STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HUBBARD CONSTRUCTION COMPANY, )

)

Petitioner, )

)

vs. )

)

JACKSONVILLE TRANSPORTATION ) CASE NO. 92-6302BID AUTHORITY, )

)

Respondent, )

)

and )

) PETTICOAT CONTRACTING, INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on December 18, 1992, in Jacksonville, Florida.

APPEARANCES

For Petitioner: F. Alan Cummings, Esquire

Mary M. Piccard, Esquire Post Office Box 589

Tallahassee, Florida 32302-0589

For Respondent: Cindy A. Laquidara, Esquire

Kenneth A. Tomchin, Esquire Post Office Box 4099 Jacksonville, Florida 32201

For Intervenor: Herbert R. Kanning, Esquire

12-14 East Bay Street Suite 302

Jacksonville, Florida 32202 STATEMENT OF THE ISSUES

The issue is whether respondent acted fraudulently, arbitrarily, illegally, or dishonestly in awarding the contract for project number 72002-3533 to intervenor, Petticoat Contracting, Inc.

PRELIMINARY STATEMENT

This matter began on October 9, 1992, when petitioner, Hubbard Construction Company, filed its formal protest to a decision by respondent, Jacksonville

Transportation Authority, to award the contract for project number 72002-3533 to intervenor, Petticoat Contracting, Inc. The contract called for certain improvements on State Road 9A in Jacksonville, Florida.

The matter was referred by respondent to the Division of Administrative Hearings on October 22, 1992, with a request that a hearing officer be assigned to conduct a formal hearing. The parties then agreed to waive the requirement that the hearing be conducted within fifteen days.

By notice of hearing dated November 9, 1992, a final hearing was scheduled on November 30, 1992, in Jacksonville, Florida. At the parties' request, the final hearing was rescheduled to December 7, 1992, and then again to December 18, 1992, at the same location. On November 12, 1992, Petticoat Contracting, Inc. was authorized to intervene as a party in this cause.

On December 15, 1992, petitioner filed a motion to amend its formal bid protest to include as requested alternative relief the rejection of all bids. This motion was granted on December 18, 1992.

At final hearing, petitioner presented the testimony of Robert J. Lindquist, a vice-president in charge of engineering and estimating, Thomas E. Drawdy, a former Department of Transportation Secretary, and Donnie K. Gay, a vice-president and division manager. Also, it offered petitioner's exhibits 1-

1. All exhibits were received in evidence. Respondent presented the testimony of Richard M. Catlett, a JTA member, Larry P. Wehner, JTA manager of construction, and Theodore A. Finch, an engineering consultant. Also, it offered respondent's exhibits 1-7. All exhibits were received in evidence, except exhibits 3-6. Intervenor presented the testimony of Elaine E. Jones, its president, and Donnie K. Gay. Also, it offered intervenor's exhibits 1-4, which were received in evidence. Finally, joint exhibit 1 was received in evidence.

   
   

   The transcript of hearing (three volumes) was filed on January 7, 1993.

   Proposed findings of fact and conclusions of law were filed by respondent, petitioner and intervenor on January 15, 19 and 20, 1993, respectively. 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. Background

      
      

      1. In September 1992, respondent, Jacksonville Transportation Authority (JTA), issued Invitation to Bid No. CF-0310-92 (ITB) inviting contractors who held certificates of prequalification to bid on Department of Transportation (DOT) projects to submit proposals for performing construction work on 1.6 miles of State Road 9A in Duval County, Florida. The contract to be awarded was the third contract of three contiguous construction projects on State Road 9A and was commonly known as contract 3. It was to be completed within twenty-four months. Essentially, the work involves the widening of that road from two to four lanes, and adding connector ramps, a median, and other associated improvements. The project is more specifically identified as project number 72002-3533. The ITB called for sealed bids to be filed no later than 2:00 p.m. on September 23, 1992, with an award of the contract to be made to the lowest

         responsive bidder at JTA's meeting on September 29, 1992. The ITB provided further that "the right is reserved (by JTA) to reject any and all bids."

