STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

COASTAL MARINE CONSTRUCTION, INC., )

)

Petitioner, )

)

vs. ) CASE NOS. 95-5701BID

) 95-5702BID

DEPARTMENT OF TRANSPORTATION, ) 95-5703BID

)

Respondent, )

) WALSH GROUP, LTD., INC., and ) SUBSIDIARIES D/B/A ARCHER-WESTERN ) CONTRACTORS, LTD., )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William J. Kendrick, held a formal hearing in the above-styled cases on January 31, 996, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Bruce A. Leinback, Esquire

Cummings, Lawrence and Vezina, P.A. 1004 DeSoto Park Drive

Post Office Box 589

Tallahassee, Florida 32302-0589

For Respondent: Thomas H. Duffy, Esquire

Department of Transportation Haydon Burns Building, Suite 562

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399-0458

For Intervenor: John C. O'Rourke, Jr., Esquire

O'Brien, O'Rourke and Hogan

135 South LaSalle Street, Suite 830 Chicago, Illinois 60603

STATEMENT OF THE ISSUE

At issue in this proceeding is whether the decision of respondent, Department of Transportation (Department), to award the subject bid to intervenor, The Walsh Group, Ltd., Inc. and Subsidiaries d/b/a Archer-Western Contractors, Ltd. (Archer-Western), comported with the essential requirements of law.

PRELIMINARY STATEMENT

These consolidated cases arose as a result of an invitation to bid (ITB) issued by the Department for a bridge repair and rehabilitation project in Palm Beach County, Florida. Following its review of the bids, the Department proposed to award the contract to Archer-Western, and petitioner, Coastal Marine Construction, Inc. (Coastal) timely protested such award (DOAH Case No. 95- 5702BID). Thereafter, the Department resolved to withdraw the notice of intent to award and to reject all bids, and Coastal timely protested such action (DOAH Case No. 95-5703BID). Finally, the Department resolved to rescind its rejection of all bids and, consistent with its initial decision, award the contract to Archer-Western. Coastal timely protested such award (DOAH Case No. 95-5701BID).

On November 20, 1995, the Department referred all three matters to the Division of Administrative Hearings for the assignment of a Hearing Officer to conduct a formal hearing pursuant to Section 120.57(1), Florida Statutes. The three cases were consolidated by order of November 27, 1995, and by order of December 6, 1995, Archer-Western, as the apparent low bidder, was granted leave to intervene.

At hearing, the parties filed a joint prehearing statement, which contained certain factual stipulations, and joint exhibits 1-7, 8A, 8B, 8C, 9, 11 and 12 were received into evidence. 1/ Additionally, petitioner called Donald James Logan and Elizabeth Ryndak, as witnesses, and its exhibit 1 was received into evidence. The Department called Donald Henderson, as a witness, and its exhibit

1 was received into evidence.2 Intervenor, Archer-Western, called no witnesses, and offered no additional exhibits.

The transcript of hearing was filed February 5, 1996, and the parties were accorded ten days from that date to file proposed recommended orders. The proposed findings of fact, contained within the parties' proposed recommended orders, are addressed in the appendix to this recommended order.

FINDINGS OF FACT

The bid process

1. In June 1995, the Department of Transportation (Department) issued an invitation to bid (ITB), State Project Number 93280-3504, Contract Number E- 4866, for the repair and rehabilitation of the Royal Park Bridge, a two span, four leaf bascule bridge, which spans the Intercoastal Waterway and connects the town of Palm Beach to West Palm Beach, Palm Beach County, Florida. Prospective bidders were contacted through a bid solicitation notice, which was sent to prequalified contractors, and interested firms ordered bid packages, which included plans and specifications.

   
   

2. The subject project was experimental, and was an effort to identify the most cost-effective means of repainting bridges that contained, inter alia,

   lead-based paint, a hazardous material, while minimizing exposure of workers and the public as well as the environment (the Intercoastal Waterway), to the hazardous materials.

