The Issue The issue is whether the proposed policies and summaries of procedures in Sections 7.29 through 7.33 of the Hillsborough County School Board Policy Manual are invalid exercises of delegated legislative authority.
Findings Of Fact Based upon the testimony and evidence received at the hearing, the following findings are made: Parties Petitioner is an engineering firm. Joe Robinson, a professional engineer, is the majority owner and president of Petitioner. Petitioner is a "small business" as defined in Section 288.703, Florida Statutes. Petitioner is also certified as a minority-owned business by the State of Florida and the School Board. Petitioner has performed engineering work on projects for the School Board in the past, and has expressed interest in performing such work for the School Board in the future. Respondent is a local school district, and is responsible for the construction, renovation, management, and operation of the public schools in Hillsborough County. To fulfill those responsibilities, Respondent is often required to obtain the services of architects, engineers and other professionals through competitive procurement under Section 287.055, Florida Statutes, the Consultants' Competitive Negotiation Act (CCNA). Background Prior to the Proposed Rules, the School Board's only adopted policy or procedure relating to the acquisition of professional services was Section 7.14 of the Policy Manual. That section does not specifically reference the CCNA; it simply authorizes the superintendent or his or her designee to "contract for professional or educational services to complete projects or activities authorized or approved by the school board." The only description of the School Board's existing procurement process under the CCNA is in a document entitled "Capital Projects Standard Procedures." That document was presented to but never adopted by the School Board, and it provides only a general outline of the procurement process. The procedures utilized by the School Board to procure professional architectural, engineering, and construction management services have been the subject of considerable review and some criticism over the past year. In February 2002, Mr. Robinson, on behalf of the Black Business Union, provided the School Board with a list of concerns related to the School Board's selection process, including: Selection criteria does not comport to requirements of F.S. 287.055 (i.e., points for utilizing certified minority firms, volume of work, etc.) [School Board] practices fail to follow the requirements of Chapter 4, SREF, Volume #1, and have not been adopted through any determinable policy or procedure. Compliance with [School Board] Policy 7.14 Purchasing Policies and Bidding, has not been followed. (Designees are exempt from nepotism and favoritism policy) On May 17, 2002, the Ernst & Young consulting firm submitted to the School Board a report summarizing the findings and recommendations of its "forensic evaluation and analysis of the District's construction and maintenance policies, practices, and procedures." At the request of the School Board staff, Mr. Robinson provided comments to Ernst & Young in connection with the evaluation. The Ernst & Young report was critical of many aspects of the School Board's procurement, construction, and maintenance policies, practices, and procedures. With respect to the procurement of architectural and engineering services, the report included the following assessment which is pertinent here: Our review of [the District's] vendor's [sic] selection process indicates, in many respects, that the process follows traditional requirements established by SREF and Florida Statute [sic]. Furthermore, in many instances, the procedures mirror those utilized by peer and contiguous school districts. However, we have identified significant shortcomings related to ranking the professional service providers that have submitted bids for either architectural design, engineering, or construction management services. * * * Interviews with the A/E/C [architectural/engineering/ construction] community have indicated that the vendor selection process is generally understood by the professional community. However, the architects and construction managers within the community do not understand how vendors are evaluated or ultimately rank ordered [sic] by the District to arrive at a list of the three highest ranked respondents. As a matter of fact, the District has moved away from using a score sheet or "score card" with pre-established evaluation criteria and a weighted point structure, and toward a rather subjective process whereby a selection committee simply appoints professional service providers either based upon past performance on a similar type of project (i.e. replicate design) or based upon the District's desire to equitably distribute work amongst the A/E/C community. This type of evaluation and selection process, as currently utilized by the District, while effective at distributing work amongst the A/E/C community, does not ensure that the best or most qualified vendor will be selected for each of the proposed school district projects. The current vendor selection process could permit abuse and favoritism as the selection committee could be influenced by School Board input, personal relationship [sic] and lack of objective criteria. Although we found no evidence of undue influence, the subjective nature of the process offers the District little credibility. * * * E&Y [Ernst & Young] found that the vendor selection process being utilized by [the District] lacks credibility in that it remains highly subjective as new projects are allocated without respect to numerical analysis of prior performance, company financial condition, proposed project management team, etc. Moreover, the selection committees do not rotate sufficiently to eliminate the possible influence from senior [District] Administrators or Board Members. * * * Upon comparison to each of the peer and contiguous school districts, Ernst & Young found that only [the District] engages in a vendor selection process in the absence of pre-established or pre-determined evaluation criteria and a numerically-based scoring system which permits a numerical ranking of each interested professional service provider. E&Y found that the vendor selection process being utilized by [the District] lacks credibility in that it remains highly subjective as new projects are allocated without respect to numerical analysis of proper performance, company financial condition, proposed project management team, etc. . . . Ernst & Young Report, at 27-29, 107 (emphasis supplied). The report included the following recommendations relevant to the procurement of architectural and engineering services: The District's vendor selection process can be more objective and better understood within the A/E/C community by developing standard evaluation criteria and a numerically-based scoring system. Such a system will permit the District to numerically rank each interested professional service provider and thus eliminate bias and potential favoritism of the [District] selection committee. Evaluation criteria should include, among other things, prior performance, company financial condition, proposed project management team, etc. Moreover E&Y recommends that the District augment its vendor selection committees with community members, business leaders, school principals, and other external stakeholders as appropriate. In conjunction, [the District] should also increase its rotation of the selection committees [sic] members to eliminate possible influence from senior Administrators or Board Members. Ernst & Young Report, at 117. On July 31, 2002, Gibson Consulting Group (Gibson), on behalf of the Legislature's Office of Program Policy Analysis and Governmental Accountability, submitted a report based upon its "best financial management practices" review of the School Board pursuant to Section 230.23025, Florida Statutes (2001). Unlike the Ernst & Young report, the Gibson report was not critical of the District's procurement process for professional services. Indeed, the report concluded that the District "has an efficient school planning and construction operation" (Gibson Report, at 6 and 10-1), and that it is utilizing best management practices in procuring professional services. Id. at 13 and 10-34 through 10-35. The Gibson report stated that "[t]he district can demonstrate that procedures for selection were in compliance with Subsections 287.055 and 235.211, Florida Statutes, and that the committee screened written applications in order to select an appropriate number of professionals to be interviewed and that selected candidates were interviewed." Id. at 10-34 (emphasis supplied). The Gibson report also noted that the district can demonstrate that the interview committee considered the factors described in Section 287.055, Florida Statutes, including minority business status. Id. The Gibson report did not acknowledge or address the shortcomings in the evaluation process detailed in the Ernst & Young report. The Gibson report did acknowledge that "[t]he state statute [Section 287.055] encourages objectivity," but it nevertheless concluded that the School Board’s existing procurement process is "an effective hybrid of objectivity and subjectivity." Id. at 10-35. Aside from that conclusion, the results of both studies are consistent with the findings and conclusions in the Recommended Order in DOAH Case No. 02-2230BID. DOAH Case No. 02-2230BID involved a challenge to the specifications of a request for qualifications (RFQ) issued by the School Board in response to a recommendation in the Ernst & Young report that the School Board supplement its in-house staff with contract architects or engineers to provide more on-site supervision and inspection of construction projects. Petitioner in this case was also Petitioner in DOAH Case No. 02-2230BID. The Recommended Order in DOAH Case No. 02-2230BID concluded (consistent with the Gibson report) that "the School Board's current selection process, although not detailed in a formally-adopted rule or policy, is consistent with the procedural requirements of the CCNA." See DOAH Case No. 02- 2230BID Recommended Order, at 35 (emphasis supplied). However, the Recommended Order also concluded (consistent with the Ernst & Young report) that the evaluation of consultants was arbitrary and contrary to competition because the factors upon which the evaluation would be made and the weight afforded to each factor was not specified in advance and because the committee members did not utilize a uniform method of evaluation. Id. at 36. Based upon the conclusion that the RFQ specifications were arbitrary and contrary to competition, the Recommended Order recommended that: the School Board issue a final order that rescinds the [RFQ] and reformulates the specifications of the request in a manner that, at a minimum, advises potential respondents in advance of the factors upon which the responses will be evaluated and the weight that will be uniformly given to each factor by the selection committee. DOAH Case No. 02-2230BID Recommended Order, at 37. The Recommended Order in DOAH Case No. 02-2230BID was issued on September 6, 2002. The record does not reflect whether the School Board has issued its final order in that case yet.3 As of the date of this Order, the final order in DOAH Case No. 02-2230BID had not been filed with the Division in accordance with Section 120.57(1)(k), Florida Statutes. Rulemaking Process In response to the Ernst & Young report and Petitioner's challenge to the RFQ specifications in DOAH Case No. 02-2230BID, the School Board initiated the rulemaking process to formalize and improve its competitive procurement procedures under the CCNA. The Proposed Rules were drafted by Tom Blackwell, the School Board's Director of Planning and Construction, and the School Board's attorney. The Proposed Rules were reviewed by an engineer on Mr. Blackwell's staff. The language of the Proposed Rules was derived from the procurement policies used by other local school boards, the State University System, and other governmental entities. Copies of those other policies were not introduced at the hearing. The Proposed Rules were first considered by the School Board at its meeting on June 18, 2002. The record does not include a copy of the notice that was provided for the June 18, 2002, meeting. Typically, however, the agenda of the meeting is provided to the press and posted on the School Board's website. The agenda includes only the general subject-matter of the agenda items (i.e., "procurement of professional services") and not their substance. The Proposed Rules were an "off-agenda item." They did not appear on the published agenda, so the first public notice that the Proposed Rules would be considered at the June 18, 2002, meeting may have been at the meeting itself. Petitioner (through Mr. Robinson) was aware that the Proposed Rules would be considered at the June 18, 2002, meeting. Mr. Robinson attended the meeting and provided extensive comments on the Proposed Rules. Copies of the Proposed Rules were apparently available at the June 18, 2002, meeting, because Mr. Robinson annotated his copy of the Proposed Rules (Exhibit P3) as he provided his comments to the School Board. At the conclusion of the June 18, 2002, meeting, the School Board authorized its staff to "go forward" with the Proposed Rules. Based upon that authorization, notices were published in local newspapers on June 27 (The Courier), June 28 (La Gaceta), June 29 (Tampa Tribune), and July 5, 2002 (Florida Sentinel-Bulletin). The notices were published in the legal advertisement sections of the papers. The notices stated in relevant part: In compliance with the Administrative Procedure Act, Chapter [sic] 120.54 of the Florida Statutes, 1978 [sic], and the School Board of Hillsborough County's policies, the public is hereby notified of the following amendment to the School Board's Policy Manual: 7.29 Acquisition of Professional Services, 7.30 Public Announcement, 7.31 Competitive Selection, 7.32 Competitive Negotiation, and 7.33 Standardized Agreements. Anyone challenging the above affected Policy/Summaries of Procedures is requested to do so in writing and mail or deliver to the address listed below within twenty-one (21) days of this notice. The public hearing is scheduled for July 30, 2002, 6:00 p.m., in the Board Room, Raymond O. Shelton School Administrative Center, 901 East Kennedy Boulevard. Copies of the affected Policy/ Summaries of Procedures, which have no appreciable economic impact on the school system, are available for inspection and copying at the office of the Superintended