STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SOVRAN CONSTRUCTION COMPANY, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 93-0562BID

)

FLORIDA BOARD OF REGENTS, )

)

Respondent, )

)

and )

) INDUS CONSTRUCTION COMPANY, INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Mary Clark, held a formal hearing in the above- styled case on March 8, 1993, in Tallahassee, Florida.

APPEARANCES

For Petitioner: James Talley, Esquire

First Union Building

20 North Orange Avenue Suite 1500 Orlando, Florida 328022

For Respondent: Jane Mostoller, Esquire

Florida Board of Regents

352 West Gaines Street Suite 1522 Tallahassee, Florida 32399-1950

For Intervenor: Robert White, Esquire

Post Office Box 3586 Orlando, Florida 32802

STATEMENT OF THE ISSUES

The issue in this proceeding is a formal protest by Sovran Construction Company, Inc. regarding the Florida Board of Regents' intent to award to Indus Construction Company a contract for construction of the student union building at the University of Central Florida.

The protest is based on Petitioner's allegation that Indus Construction Company's bid should be rejected as non-responsive for failure to meet minority business enterprise (MBE) participation or good faith effort requirements.

PRELIMINARY STATEMENT

The protest and request for formal administrative hearing were forwarded to the Division of Administrative Hearings on February 4, 1993 and the case was set for hearing within the deadlines prescribed in Section 120.53(5), F.S. The deadlines were waived and the hearing was reset for emergency good cause at the request of the Respondent.

Without objection, the request to intervene by Indus Construction Co., Inc. was granted at the time that the hearing was reset. As required by a prehearing order, notices were provided to all bidders on the project. (See Notice of Compliance by Respondent, filed on March 3, 1993.)

At the hearing, Petitioner called as witnesses Shahid Nassir, President of Indus Construction Co., Inc.; and Lawrence B. Longmuir, Vice President of Finance at Sovran Construction Co., Inc.

Respondent's witnesses were Ray Poskas and Patricia Jackson.

By stipulation, Joint Exhibits #1-47 described in the parties' prehearing statement filed on March 5, 1993, were received in evidence. In addition, Respondent's Exhibit #1, a summary of bidder MBE participation, was received without objection.

The hearing transcript was filed on March 22, 1993 and the parties' proposed recommended orders were filed on April 1 and 2, 1993. Specific rulings on the proposed findings of fact are included in the attached appendix.

FINDINGS OF FACT

These facts stipulated by the parties in their prehearing statement filed on March 5, 1993, are adopted here:

1. A Call For Bids was issued by the Respondent, Florida Board of Regents, for Board of Regents ("BR") project numbered 452, University of Central Florida, Student Union Building, in Florida Administrative Weekly, Vol. 18, No. 44, October 30, 1992.

   
   

2. A pre-solicitation/pre-bid meeting was held on November 17, 1992, at 2:00 p.m. at the University of Central Florida. Gregory Toepp and Shahid Nassir from Indus Construction, and Chuck Adair from Sovran Construction attended the meeting.

   
   

3. Sealed bids were received on December 1, 1992, at which time they were publicly opened and read aloud.

   
   

4. A total of ten construction contractors submitted bid proposals to the University of Central Florida for BR-452.

   
   

5. Indus Construction Company was the low apparent bidder, at base bid plus alternates 1 and 2, for a total of $8,265,000.00.

   
   

6. Sovran Construction Company was the second low apparent bidder, at base bid plus alternates 1 and 2, for a total of $8,310,900.00.

   
   

7. The monetary difference between Indus Construction and Sovran Construction bids for BR-452 is $45,900.00.

8. Indus Construction did not meet the 15% minority business participation requirement for BR-452. Indus did not have any minority business participation at the time of bid opening.

   
   

9. Indus Construction timely submitted its good faith efforts documentation to the University of Central Florida on December 31, 1992.

   
   

10. The University of Central Florida MBE Advisory Committee reviewed the Indus good faith effort documentation and determined compliance.

    
    

11. The University of Central Florida recommended award of the contract for BR-452 to Indus Construction as the low responsive bidder.

    
    

12. The Florida Board of Regents reviewed the recommendation of University of Central Florida and the good faith efforts submittal of Indus, concurred with the University, and awarded the contract to Indus Construction Company.

    
    

13. The Board of Regents notified by letter dated 1/20/93, all bidders of its award of contract for BR-452 to Indus Construction.