   
   

3. The technical specifications or capabilities of the equipment to be used to abrade and prepare the bridge surfaces for repainting, keeping in mind the objective of the project, were developed by the Department's consultant, Kenneth C. Clear, and are noted in section 560, subsection 1.01.1, of the specifications, discussed infra. At the time, Mr. Clear was aware of one

   system, the "Cavi-Tech" or "Cavi-Blast" method, a proprietary system devised by Cavi-Tech, Inc., that could comply with the technical specifications, but did not know of any other company that had a similar process. Consequently, in drafting the technical requirements at issue in this bid challenge, discussed more fully infra, he identified the "Cavi-Blast" system of Cavi-Tech, Inc., as capable of satisfying the technical requirements, and further provided, at the bidder's election, for the use of alternative equipment if it could be shown to meet the surface preparations standards described in the ITB.

   
   

4. Pertinent to this case, Section 560 of the specifications, entitled Repainting Exposed Steel, at page 560-1 of the ITB, specified the following technical requirements for surface preparation equipment:

   
   

   1. Surface Preparation Equipment

      
      

      1. Surfaces shall be abraded and prepared for recoating using an energy enhanced water jet generated by equipment capable of sustained operation at pressures in excess of 17,000 psi. Nozzles shall operate using resonation and cavitation technology. Production rates shall be at least 600 square feet per machine and production shift in the case of full coating

         removal (CB-4 per section 1.2), and 1,500 square feet per machine and production shift for sweep- off blasts which remove all oil, grease, dirt, loose paint, loose rust, rust scale and loose mill scale, and profile the remaining paint

         (CB-1 per section 1.2). The equipment shall include closed-loop water handling and filtration systems capable of repeated reuse of blast water and on-site treatment of the water upon completion such that it is rendered non-hazardous.

         
         

      2. Abrasives, steel shot and/or chemical strippers shall NOT be used.

         
         

      3. The surface preparation equipment shall be capable of achieving the surface preparation standards described in section 1.2, and document ation of its successful use on at lest 10 similar bridge or industrial structures totaling at least 250,000 square feet shall be submitted with the

         bid. Additionally, detailed project documentation and air monitoring historical data from at least 5 projects in which paint containing a lead primer was completely removed without the use of negative pressure enclosures, shall be submitted with the bid. These data shall show conclusively that, on each of the projects, the lead exposure to individuals WITHOUT breathing apparatus located

         5-feet and further from the water jet nozzle was less than the OSHA action level (i.e. the air qualified as non-hazardous, breathable air in accordance with Code of Federal Regulations 29 CFR 1926.62 "Lead") when the equipment was operated at full capacity for at least 8-hours.

      4. The Cavi-Tech, Inc., Inc. (2108 Moon Station Drive, Kennesaw, Georgia 30144; phone Number 404-424-4015; fax Number : 404-424-4009) "Cavi-Blast" system meets the above requirements.

   
   

5. The ITB package did not require, apart from any implications that may be drawn from the foregoing provisions, that the bidder specify the type of surface preparation equipment it proposed to use, and no form was included with the bid package on which such election could be denoted. The bid package did include, however, a standard proposal to be executed by the bidder, which bound the bidder "to perform all necessary work, as provided for in the contract, and if awarded the Contractor [Bidder] to execute the contract within 20 calendar days after the date on which the notice of award has been given." The ITB further required a proposal guarantee, payable to the Department, of not less than five percent of the total actual bid, "which guarantee is to be forfeited as liquidated damages if . . . the Proposal is accepted [and] the Bidder . . . fail[s] to execute the attached Contract under the conditions of this

   proposal. "

   
   

6. On August 17, 1995, after the pre-bid conference, the Department issued Addendum Number 1 to the ITB, which included the following clarification as to the painting specifications for the project:

   
   

   Surface preparation equipment requirements are specified in Section 1.01 of the painting specifications. Cavi-Tech, Inc. is indicated as a company having equipment and experience

   meeting the requirements of this specification section. Other companies meeting the requirements of Section 1.01 can bid on this project.