of Schools, Hillsborough County School Administrative Center. The notices did not identify the specific authority or law implemented by the Proposed Rules. However, that information was included on the copies of the Proposed Rules available at both the June 18 and July 30, 2002, School Board meetings. On July 11, 2002, Mr. Robinson sent a letter on behalf of Petitioner to the School Board requesting "a Public Workshop pursuant to Florida Statute 120.54(2)(c)" or an explanation from the agency head as to why such a workshop is unnecessary. On July 19, 2002, the chairwoman of the School Board responded to Mr. Robinson's letter and stated that a workshop was determined to be unnecessary because a public hearing was already scheduled on the Proposed Rules for July 30, 2002. The chairwoman also noted that the School Board staff had met with Mr. Robinson on a number of occasions to discuss the procurement policy, and that Mr. Robinson appeared at the June 18, 2002, meeting where he presented his recommendations on the policy. The chairwoman invited Mr. Robinson to submit written comments to the School Board prior to the July 30, 2002, public hearing, and to make an oral presentation to the School Board at the public hearing. On July 25, 2002, in response to the invitation in the chairwoman's letter, Petitioner (through Mr. Robinson) submitted a comprehensive procurement policy for the School Board's consideration. The policy was submitted as an alternative to the Proposed Rules. Petitioner's proposed policy (Exhibit P7) tracks the language of Section 287.055, Florida Statutes. It also includes the prohibition against contingent fees and the exemption for reuse of existing plans which are in the statute but were not restated in the Proposed Rules. Petitioner's proposed policy also includes a detailed explanation of the selection process, instructions for the evaluation of applicants (including criteria to be considered in the evaluation and the process for awarding points for those criteria), and forms to be used by applicants and scoring sheets to be used by the evaluation committee. The School Board held a public hearing on the Proposed Rules at its July 30, 2002, meeting. Mr. Robinson attended the meeting and provided comments on each of the Proposed Rules. The minutes of the July 30, 2002, meeting reflect that at least one other professional, an architect, appeared and provided comments on the Proposed Rules at the public hearing. At the conclusion of the public hearing, the School Board voted unanimously (six to zero) to approve the Proposed Rules. The version of the Proposed Rules approved by the School Board on July 30, 2002, included several of the changes previously recommended by Mr. Robinson. Those changes are discussed below. On August 9, 2002 (10 days after the School Board's July 30, 2002, meeting), Petitioner filed a petition with the Division requesting a determination that the Proposed Rules are invalid exercises of delegated legislative authority. Substance of the Proposed Rules The Proposed Rules create Sections 7.29 through 7.33 of the Policy Manual. The complete text of the Proposed Rules is included in the Appendix to this Final Order. Each section of the Policy Manual has two parts, a "policy" statement and a "summary of procedures" that implement the policy. The Proposed Rules follow that same pattern. Accordingly, the "policy" and the "summary of procedures" must be read together. The specific authority cited for the Proposed Rules is Sections 230.03(2), 230.22, 230.23, 235.211, and 230.23005, Florida Statutes. The law implemented by the Proposed Rules is Sections 235.211 and 287.055, Florida Statutes. The procedural aspects of the Proposed Rules are essentially the same as the practice followed by the School Board in the past as detailed in the Recommended Order in DOAH Case No. 02-2230BID. Proposed Section 7.294 establishes the general policy that professional architectural, engineering, landscape architectural, land surveying, or construction management services will be procured in accordance with the CCNA. The School Board's Operations Division is assigned the responsibility for administering the procurement process. Proposed Section 7.30 establishes the public announcement requirements for acquisitions of professional services on projects with construction costs in excess of $250,000 or professional service fees in excess of $25,000. Those are the same thresholds in the CCNA. The public announcement must include "a general description of the project and must indicate how interested consultants may apply for consideration." The announcement is required to be published in the Tampa Tribune, La Gaceta, the Florida Sentinel Bulletin, and another paper whose circulation is in the vicinity of the project. Proposed Section 7.31 outlines the competitive selection process. It requires firms interested in providing services to the District to be certified as being qualified to render the required service, and provides a non-exclusive list of factors to be used in determining whether the firm is qualified. Proposed Section 7.31 also creates the Professional Services Selection Committee (Committee) that is responsible for evaluating and ranking prospective providers of professional services. The Committee is chaired by the Assistant Superintendent of Operations, and the other members of the Committee are specified. The Committee is responsible for evaluating materials submitted by interested firms, conducting interviews, hearing presentations, and ranking applicants. The evaluation criteria "shall" include: the ability of professional personnel; whether the firm is a certified minority business enterprise; past performance; willingness to meet time and budget requirements; location; recent, current, and projected workloads of the firms; and the volume of work previously awarded to each firm by the District, and such other factors which may be pertinent to the project. Section 7.31 (emphasis supplied). The word "shall" was used rather than "may" based upon Mr. Robinson's comments at the June 18, 2002, workshop. As a result, consideration of these criteria/factors is mandatory. However, as the underscored language suggests, the evaluation criteria may vary from project to project. The project-specific evaluation criteria will be available to prospective applicants at the time of the public announcement along with the location of project, scope of work, project budget, project schedule, and submission requirements. See Proposed Section 7.30. In addition, Proposed Section 7.31 requires the weights to be associated with each qualification and evaluation criteria to be disseminated to prospective applicants, presumably also at the time of the public announcement. Proposed Section 7.31 requires the Committee to "report a consensus evaluation for each applicant, including a relative ranking for each weighted criteria." The phrase "consensus evaluation" is not explained, but because the Committee is required to "short-list" the three firms that receive the "highest aggregate score" it appears that the evaluation will be made based upon a numerical scoring system. Such a system is a significant improvement over the existing evaluation process which was found to be arbitrary in the Recommended Order in DOAH Case No. 02-2230BID at pages 16-17. Indeed, the School Board's witnesses confirmed that, although the criteria and weights may vary from project to project, all of the applicants for a particular project will be evaluated and scored by the Committee members in a uniform manner. The Committee is required to interview the applicants as part of its evaluation if the project's construction cost is more than $1 million. If the cost is less than $1 million, Proposed Section 7.31 provides that interviews are optional. The purpose of the threshold was not explained at the hearing. Mr. Blackwell simply testified that the threshold was derived from a review of the policies of other governmental entities. Those policies were not introduced at the hearing, and the record is devoid of any other evidence to justify the School Board's choice of $1 million as the threshold, as compared to some other amount. The Committee's "short-list" will be submitted to the School Board for approval. Thereafter, the School Board is required to notify each applicant of the "short-listed" firms. The notice must be given by certified mail, return receipt requested, and must include the notice required by Section 120.57(3)(a), Florida Statutes. The latter requirement was added after the June 18, 2002, meeting based upon Mr. Robinson's comments. Proposed Section 7.32 outlines the competitive negotiation process. Pursuant to that section, the Director of Planning and Construction is required to negotiate with the top- ranked firm. The top-ranked firm is required to submit a fee proposal with supportive information, if required. If a mutually acceptable compensation package cannot be negotiated with the top-ranked firm, negations will commence with the next firm on the "short list." Upon completion of successful negotiations, the agreed compensation must be submitted to the School Board for approval. Proposed Section 7.33 requires the Director of Planning and Construction, in collaboration with the School Board attorney, to prepare standard contract documents to be used on all projects. Modifications from the standard documents must be clearly indicated. In short, the polices and summaries of procedures in the Proposed Rules prescribe the process that will be followed in connection with all procurements subject to the CCNA. The policies and procedures also prescribe the critical substantive aspects of the process, but they contemplate additional detail being provided on a project-by-project basis in the solicitation package (i.e., RFQ or request for proposals (RFP)) for the project. The project-specific materials, which will be available to potential applicants at the time of the public announcement (and, hence, in advance of the submittal and evaluation of responses) will specify the particular evaluation criteria/factors to be used by the Committee as well as the weight that will be given to each factor. Those materials will include forms, instructions, and other information similar to that in Petitioner's alternative proposal (Exhibit P7). The Proposed Rules do not specifically incorporate the prohibition on contingent fees in Section 287.055(6), Florida Statutes, nor do they incorporate the provisions of Section 287.055(10), Florida Statutes, relating to reuse of existing plans.
The Issue Whether the Miami-Dade County School Board's failure to disqualify Magnum Construction Management Corporation from bidding on Project No. A0746 pursuant to paragraph G. of the General Requirements of the Request for Qualifications issued in connection with the project was clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact Based upon the evidence adduced at hearing, and the record as a whole, the following findings of fact are made: The School Board The School Board is a duly constituted district school board charged with the duty of operating, controlling, and supervising all free public schools in Miami-Dade County, including, among many others, Westview Middle School (Westview) and Miami Coral Park Senior High School. The Westview Project Westview is currently undergoing expansion, remodeling, and renovation work (Westview Project). The project is almost complete. Blanca Bazan is a School Board employee who serves as project manager on School Board construction projects. At all times material to the instant cases, Ms. Bazan has been the Project Manager on the Westview Project. LIVS and Associates (LIVS), an architectural and engineering firm, has been the Project Architect/Engineer (or A/E of Record) on the Westview Project since October of 1997, when it entered into a written agreement (which is still in effect) to assume such responsibility in return for a "lump sum" payment, plus additional fees (LIVS Westview Agreement). Paragraph III.G. of the LIVS Westview Agreement describes the "basic services" LIVS is to provide during the "construction phase" of the project. It provides, in pertinent part, as follows: The following are to be performed by the A/E [LIVS], and shall in all cases be in accordance with the requirement of the contract documents: OBSERVATION a.) The A/E shall provide construction administration of the Contract for Construction as set forth in this AGREEMENT and in the General Conditions of the Contract for Construction unless otherwise provided in this AGREEMENT. The A/E shall visit the site at least weekly or as appropriate to the stage of construction or as otherwise directed by the BOARD to become generally familiar with the progress and quality of the Work completed and to determine in general if the Work is being performed in a manner indicating that the Work when completed will be in accordance with the Contract Documents. As part of the A/E's basic services, the A/E shall conduct 120 on-site observation visits. A/E shall provide a report to the PM [Project Manager] . . . . On the basis of on-site observations as the A/E, the A/E shall keep the BOARD and Contractor informed immediately in writing of the progress or lack of progress and quality of the Work, and shall endeavor to guard the BOARD against defects and deficiencies in the Work. The A/E shall at all times have access to the Work, wherever it is in preparation or progress. * * * b.) . . . . A/E will enforce the faithful performance of Contract and assure that the Work has been or is being performed in accordance with the Construction Documents. . . . A/E will provide written notice to BOARD if it observes or has reason to become aware of any defect or non- conformance with the Construction Documents. CONTRACTOR'S SUBMITTALS The A/E shall review and evaluate samples, schedules, shop drawings, and other submissions for conformance with the design requirements of the Project, applicable codes and ordinances. . . . The A/E shall also prepare in a timely manner change order items, including the proper documentation for DOE transmittal. . . . * * * 4. QUALITY CONTROL The A/E shall make a reasonable effort to evaluate materials and/or workmanship for conformance with Construction Documents, evaluate quality control testing reports, advise the Construction Contractor and the BOARD immediately of any unacceptable materials and workmanship the A/E may discover and [e]nsure that the Contractor take appropriate action to remedy unacceptable conditions. * * * CERTIFICATION OF PAYMENTS The A/E shall review the Contractor's notarized requisitions for payment, the schedule of values, subcontractor partial releases