vs. ) Case No. 98-4062BID
Respondent. )
Pursuant to notice, a formal hearing was held in this case on October 9, 1998, via video teleconference, before Patricia Hart Malono, a duly designated Administrative Law Judge of the Division of Administrative Hearings. The Petitioner and the Respondent appeared in Fort Lauderdale, Florida.
Whether the Respondent's decision to reject the Petitioner's bid proposal for Contract No. E4A83, Financial Project
No. 231494-1-52-01, State Project No. 99904-3404, is clearly erroneous, contrary to competition, arbitrary, or capricious.
On August 3, 1998, District Four of the Department of Transportation ("Department") posted its Notice of Intent to Award Contract No. E4A83 to Control Specialists Company. On August 7, 1998, Santa Fe Technologies, Inc., the low bidder on the project, filed a notice of protest with the Department.
After a settlement conference, the Department notified Santa Fe Technologies by letter dated September 2, 1998, that it intended to "stand by its decision to deem Santa Fe Technology, Inc.'s bid nonresponsive as unbalanced due to the specific individual price units discussed at the settlement conference." In a letter dated September 3, 1998, Santa Fe Technologies indicated its intention to proceed with its bid protest, and the Department forwarded the matter to the Division of Administrative Hearings for assignment of an administrative law judge.
At the hearing, Santa Fe Technologies presented the testimony of two witnesses: Vern Sneed, Santa Fe Technologies' sales manager for Florida, and Lizz Holmes, the procurement manager in the Department's District Four office. The Department presented the testimony of two witnesses: Lizz Holmes and Robert Bostian, an engineer employed in the Department's District Four office. On rebuttal, Santa Fe Technologies presented the testimony of Vern Sneed. The parties offered Joint Exhibits 1 through 13, which were received into evidence.
The transcript of the proceeding was filed with the Division of Administrative Hearings on November 5, 1998. Santa Fe Technologies filed its Proposed Recommended Order on
November 16, 1998, and, pursuant to an order extending the time for filing, the Department filed its Proposed Recommended Order on November 20, 1998.
Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made:
The Department of Transportation is authorized to "enter into contracts for the construction and maintenance of all roads designated a part of the State Highway System . . . ." Section 337.11(1), Florida Statutes.
On June 9, 1998, the Department's District Four office issued an Invitation to Bid in which it solicited proposals for the "installation of traffic monitoring sites on State Road 93 (I-75) and State Road 862 (I-595) in Broward County and on State Road 9 (I-95) in Palm Beach County." The project was identified as "State Project Number FM # 23149415201." One hundred fifty days were allotted for completion of the work.
The work described in the Traffic Monitoring Site Plans, which are part of the Invitation to Bid, consists of installing traffic monitoring devices, referred to as loop-speed
classification assemblies, in ten locations on the specified roadways.
A loop-speed classification assembly consists of a piece of wire laid in a trench cut in the center of a lane in a roadway and attached to a computer on the side of the road. The loop sets up a magnetic field, which is broken when a car crosses the wire, and the car is counted by the computer. Installation of a loop-speed classification assembly involves cutting a six-foot- square trench in the pavement approximately three-eighths of an inch wide and two inches deep. The wire is laid in the trench, and the trench is filled with epoxy. It takes approximately an hour to make the cut and lay the wires.
Pursuant to the site plans, two loop-speed classification assemblies are to be installed at each of the ten locations, and the assemblies are to be laid ten feet apart. Accordingly, the work zone needed to install two loop-speed classification assemblies is one lane, or twelve feet, wide and twenty-two feet long. One or more lanes of traffic must be closed whenever a loop-speed classification assembly is installed.
An important aspect of the project specifications is maintenance of traffic, which involves placing traffic control devices on the roadway to divert traffic whenever a lane or lanes of traffic must be closed for installation of loop-speed classification assemblies. Signs, barricades, and flashing
lights, among other devices, are placed in configurations that are established by the Department in a document entitled "General Information for Traffic Control Through Work Zones." This document includes both the number of barricades, and lights to be used to close a lane or lanes of traffic and their exact placement in the roadway, which varies with the speed limit and the number of lanes to be closed.