         
         

      2. A total of six contracting firms filed bids in response to the solicitation. They included petitioner, Hubbard Construction Company (Hubbard), and intervenor, Petticoat Contracting, Inc. (PCI), both of whom were prequalified. Hubbard is a large construction firm headquartered in Orlando, Florida, and has been in the construction business for some seventy years. In 1992 alone, it bid on more than 300 jobs and did approximately $180 million in business. Conversely, PCI is a much smaller firm headquartered in Jacksonville, Florida, with approximately forty-five employees. It has been in business for almost seven years and is minority (female) owned and operated.

         
         

      3. Hubbard was the lowest dollar bidder with a bid in the amount of

         $6,257,722.38, while PCI was the second lowest bidder with a bid in the amount of $6,270,121.43, or approximately $12,400.00 higher than Hubbard. After the bids were opened, they were evaluated by JTA's engineering consultant, Sverdrup Corporation, a Jacksonville engineering firm. Concluding that Hubbard's bid was "unbalanced" in several material respects and thus was irregular, the consultant recommended that the contract be awarded to PCI, the second lowest bidder. This recommendation was concurred in by JTA's staff and was presented to JTA at a meeting held on September 29, 1992. After a discussion regarding the bid proposals, including consideration of comments from Hubbard and PCI representatives, JTA voted to award the contract to PCI. Hubbard then timely filed its protest. In its protest, Hubbard generally contended that JTA had erroneously determined that Hubbard's bid was unbalanced, and by doing so, JTA had imposed upon Hubbard a bid requirement not encompassed within the ITB. It also contended that under the standard used by JTA, all other proposals, including that of PCI, were unbalanced. Finally, the protest argued that PCI was not actually a disadvantaged business enterprise and thus should have been required to furnish documentation concerning its compliance with minority subcontractor requirements. As to this latter contention, no proof was submitted at hearing, and thus no discussion of that allegation is required.

         
         

   2. The ITB Requirements

      
      

      1. JTA has its own set of specifications that were distributed to each of the bidders on the project. Among other things, the ITB provided that "(a)ll work is to be done in accordance with the Plans and Special Provisions, and the Standard Specifications of the State of Florida Department of Transportation." The latter reference was to the 1991 edition of the Standard Specifications for Road and Bridge Construction used by DOT. Those specifications are included in the ITB because JTA must build its roads and bridges to state road specifications. In this regard, article 2-6 of those specifications provided in relevant part as follows:

         
         

         A proposal will be subject to being considered irregular and may be rejected if . . . it shows irregularities of any kind; also the unit prices are obviously unbalanced, either in excess of or below the reasonable cost analysis values.

         
         

      2. The ITB also contained an Appendix A which included supplemental specifications to accompany the DOT document. However, it did not modify article 2-6. The ITB further contained a section entitled Special Provisions which represented "modifications and additions to the corresponding Articles" in

         DOT's Standard Specifications and the supplemental specifications set forth in Appendix A. Again, article 2-6 was not changed but section 4-1 of the Special Provisions, which constitutes an addition to DOT's specifications, provided that

         
         

         all items which are constructed or installed will be paid for at the unit price bid regardless of the total quantity utilized.

         Unit prices shall represent the actual costs and profit earned for labor, equipment and materials used in completing the unit of work bid.

         
         

         Therefore, the DOT standard specifications, and specifically article 2-6, were controlling on this contract.