and the Project schedule. The A/E shall determine the amount which in the A/E's opinion should be paid to the Contractor and shall recommend for [the] BOARD'S approval certificates for payments in such amounts. These certificates will constitute a representation to the BOARD, based on site observations by all appropriate Designated Specialists for architectural and engineering disciplines and on the data comprising the application for payment, that the Work has progressed to the point indicated. By recommending a certificate for payment consistent with the contract documents, the A/E shall also represent to the Board that, to the best of the A/E's knowledge, information and professional judgment, the quality of work is in accordance with the Construction Contract Documents, unless the BOARD has been notified to the contrary in writing. Prior to issuing certification for payment, A/E shall review the status of Contractor's Construction Documents and Project schedule and verify that the documents and/or schedules are up-to-date and accurate to the extent visual observation of construction will disclose. A/E shall also confirm that after the first application for payment, each subsequent application shall be accompanied by subcontractor partial lien release fully accounting for subcontractor payments due for the previous application. If the Construction Documents and Project Schedule are not up-to-date and/or accurate, A/E shall include in its certification for payment a statement that the Construction Documents and/or Project Schedule are not up-to-date. In such event, BOARD may, a.) hold an additional ten (10)% of amount then due Contractor until A/E verifies that the Construction Documents and/or Project Schedule are up-to-date and accurate, b.) refuse to process the partial or final requisition for payment, or c.) pay Contractor. . . . The A/E's certification is a representation by A/E to Owner that all required items noted herein are submitted and proper and serves as a recommendation for payment only. The A/E shall make every reasonable effort to process the Contractor's requisition for payment in accordance with the timelines[] established in the General Conditions of the Construction Contract. . . . * * * SUBSTANTIAL COMPLETION The A/E, upon written notification by the Contractor that the Work is substantially complete and ready for substantial completion shall promptly conduct inspection to determine the date or dates of substantial completion for the work. . . . c) Not Substantially Complete If A/E determines that the Work has not achieved Substantial Completion, A/E will notify Contractor in writing of the deficiencies within ten (10) days of the Inspection. FINAL COMPLETION AND FINAL PAYMENT Upon receipt of written notice that the Work is ready for Final Inspection and Acceptance and upon receipt of a final Requisition for Payment, or at completion of the thirty (30) day punchlist period, whichever is earliest, A/E, its engineers and other consultants, BOARD and Contractor shall participate in a walk-through to inspect the Work. At the conclusion of the inspection, the Work shall be determined to be as follows: Finally Complete If it determined that the Work has achieved Final Completion, final payment shall be made in accordance with the Contract Documents. Not Finally Complete If it is determined that the Work has not achieved Final Completion, A/E shall prepare a Final Completion Punchlist and Final Completion shall be achieved in accordance with the Contract Documents and such other consequences as allowed by contract and at law shall be employed. . . . After all Final Inspection Punchlist items have been completed, A/E will recommend to BOARD acceptance of the Project and make recommendations regarding Contractor's final payment request. . . . Paragraph X.B. of the LIVS Westview Agreement provides as follows: If for any reason, the A/E is unable to perform the services under this contract, the BOARD reserves the right to either name or approve the A/E selected to complete the performance of this AGREEMENT. The BOARD reserves the absolute right to recommend a successor A/E or terminate the services of the A/E.[3] Paragraph XII. of the LIVS Westview Agreement provides that "[t]he BOARD may terminate this AGREEMENT, with or without cause, at any time upon thirty (30) days written notice to the A/E." With LIVS' assistance, a Project Manual for the Westview Project (Westview Manual) was prepared in anticipation of the letting of the Contract for Construction of the project through a competitive bidding process. Included in the Westview Manual were the General Conditions of the Contract for Construction. Subsections 3.1.1, 3.3.1, 3.3.2, and 3.3.3 of these General Conditions read as follows: 3.1.1 Contractor is the person, firm or corporation authorized to do business in the State of Florida and properly licensed or registered for the work to be performed with whom a Contract has been made with the Board for the performance of the Work described in the Construction Documents. * * * Contractor shall supervise and direct the Work in a manner consistent with contemporary community standards. Contractor shall be solely responsible for and have control over construction means, methods, techniques, sequences and procedures and for coordinating all portions of the Work under the Contract, unless the Construction Documents give other specific instructions concerning these matters. Contractor shall be responsible to Board for acts and omissions of Contractor's employees, Subcontractors and their agents and employees and other persons performing portions of the Work under the Contract and shall be responsible to A/E and Board for coordination and complete execution of the Work in accordance with the Construction Documents. 3.3.3. Contractor shall not be relieved of obligations to perform the Work in accordance with the Construction Documents either by activities or duties of A/E in its administration of the Contract, or by tests, inspections or approvals required or performed by persons other than Contractor. In or around 1999, the Contract for Construction of the Westview Project was awarded by the School Board to J.V. Construction Corporation (J.V.). As required by law and the terms of the Contract for Construction, J.V. executed and delivered to the School Board a payment and performance bond issued by The Hartford Fire Insurance Company (Surety). J.V. subsequently defaulted and its right to proceed under the Contract for Construction was terminated by the School Board, which called upon the Surety to fulfill the Surety's obligations under the payment and performance bond it had issued. As a result, the Surety "essentially step[ped] into the shoes of [J.V.]" under the Contract for Construction.4 The Surety thereafter contracted with MCM to act as a "completion contractor" and complete the work J.V. had begun under the Contract for Construction. The School Board was not a party to this contractual arrangement. The Completion Contract into which the Surety and MCM entered (which has been in effect since October 25, 2001) provides, in pertinent part, as follows: THIS COMPLETION CONTRACT (the "Contract") is effective the 25th day of October 2001 by and between The Hartford Fire insurance Company (the "Surety") and Magnum Construction Management Corp. (the "Completion Contractor"). RECITALS WHEREAS, J.V. Construction Corp. (the "Former Contractor") and THE SCHOOL BOARD OF MIAMI-DADE COUNTY, FLORIDA (the "Owner") entered into a contract (the "Original Contract") for the Former Contractor to furnish all labor and material and perform all work for the construction of an addition to the Westview Middle School Project No. A0670 (the "Project") in accordance with the terms and provisions of the Original Contract including all contract documents forming a part of the Original Contract; WHEREAS, as required by law and under the terms of the Original Contract, the Former Contractor and Surety made, executed and delivered to the Owner a Performance Bond, Bond No. 21 BCS AE 8081, and Payment Bond, Bond No. 21 BCS AE 8081 (collectively, the "Bonds"), each in the penal sum of $6,678,000.00; WHEREAS, the Owner has terminated Former Contractor's right to proceed under the Original Contract, and the Owner has called upon the Surety to fulfill its obligations as surety under the terms of the Performance Bond; WHEREAS, the Completion Contractor has submitted a proposal dated July 25, 2001, to the Surety to complete the Original Contract, and said proposal is incorporated herein . . . ; and WHEREAS, the Surety and the Completion Contractor desire to enter into this Contract under the terms and conditions hereinafter set forth. NOW, THEREFORE, the Surety and the Completion Contractor, for and in consideration of the mutual obligations and promises herein set forth, do contract and agree as follows: AGREEMENTS Contract Documents. The Contract to the Surety consists of the terms and provisions contained herein, including the proposal from MCM Construction to the Surety dated July 25, 2001, to complete the Original Contract . . . ; and the Original Contract, including all General, Supplementary and Special Conditions, drawings, specifications, forms, addenda and documents forming a part of the Original Contract and any modifications to the Original Contract, all of which are incorporated herein by reference and which are hereinafter referred to collectively as the "Contract Documents." The Completion Contractor hereby warrants that it has received and read all of the Contract Documents. Strict Compliance. The Completion Contractor shall be bound to the Surety by all of the terms and provisions of the Contract Documents, including administrative as well as technical provisions, and shall strictly comply therewith in all respects. Furthermore, the Completion Contractor shall be bound in the same manner and to the same extent that the Surety and the Former Contractor or either of them would be bound to the Owner under the Original Contract, including but not limited to the conditions or determinations by the Owner with respect to all work done thereunder. The Completion Contractor shall have no responsibility or liability for indebtedness incurred by the Former Contractor. * * * Work to be Performed. The Completion Contractor shall furnish and pay for all labor, materials, services and equipment and shall do everything else necessary to perform and satisfactorily complete the work of the Original Contract as required by the Contract Documents to the satisfaction of the Surety and the Owner in such manner as to fully protect and save the Surety harmless as to its liability to the Owner for the completion of the original Contract (The "Work"). Time for the Performance of the Work. . . . . Subject to allowable time extensions as provided under the terms of the Original Contract, if the Completion Contractor fails to achieve Substantial Completion as defined in the Original Contract in the time allowed by this Paragraph, the Completion Contractor is liable to the Surety for all liquidated damages assessed against the Surety for the Work under the Original Contract after 713 days from the execution of this Agreement by both parties. The Surety may withhold from the Completion Contractor payments which otherwise may be due to the Completion Contractor in an amount equal to the liquidated damages assessed by the Owner. Price. The Surety shall pay to the Completion Contractor and the Completion Contractor agrees to receive and accept Four Million, Seven Hundred Eighty Eight Thousand, Three Hundred ($4,788,300.00) Dollars (the "Price") as full compensation for the performance and completion of the Work as described in the Contract Documents. . . . * * * 9. Payment. As specified in the Original Contract, the Completion Contractor shall prepare, sign and submit to the Owner, on behalf of the Surety, a request for payment (the "Surety/Owner Requisition") showing the value of the work completed and the materials stored to date in accordance with the terms of the Original Contract. The Surety/Owner Requisition shall be based on the Original Contract price of the Former Contractor. The amount of the Surety/Owner Requisition as approved by the Owner and the Surety shall be due and payable to the Completion Contractor within seven (7) days after the Surety receives payment from the Owner. If the Owner refuses to pay the Surety for any reason related to the Completion Contractor's performance, nonperformance, or in any way related to the Completion Contractor's actions, the Surety shall have no obligation to pay the Completion Contractor until the Owner pays the Surety. In this event, the Surety shall only be obligated to pay the Completion Contractor whatever amounts are received by the Surety within seven (7) days of the Surety's receipt of payment from the Owner. In the event Owner refuses to pay Surety for any reason NOT related to the actions of the Completion Contractor, or its Subcontractors, Surety shall make payment to completion contractor, for all work in place as of the date of the payment application, within the timeframe set forth in the Original Contract for payment to the Original Contractor from the Owner. * * * B. In the same time frame as specified in the Original Contract, the Completion Contractor shall prepare and submit to the Surety a request for payment (The "Surety/Completion Contractor Requisition") based upon the amount of the Completion Contractor's price to the Surety. The Surety/Completion Contractor Requisition shall be based on the same percentages of completion (the value of the work completed and the materials stored to date (as the Surety/Owner Requisition.). The Surety shall pay the Completion Contractor for the Surety/Completion Contractor Requisition as specified in the immediately preceding paragraph. * * * Defects in Work. The Completion Contractor shall be responsible for any and all defects in the work performed or materials supplied by the Completion Contractor and/or any of the Completion Contractor's subcontractors or materialmen after the execution of this Agreement by both parties. Independent Contractor. Except as otherwise provided in this Contract and the Original Contract the Completion Contractor will be permitted to exercise the full prerogatives of a prime contractor, in prosecuting the work, including but not limited to the selection and classification of supervisors and workers, scheduling, determination of equipment and material requirements, and the establishment of work hours and work week including overtime. It is further understood and agreed that the Completion Contractor is an independent contractor in connection with all work to be