The specifications in the Traffic Monitoring Site Plans provide that lane closures to create work zones for the installation of loop-speed classification assemblies can occur only between the hours of 10:00 p.m. and 6:00 a.m. Sunday night through Thursday night and that work may be done at only one location per night. According to the specifications, a lane or lanes of traffic can be closed to create a work zone only when all the labor and material are on site, and traffic control devices can be placed only at a location where work is actually in progress. The site plans require that traffic control devices be removed from the roadway when construction is not in progress and that the roadway be made safe for traffic before the devices are removed; that is, on Monday through Friday, all barricades and flashing lights put onto the roadway at 10:00 p.m. the previous night must be removed and all lanes of traffic must be open by 6:00 a.m., and the roadway must be in a safe condition before the lanes are opened to traffic. No work can be done on the project between 6:00 a.m. on Friday and 10:00 p.m. on Sunday,
and no barricades or flashing lights may be placed on the roadway during this time, or at any time when work is not actually being performed.
The District Contracts Bid Price Proposal form included in the materials provided by District Four in the Invitation to Bid specifies the pay item numbers for each component of work and material required for the project, plan quantities for each item calculated by the engineers in District Four, and the item description in words. The bidders were directed to include on the proposal form the unit price for each pay item and the total price for each pay item, calculated by multiplying the unit price by the plan quantities specified.
Five companies submitted proposals for the project: Santa Fe Technologies, Inc.; Control Specialists Company; The Signal Group, Inc.; Transportation Safety Contract; and Designed Traffic Installation. Santa Fe Technologies was the lowest bidder at $166,805.20; Control Specialists Company was the second lowest bidder at $167,305.
An award team composed of employees of the Department's District Four office reviewed the proposals submitted for the project and decided to award the contract to Control Specialists Company, the second lowest bidder, concluding that the prices included in its bid "adequately reflect the scope of work as presented."
Even though Santa Fe Technologies was the lowest bidder for the project, the District Four award committee concluded that the prices submitted by Santa Fe Technologies "did not appear totally balanced to the scope of work as presented" with respect to Maintenance of Traffic pay items 2102-74-1, "barricade (Temporary) (Types I, II, VP & Drum)," and 2102-77, "high intensity flashing lights (Temp - Type B)," and with respect to Traffic Operations pay items 2660-70-124, "loop speed clas assem (F & I) (2 loop per lane) (4 lane)," and 2660-70-125, "loop speed clas assem (F & I) (2 loop per lane) (5 lane)."
The award committee based its conclusion that the Santa Fe Technologies' bid was unbalanced on the following analysis:
Item No. Average Price Other (4) Santa Fe Tech
2102-74-1 | $ 0.52 | $ 5.00 | 1/ |
2102-77 | $ 2.75 | $ 40.00 |
|
2660-70-124 | $3,180.59 | $675.00 |
|
2660-70-125 | $4,042.08 | $675.00 |
|
The notes taken during the deliberations of the award committee, which accurately reflect the discussion, include the following:
Low bidder - unbalanced
MOT [Maintenance of Traffic] items loaded. (barricades, flashing lights)
Incentive to look for delays. Doesn't appear to be "a good faith bid." loops - very, very low. - unrealistic
Vote to award to second low bidder. Bid reasonable, fair.
These remarks reflect the concern of the award committee with both Santa Fe Technologies' high unit prices for the Maintenance of Traffic pay items as compared with the average unit prices of the four other bidders and Santa Fe Technologies' low unit prices for the loop-speed classification assemblies as compared with the average unit prices of the four other bidders.
Santa Fe Technologies specializes in traffic monitoring and has contracts with several states for the same type of work required for the project at issue in this case. For the past four years, Santa Fe Technologies has had a contract with the Department's Tallahassee office to maintain and repair traffic monitoring sites throughout the state. The manager of the
Department's traffic data section, who administers the contract, considers Santa Fe Technologies an excellent firm with regard to its technical capability, and he believes that Santa Fe Technologies has done more than satisfactory work for the Department.
