Drake and Robert C. Wilson, and had exhibits numbered 1-6 admitted. Joint exhibit 1 was also admitted.
No transcript of the hearing was filed. Both parties filed proposed recommended orders which were considered in the preparation of this Recommended Order. The proposed findings of fact are ruled upon either directly or indirectly as reflected in this Recommended Order, and in the Appendix which is attached and hereby made a part of this Recommended Order.
On March 25, 1992, the School Board of Collier County ("School Board") issued an invitation to bid ("ITB") on the construction of an elementary school in Naples, Florida, identified as Elementary School "D", Bid #84-3/92.
Pursuant to School Board Rule No. R-03/89, potential bidders for proposed projects with a construction cost in excess of $50,000 must be prequalified by the School Board. The prequalification procedure is designed to provide the School Board with a responsible successful bidder.
The School Board considers prequalification applications at regularly scheduled board meetings. Contractors are required to submit applications at least two weeks prior to the board meeting at which the application receives consideration.
By application dated April 13, 1992, and filed April 14, 1992, G. H. Johnson Construction Company ("GHJ") applied to be prequalified by the School Board. The application contains the signed statement by Reza Yazdani, president of GHJ that all statements contained in the application are true and accurate.
Question #19 in the prequalification application states "[w]hat are the three largest contracts (dollar amount) ever performed by your organization?" The April 13 application filed by GHJ indicates that the company's three largest contracts were University of Chicago Replacement Hospital ($7,353,000), V. A. Medical Center, Loma Linda, California ($3,810,000), and Cape Canaveral Hospital Phase I, II, & III (($6,000,000).
In relevant part, section 6 of School Board Rule No. R-03/89 states: Unless specified exceptions are made by the
Board, the contractor shall be qualified to bid or negotiate on projects of equal value and complexity to the largest project previously constructed by him. The Board may qualify contractors for projects the value of which does not exceed that of the largest project previously constructed if the experience record, size and qualifications of staff and other pertinent data regarding the contractor justify such action in the discretion of the Board. However, in no event shall a contractor that has not previously performed work for the Board be granted a Certificate of Qualification which exceeds the smaller of the contractor's largest previous project or 10 times the contractor's net quick assets. In the event use of the largest project to establish the pre-qualified amount for the Certificate of Qualification would preclude the contractor from bidding or
negotiating because its work in progress exceeds the dollar amount of the largest project, the criterion of ten times the net quick assets may be used if it would yield a larger face amount for the Certificate of Qualification. (emphasis supplied)
The copy of School Board Rule No. R-03/89 provided to GHJ prior to the School Board's consideration of the GHJ prequalification application omitted the portion underlined in the preceding excerpt. Although the result of the error was to garble the meaning of the particular sentence, the first sentence of the referenced excerpt provides that, absent specific exception by the School Board, "the contractor shall be qualified to bid or negotiate on projects of equal value and complexity to the largest project previously constructed by him." Clearly, the value of the largest completed project was of importance in determining a contractor's prequalification amount.
There is no evidence that the typographical error caused GHJ to provide incorrect information in the April 13 prequalification application to the School Board. There is no evidence that any GHJ representative read the referenced section until two days before the bid submission deadline.
On April 22, 1992, a mandatory prebid conference was held. A representative of GHJ was present at the conference. At the conference, School Board representatives stated that a contractor's bid cost could not exceed the bidder's prequalification amount minus the contractor's work in progress. Contractors were invited to inquire as to prequalification amounts. There is no evidence that the GHJ representative sought any information related to prequalification.
The standard bid instructions provided to GHJ state that the School Board "will consider base bid and deduct alternates as may produce a net amount which is acceptable" to the Board. The instructions further state that bid documents include any addenda issued prior to the bid submission deadline.
On April 27, 1992, the School Board issued Addendum #2 to the ITB. Addendum #2 defines "alternate" as "an amount proposed by Bidders and stated on the Bid form that will be added to or deducted from Base Bid amount if the Owner (School Board) decides to accept a corresponding change in either scope of work or in products, materials, equipment, systems or installation methods described in Contract Documents." The addendum states "[b]asis for selection of Alternate shall not be limited to price".
Addendum #2 instructs bidders to add "removal of exotics" as "Alternate No. 1" to the bid proposal. The alternate identifies the "exotics" as melaleuca trees to be removed from approximately 10.5 acres at the site of middle school "BB". The removal of the exotics is required by an Army Corps of Engineers permit issued to the School Board for middle school site work.
The general bid instructions require that, not less than seven days prior to the bid deadline, bidder's must submit written requests for clarification of any error, ambiguity or inconsistency in the bid proposal.