performed by it pursuant to the Contract Documents. * * * The Completion Contractor as the Surety's Representative on the Project. The Surety shall be represented at the Project by the Completion Contractor. Prior to the issuance of the Notice to Proceed, the Completion Contractor shall name, and the Surety shall specifically authorize in writing an individual with the Completion Contractor to be its representative (the "Authorized Individual") solely for the purposes set forth in this paragraph. The Authorized Individual will represent the Surety in dealing with the Owner on day to day construction issues with respect to the Project. The Surety hereby designates the Authorized Individual to prepare and process pay requisitions on the Contract. However, the Surety will sign all pay requisitions submitted to the Owner. Payments from the Owner shall be made payable to the Surety and transmitted to the Surety . . . . * * * 17. Termination of Agreement. Termination for Convenience. This Contract may be terminated in whole or in part by the Surety at any time for the Surety's convenience, provided the Completion Contractor is given not less than ten (10) calendar days written notice of intent to terminate and an opportunity for consultation with the Surety prior to termination. . . . Termination for Cause. Should the Completion Contractor, at anytime, in the judgment of either the Owner or the Surety, refuse or fail to supply a sufficient number of properly skilled workmen or materials, tools, equipment, facilities, or supplies of a proper quality; or fail in any respect to prosecute the work with promptness and diligence; or interfere with or impede the work of others on the Project; or fail in the performance of any of its obligations under this Contract or under the Original Contract, and should the Completion Contractor fail within three (3) days after receipt of written notice from either the Owner or the Surety to remedy such default; . . . or disregard the instructions of the Owner or the Surety; or for any other cause whatsoever shall not carry on the work in an acceptable manner, the Surety may, in any such event, either terminate this Contract or may exclude the Completion Contractor and its employees and agents from the work without terminating this Contract. . . . Following the execution of the Completion Contract, the Surety's attorney wrote a letter, dated November 7, 2001, to Ms. Bazan, which read as follows: The Hartford is in receipt of your letter dated November 2, 2001, and has requested that we respond on its behalf. In response to your specific questions, please be advised of the following: The Hartford's authorized representative on the project is: Mr. Fernando Munilla MCM Corp. 6201 S.W. 70th Street Second Floor Miami, Florida 33143 The Hartford has also authorized Mr. Fernando Munilla to prepare and process pay requisitions on the project. However, the Hartford will sign all pay requisitions submitted to the School Board. Payments from the School Board shall be made payable to the Hartford Fire Insurance Company and transmitted to The Hartford at the following address unless and until the School Board is notified in writing of a different address: The Hartford Fire and Insurance Company Hartford Plaza-T4 Hartford, Connecticut 06115 Attention: Robert Griffith, Esq. Bond Claims Mr. Fernando Munilla shall have, on behalf of The Hartford, the authority to negotiate and sign change orders for extra work requested or required by the School Board (hereinafter "Change Order") without The Hartford's prior written approval, provided that the Change Order does not exceed $10,000.00 and that MCM requests and is given additional time to perform the Change Order. If the Change Order does exceed $10,000.00, or if MCM requests additional time but no additional time is given to MCM to perform the Change Order, then The Hartford's written approval is required to negotiate the Change Order and the final Change Order must be signed by The Hartford and not Mr. Munilla. If the total of the approved Change Orders exceeds the sum of $50,000.00, then The Hartford, and not Mr. Munilla, must approve in writing all additional or subsequent Change Orders regardless of the amount of each such Change Order. Mr. Munilla has no authority to negotiate deductive Change Orders, credits, backcharges or net deductions from the Original Contract of any nature whatsoever without The Hartford's prior written approval. Mr. Munilla has no authority to negotiate on behalf of The Hartford on any disputes between MCM and The Hartford. I trust this letter answers all of your questions. Please do not hesitate to contact me should you require any additional information or clarification. Since the effective date of the Completion Contract, LIVS, acting pursuant to the LIVS Westview Agreement as the School Board's A/E of Record on the Westview Project, has been inspecting and evaluating the work performed by MCM under the Completion Contract and verifying that work for which payment is sought (through the submission of pay requisitions by MCM on behalf of the Surety) has been completed in accordance with the requirements of the Contract for Construction. If a pay requisition is approved by LIVS, it is then sent to Ms. Bazan for her review and approval. If everything is in order, Ms. Bazan signs the pay requisition and then "run[s] it through the chain of command." When all the necessary signatures are obtained, the School Board makes payment to the Surety, which, in turn, pays MCM under the terms of the Completion Contract. MCM does not have any contract with the School Board in connection with the Westview Project. The payment it receives for the work it does on the project comes from the Surety (with which it does have a contractual relationship), not from the School Board. The School Board considers the Surety to be the Westview Project "contractor" (as evidenced by MCM Exhibit 19, which is an excerpt of an October 30, 2002, printout listing School Board construction projects).5 In the Statement of Contractor's Qualification that MCM submitted to the School Board in 2002 to obtain its Certificate of Contractor Prequalification for "General Contractor [W]ork" (which certificate was effective July 10, 2002, until July 10, 2003, and authorized MCM "to have under contract with the [School] [B]oard at any one time a total dollar value of work in the amount of $100,000,000.000 and maximum dollar value of each individual project in the amount of $40,000,000.00"), MCM stated, among other things, the following under "Contracts in Progress": PROJECT NAME: WESTVIEW MIDDLE SCHOOL- REMODELING & RENOVATION OWNER: Miami-Dade County Public Schools, Blanca Bazan (305)995-4538 ARCHITECT: LIVS and Associates CONSTRUCTION COST: $4,788,300 START/COMPLETION: 10/01 to 10/03 DESCRIPTION OF PROJECT: Addition, renovation and remodeling of an existing middle school with very stringent phasing requirements and time frames. The project consists of three phases. The first phase is a new building with classrooms and a media center, as well as a new parking lot. The second phase consists of the renovation and remodeling of a one-story building with a courtyard, classrooms, locker rooms, band room, and shop class. The third phase is a two-story building with a parking lot, classrooms, auditorium and an immediate phasing that consists of remodeling a cafetorium during summer break. The remodeling and renovation includes: asbestos abatement, architectural, electrical and mechanical demolition. The Instant Project In or about July of 2002, the School Board issued a Request for Qualifications for Design-Build Firms for "State School 'MMM' 1600 Student Station Addition at: Miami Coral Park Senior High School (Project No. A-0746)" (RFQ). In a design-build project like the Instant Project (in contrast to the "traditional bid contract scenario"), the School Board enters into a single contract (with a design-build firm) for both the design and construction components of the project.6 In the Legal Advertisement that was part of the RFQ, the School Board announced that it "intend[ed] to pre-qualify three (3) to six (6) design-build firms to subsequently invite them to bid" on the Instant Project and further stated, in pertinent part, the following: Firms and companies desiring to participate in the design-build pre-qualification process shall submit an original qualification proposal and eight copies . . . . * * * If the applicant is a joint venture, an executed copy of the joint venture agreement must be submitted with the application. Percentages of participation of fees must be clearly stated for each joint venture partner. Only one submittal will be accepted per applicant, either as a single prime or as part of a joint venture. Firms or companies desiring to participate in this contract must have been pre- qualified by the Board, in accordance with Board rule for Pre-Qualification of Contractors for Educational Facilities Construction, prior to submitting their proposal for this advertisement. . . . The General Requirements portion of the RFQ provided, in pertinent part, as follows: In order to be considered, proposers must meet the following basic requirements: * * * A pre-proposal conference will be held . . . . Attendance is highly encouraged. This will be the only opportunity to present questions regarding the proposal. Written questions may be forwarded to Mr. Ivan M. Rodriguez, R. A., . . . and said questions will be answered at the pre-proposal conference. Questions and answers will be distributed to attendees. Proposers must be authorized to do business in the State of Florida and must possess all required registration, certification and licenses (including design and construction) in accordance with all applicable Florida Statues, ordinances, regulations, and/or Board Rules. A joint venture, including a joint venture composed of qualified business organizations, is itself a separate and distinct organization that must be qualified in accordance with Board Rules and Florida Statute 489.119(2)(c). Proposers must have been in business for a period of no less than five years. In the event of a joint venture or a newly formed company, at least one of the entities of the joint venture or principal of the newly formed company must have been in business for a period of no less than five years. Any proposer, firm or company desiring to participate in this process must not have as a part of its team an A/E firm presently under contract with the Board for a specific project and a General contractor for the same project. The Board considers this a conflict of interest and such proposals will not be considered for award of a contract under this Request for Qualifications. * * * M. MDCPS reserves the right to reject any proposal, to waive technicalities, or to accept the proposal that, in its sole judgment, best serves the interest of Miami-Dade County Public Schools. * * * Failure to file a protest within the time prescribed in §120.57(3), Florida Statutes, shall constitute a waiver of proceedings under Chapter 120, Florida Statutes. Any questions concerning this RFQ should be directed to the Department of A/E Selection, Negotiations & Design Management; attention, Mr. Ivan M Rodriguez, R. A. Director at . . . . The Pre-Qualification Process portion of the RFQ provided, in pertinent part, as follows: Intent: To pre-qualify between three (3) to six (6) design-build firms to subsequently invite them to bid on the following project: State School "MMM" 1600 Student Station Addition @ Miami Coral Park Senior High School (Preliminary estimated Construction Cost- $17,473,890) 8865 S.W. 16th Street, Miami, Florida 33165 Project No.: A0746 The selected proposer will be placed on a list of qualified bidders for bidding on design-build services for the above project. * * * C. Pricing The selected proposers will be allowed to bid the above listed project[], under a competitive bid process, based on design criteria established by a Design Criteria Professional under contract by MDCPS. The Evaluation/Scoring Process portion of the RFQ provided, in pertinent part, as follows: All proposers will be evaluated based on information presented in their submittals, utilizing the Board approved "Procedure[] for [] Selection of Design-Build Firms" dated January 5, 1994 (Updated March 10, 1999) . . . . The "Procedure[] for [] Selection of Design-Build Firms" referenced in this portion of the RFQ provided, in pertinent part, as follows: I. SELECTION PROCESS: INTENT To select Design-Build firms for bidding on each DCPS Design-Build project identified. Selected proposers will be placed on a list of qualified bidders for bidding on each DCPS Design-Build project as advertised. SCHEDULE: Dates for the items listed below shall be projected and become part of future Request for Proposals (RFP) advertisement. Board Review Mailing Advertisement Proposal Submittal Deadline Evaluation Interviews Bid on Design-Build Projects Award of Design-Build Project * * * PRICING: Selected proposers will be allowed to bid each Design-Build project identified under a competitive bid process. * * * EVALUATION/SCORING PROCESS: All proposers will be evaluated based on information presented in their submittals . . . . SCORING The evaluation/scoring process will be conducted in two steps. First, staff shall evaluate all factors in the Initial Screening section of Form-1 . . . . Second, the Selection Committee shall evaluate all factors contained in the Interview section of Form-1 . . . . The evaluation/scoring process shall be as follows: INITIAL SCREENING All proposers will undergo an initial screening process conducted by staff where they will be evaluating the proposer[]s' qualifications. The proposers will be evaluated by staff utilizing Form-1 . . . ; maximum score in this category is 115 points. Proposers that do not comply with the RFP will not be accepted and shall be duly notified. INTERVIEWS All proposers that comply with the RFP shall be contacted to schedule interviews by the Selection Committee. The Proposers will be evaluated by each of the members of the Selection Committee utilizing Form-1 . . . . The maximum score in this category is 115 points. RANKING Both the initial screening score and the interview score will be added, and the sum of both scores will determine the ranking of all proposers. The highest and lowest of the seven (7) total scores for each proposer will be dropped, and an average taken of the remaining five (5), to determine total score and ranking. Three (3) or more firms will be selected as eligible to bid on the project advertised. The Board shall have the right to make exceptions to this procedure when valid public emergency conditions