         
         

      3. In construing the foregoing provisions, JTA considers a bid item to be "irregular" when it is far higher or lower than the engineer's estimate and the average of the other bids. When an irregularity is discovered in a bid, a decision is then made as to whether the irregularity is material or significant in terms of its affect on the competitive process and ensuring that no bidder receives a substantial advantage over other bidders. The potential effect of any irregularity on JTA's interest is also considered in deciding whether the irregularity is material such that the bid should be rejected pursuant to article 2-6 of the specifications. In conjunction with the above analysis, JTA compares the other contractors' bids with the engineer's estimate, and if they are closely approximated, it deems the estimate to be accurate. Conversely, where the average bids and the estimate are not close, JTA concludes that the estimate may be erroneous. It is noted that the consultant relies on the DOT specifications and DOT's historic pricing methods when preparing his estimates.

         
         

      4. The ITB called for each bidder to submit a unit price for each component of work required under the contract. This required each bidder to estimate the cost for providing services for more than one hundred sixty items, including item 110-1-1 (clearing and grubbing), item 102-2 (topsoil), and item 715-91-120 (high-mast lighting poles), which items are of particular concern in this controversy. The amount of the bid upon which award of the contract was to be based equaled the sum of the prices for the listed items.

         
         

      5. Item 110-1-1 is a lump sum item, rather than work on a per unit basis, and required the contractor to clear and grub 79.489 acres of land. This work is done at the outset of the project and is generally completed within the first ninety days of the job. Item 102-2 involved the placement of 120,041 square yards of topsoil on the embankments which was to serve as a layer for seeding the grass. However, the parties agree that the contractor had the choice of using either topsoil or a muck blanket extracted from the job site through excavation. If the latter option was chosen, this would eliminate the need to procure topsoil from off-site. Even so, to avoid the possibility of a change order by the contractor, which had occurred on several earlier projects, JTA expected the contractor to estimate his actual cost for topsoil as if the topsoil was to be obtained from off-site. The final disputed item required the contractor to furnish and install fifteen 120-foot street lighting poles. Bidders were required to give a price for a single pole and then multiply that price times the estimated quantity that would be required. This work is generally completed during the last phase of the job.

   3. The Submissions

      
      

      1. As noted earlier, six contractors filed bids in response to the ITB with prices ranging from a low of $6,257,722.38 by Hubbard to a high of

         $6,997,656.41 by the highest bidder. Hubbard proposed to complete the job in thirteen months even though the ITB allowed twenty-four months while PCI intended to use the full amount of time. As to the three items in dispute, the record reflects the engineer's estimated cost, Hubbard's cost, PCI's cost and the average cost for all bidders excluding Hubbard were as follows:

         
         

         Item Estimated Cost Hubbard PCI Average costs 110-1-1 $150,000.00 $545,000.00 $176,600.00 $147,100.14

         102-2 33,011.28 1,200.41 82,828.29 71,064.27

         
         

         715-91-120 180,000.00 25,500.00 204,750.00 199,701.54

         
         

      2. In preparing its bid, Hubbard assumed that the DOT standard specifications would be interpreted and supplied in conformity with DOT's historical interpretation. Therefore, Hubbard prepared its bid in the same manner as it always had, including prior JTA submissions, and this resulted in the above deviations from estimated and average costs for the following reasons. Hubbard obtained a copy of the plans and specifications approximately two weeks before the date for filing its bid and then assigned a team of estimators to prepare the numbers in the bid package. Because several items are subcontracted out, including grassing, striping and electrical work, Hubbard had to wait until the subcontractors returned their prices before it knew the actual cost of those services. As is true in almost every case, the subcontractors did not furnish their prices until the final day or hour. Hubbard was reluctant to leave those items blank until the last moment fearing it would be difficult for the persons filing the bid in Jacksonville to complete the lengthy proposal before the deadline, and an error might be made by them in their haste to change the prices on multiple items for which they received price quotations in the last hour. Accordingly, in filling out the items on which subcontractors would be used, Hubbard used its best estimate of the subcontractor prices based upon its prior experience on other jobs. However, to allow for variances that might occur between the actual subcontractor prices and the estimated prices, Hubbard left blank one lump sum item so that this item's estimated cost could be adjusted up or down at the last moment depending on the other variances. In this way, the total amount of the bid would not change. As it turned out, there were variances in twenty to thirty items which were based on subcontractor prices, with one item (high mast lighting poles) coming in substantially higher than originally estimated. As noted above, Hubbard did not change the estimated subcontractor prices but rather calculated the difference between its estimate and the actual subcontractor prices and added that number to the lump sum price for clearing and grubbing. This resulted in increasing the cost for clearing and grubbing from an actual cost of around $150,000.00 to $545,000.00 while the estimated cost for fifteen high mast lighting poles ($25,500.00) was substantially below its actual cost of more than $170,000.00. According to Hubbard, it follows this practice on virtually every bid document it prepares, including those filed with JTA, and has never had one rejected on the ground certain items were materially unbalanced. Testimony that these preparation procedures are standard in the industry and enable contractors to give the public the best possible prices by allowing for last minute changes while protecting against error was not contradicted.

