STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PANHANDLE GRADING & PAVING, ) INC., )

)

Petitioner, )

)

vs. ) CASE NO. 93-4210BID

) DEPARTMENT OF CORRECTIONS, )

)

Respondent, )

)

and )

) HEWITT CONTRACTING CO., INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Diane Cleavinger, on August 16, 1993, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Fletcher Fleming, Esquire

Post Office Box 1831 Pensacola, Florida 32598

For Respondent: Steven S. Ferst, Esquire

R. Beth Atchison, Esquire 2601 Blair Stone Road

Tallahassee, Florida 32399-2500

For Intervenor: Samantha D. Boge, Esquire

STOWELL, ANTON & KRAEMER

Post Office Box 11059 Tallahassee, Florida 32302

STATEMENT OF THE ISSUES

The issue addressed in this proceeding is whether Petitioner or Intervenor submitted the lowest and best bid on Project No. RS-40.

PRELIMINARY STATEMENT

This case concerns the Department of Corrections attempt to secure a contractor to perform site work and utilities work on the site where future construction of the Holmes County Work Camp will be located. The Department issued an Invitation to Bid for the Project No. RS-40 on June 4, 1993.

Petitioner and Intervenor submitted their bids. On June 29, 1993, the Department opened the bids. The contract was awarded to Intervenor. On July 8, 1993, Petitioner filed its Notice of Protest of the bid award. On July 19, 1993, Petitioner filed a Formal Written Protest of the bid award. The protest was forwarded to the Division of Administrative Hearings.

At the hearing, Petitioner presented two witnesses, but did not offer any exhibits into evidence. Respondent did not call any witnesses and did not offer any exhibits into evidence. Intervenor did not call any witnesses but did offer three exhibits into evidence. Additionally, twelve joint exhibits were stipulated to by the parties and admitted into evidence, including the deposition testimony of James H. Merchant and Gerald Holley.

Petitioner and Respondent filed their Proposed Recommended Orders on September 7, 1993. Intervenor filed its Proposed Recommended Order on September 8, 1993. The parties' Proposed Findings of Fact have been considered and utilized in the preparation of this Recommended Order except where such proposals were not supported by the weight of the evidence or were immaterial, cumulative or subordinate. Specific rulings on the parties' proposals are contained in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. On June 4, 1993, Respondent issued an invitation to bid (ITB) for Project No. RS-40 to develop the site for the future construction of a work camp in Holmes County. The work under Project No. RS-40 specifically included site preparation, grading, electrical work, sewage, utilities and fencing. The bids were due to be opened on June 29, 1993.

   
   

2. Ten bids were submitted to the Department, including Petitioner, Panhandle Grading and Paving, Inc., and Intervenor's, Hewitt Contracting Co., Inc., bids. Panhandle's bid total was $815,734.00, and was the lowest monetary bid. Hewitt's bid total was $847,554.00, and was the third lowest monetary bid. Baxter Asphalt had the second lowest monetary bid. However, both Baxter and Panhandle's bids were disqualified as nonresponsive because neither company complied with the Department's prequalification requirements. Baxter did not protest the Department's bid award to Hewitt and Baxter is not a party to this action.

   
   

3. On the other hand, Hewitt's bid was accepted since Hewitt had complied with the Department's prequalification requirements and was otherwise responsive to the ITB. Therefore, the Department awarded Hewitt the contract for Project No. RS-40 since in its opinion Hewitt was the lowest responsive bid on the project.

   
   

4. The ITB clearly notified potential bidders that they must prequalify with the Department. The ITB stated, in pertinent part:

   
   

   All bidders must submit evidence that they are qualified to perform the work in accordance with Section B, paragraph B-2 of the specifications. Evidence of eligibility must be submitted to the owner (defined in article B-1) not later than five (5) calendar days prior to bid date.

5. Additionally, the cover sheet for the bid documents admonished all bidders to submit evidence of their eligibility to bid to Respondent at least five (5) days before the bid letting.