warrant. INSTRUCTIONS FOR USE OF DADE COUNTY PUBLIC SCHOOLS DESIGN-BUILD SERVICES SELECTION-FORM 1 * * * INITIAL SCREENING (115 POINTS TOTAL) From the proposer's response to the RFP, staff will objectively evaluate the firm's abilities in accordance with those criteria listed below (Scores for each applicant will be based on comparison with all other applicants): * * * C. ARCHITECTURAL ENGINEERING DESIGN (30 POINTS): Submit General Services Administration Standard forms 254 (one for each discipline) and 255 (one for entire team), which best describes the proposed architectural/engineering design team. . . . * * * INTERVIEWS After the proposers have been evaluated based on their written applications, they will be invited to make a presentation to the Selection Committee on their approach to perform Design-Build projects for DCPS. . . . * * * The Submittal Requirements portion of the RFQ provided, in pertinent part, as follows: Note: Please refer to Pages 4-9 of the "Procedure[] for [] Selection of Design- Build Firms" attached hereto as Exhibit "C" of this RFQ, for additional information on the following items: * * * E. Architectural/Engineering design- Submit Forms 254 and 255 for A/E team members only. Identify the architect's experience in design-build, the A/E team's experience with DOE codes, MDCPS design criteria/standards, master specifications, educational specifications and furniture, fixtures and equipment. Describe the A/E team's design coordination and quality control systems. * * * P. State of Florida licenses (design and construction)- Provide current copy of State of Florida registration and licenses for proposer and all its professional consultants. * * * R. Contractors Pre-qualification Certificate- Provide current copy of MDCPS Contractor Pre-qualification Certificate. Proposers must have a valid certificate with a minimum of $17,473,890 single project capacity, in order to be considered. * * * The pre-proposal conference referenced in the RFQ was held on July 25, 2002. Attendees were given a written document which contained, among other things, the following questions (that had been submitted in advance of the conference) and answers (that had been given to these questions by "staff"): QUESTION Can an A/E firm presently under contract with the Board for a specific school project, join with the general contractor for the same school project and present a proposal. ANSWER No! The Board views this as a conflict of interest and will not consider such entities. QUESTION Can one firm submit two different proposals, one as a single prime firm and the other as part of a joint venture? ANSWER No! The legal advertisement is very specific to this issue and will only allow one submittal per applicant, either as a single prime firm or as part of a joint venture. QUESTION Can A/E firms presently under contract with the Board as term consultants participate in a design-build entity submitting a proposal? ANSWER Yes! Staff does not see any conflict with this situation. The Board, at their meeting of April 1994, has ruled that neither a direct nor an implied conflict exists. Question: Will there be a design evaluation at the time of bidding in determining the successful bidder? ANSWER No! The successful bidder will be determined based on the bid process. All bidders are to comply with the design criteria bidding documents. However, during the selection process, we will be evaluating the design approach to this project. Question: The RFP [sic] requires the applicant to be authorized to do business in the State of Florida as a design-build entity; however, when we called the State there is none available. What do we do? ANSWER You must comply with all State requirements including required registration and licenses (Design & Construction) in accordance with Florida law. It is your responsibility to comply. MCM was among those that submitted a qualification proposal in response to the RFQ (MCM's Qualification Proposal). MCM's Qualification Proposal was accompanied by a cover letter, dated August 1, 2002, from its President, Jorge Munilla, which read, in pertinent part, as follows: MCM is pleased to submit our qualifications to provide Miami Dade County Public Schools with Design-Build Service for State School MMM * * * MCM has substantial experience with the Design-Build process as it relates to constructing educational facilities. We have assembled a team of professionals that will deliver the quality and cost efficiency required by Miami Dade County Public Schools. The team includes: PJB Associates, who[] will provide architectural services; Bliss & Ny[i]tray, [who] will supply structural engineering requirements; Fortin, Leavy, Skiles, Inc., [who] will provide civil engineering services; LIVS [and] Associates,[7] [who] is providing mechanical, electrical, plumbing and fire protection consulting expertise; and the talented firm of Rosenberg Design Group, [who] will provide Landscape Architecture design. It is significant that our team members have all participated in Design- Build projects for Miami Dade County Public Schools and therefore are acquainted with the unique relationship which it necessitates. The MCM Design-Build team will deliver the cost effective construction, timely delivery, and quality design goals that are required by Miami-Dade County Public Schools. The information that follows this letter details precisely how the MCM team will satisfy these project objectives. * * * MCM's Qualification Proposal contained a Proposer's Profile, which provided, in pertinent part, as follows: TOTAL NUMBER OF YEARS IN BUSINESS MCM Corp. is confident that our team, if selected for this project, will execute the contract and deliver functionally effective facilities in concert with M-DCPS staff. The project team and our organization are structured in such a manner as to provide clear-cut lines of communication and accountability. . . . MCM Corp. has learned that a critical factor in the achievement of project goals is the selection of a project team that has the technical knowledge and experience to deliver. The following lists the principal occupation of each member of the design- build team, their occupational license number, and the number of years they have been engaged in that practice. Team Members License Years in Business MCM Corp. General Contractors CG C023834[8] 19 PJB Associates, P.A. Architects AA 0003085[9] 5 Fortin, Leavy, Skiles, Inc. Civil Engineering 3653 19 Bliss & Nyitray, Inc. Structural Engineering 674 39 LIVS Associates MEP EB 0004134[10] 17 Rosenberg Design Group Landscape LA 0000143 31 Also included in MCM's Qualification Proposal were Standard Forms (SFs) 254 (Architect and Related Services Questionnaires) for PJB Associates, P.A. (PJB); Fortin, Leavy, Skiles, Inc. (Fortin); Bliss & Nyitray, Inc. (Bliss); LIVS; and Rosenberg Design Group (Rosenberg); and an SF 255 (Architect and Related Services Questionnaire for Specific Project) completed by PJB as MCM's proposed Project Architect (or A/E of Record). Under the arrangements that had been made, if MCM were the successful bidder on the Instant Project, it would enter into an agreement for design services with PJB and PJB, in turn, would retain the services of Fortin, Bliss, LIVS, and Rosenberg (as sub-subcontractors/sub-subconsultants on the project, having no direct contractual relationship with MCM) to assist it in fulfilling its contractual obligations to MCM. The SF 254 for LIVS was filled out by Hector Vergara, the partner that is "in charge of all [the firm's] mechanical work, and it lists the Westview Project as an "example" of the projects the firm has done in the "[l]ast 5 [y]ears." According the form, the "[c]ost of [LIVS'] [w]ork" on the Westview Project was $6,800,000.00 and the "[c]ompletion [d]ate (. . . [e]stimated)" of such work was "2003." The SF 255 reflected that Fortin, Bliss, LIVS, and Rosenberg would be "consultants" to PJB on the Instant Project in the "[s]pecialit[ies] of "[c]ivil [e]ngineering," "[s]tructural engineering," "[m]echanical/[e]lectrical/ [p]lumbing/[f]ire [p]rotection," and [l]andscape [a]rchitect[ure]," respectively, and it contained "brief resumes" of "key persons" from these entities who would be working on the project. Among these "brief resumes" were those of Mr. Vergara and Arnold Leon of LIVS, which indicated that they both had done work on the Westview Project. Among the other documents that were part of MCM's Qualification Proposal were the "job descriptions" and "resumes" of MCM personnel who would be assigned to the Instant Project, including Fernando Munilla (a principal of MCM), Alexis Leal (MCM's Vice President of Purchasing), and Riccardo Salani (an Estimator-Scheduler with MCM). Fernando Munilla's, Mr. Leal's, and Mr. Salani's resumes each listed the Westview Project as one of the projects on which they had worked. This was not the first design-build project solicitation of the School Board's to which MCM had responded. It had, "several months before," submitted a qualification proposal in response to the School Board's Request for Qualifications for Design-Build Firms for State School "FF,"11 which contained the same General Requirements, including paragraph G., as the RFQ in the instant cases. As in the instant cases, PJB was MCM's proposed Project Architect (or A/E of Record) on the State School "FF" project. TLC Engineering (TLC) was the original proposed MEP (mechanical/electrical/ plumbing) sub-subcontractor/sub-subconsultant. After MCM had submitted its qualification proposal, however, MCM and PJB wanted to replace TLC with LIVS as the proposed MEP sub- subcontractor/sub-subconsultant. When School Board staff (Ms. Bazan, Carlos Hevia of Capital Construction, and Ivan Rodriguez of the Department of A/E Selection, Negotiations and Design Management) were asked whether such a substitution could be made, they indicated that it would be "no problem."12 MCM therefore assumed, when it submitted its Qualification Proposal in the instant cases, that its proposing LIVS as an MEP sub- subcontractor/sub-subconsultant would not result in MCM's disqualification from further consideration pursuant to paragraph G. of the General Requirements of the RFQ, notwithstanding that LIVS was the School Board's A/E of Record on the Westview Project and MCM was the "completion contractor" on that same project (the identical roles LIVS and MCM had had at the time MCM was competing for the State School "FF" design- build contract). Following the review and evaluation of the qualification proposals that had been submitted in response to the RFQ in the instant cases, the School Board posted an "official interview schedule," on which the competing "design- build firms'" "initial screening scores" were announced. These scores were as follows: 105.50 for SBR; 103.50 for James Pirtle Construction Company (Pirtle); 98.00 for Betancourt Castellon Associates, Inc. (Betancourt); 93.00 for MCM; and 77.50 for the Beck Group (Beck). This "official interview schedule" also contained the following "notes": NOTE 1: Each firm must bring all equipment necessary to conduct its presentation. NOTE 2: The initial scores shall be cumulative to the interview scores. The final ranking for each firm shall consist of the initial score plus the interview score. NOTE 3: The following firm has withdrawn from the interviews: The Haskell Company Prior the first scheduled interview, Beck withdrew its proposal, leaving only four proposers to compete for award of the contract for the Instant Project. The determination was thereafter made to "pre-qualify" for bidding all of the remaining proposers without conducting the scheduled interviews. The evidentiary record does not reveal that anyone protested this "pre-qualif[ication]" decision; however, neither does it reflect that the School Board gave notice of the opportunity any adversely affected persons13 had to file such a protest and of the consequences of their not taking advantage of such opportunity. Following this "pre-qualif[ication]" decision, the proposers were provided copies of the Criteria Documents (or design criteria package) that had been prepared for the Instant Project. Volume I of the Criteria Documents contained, among other things, an Instructions to Bidders, a List of Subcontractors Form, Special Provisions for Compliance with M/WBE, General Conditions of the Design-Build Contract, and General Requirements. The Instructions to Bidders provided, in pertinent part, as follows: INSTRUCTIONS TO BIDDERS * * * The Instructions to Bidders, General Conditions of the Design-Build Contract, Special Conditions for Design-Build Projects and all other documents and sections, listed in the Specifications under the Bidding Requirements, apply equally to each Section and Division of the Specifications. All sections of the Criteria Documents are complementary and are part of the contractual requirements. 