The work included in the Traffic Monitoring Site Plans prepared by the Department's District Four office is virtually identical to that required by Santa Fe Technologies' statewide traffic monitoring contract with the Department's Tallahassee office. The unit prices in the proposal submitted to the Department's District Four office by Santa Fe Technologies in response to the Invitation to Bid were based upon, and similar to, the prices in its contract with the Department, including the prices for temporary barricades (pay item 2202-74-1), temporary flashing lights (pay item 2202-77), and loop-speed classification assemblies (pay items 2660-70-124 and 2660-70-125). Santa Fe Technologies also included similar unit prices for these items in a proposal it submitted in response to an Invitation to Bid issued by District Two for a project similar to the one at issue herein and was awarded the contract for that project.
It has been the experience in District Four that, with respect to road construction contracts, cost overruns on maintenance of traffic items are very common. The Department pays the contractor the unit price for the quantity of barricades and flashing lights actually used rather than the estimated
quantity included in the bid documents; payment is made on a "per each per day" basis. Consequently, District Four's concern regarding the "unbalanced" nature of Santa Fe Technologies' unit prices for these pay items is that the final pay quantity will increase and that, were Santa Fe Technologies to be awarded the contract, the Department would have to pay $3.00 for each additional unit for pay item 2201-74-1 instead of the $0.50 bid by Control Specialists Company and $40.00 for each addition unit for pay item 2201-77 instead of the $2.00 bid by Control Specialists Company. The award committee apparently reasoned that Santa Fe Technologies deliberately and in bad faith bid a high unit price for barricades and flashing lights, as measured against the average unit prices of the four other bidders, in anticipation of increasing the quantities of these pay items and reaping a windfall on the contract.
The most common cause for increased final pay quantities for maintenance of traffic pay items in road construction projects is rain delays which add additional days onto the days allotted for completion of the project. Another cause for increased final pay quantities for maintenance of traffic pay items in road construction projects is the need to set out additional traffic control devices because of unexpectedly heavy traffic flow or other safety reasons.
Neither rain delays nor safety concerns are relevant considerations in the context of the traffic monitoring project
at issue herein. Crews cannot work on the roadways to install loop-speed classification assemblies when it is raining; pursuant to the terms of the Traffic Monitoring Site Plans, if work is not in progress at a site, no barricades and flashing lights will be set out at the site. 2/ Additionally, the Traffic Monitoring Site Plans specifically provide that "[a]t the discretion of the [Department's] engineer, if a lane closure causes extended congestion, the contractor shall be directed to re-open the closed lane(s) until such time as traffic flow has returned to an acceptable level." Finally, because the Department specifies the number of barricades and flashing lights to be used for lane closures and the precise placement of these devices, it is not likely that additional units will be needed for safety reasons since such concerns are considered by the Department in formulating its specifications for traffic control plans.
Santa Fe Technologies included in its $3.00 unit price for pay items 2201-74-1 and 2201-77 the cost of labor to put out and take down the barricades and flashing lights, using a four- man crew, as well as the cost of the barricades and lights themselves. The unit price bid by Santa Fe Technologies is reasonable even though it is higher than the average unit price bid by the four other companies submitting proposals.
The bid analysis also identified as unbalanced the unit prices included in Santa Fe Technologies' proposal for loop-speed classification assemblies, as noted above in paragraph 12. The
notes of the award committee indicate that it viewed as "very, very low. - unrealistic" the unit prices Santa Fe Technologies bid on these pay items, as measured against the average unit prices of the four other bidders.
The Department did not offer any direct evidence of the reasons for the award committee's concern that the unit prices bid on the loop-speed classification assemblies were substantially lower than the average bid of the four other bidders. It is not likely that the award committee was concerned about cost overruns on these pay items since the plan quantities of loop-speed classification assemblies are not subject to cost overruns because the planned quantities and locations are fixed and will not change as a result of site conditions, weather conditions, or other factors involving their installation.