    
    

14. Petitioner, Sovran Construction timely filed a notice of protest on January 21, 1993.

    
    

15. On January 29, 1993 Petitioner timely filed its Formal Written Protest and Request for Formal Administrative Hearing.

    
    

    In addition, these facts are found from the evidence presented at hearing:

    
    

16. The bidding requirements, sample forms, contract conditions and specifications for state project no. BR-452 are compiled in a two-volume project manual. (Joint Exhibit #2)

    
    

17. The manual provides:

    
    

    The expenditure of at least 15 percent of the Base Bid with certified Minority Business Enterprises is a requirement of this contract, unless Good Faith Effort, as identified in Paragraph 1-7 can be demonstrated by the Bidder. (Joint Ex. #2, p. I-1.)

    
    

18. Of the ten bidders, three met or exceeded the 15 percent MBE goal. Seven failed the goal. Two, Indus and the third lowest bidder, had 0 percent participation; Sovran's bid reflected 14.5 percent participation.

    
    

19. Over the last fiscal year the Board of Regents has awarded 21 competitive bid projects; 11 actually had full MBE participation and 10 met good faith effort requirements. Zero MBE participation does not disqualify a bidder so long as good faith effort is established.

    
    

20. Good faith effort is described in paragraph 1-7 of the project manual described above. Paragraph 1-7 is broken into several sub-parts specifying eight statutory elements and the implementation and documentation required by the Board of Regents for each of the eight elements. 1/

21. The good faith documentation from Indus contained a copy of the pre- bid solicitation meeting sign in sheet which indicated that Shahid Nassir, president of Indus attended the meeting on November 17, 1992. At that meeting, representatives from the University of Central Florida discussed the Board of Regents MBE program, handed out instructions and pointed out the requirements of the project manual. The meeting participants were given a packet with the MBE check list, a list of certified MBE's, and a list of minority organizations.

    
    

22. Indus immediately placed notices in the Orlando Sentinel and Orlando Times (a minority newspaper) inviting MBE's to participate in their bid on the project.

    
    

23. On November 17, 1992 Indus sent letters to the entire list of certified MBE's (over 200) soliciting their participation. Those letters state the project title and number, the bid opening deadline, the places where the specifications or plans may be viewed, and a phone number for inquiries and address for bid submittals.

    
    

24. The letters also provide these scopes of work for the project:

    
    

    Clearing Paving Irrigation Cabinets Str/MiscSteel Earthwork Painting Electrical HVAC Alum/Glass Plumbing Carpentry Masonry Roof Trusses Doors/Frames Utilities Flooring Specialties Landscaping Concrete Work Tile Thermal and Moisture Protection Studs/Drywall

    
    

    (Joint Ex. 15)

    
    

25. Follow up letters were sent to the same full list of MBE's by Indus on November 23, 1992.

    
    

26. In addition to the letters to individual MBE's, similar letters were sent to eight minority business development organizations in the central Florida area and in Tallahassee.

    
    

27. Between November 20 and November 30, 1992, Indus received telephone calls or letters from thirteen MBE's stating that they would not be bidding on the project.

    
    

    Three positive responses were received on November 30, 1992, two by telephone message and one by letter. Shahid Nassir spoke to each by telephone, briefly, on November 30, stating generally that Indus would be happy to accept their bids and wishing them good luck. The three sub-contractors did not ask for a meeting nor did Mr. Nassir suggest one at the time of the telephone conversation. Rather, he sent letters dated November 30 to each, inviting them to meet to go over the plans and specifications and answer questions.

    
    

28. Since bid opening was December 1st, the following day, typically a hectic, busy time for contractors assembling last minute quotes for their bid submittals, the letters inviting a meeting were a meaningless formality.

    
    

29. Indus received approximately eleven responses from MBE's on bid day, quoting figures for various parts of the projects. No MBE quote was low on any scope of work and none was incorporated by Indus in the bid it submitted at the bid deadline. Indus prepared a spread sheet describing the MBE bids received and an explanation why each was rejected, with the low quote included.

30. Evidence of each step in the MBE solicitation process and its rejection of quotes was submitted by Indus to the University of Central Florida. The university's MBE Advisory Committee reviewed Indus' documentation and recommended that the Board of Regents find good faith effort compliance.

    
    

31. Patricia Jackson, Projects Administrator with the Board of Regents, a ten-year veteran of the Board of Regents' MBE program, performed her independent review of Indus' documentation. She concurred that the good faith efforts complied with the criteria in the project manual and she recommended award to Indus as the low bidder for the project.