      3. In preparing its topsoil estimate, Hubbard determined that the anticipated muck and subsoil excavation would eliminate the need to procure topsoil from off-site. Therefore, it proposed a cost of only one cent per square yard for adding topsoil to the embankment on the theory that no topsoil would be procured from off-site. Because Hubbard's computer would not take a zero cost, and the cost was already included in the embankment charges, Hubbard put the next lowest price, or one cent, as the cost for topsoil.

         
         

      4. The final relevant item, high mast lighting, was to be subcontracted out to a specialty contractor. Hubbard originally estimated a cost of $1,700.00 per pole for fifteen poles, or a total cost of $25,500.00. At hearing, Hubbard conceded that this estimated cost was either a mistake on the part of the person filling out the proposal or "a mistake of judgment" by an estimator, and that its actual costs were substantially higher. However, it felt that there was no disadvantage to JTA by preparing its bid in that manner.

         
         

      5. In its proposal, PCI used a cost of $176,000 for clearing and grubbing,

         69 per square yard, or a total cost of $82,828.29, for topsoil, and $13,650 for each high mast lighting pole, or a total cost of $204,750.00. These estimates did not substantially deviate from the bidders' average or the engineer's estimated costs. As to the topsoil item, PCI also intended to use muck excavated from the job site in lieu of topsoil. However, it was not sure that the amount of muck excavated would be adequate, and thus it estimated the amount of topsoil that would be required if the soil was obtained off-site, added a component for overhead and profit, and arrived at a total cost of 69 per square yard. Finally, PCI's estimated cost for pile splices, mobilization, maintenance of traffic and prestressed concrete beams were unbalanced to some degree and constituted a violation of section 4-1. However, these variances were relatively minor in nature and were not material.

         
         

   4. The Evaluation Process

      
      

      1. JTA utilized the services of an outside engineering firm to serve as consultant on the project. Immediately after the bids were opened, the consultant's duties were to verify that certain basic requirements were met and that the contractor had the capacity to perform the work. He was also required to prepare a bid tabulation listing the contractors' estimates with the engineer's estimate and to determine if any irregularities were present. A recommendation would then be submitted to the JTA staff regarding the award of the contract. The staff was also required to review the bids and to make a recommendation to the JTA.

         
         

      2. During the course of his evaluation of Hubbard's bid, the consultant noted a marked variance between estimated costs for clearing and grubbing of

         $150,000.00 and Hubbard's price of $545,000.00, particularly since the average cost of all other bidders was $147,100.14. He next noted the proposed cost for high mast lighting poles ($25,500.00) and found it to be "extremely low" in relation to the engineer's estimated price ($180,000) and the average cost of almost $200,000.00 submitted by the other bidders. In addition, he found the engineer's estimated cost for topsoil of $33,011.28 to be much higher than Hubbard's proposed cost of $1,200.41, especially since the other bidders averaged $71,064.27. Finally, the consultant conducted a similar review of PCI's proposal, and while he found some irregularities in its bid, he did not consider them material. Thereafter, in a letter to JTA's executive director on September 28, 1992, the consultant noted that:

         
         

         Upon examination of the bids, it became

         evident that some of Hubbard Construction Company's unit prices are unbalanced. Item No. 110-1-1, Clearing and Grubbing, is a lump sum item and is one of the first pieces of work to be performed in this project.