Santa Fe Technologies estimates that, at most, the cost of the material in a loop-speed classification assembly is $100. The remainder of the $675.00 unit price it specified for pay items 2660-70-124 and 2660-70-125 is the cost of labor for the actual installation of the loop-speed classification assembly, which, as noted above in paragraph 4, involves cutting a trench into the pavement six-feet square, three-eighths of an inch wide, and two inches deep, laying loops of wire in each trench, sealing the trench with epoxy, and connecting the wires to a computer at the side of the roadway. Its bid of $675.00 per loop-speed classification assembly unit is reasonable even though it is
substantially lower than the average unit prices bid by the four other companies submitting proposals.
The Department's decision to reject the low bid of Santa Fe Technologies on the grounds that it is unbalanced is arbitrary and capricious because it is not supported by logic and is not based on a reasoned consideration of the requirements of the Traffic Monitoring Site Plans on which the responses to the Invitation to Bid were based. Although the unit prices for barricades and flashing lights Santa Fe Technologies included in its proposal were significantly higher than the average unit prices bid by the four other companies, the evidence submitted by Santa Fe Technologies is sufficient to establish with the requisite degree of certainty that the unit prices of $3.00 and
$40.00, respectively, are reasonable. The evidence presented by Santa Fe Technologies is also sufficient to establish with the requisite degree of certainty that the assumption of the District Four award committee that there is a substantial likelihood of cost overruns on the contract because of an increase in the number of barricades and flashing lights used for traffic maintenance is unfounded.
Likewise, although the unit price for loop-speed classification assemblies Santa Fe Technologies included in its proposal was significantly lower than the average unit prices bid by the four other companies, the evidence submitted by Santa Fe
Technologies is sufficient to establish that its unit price of
$675.00 is reasonable.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding and of the parties thereto pursuant to Sections 120.569, 120.57(1), and 120.57(3), Florida Statutes (1997).
The legislature has set forth its intent regarding the procurement of goods and services by state agencies in Section 287.001, Florida Statutes, as follows:
The Legislature recognizes that fair and open competition is a basic tenet of public procurement; that such competition reduces the appearance and opportunity for favoritism and inspires public confidence that contracts are awarded equitably and economically; and that documentation of the acts taken and effective monitoring mechanisms are important means of curbing any improprieties and establishing public confidence in the process by which commodities and contractual services are procured. It is essential to the effective and ethical procurement of commodities and contractual services that there be a system of uniform procedures to be utilized by state agencies in managing and procuring commodities and contractual services; that detailed justification of agency decisions in the procurement of commodities and contractual services be maintained; and that adherence by the agency and the contractor to specific ethical considerations be required.
The Department, in exercising its contracting authority, "may award the proposed [road] construction and maintenance work to the lowest responsible bidder, . . . or it
may reject all bids and proceed to rebid the work in accordance with subsection (2) or otherwise perform the work." Section 337.11(4), Florida Statutes.
Santa Fe Technologies, the lowest bidder on the project at issue herein, filed a bid protest pursuant to Section 120.57(3)(f), Florida Statutes (1997), challenging the Department's decision to award the contract to the second lowest bidder. Section 120.57(3)(f) provides in pertinent part:
In a competitive procurement protest, other than a rejection of all bids, the administrative law judge shall conduct a de novo proceeding to determine whether the agency's proposed action is contrary to the agency's governing statutes, the agency's rules or policies, or to the bid specifications. The standard of proof for such proceedings shall be whether the proposed agency action was clearly erroneous, contrary to competition, arbitrary, or capricious. . . .
"A capricious action is one taken without thought or reason or irrationally. An arbitrary decision is one not supported by facts or logic." Agrico Chemical Co. v. Department of Environmental Regulation, 365 So. 2d 759, 763 (Fla. 1st DCA 1978). The inquiry to be made in determining whether an agency has acted in an arbitrary or capricious manner involves consideration of "whether the agency: (1) has considered all relevant factors; (2) has given actual, good faith consideration to those factors; and (3) has used reason rather than whim to progress from consideration of these factors to its final
decision." Adam Smith Enterprises v. Department of Environmental Regulation, 553 So. 2d 1260, 1273 (Fla. 1st DCA 1989).
