STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GREAT ATLANTIC BOILER SERVICES, ) INC., )

)

Petitioner, )

)

vs. ) CASE NO. 92-0537B1D

)

DEPARTMENT OF CORRECTIONS, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by it duly designated

Hearing Officer, Donald R. Alexander, on February 12, 1992, in Tallahassee, Florida.

APPEARANCES

For Petitioner: William Stewart (qualified rep.)

1721 Egner Street

Jacksonville, Florida 32206

For Respondent: Steven S. Ferst, Esquire

2601 Blairstone Road

Tallahassee, Florida 32399-2500 STATEMENT OF THE ISSUES

The issues are whether Keller and Associates, Inc.'s response to Bid No. 91-FSP-5446 was nonresponsive, and if so, whether respondent's acceptance of the same was unlawful.

PRELIMINARY STATEMENT

This matter began on January 13, 1992, when petitioner,

Great Atlantic Boiler Services, Inc., filed its written protest to an award of a contract by respondent, Department of Corrections (DOC). The contract called for the successful firm to install a new boiler at the Florida State Prison near Raiford, Florida.

According to the written protest, the apparent successful bidder, Keller and Associates, Inc. (Keller), was ineligible to perform the work since it was not certified by the American Society of Mechanical Engineers to install a new boiler. Rather, the protest alleged that Keller was certified only to make repairs to an existing unit and thus was unqualified to perform the job.

The matter was referred by respondent to the Division of Administrative Hearings on January 29, 1992, with a request that a hearing officer be assigned to conduct a formal hearing. By notice

of hearing dated January 30, 1992, a final hearing was scheduled on February 12, 1992, in Tallahassee, Florida.

At final hearing, petitioner was represented by its manager, William Stewart, who also gave testimony on its behalf.

In addition, it offered petitioner's exhibits 1-6. All exhibits were received in evidence. Respondent presented the testimony of Gene H. McCampbell, a DOC professional engineer and accepted as an expert, and Ted L. Keller, president of Keller and Associates, Inc., and accepted as an expert. Also, it offered respondent's exhibits 1-7. All exhibits were received in evidence.

The transcript of hearing was filed on February 17,

1992. Proposed findings of fact and conclusions of law were due no later than February 27, 1992, and were timely filed by respondent. None were filed by petitioner. A ruling on each proposed finding of fact is made in the Appendix attached to this Recommended Order.

FINDINGS OF FACT

Based upon all of the evidence, the following findings of fact are determined:

1. On December 19, 1991, respondent, Department of Corrections (DOC), issued an invitation to bid (ITB) to various firms inviting them to submit price proposals for the installation of a new high temperature water boiler at Florida State Prison near Raiford, Florida. The ITB is more specifically identified as Project No. PG-05-RR or Bid No. 91-FSP-5440. The potential bidders were advised that their bids must be filed no later than 11:00 a.m. on January 10, 1992, and that the responses would be opened the same date.

   
   

2. The number of vendors filing responses to Bid No.

   91-FSP-5440 is not of record. However, timely responses were filed by petitioner, Great Atlantic Boiler Services, Inc. (Great Atlantic or petitioner), a firm located at 1721 Egner Street, Jacksonville, Florida, and Keller and Associates, Inc. (Keller), a firm located at 2810 Security Lane, Lakeland, Florida. The record indicates that Keller's total bid of $191,960 was $7,440 less than the bid submitted by petitioner ($199,400), and accordingly DOC announced its intention of awarding the contract to Keller, the lowest responsive bidder. Claiming that Keller was not qualified to perform the work required under the contract, petitioner filed its written protest on January 13, 1992.

   
   

3. In 1959, the Florida State Prison purchased and installed two high temperature water boilers. However, boiler

   number one has been out of service for the last seventeen years and the second unit, although in operating condition, is in need of repairs. For this reason, DOC intends to replace the inoperable unit and to have needed repair work performed on the second unit.