         Hubbards' bid amount is $545,000.00. The engineer's estimate is $150,000.00 and the average of all other bidders is $147,000.14. Item no. 715-91-120, High Mast Lighting Pole Complete (Furnish and Install)(120'), also appears to be unbalanced. This work would be performed near the end of the contract.

         Hubbard's bid amount is $25,500.00. The engineer's estimate is $180,000.00 and the average of the other bidders is $199,701.54. Hubbard's bid amount will not cover the cost of the materials required of this item based on reasonable expected costs. Both of the items are in contradiction to Section 4, Article 4-1 which states "Unit prices shall represent the actual costs and profit earned for labor, equipment and materials used in completing the unit of work bid." Item 102-2, Topsoil, shows an inconsistency. Hubbard's bid amount is $1,200.41. The engineer's estimate is $33,011.28 and the average of the other bidders is $71,064.27.

         
         

         Based on the results of the bid review noted above, it is recommended that Hubbard Construction Company's bid proposal be considered irregular as per Article 2-6 of the Standard Specifications, and therefore rejected.

         
         

      3. A similar evaluation process was subsequently conducted by the JTA staff, and it reached the same conclusion as the consultant. Its recommendation to reject the bid of Hubbard on the ground the bid was "irregular as per Article 2-6 of the JTA Standard Specifications" and to award the contract to the second lowest bidder, PCI, was conveyed by memorandum to the JTA Highway Committee on September 29, 1992, and was approved by JTA the same date.

         
         

   5. Was the Agency's Action Arbitrary?

   
   

   1. JTA's conclusion that Hubbard's bid was materially unbalanced and irregular and thus violated article 2-6 was based on two principal concerns. First, JTA considered the adding of nearly $400,000.00 in costs to clearing and grubbing to be "front-end loading" and thus improper. This means the bid was structured so that a large amount of money, not commensurate with the amount of work actually performed, would be paid at the beginning of the project. In this case, clearing and grubbing would be completed within the first ninety days of the project yet Hubbard would receive almost $400,000.00 in excess of its actual costs to perform that work. JTA believed that this would reduce its control over the performance of the contract, it would be unfair to other bidders on the project, the money would be used to finance other portions of the work, and the possibility existed that Hubbard might not complete performance on the job after being paid the up-front money. Second, and based on what it says has happened

      on other jobs, JTA feared that by allowing Hubbard to underprice its topsoil item, Hubbard could conceivably request a change order increase of more than

      $100,000.00. This amount was calculated on the theory that Hubbard might have a

      $60,000.00 overrun on muck (120,000 cubic yards x 50 ) because it was using the muck to meet the topsoil requirement, and a $1,200.00 underrun on topsoil (which represents the amount bid) because no topsoil would be used, or a net overrun of

      $58,800.00. At the same time, JTA feared that an overrun on muck would lead to an overrun on subsoil excavation. At a price of $5.00 per cubic yard for any overruns on this item, JTA would be forced to spend as much as $53,000.00 more on a change order for this item. Assuming this actually occurred, PCI would then be the low bidder by almost $88,000.00.

      
      

   2. Initially, JTA's concerns must be tempered by the fact that on the previous contract for State Road 9A, known as contract 2, Hubbard structured its bid in the same manner as on contract 3. On that contract, its bid was almost three times the engineer's estimate for clearing and grubbing and exceeded the engineer's estimate for mobilization by more than four fold. Even so, Hubbard was more than $200,000.00 lower than the second low bidder and was $400,000.00 lower than the engineer's estimate. On that project, JTA awarded the contract to Hubbard and did not raise the contention, as it did here, that the bid was materially unbalanced. At hearing, the consultant was unable to give a satisfactory explanation as to why the prior bid was "regular" but the instant bid was "irregular" even though both bids had been prepared in the same manner and contained "obviously unbalanced items." In this case, JTA did not give bidders any notice that it intended to construe article 2-6 any differently than it had on prior contracts.