   
   

   The cover sheet stated:

   
   

   All bidders on this project must prequalify according to the provisions of section B, "Instructions to Bidders", article B-2.

   Evidence of eligibility must be submitted to the owner (defined in article B-1) not later than five (5) calendar days prior to bid date.

   
   

6. Section B-1 of the bid documents defines the owner of Project RS-40 as the Department of Corrections.

   
   

7. Section B-2 of the bid documents instructed all bidders to prequalify with Respondent to participate in the bid process. Section B-2 states:

   
   

   Prequalification: Each bidder whose field is governed by Chapter 399, 489, and 633 of the Florida Statutes for licensure will be prequalified by the Department to participate in the bid process for a specific field or area of construction based on the bidder's area of license or certification.

   Bidder qualification requirements and procedures are established by the State of Florida, Department of General Services rule (Chapter 13D-11, Florida Administrative Code) and by the bidding conditions and specifications. Failure of the bidder to strictly meet and follow all such requirements and procedures may result in bid rejection or disqualification for contract award. For the bidder's convenience, the provisions of Rule 13D-11.004 Bidder's Qualifications Requirements and Procedures are set forth below.

   
   

   Requirements: Each potential bidder must present, or have presented within this current biennium (July 1 through June 30) odd number years, evidence that:

   1. He is authorized to perform the work required by these documents in accordance with the applicable provisions of Florida Statutes governing contractors, as a general (Insert contractor designation) contractor.

   2. If the Bidder is a corporation, he must submit evidence that this corporation is properly registered with the State of Florida, Department of State, Division of Corporations,

      and holds a current State Corporation Charter Number in accordance with the Florida Statutes.

      
      

      (*This sentence to be deleted by Architect- Engineer if not applicable.)

      
      

      All interested firms who have NOT qualified within the current biennium (July 1 thru June

      30) odd number years must submit evidence of their eligibility during the bidding period, not later than five (5) calendar days (received date) prior to the bid date. The Owner may, for good cause, allow a firm to correct any deficiencies in evidence submitted.

      Notice of qualification will be mailed to each bidder, but a Bidder may not receive the written notification prior to a bid opening. He may learn his status prior to the bid opening time by calling the Owner (Department of Corrections), Bureau of Facilities Services at 904-487-1330).

      The Bidder shall submit the required evidence of eligibility to the Department of Corrections, Bureau of Facilities Services, 2601 Blairstone Road, Tallahassee, Florida 32399-2500. (emphasis supplied)

      All information shall indicate the full name, address and telephone number of the individual, partnership, or corporation, and the name of the contact person. Include a self-addressed stamped envelope.

      The names of all bidders will be checked against the list of contractors who have prequalified in accordance with the requirements of Section B-2.

      
      

8. Additionally, a careful reading of Rule 13D-11, Florida Administrative Code, reveals that the information required under the Rule should be submitted to the owner of the project involved in the bid process, i.e. the Department of Corrections in this case.

   
   

9. A contractor is the person who is qualified and responsible for an entire project and includes the person who submits a bid for a given project. Section 489.105(3), Florida Statutes. A general contractor is a person who is unlimited as to the type of work they can do, unless a specific type of license is required by Chapter 489, Florida Statutes. Section 489.105(3)(a), Florida Statutes. See also Section 489.113, Florida Statutes.

   
   

10. Under Chapter 489, Florida Statutes, a contractor can be a certified general contractor or a registered general contractor.