2.7.1 Board reserves the right to waive informalities and irregularities in a proposal, to reject any bid that shows omissions, alterations or additions not called for in the Criteria Documents and to reject any bid containing conditions or unauthorized alternate bids. * * * 2.8.1 A bid may not be modified, withdrawn or canceled by the bidder during the stipulated time period following the time and date designated for the receipt of bids and the bidder so agrees in submitting the bid. * * * 3.2.2 When notified by Criteria Professional, prior to or after Award of Contract by Board, the successful bidder shall meet with representatives of Board at MDCPS/DCP/DB "Kick Off" meeting. At that time, the successful bidder shall bring the Design Build Team whose work is highly crucial to the completion of the Work. . . . The List of Subcontractors Form contained the following directions: This list of subcontractors shall be submitted to the Section of Contract Management, 155, N.E. 15th Street, Miami, Florida, 33132, no later than the end of the second working day after award, i.e., for bids awarded on Wednesday, list shall be submitted by 4:30 p.m. on Friday. If the list of subcontractors is not submitted as requested, the Board may initiate action which will result in rescinding the award. Subcontractor as used herein shall be defined in Florida Statute 713.01(16)- Subcontractor means a person other than a material supplier or laborer who enters into a contract with the contractor for the performance of any part of such contractor's contract. For each subcontract listed below, the bidder shall name the subcontractor or list the bidder's firm if he/she proposes to do the work. The cost of work as quoted by the subcontractor shall be listed. If the name of a subcontractor is deleted or added, the owner shall be notified immediately along with the justification for the change. The Special Provisions for Compliance with M/WBE provides, in pertinent part, as follows: Subcontractor/Subconsultant- A person other than material person or laborer who enters into a contract with a contractor for the performance of any part of such Design Builder's contract. Design or other required consultant services contracted for, in the performance of this contract will be considered as a Subcontractor. . . . The General Conditions of the Design-Build Contract provided, in pertinent part, as follows: General Conditions of the Design Build Contract * * * 1.1.2 The Contract The Contract represents the entire integrated agreement between the parties hereto and supercedes prior negotiations, representations or agreements, either oral or written. The Contract may be amended or modified only by a Modification. The contract shall not be construed to create a contractual relationship of any kind (1) between the Board and a Subcontractor or Sub-subcontractor, or (2) between any persons or entities other than the Board and the Design-Build Contractor. The Contract Documents include the Criteria Documents and the approved Construction Documents. * * * 3.1.1 The "Design-Build Contractor" is the person, firm or corporation authorized to do business in the State of Florida and properly licensed or registered for the work to be performed with whom the Contract has been made with the Board for the performance of the Work described in the Criteria Documents. "Contractor" refers to a third party Contractor. * * * 3.3.2 The Design-Build Contractor shall be responsible to the Board for acts and omissions of the Design-Build Contractor's employees, Subcontractors and their agents and employees and other persons performing portions of the Work under the Contract and shall be responsible to the Board for coordination and complete execution of the Work in accordance with the Contract. * * * 3.3.6 The Design-Build Contractor shall enforce strict discipline and good order among its employees and other persons carrying out the Contract including its Subcontractors and Sub-subcontractors. . . . * * * 3.9.2 During the Construction Phase, the Design-Build Contractor shall employ a competent, full time, on-site Superintendent, the Design-Build Contractor's A/E of Record Representative, who participated at least fifty percent (50%) of his/her time during the Design Phase, and shall be on site at a minimum of 50% of the working hours of each week. An M/E/P coordinator and necessary assistants shall be in attendance at the job site during the performance of the Work. . . . The Design-Build Contractor's A/E of Record on-site Representative shall not be used for checking shop drawings. The Superintendent, the Design-Build Contractor's A/E of Record Representative, M/E/P Coordinator and the major Subcontractor's Superintendents shall be fluent in English. * * * 3.12.1 Shop drawing are drawings, diagrams, schedules and other data specifically prepared for the Work by the Design-Build Contractor or a Subcontractor, Sub- Subcontractor, . . . to illustrate some portion of the Work. The Design-Build- Contractor, Subcontractor, Sub- Subcontractor, . . . shall not use the Design-Build Contractor's A/E of Record contract drawings as shop drawings, but the Design-Build Contractor shall require these entities to produce and submit such documents independently. * * * 3.18.1 The Design-Builder shall negotiate a fair and equitable agreement with each of the Architect/Engineer consultants listed in the Design-Builder's response to the request for qualifications for this project. The Design-Builder may choose additional A/E consultants, for which prior written notice to Board shall be given, but shall not terminate or replace those A/E consultants originally designated without the prior written approval of the Board. When requesting termination or replacement of A/E consultants, the Design-Builder must submit the following items: Letter requesting written Board approval of the action, stating clearly the reason for such request and the proposed replacement A/E consultant(s). Signed and sealed or notarized release from the A/E consultant(s) being replaced or justification acceptable to the Board that such release is not obtainable. Federal Standard Form 255 and 254 of the proposed A/E consultant(s). Site specific professional liability insurance incorporating the proposed A/E consultant(s) in the policy. A hold harmless clause signed and notarized . . . . * * * 4.1.1 The Board's Representative (also referred to as the "Design Criteria Professional" or "DCP") will provide administration of the Contract as described in the Criteria Documents . . . * * * 4.2.6 The DCP will review and approve or take other appropriate action upon Design- Build Contractor's submittals, previously approved by the Design-Build Contractor's A/E of Record such as Shop Drawings, Product Data and Samples, for conformance with the information given and the design concept expressed in the Criteria Documents. . . . * * * 4.2.12 The Design-Build Contractor and Design-Build Contractor's A/E of Record shall provide DCP which will confirm completeness and correctness of same and forward to Board for Board's review and records, the written documents required by the Contract to be provided such as Warranties, Operation and Maintenance Manuals, as-built drawings, releases of claim and other documents required of the Contract. The DCP will process any pending Change Order requests and evaluate the assessment of liquidated damages, if any. Upon its determination that the Design-Build Contractor and Contractor[']s A/E of Record has fulfilled the requirements of the Contract, the DCP will issue a final Certificate for Payment. * * * A Subcontractor is a person or entity other than a materialman or laborer who enters into a subcontract with the Design- Build Contractor for the performance of any part of the Design-Build Contractor[']s Work. The term "Subcontractor" is referred to throughout the Contract as if singular in number and means a Subcontractor or an authorized representative of the Subcontractor. The term "Subcontractor" does not include a separate contractor (sometimes referred to as a "third party contractor" ) or subcontractors of a separate (third party) contractor. A Sub-subcontractor is a person or entity other than a materialman or laborer who enters in to a sub-subcontract with a subcontractor for the performance of any part of such subcontractor's contract. The term "Sub-Subcontractor" is referred to throughout the Contract as if singular in number and means a Sub-subcontractor or any authorized representative of the Sub- subcontractor. The term "Sub-subcontractor" does not include separate subcontractors of a third party contractor. All Subcontractor's shall be licensed and/or certified as required by the Florida Building Code and state statutes. Separate permits may be required including but not limited to electrical, plumbing, mechanical, and roofing work. * * * As stated in the Instructions to Bidders, the Design-Build Contractor shall furnish in its proposal to Board the list of Subcontractors, Sub-subcontractors and materialmen (including those who are to furnish materials or equipment fabricated to a special design) proposed for each principal portion of the Work . . . . If Board has a reasonable objection to any proposed Subcontractor, Sub- subcontractor or materialman, Board will promptly notify Design-Build Contractor. The Design-Build Contractor shall not contract with any proposed Subcontractor, Sub-subcontractor or materialman to whom Board has made a reasonable objection pursuant to Subparagraph 5.2.2. If Board has a reasonable objection to a Subcontractor, Sub-subcontractor or materialman, the Design-Build Contractor shall propose another to whom the Board has no reasonable objection. A Subcontractor, Sub-subcontractor or materialman may be added to the list of Subcontractors, Sub-subcontractor[s] or materialmen if required for performance of Change Order Work. A listed Subcontractor, Sub-subcontractor or materialman may be changed only upon written approval of the Board. The request to change shall state reasons for the request and shall be accompanied by a signed and notarized release from the listed Subcontractor or Contractor's Affidavit to Board that such a release is not obtainable. * * * The General Requirements include Procedural Requirements, Subsections 2.03 and 9.01 of which provide as follows: 2.03 DESIGN-BUILDER ("D-B") D-B shall appoint its D-B Project Manager which is D-B's representative for the Project. The collective management of D-B services, including D-B'[s] architect, engineers and other consultants, is to be vested in D-B Project Manager. D-B Project Manager is the representative of D-B and all communications are to be through him/her to DCP and M-DCPS Project Manager. D-B Project Manager's role does not preclude the involvement of D-B's architect, engineers and other consultants. The architects, engineers and other consultants with responsibility for different aspects of the Project are to attend appropriate meetings but this must be coordinated with D-B Project manager. 9.01 PRE-CONSTRUCTION CONFERENCE Prior to beginning construction, DCP (through PM) shall schedule a Pre- Construction Conference. Ten (10) days notice is required for the meeting. At minimum, the following parties shall attend: DCP Team (DCP) Design-Builder Team (D-B) PM Major Subcontractors Region Superintendent Principal BCC Representatives Testing Lab Consultant HVAC Test & Balance Consultant H. Others as applicable. * * * Section 01012 of the General Requirements discusses the Project Architect. It provides as follows: PROJECT ARCHITECT (Also referred as Architect/Engineer of Record or D-B'[s] A/E. The Project Architect (A/E of Record) is a Principal, Partner, Agent, Subcontractor or Employee of the Design-Builder,[14] and is the person lawfully licensed to practice Architecture and Engineering or an entity lawfully practicing Architecture and Engineering identified as such in the Contract; and is referred to throughout the Criteria Documents as is singular in number. The term Architect/Engineer of Record means the Architect/Engineer of Record or its authorized representative. Whenever the terms Design-Builder's A/E or A/E is used throughout the Criteria Documents, it refers to the Project Architect. DUTIES AND RESPONSIBILITIES OF THE PROJECT ARCHITECT The Project Architect shall have all the duties and responsibilities established under the applicable State Statutes regulating the professions of Architects and Engineers. The Project Architect shall employ a Project Manager and necessary assistants, and shall be responsible for managing all design and production of Design and Construction Documents and the coordination of its implementation during the construction. The Project Architect shall review and approve or take other appropriate action upon Subcontractor submittals, such as Shop Drawings, Product Data and Samples prior to their submittal to the DCP for approval. The Project Architect shall consult with the DCP concerning all items related to the design and production of the Construction Documents. The Project Architect shall be responsible for the preparation of the Record Drawings. Prior to Design-Builder's request for determination by DCP of substantial completion, the Project Architect shall determine, on his/her own, that the Project has achieved substantial completion. The Project Architect shall inspect the work and provide, through the Design-Builder, a punchlist of all items to be completed or corrected. Upon receipt of request for determination of substantial completion from the Design-Builder, the DCP shall proceed to determine if the work is ready for inspection as provided under the General Conditions. All four remaining proposers, MCM, SBR, Pirtle, and Betancourt, submitted sealed bids. The bids were opened on December 17, 2002, and subsequently tabulated. MCM had the lowest "base bid" ($17,673,600.00). SBR had the second lowest "base bid" ($18,037,446.00). Betancourt's and Pirtle's "base bids" were $18,269,000.00 and $19,540,000.00, respectively. Following the tabulation of bids, School Board staff recommended to the members of the School Board that the contract for the Instant Project be awarded to MCM as the lowest bidder. On February 6, 2003, SBR, through counsel, filed a notice of protest with the School Board, which read as follows: This firm represents SBR Joint Venture, who as you know, has submitted a proposal for construction of the above-referenced [p]roject [the Instant Project]. It has come to our attention that MCM Corp. ("MCM") who submitted a proposal to provide design build services for the above- referenced project, must be disqualified from further consideration in connection with an award of the Project due to MCM's failure to comply with general requirements as promulgated by the Miami-Dade County Public Schools relative to the Project. Specifically, item I G of the General Requirements mandates that: " Any proposer, firm or company desiring to participate in this process must not have as a part of its team an A/E firm presently under contract with the Board for a specific project and a General [c]ontractor for the same project." As disclosed by MCM in its proposal to construct the [p]roject, MCM is currently performing substantial work connection with another project known as the Westview Middle School-remodeling and renovation ("Westview"). The architect under contract with the School Board regarding the Westview Project is LIVS and Associates. In conflict with the qualification general requirements, MCM's proposal to construct school MMM contemplates the formation of a design build team which will include LIVS and Associates, as its mechanical, electrical, plumbing and fire protection consulting engineers. As such, the proposal by MCM is violative of the requirements of design/build firms in order to qualify for the Project. Back-up documentation including, but not limited to, material portions of the request for qualifications and disclosures by MCM are attached for your review. Under the circumstances, we respectfully request that MCM be disqualified from performing any services in connection with [p]roject and the second [lowest] bidder, which is SBR Joint Venture, be awarded the Project. MCM responded to SBR's notice of protest by letter dated February 10, 2003, in which it argued that SBR's protest was without merit and "should be dismissed" and further stated, among other things, the following: The Contract documents permit[] the board to waive all irregularities. If the board were to consider that Ivan Rodriguez, Carlos Hevia