      
      

   3. In addition, in preparing its bid, Hubbard assumed that article 2-6 would be interpreted in the same manner as did DOT since the ITB provided that the DOT specifications would apply. Moreover, there was nothing in the ITB Special Provisions which gave notice that JTA intended to place a different interpretation on article 2-6 than was customarily done by DOT. According to uncontradicted testimony, DOT has consistently interpreted article 2-6 in the following manner. DOT does not find balancing in and of itself to be a sufficient basis to reject a bid as being irregular under article 2-6. Indeed, virtually every bid submitted for any highway construction project, including those of PCI and Hubbard here, are unbalanced in some respect. If DOT has serious concerns about an unbalanced bid, the terms of article 2-6 require that a study be made to see if the unit prices are "either in excess of or below the reasonable cost analysis values." To do this, DOT performs a study of the time value of money related to the major components of work in a contract on an item by item intra-bid basis, compares the results of that analysis to an irrevocable schedule of construction, and then determines whether the taxpayers would be detrimentally affected by awarding the contract to a bidder with the unbalanced items. In other words, a contractor is paid as units of work are completed, and to the extent major items of work are unbalanced so that payments are deferred or accelerated, the cash flow of the agency may be adversely affected. Without a time value of money analysis, a determination cannot be made as to whether the taxpayers are detrimentally affected by an unbalanced bid. Indeed, out of several thousand bids over a twelve year study period (1975-1987), DOT rejected no more than six because of unbalancing, and then only after such an analysis was performed. As to Hubbard's bid, a former DOT secretary expressed the view that Hubbard's bid did not even rise to the level necessary to invoke the analysis. In any event, by failing to follow its own specifications and performing such a study, JTA could not fairly conclude that the awarding of a contract to PCI would positively impact its net present value of money. This is especially true here since Hubbard proposed to complete the project in thirteen

      months and PCI in twenty-four months, and neither party submitted a construction schedule with its bid. Therefore, JTA had no basis to conclude that article 2-6 had been violated. Finally, there was no evidence to support the contention that JTA would lose control of the project if Hubbard was paid the excess monies for clearing and grubbing.

      
      

   4. JTA's concern that Hubbard might fail to complete the job if it received a large payment up front is also without merit. While front end loading is a legitimate concern where a contractor might not finish the project, the facts dispel that concern here. Besides having to post a performance bond, Hubbard would also be disqualified from bidding on other jobs in the event a project was abandoned. Given Hubbard's size and reputation, and the fact that the contract itself provides for JTA retaining a percentage of the payment of work until all work is completed, it is found this concern is not legitimate.

      
      

   5. As to the concern over topsoil, there was insufficient evidence to establish that muck was more likely to overrun than any other item. Indeed, JTA acknowledged at hearing that the engineer's estimate for muck excavation was as accurate as it could be and no analysis or testing had been performed which would support a change in position. In addition, a JTA board member testified that the topsoil pricing was not considered the primary basis for rejection of Hubbard's bid. Finally, the use of a one cent price for topsoil did not affect the overall price of the bid or give Hubbard an advantage or benefit not enjoyed by others.

      
      

      CONCLUSIONS OF LAW

      
      

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

      
      

   7. The scope of inquiry in this proceeding is limited to determining "whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly" in rejecting the low bidder and awarding the contract to the second low bidder on the ground Hubbard's bid violated article 2-6. Department of Transportation

      v. Groves-Watkins Constructors, 530 So.2d 912, 914 (Fla. 1988). At the same time, the undersigned is required to honor the rule that a public body has "wide discretion" in the bidding process and its decision, when based upon 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. Finally, as the party challenging the agency's action, Hubbard must prove by a preponderance of the evidence that JTA's decision was unacceptable for one of the reasons cited in Groves-Watkins.

