STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

AMERICAN DRILLING, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 92-6618BID

)

SOUTHWEST FLORIDA WATER )

MANAGEMENT DISTRICT, )

)

Respondent, )

)

and )

)

YOUNGQUIST BROTHERS, INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings by its duly designated Hearing Officer, K. N. Ayers, held a formal hearing in the above- styled case on December 17-18, 1992 at Tampa, Florida.

APPEARANCES

For Petitioner: Douglas P. Manson, Esquire

Mary Catherine Lamoureaux, Esquire Post Office Box 499

Tampa, Florida 33601-0499

For Respondent: Richard Tschantz, Esquire

A. Wayne Alfieri, Esquire 2379 Broad Street

Brooksville, Florida 34609-6899

For Intervenor: Mark R. Komray, Esquire

Thomas Smoot, III, Esquire Suite 600

12800 University Drive

Fort Meyers, Florida 33609-6259 STATEMENT OF THE ISSUES

Whether Petitioner's bid on Bid Request No. 9237 was the lowest responsible bid; whether Youngquist's bid is responsive; and, whether Respondent's evaluation and proposed award to Youngquist is arbitrary and capricious.

PRELIMINARY STATEMENT

By Formal Bid Protest timely filed following notice of award dated October 1, 1992, American Drilling, Inc. ("ADI"), Petitioner, seeks to have the proposed award to Youngquist Brothers, Inc. set aside and the bid on No. 9237 awarded to ADI, the apparent low bidder. As grounds therefore, it is alleged that ADI's bid complied with the bid specifications, was the lowest bid submitted, and the proposed award of the contract to Youngquist Brother's, Inc. is arbitrary and capricious. The protest was forwarded to the Division of Administrative Hearings, Youngquist Brothers, Inc.'s petition to intervene was granted, and these proceedings followed. The parties waived the requirement in Section 120.53(2)(e), Florida Statutes, that the hearing be conducted within 15 days of receipt of the formal written protest.

At the hearing, Petitioner called 10 witnesses, Respondent called 2 witnesses, Intervenor called 2 witness and 19 exhibits were admitted into evidence. Exhibit 17 consists of exhibit 17A through 17F.

Proposed findings have been submitted by the parties. Treatment accorded those proposed findings is contained in the appendix attached hereto and made a part hereof. Having fully considered all evidence presented, I submit the following:

FINDINGS OF FACT

1. At all times relevant hereto, ADI and Youngquist Brothers were licensed well drilling contractors and qualified to bid on Bid Request No. 9237 issued by Southwest Florida Water Management District ("SWFWMD" or "District"), Respondent.

   
   

2. On July 23, 1992 the District mailed packets for bid requests to ADI, Youngquist Brothers, Inc., and others.

   
   

3. On August 12, 1992 a mandatory pre-bid meeting for Bid Request No. 9237 was conducted at the District office. Representatives of ADI and Youngquist attended the pre-bid meeting.

   
   

4. Responses to Bid Request No. 9237 were opened by the District on August 26, 1992. ADI's bid was for $159.50 per hour, and Youngquist's bid was for

   $200.00 per hour.

   
   

5. Greg McQuown, District Manager of the Geohydrologic Data Section prepared the technical portions of this bid request and, following the bid opening, visited the facilities of both ADI and Youngquist as provided in Section 2.1.1.19 of the bid specifications to observe the equipment they proposed to use.

   
   

6. Request for Bid No. 9237 requested bidders to submit an hourly rate for furnishing an experienced crew, the drilling rig and all equipment, materials, fuel and services necessary for the proper operation and maintenance of the drilling rig to be used in drilling numerous monitoring wells as directed by the District. Although the bid is for one year, it is renewable for two additional years. Drilling contracts on an hourly basis are not frequently used in water well drilling contracts, but for this project, this type contract appeared preferable to the District due to the wide variations in well depths and drilling conditions.

7. Speed of drilling is a very significant element in an hourly rate drilling contract.

   
   

8. Section 1.17 of the general conditions of Request for Bid No. 9237 provides in pertinent part:

   
   

   If bids are based on equivalent products, indicate on the bid form the manufacturer name and number.

   * * *

   The bidder shall explain in detail the reason(s) hoe (sic) the proposed equivalent will meet the specifications and not be considered an exception thereto. Bids which do not comply with these requirements are subject to rejection. Bids lacking any written indication of intent to quote an alternate brand will be received and considered in complete compliance with the specifications as listed on the bid form.