   
   

7. In response to the ITB, the Department received five bids for the project. The lowest bid was submitted by Archer-Western, $2,868,816.35, and the second lowest bid was submitted by Coastal, $2,930,461.68. The three other firms that bid on the project were PCL Civil Contracts, Inc. (PLC), with a bid of $2,943,370.20, Gilbert Southern Corp. (Gilbert), with a bid of $2,967,928.10, and M & J Construction Co. of Pinellas County (M & J), with a bid of

   $3,274,867.17.

   
   

8. The bid price proposal submitted by each bidder contained various items which were tallied to derive the total amount bid. Item Number A560 1 was for painting structural steel, and Archer-Western listed a price of $425,300, Coastal a price of $500,000, PCL a price of $350,000, Gilbert a price of

   $450,000, and M & J a price of $575,348.45.

   
   

9. Pertinent to this case, while Archer-Western did secure a quotation from Cavi-Tech, Inc., for Cavi-Blast and coating services, as well as historical data regarding its use, it did not include such documentation with its bid. Consequently, the bid submitted by Archer-Western, as well as the bid of PCL, contained no information in response to subsection 1.01.3, regarding surface preparation equipment. Contrasted with those bids, Coastal, in what it perceived as the appropriate response to subsection 1.01.3, included information from Cavi-Tech, Inc., on the Cavi-Blast system. Gilbert and M & J likewise included documentation on the Cavi-Blast system.

10. The Department, following its evaluation, deemed the five bids responsive, and on October 4, 1995, posted notice of its intent to award the contract to Archer-Western. Coastal timely protested the proposed award (DOAH Case No. 95-5702BID).

    
    

11. On October 9, 1995, the Department notified all bidders that it was rescinding its notice of intended award and proposed to reject all bids. Coastal timely protested such decision (DOAH Case No. 95-5703BID).3

    
    

12. Finally, on October 24, 1995, the Department, following reconsideration of its position, resolved to rescind its rejection of all bids and, consistent with its initial decision, award the contract to Archer-Western. Coastal timely protested such award (DOAH Case No. 95-5701BID).

    
    

    The bid protest

    
    

13. Here, Coastal contends that Archer-Western's proposal (bid) was not responsive to the ITB because it did not include documentation in response to subsection 1.01.3 of the ITB. By such failure, Coastal suggests Archer-Western failed to commit to using the Cavi-Blast system or identify an alternative system it would use and, therefore, its bid was at material variance from the ITB. That variance, Coastal avers, accorded Archer-Western the opportunity to reevaluate its bid, after bid opening, and then decide whether to adhere to is bid or refuse to abide its bid without penalty due to its non-responsiveness.

    
    

14. Contrasted with Coastal's perception of subsection 1.01.3, the Department views that subsection, when read in pari materia with subsections

    1.01.1 through 1.01.4, as only requiring documentations when the bidder proposes to use surface preparation equipment other than the Cavi-Blast system. Indeed, the Department observes, it would be superfluous to include documentation demonstrating that the Cavi-Blast system was capable of achieving the surface preparation standards when subsection 1.01.4 specifically states that the Cavi- Blast system meets requirements. Accordingly, where, as here, the bidder does not provide any documentation in response to subsection 1.01.3, the Department contends it may be fairly implied, based on the bidder's agreement in the proposal "to perform all necessary work, as provided for in the contract," that it has proposed to use, and is bound to use, the Cavi-Blast system. Consequently, the Archer-Western bid was, in the Department's opinion, responsive to the ITB.

    
    

15. Reading the provisions of subsections 1.01.1 through 1.01.4 in para materia, it must be concluded that the Department's conclusion in this case is supported by logic, and that its decision to award the contract to Archer- Western did not depart from the essential requirements of law.

    
    

    CONCLUSIONS OF LAW

    
    

16. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings. Sections 120.53(5)(d)2 and 120.57(1), Florida Statutes.