   
   

4. Pursuant to Rule 4A-51.010, Florida Administrative Code, various technical codes have been adopted by the Department of Insurance and govern the design, fabrication, installation and repair of new and existing boilers and pressure vessels. As to new

   boilers and associated pressure piping, the American Society of Mechanical Engineers (ASME) has promulgated the ASME Boiler and Pressure Vessel Code and the ASME Power Piping Code. As to repair work on existing units, The National Board of Boiler and Pressure Vessel Inspectors (NBBPVI) has promulgated the Inspection Code - 1987 edition, as amended. In addition, both technical bodies issue certificates of authorization in the form of stamps which authorize the holder to perform designated types of functions. More specifically, the ASME issues an ~"S" stamp and a "PP" stamp which pertain to certifications required for the boiler and external piping portions of the boiler system. The NBBPVI issues an "R" stamp which authorizes the holder to make repairs to existing units. The parties agree that petitioner holds the S and PP stamps while Keller holds only an R stamp.

   
   

5. Pursuant to the above two ASME codes, boilers are separated into three components. First, there is the boiler unit (steam drum) and the flange or stub welded to the drum, which generally sit on a concrete pad. Second, there is the external piping which runs from the flange (a part of the boiler unit) to the first valve closest to the boiler proper. It should be noted here that it is possible to attach the boiler directly to the first valve, which would eliminate the need for any boiler external piping. Finally, there is nonboiler external piping which runs from the valve and beyond and generally constitutes the piping for the distribution system.

   
   

6. Jurisdiction under the two ASME codes is either of

   an administrative or technical nature. Administrative jurisdiction includes, among other things, stamping while technical jurisdiction covers design considerations, material specifications, dimensional requirements and the like. However, stamps are specific elements only of the ASME Boiler and Pressure Vessel Code. Since the ASME Boiler and Pressure Vessel Code has administrative jurisdiction over the boiler unit and external piping, S and PP certifications are required for those two components. Such certifications indicate that the boiler and boiler external piping were constructed and manufactured in compliance with the code. The nonboiler external piping is subject to the administrative and technical jurisdiction of the ASME Power Piping Code and thus no stamping is required for that component.

   
   

7. In lieu of obtaining stamps, a contractor may purchase prefabricated parts of the boiler system that already have the necessary S and PP stamps affixed thereto by the manufacturer.

   Indeed, section 104.1 of the ASME Boiler and Pressure Vessel Code provides that the manufacturer shall have the duty of compiling proper code certification covering all parts of a field-assembled

   boiler and to prepare appropriate report forms of such certification. Further, section 109.1 of the same code provides

   that the boiler external piping may be fabricated by a manufacturer provided the manufacturer has been issued the S and PP stamps. If the parts are purchased in that manner, any contractor, including Keller, may install the new, already-stamped and certified, prefabricated parts without possessing the S and PP stamps.

8. Section B-2 of the specifications provides that the low bidder must be "authorized to perform the work required by these documents in accordance with the applicable provisions of Florida Statutes governing contractors, as a contractor; and possess an "R" stamp from the American Society of Mechanical Engineers (ASME) to work on high temperature hot water piping

   systems." In drafting the above provision, it was DOC's intention that a prefabricated unit and associated boiler external piping with all necessary stamps could be purchased by the successful bidder and thus the contractor would not need the S and PP stamps. In this case, Keller intends to install a boiler proper and external piping, if necessary, with the appropriate stamps from the manufacturer. Therefore, Keller was a responsive bidder under the ITB. Finally, the R stamp was placed in the specifications only because DOC wanted to hire a contractor who could do repairs on the second boiler unit, if necessary, while the contractor was already on the site. As a holder of an R stamp, Keller is qualified to do the repair work.

   
   

9. Although petitioner correctly interpreted the specifications to mean that all ASME codes must be satisfied, it

   erroneously concluded that the successful bidder must possess S and PP stamps in order to perform work under the contract. As noted earlier, the use of certified (stamped) parts negates the requirement that the successful contractor possess these stamps.

   Petitioner also contended that the specifications were in error because the ITB required the R stamp as a part of the vendor's qualifications. Again, as noted above, the R stamp was not included in the ITB to qualify the successful vendor but was intended only as a requirement in the event repair work on the second unit would be performed by the same vendor. Thus, even if the R stamp was not included in the ITB, Keller would still be qualified to work on the project. In any event, petitioner did not timely challenge or question any of the specifications as required by Subsection 120.53(5)(b), Florida Statutes, and thus it waived its right to challenge them.