    
    

11. A certified general contractor can contract in any jurisdiction in the state without fulfilling the competency requirements of the local jurisdiction. Section 489.105(8), Florida Statutes. On the other hand, a registered general contractor is required by Section 489.117(2), Florida Statutes, to comply with

    all local licensing requirements. Registration with the state is specific for a given local jurisdiction and cannot be used in another jurisdiction. Section 489.113(2), Florida Statutes. In fact, Section 489.113(1), Florida Statutes, requires a contractor to be registered for a specific jurisdiction prior to engaging in the business of contracting. Additionally, a contractor must subcontract electrical, mechanical and plumbing work unless the contractor is state certified or holds the specific trade license required by the appropriate local authority if such a local license is required. Section 489.113(3), Florida Statutes. Importantly, Chapter 489, Florida Statutes, permits a person to act as a prime contractor, including submitting a bid on a project, where the bulk of the work under the contract is covered by the contractor's specific license, as long as the parts of the project for which he is not licensed are subcontracted to persons holding an appropriate license. Section 489.113(9), Florida Statutes.

    
    

12. Respondent requires prequalification of contractors in advance of its bid lettings to ensure that everyone who bids is legally or financially qualified to do the work required in the bid. The five (5) day deadline prior to the bid letting gives Respondent's staff an opportunity to resolve any irregularities in a bidder's prequalification materials prior to the letting. Indeed, if a contractor is state registered, as opposed to state certified, Respondent's staff, prior to the bid, routinely contacts the local government with jurisdiction over the building site to determine if there are any local licensing requirements and if there are, to determine if the bidder/contractor is locally licensed in that jurisdiction. This process avoids the waste of time involved in reviewing a bid package from a bidder who cannot ultimately perform the work called for in the bid. More importantly, this process prevents a locally unlicensed registered contractor from having the ability to void a contract at its will after the bids are opened since it would be unlawful for the contractor to have either bid on a project located in a jurisdiction where the contractor was not licensed or enter into such a contract. The ability to refuse an award of a bid clearly constitutes an unfair advantage to the locally unlicensed registered contractor and could not be waived as immaterial by an agency.

    
    

13. In this case, Hewitt is a certified general contractor and is therefore automatically qualified to work in Holmes County. Panhandle is a registered general contractor and can only bid on Project RS-40 if it has met the requirements for general contracting in Holmes County.

    
    

14. The prequalification process requires a bidder who has not prequalified with Respondent during the current biennium to submit to Respondent his current state contractor license certification or registration, as well as his current corporate charter registration (if a corporation).

    
    

15. When Respondent opened the bids for the Project, Petitioner had neither prequalified with Respondent nor obtained a license or certification of competency to engage in contracting work in Holmes County.

    
    

16. Petitioner thought it was already prequalified under its prequalification with the Department of Management Services. However, prequalification with the Department of Management Services does not meet the requirements of the ITB which requires prequalification with the Department of Corrections.

17. Panhandle did obtain the necessary licensure after submitting its bid and after the bids were opened. However, such belated licensure does not negate the unfair advantage created by Panhandle's failure to prequalify and be properly licensed prior to the bid opening as required by the bid documents.

    
    

    CONCLUSIONS OF LAW

    
    

18. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. Section 120.57(1), Florida Statutes.

    
    

19. In a bid protest proceeding, the Hearing Officer's sole responsibility is "to ascertain whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly" in its decision to reject Petitioner's bid and award the contract for the Project to Intervenor. Department of Transportation v. Groves- Watkins Constructors, 530 So.2d 912, 914 (Fla. 1988).

    
    

20. An agency, in its discretion, may waive a minor irregularity in a bid proposal. Tropabest Foods, Inc. v. State of Florida, Department of General Services, 493 So.2d 50 (1st DCA 1986); Robinson Electrical Co., Inc. v. Dade County, 417 So.2d 1032 (Fla. 3d DCA 1982).

    
    

21. A minor irregularity is a variation from the bid specifications which "does not affect the price of the bid, or give the bidder an advantage or benefit not enjoyed by other bidders or does not adversely impact the interests of the agency." Tropabest, supra at 52.

    
    

22. In this case, Respondent rejected Petitioner's bid because Petitioner failed to prequalify with Respondent and because Petitioner had not obtained in advance of the bid opening a license to perform general contracting work in Holmes County. Petitioner acknowledges its failure to be properly licensed prior to the bid opening and to prequalify with Respondent.

