF THE ISSUE

The issue is whether the proceeding initiated by the Department to suspend the certificate of qualification of Traylor Brothers, Inc. and Archer-Western Contractors, Ltd. on May 30, 1991, should be dismissed for failure to comply with the Department's own procedural rules.

FINDINGS OF FACT

1. Traylor Brothers, Inc. and Archer-Western Contractors, Ltd. are joint venturers, who successfully bid to construct a portion of the I-95 expansion program in Broward County. Their contract was to widen 5.7 miles of I-95, including a number of bridges.

   
   

2. The contract the Department signed with the joint venturers contained two time-related deadlines, an interim/milestone completion date of 550 days after the Department issued its notice to proceed with the contract, and a contract completion date of 670 days after the joint venturers received the Department's notice to proceed.

3. As is common in such contracts, the joint venturers requested extensions of the contract interim/milestone and contract completion dates. Obtaining such extensions when they are justified is important to the contractor, because a failure to meet those deadlines can result in substantial penalties, including suspension of the contractor's Certificate of Qualification to bid on other contracts, and the imposition of liquidated damages. On February 27, 1990, the resident engineer supervising the project on behalf of the Department of Transportation, James W. Ordway, who is an employee of the engineering firm of Post Buckley, et.al., wrote to the area manager for the joint venturers concerning a completion schedule the joint venturers had submitted on February 12, 1990. Mr. Ordway told the joint venturers that the Department had "agreed to a 35 calendar day extension of the contract milestone [date], but the contract completion [date] was to remain at 670 days". This letter was a response to a request made by the joint venturers for extensions of the milestone date and a final completion date due to subsoil excavation problems. While the February 27, 1990, letter from the Department's engineer agreed to the contract milestone extension, it did not deal with the contract completion date directly, for although the completion date was not extended, the request for extension of the completion date was not squarely denied. The joint venturers emphasized this point in a letter to the Department's District IV Direction of Operations dated March 9, 1990.

   
   

4. The parties have been in negotiations with respect to the effect of subsoil excavation on the completion date for a long time; those negotiations led to an amendment to the construction contract, which bears the title "Supplemental Agreement." It was executed by the parties in March of 1991, the last signature was placed on the Supplement Agreement on March 25, 1991. Paragraph 3 of that agreement, and the language immediately following paragraph

   3 state:

   
   

   (3) The interim milestone date of the contract is hereby extended thirty-five (35)

   calendar days, as agreed to in the Department's letter to the contractor dated February 19, 1990. This time extension does not alter

   the contract duration.

   The contractor takes exception to the adjustments to the contract made by the Engineer for Subsoil Excavation only, but agrees to perform the work and to accept compensation as determined herein by the Engineer without prejudice to any claim related to Subsoil Excavation which the Contractor may submit pursuant to Article 5-12 of the Standard Specifications. The Contractor's exception to the adjustments for Subsoil Excavation shall not constitute notification by the Contractor of his intention to make [a] claim for compensation in addition to the adjustments agreed to in

   this Supplemental Agreement. (Joint Venturers' Supplemental Response to its Motion to Dismiss and Reply to the Department's Response Thereto, Exhibit G.)

   
   

5. On that same day, the joint venturers sent a letter to the resident engineer, Mr. Ordway, which stated

   The Department has extended the milestone date by 35 calendar days for this work.

   The Contractor claims for an extension of the final completion date for the same 35 days. (Id., Exhibit H.)

   
   

6. This request for an extension was consistent with the agreement memorialized in the Supplemental Agreement quoted in Finding 4, above.

   
   

7. The joint venturers received no response to their request for a 35 day extension of the project completion date made in the March 19, 1991, letter before they received the Secretary's notice that the Department intended to suspend the joint venturers' Certificate of Qualification under Rule 14-23, Florida Administrative Code, for unsatisfactory progress on the construction contract "because the allowed contract time for performing the work has expired and the contract work is not complete." (Secretary's letter of May 30, 1991.)