and Blanca Bazan[15] misspoke on behalf of MDCPS when they approved LIVS as part of the MCM Design Build team, and or if the board were to consider the inclusion of LIVS as part of the Design Build Team as a conflict, then if that be the case, by this letter MCM hesitantly tenders substitution of LIVS (who has graciously agreed), with SDM Consulting Engineers, Inc., who is also fully qualified, has had extensive experience with DCPS and has agreed to take on the challenge. The members of the School Board were scheduled to vote at their February 12, 2003, meeting on staff's recommendation to award the contract for the Instant Project to MCM, but the "item [was] tabled" because of the pendency of SBR's protest. At the meeting, the School Board Attorney told the School Board members that he had "reviewed [SBR's] protest with staff and [they had] come to the conclusion that [they did not] agree with [SBR's] position," explaining, in part, as follows: The language [of paragraph G. of the General Requirements of the RFQ] is interpreted that if you have the A/E and the general contractor, who are under contract with the board on the same project, that is considered a conflict. In this particular instance, you have a third element here. One, is that the bonding company took over this project and the bonding company brought MCM in as a subcontractor, if you will, a completing contractor here in this particular instance. So, it was never the intent of this language to cover a situation other than one where you had both the A/E and the general contractor under contract with the board. Construing the language of paragraph G. of the General Requirements of the RFQ (which is not clear and unambiguous on its face) as not "cover[ing] [the] situation" present in the instant cases is not at all unreasonable. Because it has a contract with the Surety and not the School Board, MCM is not the Westview Project's "General contractor"16 as that term is typically used in the construction industry.17 Since there is no language manifest in the proposal/bid solicitation documents in evidence which compels the conclusion that, for purposes of the solicitation, this accepted industry meaning of the term was not intended, it is entirely appropriate to rely on this meaning and find, as did School Board staff, that MCM's role in the Westview Project does not disqualify its proposal from consideration under paragraph of the General Requirements of the RFQ.18 Moreover, even if it could not be reasonably disputed that MCM was the Westview Project's "General contractor" within the meaning of paragraph G. of the General Requirements of the RFQ (which, as noted above, is not the case), MCM's proposed use of LIVS on the Instant Project would still not, under every reasonable interpretation of the paragraph, create a "conflict of interest" of the type the paragraph prohibits. It is not beyond reason, particularly when the provisions of the Criteria Documents are considered19 (most significantly, Subsection 3.18.1 of the General Conditions and Section 01012 of the General Requirements), to conclude that an "A/E firm" on the design- build "team," within the meaning of paragraph G., does not refer to an entity, like LIVS, that is neither the design-builder seeking the contract for the Instant Project, a member of such a design-builder (where it is joint venture or partnership), the design-builder's proposed "Project Architect" as described in Section 01012 of the Criteria Documents' General Requirements (who is also referred to therein as the "Architect/Engineer of Record" or "A/E"), nor any other Architect/Engineer consultant with whom the design-builder intends to contract in accordance with the requirements of Subsection 3.18.1 of the Criteria Documents' General Conditions, but rather is merely a proposed MEP sub-subcontractor/sub-subconsultant (that is, a third-tier contractor). The evident purpose of paragraph G. of the General Requirements of the RFQ is to avoid a situation where a firm acting as the School Board's A/E of Record on another School Board project let under the "traditional bid contract scenario" is inclined to deal with the "General contractor" on that project in a lax manner compromising the School Board interests because of a relationship the firm has with that "General contractor" on the Instant Project.20 The chance of this happening if the firm were merely a third or lower tier contractor on the Instant Project would be remote, so remote that it is reasonable to believe (as John Pennington, the School Board's Director for Construction Compliance, who was "intimately involved in making [the language in paragraph G.] the final language," credibly testified) that it was not the School Board's intent, in including paragraph G. in the General Requirements of the RFQ, to eliminate a potential competitor based on this possibility.21 Had the School Board intended otherwise, it could have made its intent clear and unmistakable by having the first sentence of paragraph G. read as follows: "Any proposer, firm or company desiring to participate in this process must not propose to have working on the instant project in any capacity, including as a third or lower tier contractor, both a firm that is presently serving under a contract with the Board as the Board's A/E of Record on another project and a firm that is a General contractor for that same project." It did not do so, however. Instead, it used language in paragraph G. reasonably susceptible to the interpretation that, under this provision, proposing to use as an MEP sub-subcontractor/sub- subconsultant on the Instant Project a firm that is the School Board's A/E of Record on another project does not disqualify a proposer even if the proposer is the "General contractor" for that other project. Following the School Board meeting, SBR, on February 16, 2003, filed its formal written protest of the intended decision to award the contract for the Instant Project to MCM. On February 18, 2003, Fernando Munilla sent a letter to School Board member Dr. Marta Perez, which read, in pertinent part, as follows: MCM has been informed that unfortunately MCM's response to SBR's bid protest was not provided to you prior to the February 12, 2003, Board meeting. We enclose same for your ready reference. We respectfully request you inquire on the particulars raised in our letter, and if you agree with your staff's recommendation (that SBR's alleged irregularity in MCM's bid lacks [sic] merit), then we ask you move the Board to exercise its right to waive the alleged irregularity, as permitted by the bid documents under section 00100 page 4 subsection 2.7.1 in order that MCM continue to work on the project. On March 4, 2003, the School Board Attorney sent a memorandum to the Superintendent of Schools advising that upon further review of the matter he had changed his opinion and was now of the view that SBR's protest had merit, explaining in the memorandum as follows: This specification [paragraph G. of the General Requirements of the RFQ] prohibits a proposer from having as a part of its Design-Build team an Architect/Engineer (A/E) firm who is under contract with the Board for a specific project and General Contractor for the same project. The specification provides that the Board considers this a conflict of interest and such proposals would not be considered for award of the contract. MCM submitted a proposal which has LIVS [and] Associates, an A/E firm under contract for the Westview Middle School project as part of its team. MCM is the General Contractor on the Westview Middle School project under a contract with the surety company to complete the project as the completing contractor. MCM contends that in view of the fact that they are the completing contractor and are not in direct contract with the Board for the project, this particular provision should not apply. We disagree. The particular specification in question does not specify or require that the general contractor for the same project be under contract with the Board. Conflict exists by virtue of the fact that the A/E, acting on behalf of the Board for the Westview Project, has to inspect and review the work of MCM and, with this proposal, will be in business with MCM on another Board project. Accordingly, MCM's proposal should not have been considered for award. While it is true that, in paragraph G. of the General Requirements of the RFQ, the School Board did not include the words "under contract with the Board" after "General contractor," if it intended that "General contractor," as used in paragraph G., have the same common meaning as the term has in the construction industry (and there is no language in the proposal/bid solicitation documents in evidence compelling the conclusion that it did not have such an intent), these additional words would have been redundant because, as noted above, a "General contractor," as that that term is typically used in the construction industry, is necessarily one who is "under contract" with the owner. Furthermore, contrary to the suggestion made by the School Board Attorney in his March 4, 2003, memorandum, under MCM's proposal, MCM and LIVS would not have a direct business relationship22; rather, LIVS would be doing business with PJB.23 While LIVS' participation (as a third-tier contractor) in the Instant Project with MCM may create a potential "conflict" for LIVS, this potential "conflict," at least arguably, is not the type that is prohibited by paragraph G. of the General Requirements of the RFQ. On March 11, 2003, MCM and PJB sent the following letter to the School Board: This letter will serve as our formal request to replace the engineering firm of LIVS originally selected for State School MMM [with] SDM Consulting Engineers in which MCM's architect of record, PJB Associates, P.A., had entered LIVS as their mechanical and electrical consultants for the above referenced project [the Instant Project]. Even though we consider LIVS to be an excellent engineering firm, d[ue] to an alleged conflict of interest that is said to exist, we are respectfully requesting replacement to prevent controversy.[24] We also request that you submit this to M- DCPS's Legal Department to verify if there is any conflict; and if so, we respectfully request a written reply. In the absence of a reply within the next three working days, we will assume that this issue has been resolved. Thank you in advance for your attention. Also on March 11, 2003, MCM, anticipating that it would not be awarded the contract for the Instant Project, sent the School Board another letter, which read as follows: This letter will serve as notice of the intent of Magnum Construction Management Corporation (MCM) to protest any decision of the Miami-Dade County School Board to reject all bids on the Miami-Coral Park Project. Based on information obtained to date, MCM will assert that the decision to reject all bids is based on the false assumption that under the terms of the Request for Qualifications, MCM was disqualified to bid on the Miami-Coral Park Project and that bids on the project were over budget. MCM will assert that it was qualified to bid on the project and that its bid was responsive and within the budget. MCM subsequently filed a formal written protest and an amended formal written protest. On March 12, 2003, the Design Criteria Professional for the Instant Project sent a letter to Ms. Bazan advising her that the three lowest bids submitted for the Instant Project "were within the budget of $17,473,891.36," and that the two lowest bids, those submitted by MCM and SBR, were "substantially below the State of Florida allowable cost per student station under the Smart Schools Clearinghouse." On March 26, 2003, the School Board referred SBR's and MCM's formal written protests to DOAH. A day later, it referred MCM's amended formal written protest to DOAH.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the School Board enter a final order rejecting SBR's protest and awarding the contract for the Instant Project to MCM. DONE AND ENTERED this 1st day of August, 2003, in Tallahassee, Leon County, Florida. S STUART M. LERNER Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 1st day of August, 2003.
The Issue The issues to be resolved in this proceeding concern whether the Petitioner, D. J. Haycook Construction Company (Haycook) was the lowest responsive bidder for an elementary school procurement project known as Elementary School "X," let by the Volusia County School Board and whether the Petitioner should have been awarded the contract.