    
    

32. In particular, Ms. Jackson considered that Indus properly had a breakdown of scope of work when it sent notice letters to all of the MBE's selected by the university in various categories of work, and it also included a breakdown of scope in its solicitation letter.

    
    

33. Ms. Jackson did not have a problem with the fact that the letters suggesting a meeting were mailed one day before bid opening because Indus was contacted by the three MBE's at the last minute, and there was no time left. She did not expect Indus to "negotiate" better quotations from the MBE's as the agency discourages what it terms "bid shopping".

    
    

34. That is, the agency expects that an MBE quotation will be rejected if it is not the low quotation. It discourages the practice of approaching an MBE with another firm's lower bid and giving the MBE an opportunity to go lower.

    
    

    As Indus' president, Shahid Nassir, explained, the practice of soliciting a lower bid from an MBE, or giving the MBE the last opportunity to make a lower bid, is considered favoring one subcontractor over another with the negative effect of assuring higher bids from these subcontractors on the next project.

    That is, when a contractor is known to "shop the number", subcontractors either stop bidding to that contractor or they bid high with the anticipation that they will have to cut their numbers later.

    
    

35. The "negotiation" requirement of the statute is not, therefore, interpreted by the Board of Regents to mean negotiation on price.

    
    

36. The university staff and the Board of Regents conducted separate thorough reviews of Indus' good faith efforts and reasonably determined that it met the requirements of the MBE program. Although it is always preferable to achieve MBE participation in construction projects, and, even though one step in Indus' process (the letters inviting a meeting) was merely pro forma, there is no evidence in this proceeding that the Respondent acted fraudulently, arbitrarily or illegally in determining the bid should be awarded to the lowest bidder, Indus.

    
    

    CONCLUSIONS OF LAW

    
    

37. The Division of Administrative Hearings has jurisdiction in the proceeding pursuant to Sections 120.53(5), F.S. and 120.57(1), F.S.

    
    

38. Section 287.0947, F.S. requires that each state agency coordinate its MBE procurement activities with the Department of General Services (now, Department of Management Services), and adopt an MBE utilization plan. The Board of Regents has accomplished this, and its plan is reflected in the project manual applicable to the project in issue.

39. Section 287.0945(3)(b), F.S. lists these factors to be considered in determining whether a contractor has made good faith efforts:

    
    

    1. Whether the contractor attended any presolicitation or prebid meetings that were scheduled by the agency to inform minority business enterprises of contracting and subcontracting opportunities;

    2. Whether the contractor advertised in general circulation, trade association, and/or minority-focus media concerning the subcontracting opportunities;

    3. Whether the contractor provided written notice to a reasonable number of specific minority business enterprises that their interest in the contract was being solicited in sufficient time to allow the minority business enterprises to participate effectively;

    4. Whether the contractor followed up initial solicitations of interest by contacting minority business enterprises or minority persons to determine with certainty whether the minority business enterprises or minority persons were interested.

    5. Whether the contractor selected portions of the work to be performed by minority business enterprises in order to increase the likelihood of meeting the minority business enterprise procurement goals, including, where appropriate, breaking down contracts

       into economically feasible units to facilitate minority business enterprise participation;

    6. Whether the contractor provided interested minority business enterprises or minority persons with adequate information about the plans, specifications, and requirements of the contract or the availability of jobs;

    7. Whether the contractor negotiated in good faith with interested minority business enterprises or minority persons, not rejecting minority business enterprises or minority persons as unqualified without sound reasons based on a thorough investigation of their capabilities; and

    8. Whether the contractor effectively used the services of available minority community organizations; minority contractors' groups; local, state, and federal minority business assistance offices; and other organizations that provide assistance in the recruitment and placement of minority business enterprises or minority persons.

40. Indus attended the meeting; Indus advertised; Indus sent notices to MBE's and follow up notices providing adequate information on the project; Indus sent notices to community organizations; and Indus broke down the job components into smaller economically feasible units. Indus did not negotiate with the interested MBE's, but Respondent excused that requirement because of lack of time, and Respondent specifically discourages negotiations on price quotations. The qualifications of the MBE firms providing quotations to Indus were not at issue and the quotations were rejected solely because they were too high.