   
   

10. Although not raised in the pleadings, petitioner

    also asserted at hearing that the manufacturer or supplier of the boiler external piping is in actuality a subcontractor, and (a) Keller erred by not identifying the manufacturer as a subcontractor in its bid response, and (b) Keller is now precluded from changing its response to reflect the manufacturer as its subcontractor.

    However, aside from the fact that it is possible to install the system without external piping, the more persuasive and logical evidence supports a finding that a manufacturer is not a subcontractor within the meaning of the specifications, and a bidder has no obligation to identify it as such.

    
    

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties hereto pursuant to Subsection 120.57(1), Florida Statutes (1991).

    
    

12. As the party challenging the award of the contract, Great Atlantic must prove by a preponderance of the evidence that

    DOC's action was improper. Cf. Capeletti Bros., Inc. v. State, Department of General Services, 432 So.2d 1359, 1363-64 (Fla. 1st DCA 1983) (no error in requiring challenging party in bid proceeding to bear burden of proving agency action incorrect).

    
    

13. Two broad principles govern this controversy. First, as a general rule, the scope of inquiry in a bid proceeding is limited to determining "whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly." Department of Transportation v. Groves-Watkins Constructors, 530 So.2d 912, 914 (Fla. 1988). See also, Scientific Games, Inc. v. Dittler Brothers, Inc., 586 So.2d 1128, 1131 (Fla. 1st DCA 1991). Thus, the undersigned is required to honor the rule that a public body has "wide discretion" in the bidding process and its decision, when based on an honest exercise of the discretion, should not be overturned "even if it may appear erroneous and even if reasonable persons may disagree." Id. at 1131. Second, a party challenging the specifications in an invitation to bid must file its written protest to the specifications within seventy-two hours after receipt of the project plans and specifications. Subsection 120.53(5)(b), F. S. (1991). A failure to do so constitutes a waiver of a party's right to challenge such specifications. Capelletti Brothers, Inc. v. Department of Transportation, 499 So.2d 855, 857 (Fla. 1st DCA 1986).

    
    

14. The preponderance of the evidence supports a conclusion that Keller was a responsive bidder and did not need to hold the S and PP stamps in order to perform the work under the contract. Thus, there was no showing that DOC acted fraudulently, arbitrarily, illegally or dishonestly in accepting Keller's bid. In addition, to the extent petitioner may disagree with the specifications in the ITB, by failing to timely file a protest to the specifications, it waived its right to do so. This being so, it is concluded that the protest of Great Atlantic should be dismissed, and a final order entered awarding the contract to Keller.

    
    

15. Finally, on February 26, 1992, or two weeks after the final hearing was concluded, respondent filed a motion for

attorney's fees and expenses pursuant to Subsection 120.57(1)(b)5., Florida Statutes (1991) on the theory that petitioner filed its bid protest for an "improper purpose" within the meaning of the law.

Because such a request must be "promptly" asserted by the moving party, Mercedes Lighting and Electrical Supply, Inc. v. Department of General Services, 560 So.2d 272, 277 (Fla. 1st DCA 1990), the motion is hereby denied.

RECOMMENDATION

Based on the foregoing findings of facts and conclusions of law, it is,

RECOMMENDED that a final order be entered by respondent awarding the contract on Project No. PG-05-RR to Keller and Associates, Inc.

DONE and ENTERED this 3rd day of March, 1992, in Tallahassee, Florida.

DONALD R. ALEXANDER

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 3rd day of March, 1992.

APPENDIX

Respondent:

1-2. Partially adopted in finding of fact 1.

1. Partially adopted in finding of fact 3.

2. Partially adopted in finding of fact 1.

5-10. Partially adopted in finding of fact 2.

Note - Where a proposed finding has been partially adopted, the remainder has been rejected as being irrelevant, unnecessary, subordinate, not supported by the evidence, redundant, or a conclusion of law.

COPIES FURNISHED:

Mr. William Stewart, Manager

Great Atlantic Boiler Services, Inc. 1721 Egner Street

Jacksonville, Florida 32206

Steven S. Ferst, Esquire 2601 Blairstone Road

Tallahassee, FL 32399-2500

Harry K. Singletary, Jr., Secretary Department of Corrections

2601 Blairstone Road

Tallahassee, FL 32399-2500

Louis A. Vargas, Esquire 2601 Blairstone Road

Tallahassee, FL 32399-2500

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 top 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: 92-000537BID

Orders for Case No: 92-000537BID