Prior to submission of their bid, GHJ representatives discussed whether the add alternate #1 would be considered by the School Board in making the bid award, and, relying solely on the initial bid instructions, determined for themselves that it would not. At no time did GHJ inquire of any School
Board representative as to the effect of addendum #2 or the "add alternate #1" on the Board's bid consideration.
Based on the information provided in GHJ's April 13 application, the School Board on May 7, 1992, prequalified GHJ for projects not in excess of
$7,353,000. The figure is derived directly from GHJ's identification of the three largest jobs completed. The University of Chicago Replacement Hospital's cost of $7,353,000 is the largest of the three jobs cited in the GHJ application for prequalification. There is no evidence that the approved prequalification amount was calculated incorrectly or contrary to the School Board's rule.
By "Certificate of Prequalification" and letter of May 8, 1992, the School Board notified GHJ of the prequalification amount of $7,353,000. GHJ had not received the letter prior the May 12, 1992 bid deadline.
On or about May 10, 1992, two days prior to the bid opening, the president of GHJ contacted the School Board to ascertain the approved prequalification amount. The prequalification amount was orally provided to him. At no time prior to the bid opening did GHJ question, challenge or seek to amend the prequalification amount.
On May 12, 1992, GHJ timely submitted a bid on the project, with a base bid of $7,146,000 and an alternate #1 bid of $50,850. GHJ's base bid was the lowest base bid submitted. The total GHJ bid, including alternate #1, was
$7,196,850, the second lowest total bid submitted.
The GHJ "Certificate of Current Capacity" submitted as part of the bid proposal identified GHJ's prequalification amount as $7,353,000, total uncompleted work in progress as $1,325,655, and a current capacity (prequalification amount less current uncompleted work) of $6,027,345.
Otherwise stated, the GHJ bid of $7,196,850 exceeds the contractor's capacity by
$1,169,505.
School Board Rule No. R-03/89, Section 2(d), provides as follows:
If the bid of any qualified contractor exceeds the difference between the amount stated on the contractor's Certificate of Qualification (as effective on the date of the bid opening) and the contractors work in progress, the bid shall be rejected by the School Board.
GHJ asserts that the bid specifications provided only that the award would be made on the basis of the base bid plus "deduct alternates" (of which there were none). Even assuming that the School Board's addendum #2 failed to indicate that factors other than the base bid would be considered, GHJ's base bid of $7,146,000 exceeds GHJ's capacity by $1,118,655.
Under the provisions of the rule, the School Board may properly reject the GHJ bid.
On May 12, 1992, Carlson Harris General Contractors, Inc., ("CH") timely submitted a bid on the project, with a base bid of $7,163,513 and an alternate #1 bid of $27,115. The total of the CH bid was $7,190,628. The total CH bid was the lowest of the total bids received.
The CH "Certificate of Current Capacity" (based on a prequalification amount of $11,201,000), identified total work in progress of $740,830 and a current capacity of $10,460,170.
The standard instructions provided to bidders on the project state that the School Board has the "complete and unrestricted right...to reject any and all bids and to waive any informality or irregularity in any bid received."
Among other items required by the bidder instructions, each bidder was required to submit a list, signed by the bidder, of subcontractors and major material suppliers.
The Petitioner claims that, at the time of submission, and as late as two days after the bid opening, the CH subcontractor list was unsigned. A witness for the Respondent claims that, as of thirty minutes after the bid opening (when he viewed the CH proposal), the list was signed. The School Board official who actually opened and examined the bids did not testify. The testimony of Reza Yazdani is credited and establishes that, at the time of submission, CH's subcontractor list was unsigned.
The Petitioner asserts that CH's submission of an unsigned subcontractor list is a material defect which requires that the bid be rejected. The evidence establishes that such is a minor irregularity which does not affect the total cost of the bid or the ability of the School Board to enforce the contract provisions against CH and accordingly may be waived.
The instructions also require submission of a bid bond issued by a Florida-licensed surety with a Best's rating of "A" or better who has fulfilled any previous obligation to the School Board. The bond submitted by CH was issued by Employers Reinsurance Corporation and Reliance Insurance Company, and was signed by the surety agents, although not by the CH representatives. Employers had a Best rating of "A+13" and Reliance had a Best rating of "A-11".
The Petitioner asserts that CH's submission of a bid bond signed by the surety and not by the contractor is a material defect which requires that the bid be rejected. The Petitioner further asserts that Reliance's Best rating of "A-11" fails to meet the requirement that the surety have a Best rating of "A" or better. The evidence fails to establish that the irregularities in the bid bond are material. Employers Reinsurance had a Best rating of "A+13". The bid bond sufficiently protects the ability of the School Board to enforce the bond against the surety should CH fail to perform under the contract.