      
      

   8. Hubbard contends that by rejecting its bid for being unbalanced, JTA's action was arbitrary and thus violated the Groves-Watkins standard. In resolving this contention, it is noted first that by the terms of the ITB, an unbalanced bid constitutes a violation of section 4-1 since that section requires that "unit prices shall represent the actual costs and profits earned for labor, equipment and materials used in completing the unit of work bid." By violating section 4-1, the unbalanced item also constitutes an "irregularity" within the meaning of article 2-6. However, unbalanced bids are not prohibited, especially since almost all bids submitted on substantial projects, including those of Hubbard and PCI here, are unbalanced to some degree. See, e.g. Frank Stamato and Co. v. City of New Brunswick, 90 A.2d 34 (N.J. App. 1952); Armaniaco

      v. Borough of Cresskill, 163 A.2d 379 (N.J. 1960). Since unbalancing per se is not an appropriate basis for rejecting a bid, it follows that a bid can be

      rejected only if it is unbalanced in a material respect. The issue, then, is how that determination should be made. There are no Florida appellate decisions that deal with this issue. However, decisions in other jurisdictions and one prior agency final order are helpful in resolving this question.

      
      

   9. Unbalancing has been held to be an appropriate basis for rejection only if the end result is that the award to the lowest bidder will not result in the lowest ultimate cost to the government. Solon Automated Services v. United States, 658 F. Supp. 28 (D. C. D. C. 1987); Riverland Construction Co. v. Lombardo Contracting Co., 380 A.2d 1161 (N.J. App. 1977). This holding is consistent with article 2-6 of the DOT specifications which deems a bid to be materially unbalanced when "the unit prices are obviously unbalanced, either in excess of or below the reasonable cost analysis values." Stated in plainer language, a bid is materially unbalanced when the award of the contract adversely affects the interests of the taxpayers. Where, for example, an overrun is expected on an item which has been inflated, the end result may be that the government pays the contractor more than the amount bid and thus the low bid will not ultimately result in the lowest cost to the government. This occurred in the case of Ranger Construction Industries, Inc. v. Department of Transportation, Case No. 92-1538BID (DOT, July 23, 1992), where after the unbalanced item was corrected, the bid was not actually the lowest and therefore the unbalancing was deemed to be material.

      
      

   10. The above principles hold that in order to comport with the law, JTA could not reject the bid of Hubbard simply because it was unbalanced but instead would have to show the irregularity was material. To do this, JTA was obliged to show that if the contract was awarded to Hubbard, the lowest bidder, this "would not result in the lowest ultimate cost to the government." JTA was also required to make that determination by performing a study in the manner prescribed by DOT in article 2-6, and described in finding of fact 19, to see if "the unit prices are obviously unbalanced, either in excess of or below the reasonable cost analysis values". In addition, if the unbalancing is deemed to be immaterial, JTA has the authority to waive a minor irregularity where tax dollars will be saved and the low bidder did not derive any unfair competitive advantage by reason of the irregularity. Intercontinental Properties, Inc. v. State, Dept. of Health and Rehabilitative Services, 606 So.2d 380, 386 (Fla. 3d DCA 1992). Finally, if JTA did not intend to conform to the DOT specifications, notice of such intent to deviate should have been announced in the ITB to all bidders.