    
    

41. The hearing officer has a limited role in administrative proceedings involving agency decisions in a competitive bid process. As described in Scientific Games v. Dittler Bros. 586 So.2d 1128, 1131 (Fla. 1st DCA 1991):

    
    

    The Hearing Officer need not, in effect, second guess the members of evaluation committee to determine whether he and/or other reasonable and well-informed persons might have reached and a contrary result. Rather, 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." Department of Transportation v. Groves-Watkins Constructors,

    530 So.2d 912 913 (Fla. 1988) (quoting Liberty County v. Baxter's Asphalt & Concrete, Inc.

    421 So.2d 505 (Fla. 1982)(emphasis in original). "[T]he hearing officer's sole responsibility is to ascertain whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly." Groves-Watkins,

    530 So.2d at 914.

    
    

42. Under the established standard of review, it must be concluded that Petitioner failed to prove that the agency erred.

RECOMMENDATION

Based upon the foregoing, it is hereby RECOMMENDED

That the petition of Sovran Construction Company, Inc. be dismissed and a final order entered awarding the bid in project BR-452 to Indus Construction Company, Inc.

DONE AND ORDERED this 7th day of May, 1993, in Tallahassee, Florida.

MARY CLARK

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 7th day of May, 1993.

ENDNOTE

1/ Paragraph 1.7 (Joint Exhibit #2) provides: 1.7 GOOD FAITH EFFORTS: The Florida Statutes provide factors to be considered for determination of a Bidder's Good Faith Efforts. The Statutes, the implementation required by the State University System, and the documentation in support of the efforts are identified under the following Subparagraphs.

1.7.1 Statute 287-0945(3)(b)1:

1. STATUTORY REQUIREMENTS: Whether the contractor attended any pre- solicitation or pre-bid meetings that were scheduled by the agency to inform minority business enterprises of contracting and subcontracting opportunities.

   
   

2. IMPLEMENTATION REQUIRED BY STATE UNIVERSITY SYSTEM: Attendance by

   the Bidder or a representative will be required.

   
   

3. DOCUMENTATION REQUIRED: Signature on the meeting roster maintained by the University or the Architect/Engineer.

1.7.2 Statute 287.0945(3)(b)2:

1. STATUTORY REQUIREMENTS: Whether the contractor advertised in general circulation, trade association, and/or minority-focus media concerning the subcontracting opportunities;

   
   

2. IMPLEMENTATION REQUIRED BY STATE UNIVERSITY SYSTEM: Advertising

   through minority focus media, through a trade association, or one local newspaper with a minimum circulation of 25,000. In the event the project is located where such circulation is not available, then advertising in a vicinity newspaper with a minimum circulation of 25,000. Such advertisement must run or be published on a date at least seven days prior to the bid opening.

   
   

3. DOCUMENTATION REQUIRED: Copy of the ad run by the media and the date thereof.

1.7.3 Statute 287.0945(3)(b)3:

1. STATUTORY REQUIREMENTS: Whether the contractor provided written notice to a reasonable number of specific minority business enterprises that their interests in the contract was being solicited in sufficient time to allow the minority business enterprise to participate effectively;

   
   

2. IMPLEMENTATION REQUIRED BY STATE UNIVERSITY SYSTEM: The Bidder

   shall solicit specific trades for MBE participation, matching the capabilities of solicited MBE's with the subcontract type, consistent with the requirements of 1.7.5.1.

   
   

3. DOCUMENTATION REQUIRED: Copy of letters required as evidence.

1.7.4 Statute 287.0945(3)(b)4:

1. STATUTORY REQUIREMENTS: Whether the contractor followed up initial solicitations of interests by contracting minority business enterprises or minority persons to determine with certainty whether the minority business enterprises or minority persons were interested;

   
   

2. IMPLEMENTATION REQUIRED BY STATE UNIVERSITY SYSTEM: The Bidder

   shall make no less than one written follow-up contract per initial contact. In the event a positive response is obtained, the Bidder shall request, in writing, a meeting between MBE and the Bidder's staff.

   
   

3. DOCUMENTATION REQUIRED: Copy of letters, telegrams, and/or meeting notes required as evidence.

1.7.5 Statute 287.0945(3)(b)5:

1. STATUTORY REQUIREMENTS: Whether the contractor selected portions of the work to be performed by minority business enterprises in order to increase the likelihood of meeting the minority business enterprise goals, including, where appropriate, breaking down contracts into economically feasible units to facilitate minority business enterprise participation;

   
   

2. IMPLEMENTATION REQUIRED BY STATE UNIVERSITY SYSTEM: A subdivision

   of a "system" is not anticipated. However, "sitework" might be broken down into separate viable items -- paving, earth moving, sidewalks, sodding, etc. Or, irrigation system might be separate from other plumbing, etc.