Because Santa Fe Technologies has challenged the Department's decision to award the contract at issue herein to Control Specialists Company, it has the burden of proving "a ground for invalidating the award." State Contracting and Engineering Corp. v. Department of Transportation, 709 So. 2d 607, 609 (Fla. 1st DCA 1998); Section 120.57(3)(f), Florida Statutes ("Unless otherwise provided by statute, the burden of proof shall rest with the party protesting the proposed agency action."). Because there is no statute providing otherwise, the findings of fact in this proceeding "shall be based upon a preponderance of the evidence." Section 120.57(1)(h), Florida Statutes.
In this case, the Department decided not to award the contract to the lowest bidder after concluding that the proposal should be rejected as unbalanced. The Department's authority to reject a proposal because it is unbalanced derives from the Florida Department of Transportation Standard Specifications for Road and Bridge Construction, 1996, which provides in
Section 2-6:
A proposal will be subject to being considered irregular and may be rejected if it shows omissions, alterations of form, additions not called for, conditional or unauthorized alternate bids, or irregularities of any kind; also if the unit prices are obviously unbalanced, either in
excess of or below the reasonable cost analysis values.
Although the Department may reject a proposal deemed irregular as unbalanced, it may not, consistent with Section 120.57(3)(f), exercise this discretion in an arbitrary or capricious manner, in a manner that is clearly erroneous, or in a manner that is contrary to competition.
Based on the findings of fact herein, Santa Fe Technologies has proven by a preponderance of the evidence that the Department's decision to award the traffic monitoring contract at issue herein to the second lowest bidder is arbitrary and capricious. The Department did not consider all the factors relevant to this particular project in reaching its decision to reject Santa Fe Technologies' proposal as unbalanced. The decision was based on the assumption of the District Four award committee that Santa Fe Technologies would reap a windfall were it awarded the contract because of the likelihood of cost overruns on the pay items for barricades and flashing lights, but this assumption is not supported by credible evidence. In addition, there is no evidence of record to indicate that the District Four award committee established that the bid of Santa Fe Technologies was unbalanced, "either in excess of or below the reasonable cost analysis values," because no evidence was presented which included the reasonable cost analysis values for the pay items in question.
Santa Fe Technologies has proven by a preponderance of the evidence that it is the lowest responsible bidder for Contract No. E4A83, Financial Project No. 231494-1-52-01, State Project No. 99904-3404. As a result, the Department's decision to award the contract to the second lowest bidder is not consistent with the legislative intent for procurement of goods and services by state agencies and is "contrary to competition" because it would not "secure the best values for the [public] at the lowest possible expense." Wester v. Belote, 103 Fla. 976, 138 So. 2d 721, 723-24 (Fla. 1931).
Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Transportation enter a final order sustaining the bid protest and awarding the subject contract to Santa Fe Technologies, Inc.
DONE AND ENTERED this 9th day of December, 1998, in Tallahassee, Leon County, Florida.
Filed with the Clerk of the Division of Administrative Hearings this 9th day of December, 1998.
$3.00 for this pay item.
2 Both employees of District Four who appeared as witnesses at the hearing testified that it was their understanding that the project specifications required that the barricades and flashing lights remain on the roadway until the installation of a loop- speed classification assembly is complete and that the barricades and flashing lights are not to be removed each morning. (Transcript at 86, 92, 113-14, 127-28.) Ms. Holmes has no experience with traffic monitoring contracts since the only contracts which have been let by District Four during her time with that office are road maintenance or construction contracts. Mr. Bostian testified that he had no firsthand knowledge of cost overruns for maintenance of traffic pay items in general but had been told by others familiar with road construction projects that overruns were common.
Brian F. McGrail, Assistant General Counsel Department of Transportation
Randall O. Reder, Esquire 1319 West Fletcher Avenue Tampa, Florida 33612
Thomas F. Barry, Secretary Attention: James C. Myers, Clerk Department of Transportation Haydon Burns Building
Pamela Leslie, General Counsel Department of Transportation Haydon Burns Building
All parties have the right to submit written exceptions within 10 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.