    
    

17. Here, Coastal contends that the Department's decision to award the bid to Archer-Western departed from the essential requirements of law because

    Archer-Western's bid was nonresponsive to the ITB. As the protestant, Coastal has the burden of establishing, by a preponderance of the evidence, that the

    Department's actions or decisions departed from the essential requirements of law. Department of Transportation v. J.W.C. Co., Inc., 396 So.2d 778 (Fla. 1st DCA 1981).

    
    

18. Competitive bidding requirements, such as those imposed upon the Department, have as their purpose and object the following:

    
    

    [T]o protect the public against collusive contracts; to secure fair competition upon equal terms to all bidders; to remove not only collusion but temptation for collusion and opportunity for gain at public expense; to close all avenues to favoritism and fraud in various forms; to secure the best values

    for the [public] at the lowest possible expense; and to afford an equal advantage to all desiring to do business with the [government], by affording an opportunity for an exact comparison of bids.

    
    

    Wester v. Belote, 103 Fla. 976, 138 So. 721, 723-24 (Fla. 1931); Harry Pepper & Associates, Inc. v. City of Cape Coral, 352 So.2d 1190-92 (Fla. 2d DCA 1977).

    
    

19. In soliciting and accepting competitive bids, an agency has wide discretion, and its decision, if based on an honest exercise of this discretion will not be overturned even if reasonable persons may differ with the outcome. See D.O.T. v. Groves-Watkins Constructors, 530 So.2d 912 (Fla. 1988); Liberty County v. Baxter's Asphalt & Concrete, Inc., 421 So.2d 505 (Fla. 1982). Its discretion, while broad, is not, however, unbridled. It must exercise such discretion in a manner that is not illegal, dishonest, fraudulent, arbitrary, or in any other way that would subvert the purpose of competitive bidding. See

    D.O.T. v. Groves-Watkins Constructors, supra; Caber Systems v. Department of General Services, 530 So.2d 325 (Fla. 1st DCA 1988); Couch Construction Company, Inc. v. Department of Transportation, 361 So.2d 172 (Fla. 1st DCA 1978); and Wood-Hopkins Contracting Company v. Roger J. Au & Sons, Inc., 354 So.2d 446 (Fla. 1st DCA 1978). Here, for the reasons that follow, it is concluded that Coastal has failed to demonstrate that the Department's decision to award the contract to Archer-Western departed from the essential requirements of law.

    
    

20. In exercising its discretion, an agency may not accept a proposal that is materially at variance with the request for proposal. However, although a proposal containing a material variance is unacceptable, not every deviation from the request for proposal is material. It is only material if it affects the price of the proposal, gives the offeror an advantage or benefit not enjoyed by other offerors, or adversely impacts the interests of the agency. See: Tropabest Foods, Inc. v. Department of General Services, 493 So.2d 50 (Fla. 1st DCA 1986); Robinson Electrical Co., Inc. v. Dade County, 417 So.2d 1032 (Fla. 3d DCA 1982); Harry Pepper & Asso., Inc. v. City of Cape Coral, supra, and Rule

13A-1.001(32), Florida Administrative Code. Here, reading the provisions of subsections 1.01.1 through 1.01.4 in pari materia, the Department has reasonably concluded that the requirements of subsection 1.01.3 are mandatory only when the bidder proposes to use a system other than the Cavi-Blast system. Therefore, when a bidder has not provided any documentation in response to subsection

1. it is fair to imply, as suggested by the Department, that the surface preparation equipment it proposes to use, and by contract is bound to use, is the Cavi-Blast system, as approved by subsection 1.01.4. Consequently, Archer-

   Western's bid was not materially at variance from the ITB, and the Department's decision to award the bid to Archer-Western did not depart from the essential requirements of law.

   
   

   RECOMMENDATION

   Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a final order be entered dismissing Coastal's protests

   and, more particularly, its protest of the award of the subject bid to Archer-

   Western.

   
   

   DONE AND ENTERED this 26th day of February 1996 in Tallahassee, Leon County, Florida.

   
   

   
   

   WILLIAM J. KENDRICK, 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 26th day of February 1996.

   
   

   ENDNOTES

   
   

   1/ Joint exhibit 10, marked for identification, was withdrawn.