   
   

9. Section 1.11 of the general specifications provides:

   
   

   1.11 BID DATA. Bidders shall furnish complete and detailed Bid Data as specified on the Request for Bid Form. Bids furnished without data, or incomplete submissions may be rejected at the discretion of the District. Exceptions to the requirements, if any, shall be noted in complete detail. Failure by the bidder to detail each exception to a bid specification or a requirement results in the bidder being required to meet each specification or requirement exactly as stated.

   
   

10. Section 2.2.2.3 under Contractor Equipment and Services (exhibit 2) lists the following equipment:

    
    

    API 3 1/2 inch drill pipe, no hard banding, square shoulders acceptable, 1,400 feet.

    API 4 3/4 inch steel drill collars 10,000 lbs. (approximately 200 feet). API 7 to 7 1/2 inch

    steel drill collars, 13, 500 lbs. (approximately 100 feet) are acceptable equivalent. Rig equipped with hydraulic torque equipment for drill collars and drill pipe.

    
    

11. The drilling contemplated by this Bid Request is reverse air drilling in which an air hose is inserted inside the drill pipe and air from this hose facilitates a removal of the material through which the drill bit penetrates.

12. ADI's Bid Proposal (exhibit 4) under Equipment List provides in pertinent part:

    
    

    Drill stem 4 1/2" flush joint 2 1/8 ID Collars 2 @ 3 1/2" X 20' 1 @ 6" X 20' -2 @

    7 3/4" X 30'

    * * *

    Above listed tools available, we will make available any other specified tools.

    
    

13. The inside diameter (ID) of API 3 1/2 inch drill pipe is 2 11/16 inches. This size pipe will allow use of a 3/4 inch air hose and still provide adequate area for the drilled material to be excavated from the hole being drilled.

    
    

14. Further, this Bid Request proposed the use of 6 inch PVC casing to be provided by the District. Thus, the drill pipe and drilling equipment needed to pass through this size casing.

    
    

15. The function of the drill collar is to provide weight on the drill bit to insure a straight hole as well as increase the speed of drilling. All else being equal (especially speed of rotation of drill bit) the greater the weight the faster the drilling.

    
    

16. Standard API 3 1/2 inch drill pipe has an outside diameter of 4 3/4 inches and is the largest standard drill pipe that can be used in the 6 inch casing here proposed.

    
    

17. Not only does the 4 1/2 inch drill pipe proposed for use by ADI have a smaller ID than API 3 1/2 inch drill pipe specified, but also this is not a constant ID but constricts to this 2 1/8 inch ID where pipe sections are connected. This constriction can increase the turbulence in the pipe and slow the removal of the drilled material.

    
    

18. The cross section area of a 2 1/8 inch ID pipe is 5/8 the area of a 2 11/16 inch ID pipe. Accordingly, drilling with the API 3 1/2 inch pipe can be much faster than with a drill pipe with a 2 1/8 inch ID due solely to the greater volume flowing through the 3 1/2 inch pipe.

    
    

19. The 4 1/2 inch drill collars listed in ADI's bid proposal weighed in at 1100 pounds in lieu of the 4 3/4 drill collars and 10,000 pounds specified in Request for Bid.

    
    

20. ADI contends that by adding the words "above listed tools available, we will make available any other specified tools" they clearly intended to provide all equipment demanded by the District. This is the type language which leads to contract disputes.

    
    

21. All of Petitioner's witnesses testified that they intended to commence the work, if awarded the contract, with the equipment listed on their bid proposal. On an hourly drilling contract this equipment is inadequate. All of these witnesses also testified they would use the equipment listed in the Request for Bid specifications if required to do so by the District. Neither Dave Robinson, Petitioner's superintendent who prepared its bid and attended the pre-bid conference, nor Jerry C. Howell, President of Petitioner who modified and approved the bids submitted, had ever used API 3 1/2 inch drill pipe and were not familiar with the dimensions of that item. Yet they did not check to

    ascertain how the inside diameter of that drill pipe compared with the inside diameter of the 4 1/2 drill stem flush joint they had on hand.

    
    

22. Petitioner further contended that the cost of the API 3 1/2 inch drill pipe was insignificant in determining the bid price submitted, and therefore, this discrepancy was immaterial and should not lead to rejection of the bid.

    
    

23. Petitioner's bid failed to comply with General Conditions 1.17 in that it failed to explain in detail the reasons the 4 1/2 inch drill stem proposed for use meets the specifications which required a drill pipe with a substantially larger minimum interior cross section area.

    
    

24. Petitioner's challenge to Youngquist's bid proposal as being non- responsive for not listing the API 3 1/2 inch pipe is without merit. Youngquist's bid complied with the provision of Section 1.11 of the General Specifications and McQuown's visit to Youngquist's facility confirmed that Youngquist had on hand all of the equipment specified in the Request for Bid Proposal.