At hearing, GHJ asserted that the School Board had previously contracted with CH and favored CH based on prior performance. There is no evidence that the School Board has previously contracted with CH for any construction project.
Subsequent to the bid opening, GHJ amended it's application for prequalification to indicate that the University of Chicago Replacement Hospital cost was $11,400,000. Although staff has recommended that GHJ's prequalification amount be amended, the School Board has not taken action on the request. There is no evidence that such amended prequalification amount would be or should be applied retroactively to the bid at issue in this case.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to and subject matter of this proceeding. Sections 120.53(5) and 120.57(1), Florida Statutes.
The Petitioner has the burden of establishing, by a preponderance of the evidence, that the School Board's actions were contrary to the requirements of law. Department of Transportation v. J. W. C. Company, Inc., 396 So.2d 778 (Fla. 1st DCA 1981). In this case, the burden has not been met.
An agency has wide discretion in soliciting and accepting bids and is accorded substantial deference in competitive bidding activities. The agency decision, when based on an honest exercise of discretion, should not be overturned even if it may appear erroneous and even if reasonable persons may disagree. Liberty County v. Baxter's Asphalt & Concrete, Inc., 421 So.2d 505, at 507 (Fla. 1982).
In an administrative challenge to an agency's decision to award a contract or to reject all bids, the scope of the inquiry is limited to whether the purpose of competitive bidding has been subverted. The hearing officer's sole responsibility is to ascertain whether the agency acted fraudulently, arbitrarily, illegally or dishonestly. Department of Transportation v. Groves- Watkins Constructors, 530 So.2d 912, at 914 (Fla. 1988). An arbitrary act is one not supported by facts or logic, or despotic. Agrico Chemical Company v. Department of Environmental Regulation, 365 So.2d 759, at 763 (Fla. 1st DCA, 1979).
The evidence fails to establish that the School Board of Collier County acted fraudulently, arbitrarily, illegally or dishonestly in approving GHJ's prequalification amount, in reviewing the construction bid proposals submitted, or in determining that the bid of Carlson Harris General Contractors should receive the contract award.
The School Board asserts that because GHJ's base bid and total bid exceed the contractor's capacity and because the rule requires that such bidders be disqualified, GHJ could not have been awarded the contract and therefore GHJ is without standing to challenge the proposed bid award in this case. GHJ argues that the prequalification amount and current capacity level approved by the School Board are incorrect and should be retroactively amended based upon the amended University of Chicago Replacement Hospital contract valuation. Although the School Board rule would permit GHJ's disqualification, there is no evidence that the GHJ bid was rejected by the School Board on such grounds. The Petitioner has standing to challenge the action of the board.
As to GHJ's prequalification amount, any error in the prequalification amount was based on information supplied to the School Board by GHJ. Although one sentence in the copy of the School Board rule governing prequalification procedures was typographically flawed, the rule clearly states that the contractor shall be qualified to bid or negotiate on projects of equal value and complexity to the largest previous project. GHJ apparently erroneously identified the value of the largest job previously completed. There is no evidence that the School Board's determination of GHJ's prequalification amount was inappropriate given the data provided by the contractor.
The School Board did not act improperly by totaling the base bid and the add alternate (removal of exotics) in determining the award of bid contract.
While it is correct to note, as the Petitioner does, that the standard bid instructions provided for consideration of the base bid and deduct alternates, the instructions also state that bid documents include any addenda issued by the board. Addendum #2 requires bidders to add the alternate. The definition of "alternate" indicates that such is an amount that will be added to or deducted from base bid amount if the School Board decides to change the scope of work.
The actual language of the add alternate clearly indicates that the removal of exotics is required by the Army Corps of Engineers permit related to middle school "BB", that bidders were required to include the removal of exotics add alternate in bid submissions, and that the alternate could be included in the board's consideration.
GHJ representatives were apparently unsure as to whether the add alternate would be included in the board's calculations and discussed the matter among themselves, but did not seek additional guidance from the School Board. The general bid instructions provide for submission of written requests for clarification of any error, ambiguity or inconsistency in the bid proposal. GHJ erroneously determined that, based solely on the statement in the instructions that the board would consider base bid and deduct alternates, the board would not include the add alternate in the calculation.
The School Board clearly has the authority to waive minor irregularities. None of CH's omissions affected the total bid or the School Board's ability to enforce the bid contract. The uncontroverted testimony establishes that the omissions were minor and would not require rejection of the bid.
The fact that GHJ, subsequent to the bid opening, filed an amended application for prequalification, is irrelevant to this proceeding. Although the Petitioner cited School Board rules which permit amendment of the prequalification amount at any time, the rules do not suggest that such amendment may be applied retroactively to the case at hand.