    
    

23. Petitioner apparently maintains that its prequalification with the Department of Management Services satisfied Respondent's prequalification requirements. However, both the bid instructions and Section B-2 of the bid specifications clearly require each bidder to prequalify with Respondent no later than five (5) days prior to the bid opening date. Petitioner simply did not meet the requirements of the bid specifications and therefore did not qualify to bid.

    
    

24. Furthermore, Section 489.117(2), Florida Statutes, only allows a registered contractor to engage in contracting in those counties where "he has complied with all local licensing requirements and only for the type of work covered by the registration". Because Chapter 489, Florida Statutes, does not require an examination of an applicant for registration, the law relies on local government to establish and enforce building standards for contracting work in a specific locale. Section 489.117(1), Florida Statutes (1992 Supp.). Failure to comply with the registration restrictions of Section 489.117, Florida Statutes, subjects a violator to the penal provisions of Section 489.127, Florida Statutes and enables the bidder to refuse the contract once the bids were opened. Such an advantage not enjoyed by bidders like Intervenor who, by statute, qualify to engage in contracting work in all areas of the State is unfair and cannot be permitted to exist.

25. The requirement of licensure prior to submittal of a bid is not a minor irregularity but mandated by state and local statutes which the Department should not waive. City of Opa-Locka v. Trustees of the Plumbing Industry Promotion Fund, 193 So.2d 29 (Fla. 3d DCA 1966) and Greenhut Construction Company, Inc. v. Henry A. Knott, Inc., 247 So.2d 517 (Fla. 1st DCA 1971).

    
    

26. In the case of City of Opa-Locka, the court reviewed a city's decision to waive a low bidder's failure to comply with a county ordinance requiring a certificate of competency from all contractors submitting a bid for any public works project. The city sought to permit the low bidder to obtain the required certificate after the bids were opened. The court prohibited the city from allowing its bidders to qualify after their bids were accepted, stating that to do so would circumvent the intent of the ordinance. Additionally, the city's plan would result in an unfair advantage over those who must prequalify to have their bids considered favorably. The court concluded that the city's exercise of discretion to waive the ordinance would also be conducive to the exercise of favoritism by allowing some bidders to qualify after opening while the city could reject others because they did not prequalify. Id. at 32.

    
    

27. In 1971, the First District Court of Appeal quoted favorably the Opa- Locka decision in Greenhut Construction Company, Inc. v. Henry A. Knott, Inc.,

    247 So.2d 517 (Fla. 1st DCA 1971). In that case, the court reviewed a decision of the Department of General Services to reject Knott's low bid. Like Petitioner in the instant case, Knott failed to prequalify before submitting its bid. In the Greenhut case, Knott argued that the forerunner to Chapter 489, Florida Statutes, required a contractor to be certified or registered only before actually commencing construction. Like today's Chapter 489, Florida Statutes, and the definition of contracting set forth in Holmes County Ordinance No. 72-1, the governing statute in Greenhut defined "contracting" to include the act of submitting a bid for contracting work. Knott, however, relied upon another section of the statute (now codified in Section 489.131, Florida Statutes (1992 Supp.), which required a local agency to determine a contractor's compliance with the licensing requirements before allowing a contractor to proceed with construction of any public project. Id. at 522. Rejecting Knott's argument, the court determined to give effect to all of the provisions of the contracting statute. Specifically, the statute prohibited any contractor from engaging in contracting without the appropriate license. The court determined the submission of a bid constituted "contracting" and was prohibited absent licensure.

    
    

28. Based on the above, the Department had a logical and rational predicate for it's action in this case. Like the Department of General Services in the Greenhut case, Respondent established prequalification criteria for its bidders. Those criteria required state registered contractors like Petitioner to obtain a certificate of competency in Holmes County and to furnish Respondent with evidence of their eligibility to bid prior to submitting a bid to Respondent for work in that county. Although today's contracting statutes are numbered differently than the statutes in Greenhut, the language of the statutes has remained substantially intact. The reasoning applied by the Greenhut and City of OpaLocka courts should dictate the result of this case--to uphold a state agency's right, if not obligation, to enforce its pre-bid qualification requirements.