    
    

25. Petitioner was represented at the compulsory pre-bid conference by David Robinson, ADI's superintendent, who prepared ADI's bid package. Robinson testified that at the pre-bid conference he asked Mr. McQuown what was the inside diameter of the API 3 1/2 inch drill pipe and McQuown responded 1 7/8 inches. Several other witnesses, including McQuown, testified that no questions were asked at the pre-bid conference about the API 3 1/2 inch pipe and all of these witnesses were fully aware that the pipe has an ID greater than 2 1/2 inches. McQuown's testimony that Robinson asked only about the inside diameter of the 4 3/4 inch drill collar shown in the bid specifications and he responded

    1 7/8 inches to that question is deemed the more credible evidence. Robinson testified that he thought McQuown has misspoke when he said 1 7/8 inches but did not check available catalogues to determine the actual ID of this pipe to shed some light on the adequacy of the 4 1/2 inch drill pipe proposed in ADI's bid. The more credible testimony is that Robinson was not misinformed about the ID API 3 1/2 inch drill pipe at the pre-bid conference.

    
    

    CONCLUSIONS OF LAW

    
    

26. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.

    
    

27. Section 2.2.2.3 of the bid specification above quoted provides for the use of API 3 1/2 inch drill pipe, period. The drill collars allow for an acceptable equivalent. Petitioner's position that this section of the bid specifications also provided for use of an acceptable equivalent substitute for the API 3 1/2 inch drill pipe is without merit. The language there used is clear and not subject to further interpretation. The only variation allowed in the first sentence of this section of the Request for Bid is that the drill pipe may have square shoulders. The second sentence in this section allowing an acceptable equivalent for the listed collar does not refer back to the drill pipe and it is not applicable thereto.

1. Even if Section 2.2.2.3 could be read to allow the bidder to supply an acceptable equivalent for the API 3 1/2 inch drill pipe specified, the drill stem 4 1/2 inch flush joint with a 2 1/8 inch inside diameter is not an acceptable equivalent. As noted in the above findings, the area of each of these drill pipes which determine the volume of fluid which can pass through the pipe, varies with the square of the diameter of the pipe. Thus, the area of the

   API 3 1/2 inch drill pipe with a 2 11/16 inch ID is (2 11/16)2 pi divided by 4 and the area of the 4 1/2 inch pipe is (2 1/8)2 pi divided by 4. Thus the ratio of the area is (2 11/16)2 to (2 1/8)2 or 7.2226 to 4.5156. Using a 3/4 inch blow hose in the API 3 1/2 inch drill pipe would reduce the cross-section area proportionately less than would the use of a 1/2 inch blow hose in the 4 1/2 inch drill stem proposed by ADI. With these assumptions, the API 3 1/2 inch drill would have almost 50% more capacity than a 4 1/2 inch drill stem proposed by ADI, in addition to having more than twice the air capacity (.752 compared to

   .52).

   
   

2. With respect to the collar shown on ADI's bid, these do not come close to the weight specified in the Request for Bid/Quote submitted to all bidders. Petitioner's contention that the catch-all words "we will make available any other specified tools", indicates a willingness on its part to provide the drill pipe and collar specified, is without merit as those words would lead only to more uncertainty and potential contract disputes.

   
   

3. Petitioner's contention that Youngquist's bid was non-responsive because Youngquist did not list the drill stems, collars, and certain other equipment the bid specification prescribed is also without merit. The bid specification clearly stated that if a bidder failed to list equipment different from that contained in the specifications it would be concluded that the bidder would furnish only the equipment and tools specified.

   
   

4. The standard by which an agency's actions in bid letting is gauged is as stated in DOT v. Grove-Watkins Construction, 530 So.2d 912 (Fla. 1988):

   
   

   ...An agency's decision based upon an honest exercise of its discretion cannot be overturned absent a finding of illegality, fraud, oppression, or misconduct. This is the standard by which an agency's decision on competitive bids for a public contract should be measured. [In a bid challenge] the hearing officer's sole responsibility is to ascertain whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly.

   
   

5. An arbitrary decision is one that is not supported by facts or logic or that is despotic.

   
   

6. The action of Respondent in declaring ADI's bid non-responsive was supported by competent and substantial evidence that the drill pipe proposed to be use by ADI would not allow rapid drilling and would require the expenditure of many more hours drilling the same hole than would be required if the designated drill pipe was used.

   
   

7. Similarly, the collars ADI had available and proposed to use were inadequate for the deep drilling contemplated. ADI's bid was also non- responsive in this regard.