   
   

   CONCLUSIONS OF LAW

   
   

8. The Division of Administrative Hearings has jurisdiction over this matter. Section 120.57(1), Florida Statutes.

   
   

9. The Department is authorized by Section 337.16(1), Florida Statutes (1989) to suspend or revoke a certificate of qualification held by a contractor, if the contractor is delinquent on any pending contracts. The certificate allows the contractor to bid on Department construction projects. Under the statute

   
   

10. A contractor is delinquent when unsatisfactory progress is being made on a construction project or when the allowed contract time has expired and the contract work is not complete. . . Section 337.16(1)(a), Florida Statutes (1989).

    
    

11. The Department has adopted procedural rules governing proceedings to suspend or revoke certificates of qualification under Section 337.16, Florida Statutes (1989). The provision directly applicable here is the final sentence of paragraph (1) of Rule 14-23.031, Florida Administrative Code, which limits the circumstances in which a notice of suspension can be given with this language:

    
    

    Notice of intent to suspend may not be given if a timely filed request for time extension is pending.

    
    

12. By the text of the Supplemental Agreement of March, 1991, the Department and the joint venturers agreed that the joint venturers would be permitted to make a claim related to subsoil excavation. That claim was actually made on March 19, 1991, and under the Supplemental Agreement that claim was timely. No response to that request was made by the Department before the Secretary issued his May 30, 1991, notice of intention to suspend the joint venturers' Certificate of Qualification. Under the Department's own rules, the notice of intent was issued in error, because the Department had not responded to the March 19, 1991, request for an extension of the contract completion date due to the problems with subsoil excavation raised by the joint venturer. The joint venturers raised this procedural defect in their motion to dismiss filed on July 11, 1991. The Department's own rules forbid it from issuing a notice of

    intent to suspend a Certificate of Qualification while a timely request for time extension is pending.

    
    

13. In other contexts this sort of procedural default would not be particularly significant, and the Hearing Officer would be inclined to permit the agency to cure the default by filing its response to the contractor's request for time extension in the course of this proceeding. This proceeding is unusual because the Legislature imposed exceptionally stringent time deadlines for disposing of actions to suspend or revoke Certificates of Qualification. After receiving notice of the Department's intention to take action, the contractor must request a hearing in ten days, and

    
    

    the hearing shall be held within 30 days after receipt by the Hearing Officer of the request for the hearing. Section 337.16(1)(b), Florida Statutes (1989).

    
    

14. Under the Department's procedural rule, neither it nor the contractor will be required to devote the significant resources required to prepare a case for hearing within 30 days when a timely extension request is pending, which could moot any suspension or revocation. This is a reasonable rule, and benefits the contractor as well as the Department. The contractor is entitled to expect the Department to follow its own rule.

    
    

15. The Department did not respond to the March 19, 1990, request for an extension of the contract completion date before the notice of intent to suspend the certificate of qualification was issued, in contravention of the Department's own rule. The appropriate remedy is to follow the Department's rule and dismiss this proceeding. The Department may therefore reconsider whether the joint venturers are entitled to a 35 day extension of the contract completion date for the reasons incorporated in their March 19, 1991, letter. The Department's response may moot this proceeding. If not, the issues will be more carefully framed for a hearing, if one is necessary.

RECOMMENDATION

It is RECOMMENDED that the May 30, 1990, notice of intent to suspend the Certificate of Qualification of the joint venturers be dismissed, without prejudice, for the Department's failure to comply with Rule 14-23.013(1), Florida Administrative Code, one of the Department's own rules.

DONE and ENTERED this 22nd day of July, 1991, at Tallahassee, Florida.

WILLIAM R. DORSEY, JR.

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 22nd day of July, 1991.

COPIES FURNISHED:

Reynold D. Meyer, Esquire Department of Transportation 605 Suwannee Street, MS-58

Tallahassee, Florida 32399-0458

James E. Moye, Esquire Moye, O'Brien, O'Rourke,

Hogan & Pickert Suite 710

Southeast Bank Building

201 East Pine Street Orlando, Florida 32801

Ben G. Watts, Secretary Department of Transportation Haydon Burns Building

605 Suwannee Street

Tallahassee, Florida 32399-0458 ATTN: ELEANOR F. TURNER, MS #58

Thornton J. Williams, General Counsel Department of Transportation

562 Haydon Burns Building 605 Suwannee Street

Tallahassee, Florida 32399-0458

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: 91-004077

Orders for Case No: 91-004077