       
       

   11. Here, the greater weight of credible and persuasive evidence supports a conclusion that JTA's decision to reject the lowest bidder was arbitrary. Although the bid submitted by Hubbard was admittedly irregular, JTA failed to make the analysis required by article 2-6 and likewise failed to determine that the award of the contract to Hubbard would not result in the lowest ultimate cost to the government. Therefore, it had no basis upon which to conclude that Hubbard's bid was materially flawed. Since the irregularity must be deemed to be minor or immaterial, it was improper of JTA to refuse to waive that irregularity. Finally, the bidders were not given notice that JTA intended to deviate from the terms of the DOT specifications, which were incorporated into the ITB. This is especially important here since Hubbard presumed such specifications would be followed, particularly since JTA had just awarded another contract to Hubbard even though its bid on that project was "obviously unbalanced" and had been prepared in an identical manner. By failing to comport with the law in these respects, the decision of JTA is deemed to be arbitrary.

RECOMMENDATION

Based upon the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a final order be entered by respondent awarding the

contract for project no. 72002-3533 to Hubbard Construction Company.

DONE AND ENTERED this 28th day of January, 1993, in Tallahassee, Leon County, 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 28th day of January, 1993.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-6302BID

Petitioner:

1-3. Partially accepted in finding of fact 1.

1. Partially accepted in finding of fact 3.

2. Partially accepted in findings of fact 4 and 7.

3. Partially accepted in finding of fact 3. 7-12. Partially accepted in finding of fact 10.

1. Partially accepted in findings of fact 10 and 12.

2. Partially accepted in findings of fact 8 and 12.

3. Partially accepted in findings of fact 10 and 12. 16-19. Partially accepted in finding of fact 10.

20-22. Partially accepted in finding of fact 15.

23. Accepted in finding of fact 4.

Respondent:

1. Partially accepted in findings of fact 2 and 3.

2. Partially accepted in findings of fact 4 and 5.

3. Partially accepted in finding of fact 14.

4. Partially accepted in finding of fact 6.

5. Partially accepted in findings of fact 15 and 17. 6-8. Partially accepted in finding of fact 17.

1. Rejected as being unnecessary.

2. Partially accepted in finding of fact 15.

3. Partially accepted in findings of fact 13 and 16.

4. Partially accepted in finding of fact 3.

5. Rejected as being unnecessary.

Intervenor:

1. Partially accepted in finding of fact 1.

2. Partially accepted in finding of fact 3.

3. Partially accepted in findings of fact 4 and 5.

4. Partially accepted in finding of fact 14. 5-10. Partially accepted in finding of factg 15. 10A-C. Partially accepted in finding of fact 17.

11. Partially accepted in findings of fact 3 and 16.

Note - Where a proposed finding has been partially accepted, the remainder has been rejected as being irrelevant, unnecessary, cumulative, not supported by the more persuasive evidence, or a conclusion of law.

COPIES FURNISHED:

Miles N. Francis, Jr. Executive Director

Jacksonville Transportation Authority

P. O. Drawer O Jacksonville, Florida 32203

F. Alan Cummings, Esquire Mary M. Piccard, Esquire

P. O. Box 589

Tallahassee, Florida 32302-0589

Cindy A. Laquidara, Esquire Kenneth A. Tomchin, Esquire

P. O. Box 4099

Jacksonville, Florida 32201

Herbert R. Kanning, Esquire 12-14 East Bay Street

Suite 302

Jacksonville, Florida 32202

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

ALL PARTIES HAVE THE RIGHT TO SUBMIT TO THE JACKSONVILLE TRANSPORTATION AUTHORITY WRITTEN EXCEPTIONS TO THIS RECOMMENDED ORDER. ALL AGENCIES ALLOW EACH PARTY AT LEAST TEN DAYS IN WHICH TO SUBMIT WRITTEN EXCEPTIONS. SOME AGENCIES ALLOW A LARGER PERIOD WITHIN WHICH TO SUBMIT WRITTEN EXCEPTIONS. YOU SHOULD CONSULT WITH THE JACKSONVILLE TRANSPORTATION AUTHORITY CONCERNING ITS RULES ON THE DEADLINE FOR FILING EXCEPTIONS TO THIS RECOMMENDED ORDER.

Docket for Case No: 92-006302BID

Orders for Case No: 92-006302BID