   
   

8. The few exceptions from the specified equipment noted on Youngquist's bid were explained as required by the General Conditions of the Request for bid. These exceptions were evaluated by the District. Finding that the substituted equipment was equal to or greater than that specified in the Request for Bid was also supported by competent evidence and was not arbitrary and capricious.

9. From the foregoing it is concluded that ADI's bid on Project 9237 was non-responsive in proposing the use of inadequate drill pipe and collars and the rejection of this bid was neither arbitrary nor capricious. The bid submitted by Youngquist did meet the specifications in the Request for Bid, was responsive, and the lowest responsive bid.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the formal bid protest filed by American Drilling, Inc. to

challenge the award of Bid Request 9237 be dismissed and that the contract be awarded to Youngquist Brothers, Inc.

DONE AND ENTERED this 15th day of February, 1993, in Tallahassee, Leon County, Florida.

K. N. AYERS 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 15th day of February, 1993.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 92-6618BID

Proposed findings listed by Petitioner are accepted except as noted below.

Those neither noted below nor included in the Hearing Officer's findings were deemed unnecessary to the conclusions reached.

16. Rejected. Although there can be a slight variation in the internal diameter of API 3 1/2 inch drill pipe, there is no API 3 1/2 inch drill pipe with an inside diameter less than 2 1/2 inches.

18. Rejected as contrary to the credible evidence.

1. Rejected. ADI fully intended to use the drill pipe and collars listed on its bid unless or until the District mandated a change to the equipment or tools specified. Both of Petitioner's principle witnesses believed the 4 1/2 inch drill stem listed could satisfactorily perform the required drilling.

   
   

2. Rejected as contrary to the evidence.

   
   

3. Accepted as a fact that after ADI learned it was low bidder inquiries were made to locate a source for the specified drill pipe and collars.

1. At McQuown's visit to ADI, Jerry C. Howell assured him that ADI wanted to fully cooperate with the District in carrying out the contract when issued.

2. Rejected that ADI's response was clear and complete as required by the specifications.

1. Second sentence rejected as irrelevant and immaterial.

   
   

2. Rejected as irrelevant. Diversified was not a party to these proceedings.

   
   

3. Rejected. Youngquist's bid complied with the bid specifications.

   
   

4. By not responding to those items in the bid specification, Youngquist, pursuant to the General Bid Specifications, agreed to provide exactly the equipment specified by the District in the Request for Bid.

32. These omissions have never been deemed by the District to be grounds for rejecting bids.

33 -34. Rejected as immaterial.

36. Although McQuown testified that he did not pay a lot of attention to the general (boiler plate) conditions in the bid proposal, he recognized that the failure of a bidder to list equipment different than that contained in the bid proposal meant that the bidder intended to supply the equipment specified.

1. See 36 above.

   
   

2. Rejected as irrelevant.

1. Last sentence rejected as immaterial.

   
   

2. First sentence rejected.

   
   

3. Rejected.

   
   

4. First sentence rejected.

46 - 49. Rejected as immaterial.

51. Rejected insofar as Youngquist's bid is concerned.

53. Last sentence rejected.

1. Rejected as improper and inaccurate interpretation of the contract provisions. Moreover, this is a question of law, not of fact.

   
   

2. The bid specifications speak for themselves. Interpretation of these specifications is a legal not a factual matter.

   
   

3. Last sentence rejected.

   
   

4. Last sentence rejected.

   
   

5. Rejected as fact, accepted as a conclusion of law.

   
   

6. See 36 above.

63 Generally accepted. However, it is found that all parties recognize that it was not necessary for bidders to have on hand all equipment requested in the bid specification, and that ADI representatives indicated that they would like to start work with the equipment on hand and would do so unless otherwise directed.

Proposed joint findings submitted by Respondent and Intervenor are accepted. Those not included in the Hearing Officer's findings were deemed unnecessary to the conclusions reached.

COPIES FURNISHED:

Douglas Manson, Esquire

Mary Catherine Lamoureaux, Esquire Post Office Box 499

Tampa, Florida 33601-0499

Richard Tschantz, Esquire

A. Wayne Alfieri, Esquire 2379 Broad Street

Brooksville, Florida 34609-6899

Mark R. Komray, Esquire Thomas Smoot, Esquire Suite 600

12800 University Drive

Fort Myers, Florida 33906-6259

Peter G. Hubbell, Executive Director Southwest Florida Water Management District 2379 Broad Street

Brooksville, Florida 34609-6899

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 ten 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: 92-006618BID

Orders for Case No: 92-006618BID