   
   

   2/ Petitioner objected to the introduction of the Department's exhibit 1 on the basis of relevancy, and such objection was taken under advisement. Upon review of the exhibit (the deposition of Kenneth C. Clear), petitioner's objection is overruled, and the Department's exhibit 1 is received into evidence.

   
   

   3/ Archer-Western also protested the Department's decision to reject all bids but, following the Department's decision on October 24, 1995, to abide by its initial decision and award the contract to Archer-Western, it withdrew its protest.

   
   

   APPENDIX

   
   

   Petitioner's proposed findings of fact are addressed as follows:

   
   

   1. Addressed in paragraph 1.

   2. Addressed in paragraphs 2 and 3.

   3. Addressed in paragraph 4.

   4. Rejected as argument. See paragraphs 13-15.

   5. First sentence addressed in paragraph 5. Second sentence rejected as argument. See paragraphs 13-15

   6. Rejected as argument. See paragraphs 13-15.

7 and 8. Not relevant.

9 and 10. Addressed in paragraph 9, otherwise unnecessary detail.

11 and 12. Addressed in paragraph 7.

13 and 14. Addressed in paragraph 9.

1. Addressed in paragraph 9.

2. First sentence addressed in paragraph 9. Second sentence rejected as contrary to the facts as found. See paragraphs 13-15.

3. Not shown to be relevant.

4. Addressed in paragraph 10.

5. Unnecessary detail.

6. Rejected as containing an unwarranted assumption, "that bidders were required to identify the paint removal equipment they proposed to use by attaching the documentation required by subsection 1.03.3," being argumentative, and contrary to the facts as found. See paragraphs 13-15.

7. Not relevant, and suffers the same deficiencies as petitioner's proposed paragraph number 20.

8. Addressed in paragraph 11, otherwise unnecessary detail.

9. Addressed in paragraph 11 and endnote 3.

10. Addressed in paragraph 12.

11. Rejected as argument and contrary to the facts as found. See paragraphs 13-15.

12. Rejected as a mischaracterization of the testimony and contrary to the facts as found. See paragraphs 13-15.

13. Rejected as argument and contrary to the facts as found. See paragraphs 13-15.

The Department's proposed findings of fact, which were also adopted by Archer- Western, are addressed as follows:

1 and 2. Addressed in paragraph 1.

1. Addressed in paragraph 2.

2. Addressed in paragraph 4.

5-12. Addressed in paragraph 3.

13. Accepted, but subordinate to the conclusions reached in paragraphs 14 and 15.

14 and 15. Addressed in paragraph 5, otherwise unnecessary detail.

16. Addressed in paragraph 6.

17-20. Addressed in paragraphs 7-9.

21-23. Addressed in paragraph 10.

1. Addressed in paragraph 11, otherwise unnecessary detail.

2. Addressed in paragraph 12 and endnote 3.

3. Addressed in paragraph 14.

4. Subordinate or unnecessary detail.

5. Rejected as not relevant.

COPIES FURNISHED:

Thomas H. Duffy, Esquire Department of Transportaition

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399-0450

Bruce A. Leinback, Esquire Cummings, Lawrence and Vezina, P.A. 1004 DeSoto Park Drive

Post Office Box 589

Tallahassee, Florida 32302-0589

John C. O'Rourke, Esquire Michael Gilman, Esquire O'Brien, O'Rourke and Hogan

135 South LaSalle Street, Suite 830 Chicago, Illinois 60603

James E. Moye, Esquire

Moye, O'Brien, O'Rourke, Hogan & Pickert

201 East Pine Street, Suite 710 Orlando, Florida 32801

Ben G. Watts, Secretary Department of Transportation Attn: Diedre Grubbs

Haydon Burns Building, Mail Station 58 Tallahassee, Florida 32399-0450

Thornton J. Williams, General Counsel Department of Transportation

562 Haydon Burns Building Tallahassee, Florida 32399-0450

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: 95-005701BID

Orders for Case No: 95-005701BID