    
    

29. Respondent is entitled to enforce the criteria it established in its bidding instructions. Therefore, Respondent's decision to reject Petitioner's bid was neither arbitrary nor capricious. Petitioner presented no evidence that Respondent's action was the result of fraud or illegality or favoritism to any

other bidder. Because Petitioner has not demonstrated the existence of fraud, illegality, favoritism or arbitrary conduct on the part of Respondent, Respondent's decision to reject Petitioner's bid and award the contract for the Project to Intervenor as the lowest qualified bidder was appropriate.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Respondent issue a Final Order in this case dismissing

Petitioner's formal protest and awarding the contract for the Project to Intervenor.

DONE AND ENTERED this 4th day of October, 1993, in Tallahassee, Florida.

DIANE CLEAVINGER

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 4th day of October, 1993.

ENDNOTE

1/ Holmes County Ordinance No. 72-1 sets forth that county's requirements for a general contractor to engage in contracting. By definition, the act of contracting under Chapter 489, Florida Statutes and the Holmes County ordinance includes submission of a bid for a contract. The Holmes County ordinance obligates the contractor to pass an examination, submit to an investigation into the contractor's financial responsibility, credit and business reputation, and provide proof of adequate insurance to the local Construction Industry Licensing Board.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-4210BID

1. The facts contained in paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 38, 39, 44, 54, 55,56, 57, 58, 60, 61, 62, 64 and 68 of Respondent's Proposed Findings of Fact are adopted in substance insofar as material.

2. The facts contained in paragraphs 13, 20, 36, 37, 40, 41, 42, 43, 45, 46, 47, 48, 49, 51, 53, 59, 63 and 67 of Respondent's Proposed Findings of Fact are subordinate.

3. The facts contained in paragraph 66 of Respondent's Proposed Findings of Fact were not shown by the evidence.

4. The facts contained in paragraphs 50, 52 and 65 of Respondent's Proposed Findings of Fact were immaterial.

5. The facts contained in paragraphs 1, 2 and 9 of the Petitioner's Proposed Findings of Fact are adopted in substance insofar as material.

6. Paragraphs 7 and 13 of Petitioner's Proposed Findings of Fact were legal argument.

7. The facts contained in paragraph 5 of Petitioner's Proposed Findings of Fact are adopted. The remainder of the paragraph is legal argument.

8. The facts contained in paragraphs 3, 6, 8, 10 and 17 of Petitioner's Proposed Findings of Fact are subordinate.

9. The facts contained in paragraphs 4, 11, 12, 14, 15, 16, 18, 19 and 20 of Petitioner's Proposed Findings of Fact were not shown by the evidence.

10. The facts contained in paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 9 and 18 of Petitioner's Proposed Findings of Fact are adopted.

11. The facts contained in paragraphs 10, 11, 12, 13, 14, 15, 16, 17, 19 and 20 of Petitioner's Proposed Findings of Fact were are subordinate.

COPIES FURNISHED:

Fletcher Fleming, Esquire Post Office Box 1831 Pensacola, Florida 32598

Steven S. Ferst, Esquire

R. Beth Atchison, Esquire 2601 Blair Stone Road

Tallahassee, Florida 32399-2500

Samantha D. Boge, Esquire STOWELL, ANTON & KRAEMER

Post Office Box 11059 Tallahassee, Florida 32302

Harry K. Singletary, Jr.

Secretary

Department of Corrections 2601 Blair Stone Road

Tallahassee, Florida 32399-2500

Louis A. Vargas, Esquire General Counsel Department of Corrections 2601 Blair Stone Road

Tallahassee, Florida 32399-2500

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit to the agency 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: 93-004210BID

Orders for Case No: 93-004210BID