   
   

3. DOCUMENTATION REQUIRED: The same evidence as required for Subparagraph 1.7.3.3.

1.7.6 Statute 287.0945(3)(b)6:

1. STATUTORY REQUIREMENTS: Whether the contractor provided interest minority business enterprises with adequate information about the plans, specifications, and requirements of the contract or the availability of jobs;

   
   

2. IMPLEMENTATION REQUIRED BY STATE UNIVERSITY SYSTEM: The Bidder

   will be considered to be in compliance with this requirement if the contacts in Subparagraphs 1.7.2 and 1.7.3 indicate access to plan review at the Bidder's place of business or other designated location.

3. DOCUMENTATION REQUIRED: Copies of documents reflecting why Minority Business Enterprise price were not used in preparing the bid.

1.7.7. Statute 287.0945(3)(b)7:

1. STATUTORY REQUIREMENTS: Whether the contractor negotiated in good faith with interested minority business enterprises or minority persons, not rejecting minority business enterprises or minority persons as unqualified without sound reasons based on a thorough investigation of their capabilities.

   
   

2. IMPLEMENTATION REQUIRED BY STATE UNIVERSITY SYSTEM: If proposals

   received from MBE's pursuant to 1.7.3 above were no greater than the lowest and best bona fide trade contract bid received by the Bidder, why were the MBE prices not used in preparing the bid?

   
   

3. DOCUMENTATION REQUIRED: Copies of documents reflecting why Minority Business Enterprise price were not used in preparing the bid.

1.7.8 Statute 287.0945(3)(b)8:

1. STATUTORY REQUIREMENTS: Whether the contractor effectively used the services of available minority community organizations; minority contractors' groups; local, state, and federal minority offices; and other organizations that provide assistance in the recruitment and placement of minority business enterprises or minority persons.

   
   

2. IMPLEMENTATION REQUIRED BY STATE UNIVERSITY SYSTEM: Did the

   Bidder send copies of the information provided under Subparagraphs 1.7.2 and

   1. to the organizations, groups, and offices listed in 1.7.8.1.

      
      

3. DOCUMENTATION REQUIRED: Copies of information sent to such organizations, groups, and offices, at least one week prior to bid date required as evidence.

APPENDIX

The following constitute specific rulings on the findings of fact proposed by the parties.

Petitioner's Proposed Findings

1. Adopted in paragraphs 1-15.

2.-4. Included in conclusions of law.

1. Rejected as unnecessary. This does not mean the argument is rejected, only that under the standard of review, Petitioner failed to meet its burden of proof.

2. Adopted in paragraph 18.

3. Adopted in paragraphs 22-26.

4. Adopted in paragraph 27.

5. Rejected as irrelevant; that is, the steps not taken were not necessary.

6. Adopted in paragraph 30.

11.-13. Rejected as unnecessary. The final decision was made by the Board of Regents.

Respondent's Proposed Findings

1.-15. (adopted in full as paragraphs 1-15)

1. Adopted in paragraph 16.

2. Adopted in paragraph 17. 18.-26. Rejected as unnecessary.

1. Adopted in paragraph 21.

2. Adopted in paragraph 22.

3. Adopted in paragraphs 23 and 25. 30.-32 Adopted in paragraph 27.

1. Adopted in paragraph 29.

2. Adopted in paragraph 21.

3. Adopted in paragraph 30. 36.-39. Rejected as unnecessary. 40.-41. Adopted in paragraph 31. 42.-43. Rejected as unnecessary.

1. Adopted in paragraph 19.

2. Included in endnote #1.

3. Adopted in paragraph 32.

4. Adopted in paragraph 29. 48.-49. Adopted in paragraph 34.

1. Adopted in paragraph 33.

2. Adopted in paragraph 26. 52.-53. Adopted in paragraph 36.

Intervenor did not submit proposed findings, but filed written closing argument which was considered in the preparation of this recommended order.

COPIES FURNISHED:

Jane Mostoller, Esquire Florida Board of Regents Suite 1522

352 West Gaines Street Tallahassee, FL 32399-1950

James Talley, Esquire First Union Building

20 N. Orange Avenue Suite 1500

Orlando, FL 328022

Robert White, Esquire

P.O. Box 3586 Orlando, FL 32802

Charles Reed, Chancellor

State University System of Florida

325 W. Gaines Street Tallahassee, FL 32399-1950

Gregg Gleason, General Counsel State University System of Florida Suite 1522

325 W. Gaines Street Tallahassee, FL 32399-1950

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order. All agencies allow each party at least 10 days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 93-000562BID

Orders for Case No: 93-000562BID