Findings Of Fact On June 13, 2003, the School Board of Volusia County authorized the issuance of a request for proposal for the construction of a new elementary school known as Elementary School "X." The proposed new school would be located in Orange City, Florida. The school board issued an advertisement for the construction of Elementary School "X" and had it published. The project architect for the Board prepared the solicitation documents constituting a "Phase III specifications" manual and three addenda. The advertisement stated that "the school board expressly reserves the right to reject any and all bids and to waive informalities therein, and to use sufficient time to investigate the bids and the qualifications of the bidders." Section 00430 of the solicitation required that all bidders list the name of the subcontractor for each type of the 12 areas of construction work for Elementary School "X" as follows: 'For each type of work' below, list the name of the subcontractor. List only one name on each line and only one subcontractor for each type of work. Various 'type of work' sub-contracts may have more than one subcontractor (re: roofing; metal roofing and membrane roofing), list each subcontractor accordingly. Use additional sheets, if required. Additionally, Section 00430 provided: The term subcontractor as used herein shall be defined in 2001, Florida Statute 713.01(27) - subcontractor means a person other than a materialman or laborer who enters into a contract with a contractor for the performance of any part of such contractor's contract. The deadline for submission of proposals in response to the solicitation was August 6, 2003. On August 6, 2003, Haycook's bid proposal and that of the second and third lowest bidders were opened and read by the members of the school board's staff. Haycook listed itself as performing or "self-performing" in areas of earthwork, masonry, concrete, and structural steel on the required list of subcontractors form pursuant to section 00430 of the solicitation. Subsequently, the project architect began to investigate the bids for the project. This was done through correspondence and direct contact between Haycook, the project architect, Mr. Daimwood, and the school board staff. This process began on August 8, 2003. As part of the evaluation process the architect verbally requested documentation from Haycook to verify its past and present abilities to self-perform in the four areas of earthwork, concrete, masonry, and structural steel, as well as by letters dated August 12, August 15, and August 25, 2003. Haycook responded to these information requests by letters of August 11, 13, and 28, 2003. The bid documents for the school project included the bidding and contractual conditions, general conditions, technical specifications, and the drawings listed on pages 10D-1 to 10D-2. In order to have a responsive bid a bidder was required to comply with the bid documents when submitting its bid. The relevant bid documents at issue in this dispute are Section 0020, "invitation to bid," Section 00100, "instruction to bidders," Section 00300, "bid form," and Section 00430, "list of subcontractors." The bid documents also required each bidder to deliver a bid bond in the amount of five percent of its bid to accompany the proposal. After acceptance of the lowest responsive bid, and issuance of the contract award, a bidder was required to deliver a payment and performance bond in the amount of 100 percent of the contract price. There is no dispute that Haycook has a bonding capacity of 18 million dollars for a single project and 35 million dollars for aggregate projects and the bonding capacity is not in dispute. The invitation to bid documents require that bidders be required to hold a current Certificate of Pre-Qualification issued by the school board at the time of bid opening. Haycook at all material times hereto held a Certificate of Pre- Qualification and was licensed to perform all work called for by the bid documents including, among others, self-performance of earthwork, concrete work, masonry, and structural steel. The three bids received were in the amounts as follows: (1) D. J. Haycook Construction Company: a base bid of $7,599,000.00; Alternate One, $189,000.00; Alternate Two, $48,800.00; Alternate Three, $21,000.00; (2) Mark Construction Company of Longwood, Florida: base bid of $7,657,000.00, Alternate One, $221,000.00; Alternate Two, $50,000.00; Alternate Three, $20,000.00; (3) Clancy and Theys Construction Company of Orlando, Florida: base bid of $7,840,000.00; Alternate One, $230,000.00; Alternate Two, $50,000.00; Alternate Three, $21,000.00. Section 00430 required each bidder to furnish a list of subcontractors defined as quoted above in the bid form. Section 00430 of the bid form also permitted a bidder to list itself as a subcontractor. The form provides: "A contractor may not list himself as performing a type of work unless he is self- performing and is a Florida licensed contractor for that type of work". Haycook was properly licensed at the time of bidding, and at all relevant times, to self-perform in the four areas of earthwork, structural steel, masonry, and concrete at issue in this case. After the bids were opened and examined, Mr. Daimwood, the architect evaluating bids for the school board, requested that Haycook furnish a list of past projects where it had self- performed earthwork, structural steel, masonry, and concrete work. Haycook provided a list of examples of prior projects for which it had self-performed work in those areas on August 11, 2003. The list included five projects for earthwork, four projects for structural steel, seven projects for masonry, and seven projects for concrete. Thereafter, on August 12, 2003, the architect requested additional information regarding self- performance of work in the four areas at issue. Haycook provided the architect with the requested additional information on August 13, 2003, including a list of each project, the total cost of each project, the completion dates, as well as contact persons with their telephone numbers and including copies of qualifications of the subcontractors listed on Haycook's subcontractor list. On August 25, 2003, the architect requested Haycook payroll records and workers compensation information for two of the listed projects of those Haycook had provided, that for Goldsboro Elementary School and Eustis Elementary School. On August 28, 2003, Haycook sent a letter to the architect explaining that on the Goldsboro job the earthwork was self-performed by a combination of supervising and directing the work with salaried employees, with leasing of labor from an employment service, and hiring of labor by the cubic yard with a cap on the activity. Haycook also explained that structural steel work on the projects was self-performed by a combination of supervising and directing the work with salaried employees, leasing of labor from an employment service, hiring of labor paid by the foot to erect specific components of the job, as well as using salaried employees for the performance of specific activities, and including purchasing of fabricated materials and then hiring crew labor and equipment on an hourly basis to erect them. In the August 28, 2003, letter Haycook also explained, with respect to the self-performed masonry work on both the Eustis and Goldsboro jobs, that those areas of work were self- performed by purchasing fabricated material, supervising and directing the work with salaried employees, hiring labor by the unit price (for instance by the block) to lay the block, and hiring labor from an employee leasing service for specific activities as to those jobs. Haycook also explained in the August 28, 2003, letter that a combination of the methods and means of performing delineated above and in that letter would be used for the activities listed on the subcontractor list on the relevant bid form for Elementary School "X". Haycook explained that it had priced and used its own costs for the activities listed on the bid form to arrive at the bid price for Elementary School "X". Enclosed with the August 28, 2003, letter from Haycook were copies of its purchase orders and cost journals for the Goldsboro School, concerning earthwork, masonry, and structural steel activities and its vendor purchase orders and cost journals for the Eustis Elementary School's masonry work done by Haycook. The enclosures with the August 28, 2003, letter showed that Haycook had purchased the materials, performed the work with its own employees, and performed work using additional outside labor in the areas of structural metals, prefabricated structures, earthwork, cast-in-place concrete, structural steel erection, and masonry work. Haycook also provided its proposals used on the Goldsboro project which consisted of concrete labor and structural steel labor. The architect interpreted the term "self-performance" to mean labor with the contractor's own employees only. Based upon that restrictive interpretation, he concluded that he had not found adequate information demonstrating Haycook's having "self-performed" these types of work previously. Additionally, the architect opined that Haycook's intended self-performance on Elementary School "X" project at issue, in the four work areas in dispute, "is in our opinion, a subcontractor format." Uncontroverted evidence adduced at hearing established that Haycook has extensive public school construction experience. The Petitioner's President, Dennis Haycook, has built more than 35 public schools and Haycook's project manager, Reed Hadley, who is assigned to the Elementary School "X" project, has built over 25 school projects. Dennis Haycook was also a principal of Mark Arnold Construction Company in the past, which was one of the largest public school contractors in Florida. In the past 10 years, with his own company, the Petitioner, Haycook, has built numerous school projects including the Goldsboro school which was a $7,000,000.00 project. The Goldsboro, Eustis, and other Haycook-built schools referenced during the hearing and in the evidence were all projects that were built within the authorized budget, were timely, and were of quality construction. The Board ultimately rejected Haycook's bid on Elementary School "X" because of the architect's interpretation concerning "self-performance," i.e. that all work must be performed by employees on Haycook's payroll. The bid documents did not define "self-performance," nor do the bid documents require that labor used must be on the contractor's payroll in order for his performance to constitute "self-performance." Haycook's witnesses were consistent in their testimony as to the definition of "self-performance": "self-performance," as customarily used in the construction industry, includes the contractor's purchasing of materials, performing part of the work with its own labor force, providing other labor not on the contractor's payroll, and directly supervising the work with the contractor's supervisory personnel. The term "subcontractor" is defined in the custom and usage of the construction industry, however, to mean someone or an entity that provides all labor, material, and equipment necessary to do the complete operation, as well as all supervision. It is more of a "total turn key operation." A subcontractor provides everything necessary to finish the work, including supervision, and then merely answers to the general contractor in terms of responsibility for the quality of the job and its timeliness. The school board's witnesses, expert and otherwise, gave interpretations of the concept of self-performance which were somewhat conflicting. Mr. Daimwood, the architect, opined that self-performance requires the contractors to use employees on its own payroll and make direct payment of workers' compensation for such employees. His opinion was that anything else would be a subcontractor relationship and not self- performance. He later testified, however, that paying labor not actually on Haycook's payroll could still constitute self- performance. Patricia Drago, of the school board staff, testified that if a contractor uses 10 employees on his payroll and uses 10 non-employees, this would be self-performance. If such a contractor has 10 employees and uses 11 non-employees, she was not sure whether this would constitute self-performance. Allen Green testified that self-performance of an area of work requires the majority of that work to be performed by the contractor's own employees, while other work could be performed by contract labor. He later changed his definition to require a contractor to have all employees on the payroll in order to self-perform. In other testimony, however, Mr. Green opined that if a contractor supplemented his labor with a couple of additional masons and paid them by the piece, then he would no longer be self-performing. At still another point in his testimony he added that it would be dependent upon the stage of the project as to whether the contractor's use of contract labor is self-performing or subcontracting. He felt that if the contractor adds some additional masons near the end of a job, as opposed to the beginning, then he could still be self- performing. Gary Parker is the Director of Facilities for the Lake County School Board. He testified that from his perspective, self-performance required the use of employees on the contractor's payroll. This definition, however, was not consistent with Lake County's course of conduct with the job that Haycook performed. Mr. Parker acknowledged that there had been no complaints by the architect or anyone else associated with the Eustis school project where Haycook listed itself as self-performing for masonry work, even though Haycook had retained a different entity to perform masonry labor (although not supply materials or supervision). Scott Stegall, the Director of Capital Outlay for the Seminole County School Board, testified that self-performance would require a contractor to perform all work without the use of outside contractors, including labor. Yet Mr. Stegall acknowledged that Haycook listed itself as self-performing masonry work on the Goldsboro school project and used a firm or entity known as Webber and Tucker to perform some masonry work, and that the Seminole County School Board had no dispute with this approach. Mr. Stegall's evaluation form for Haycook had stated that Haycook did not improperly substitute any subcontractors from the submitted list in that project. He later changed his definition of self-performance to acknowledge that a contractor could bring in laborers individually to perform without a "formal contract"; these informal labor contracts would not take it out of the self-performance category according to Mr. Stegall. The evidence concerning the Lake County District's and Seminole County District's experience as to the Eustis school project and the Goldsboro school project with Haycook's performance, including Haycook's approach to self-performance, was satisfactory in terms of pricing and the quality and timeliness of the work performed. The perceived fear by the Respondent that Haycook's performance might be substandard or that it might "bid shop" amongst potential subcontractors, after the bid opening, if Haycook did not list all subcontractors on the bid response, and self-performed in the manner Haycook described in its evidence, has not been shown to have occurred with regard to any of Haycook's past projects. There has been no demonstration by preponderant evidence that the use of only subcontractors listed or named in the bid response has resulted, in itself, in a lower price or better performance for the public by a contractor situated as Haycook. The architect testified that one method of defining "self-performance" is to determine whether the entity performing work was a subcontractor as defined by the bid documents. If the work is not being performed by a subcontractor, then it is being performed by the general contractor or self-performance. As the term is used in the construction industry, a subcontractor generally furnishes materials, installs the work, and supervises its own work. The bid documents define subcontractor as follows: "subcontractor means a person other than a materialman or laborer who enters into a contract with a contractor for the performance of any part of such contractor's contract." Preponderant, credible, and substantial evidence was presented by Haycook to show that Haycook's use of the term "subcontractor" was an entity that furnishes the materials, provides the labor, and the supervision, and undertakes the entire responsibility for that type or phase of the work. When a general contractor hires contract labor only, this excludes what is occurring from the definition of subcontractor, since the definition of subcontractor prevailing in this proceeding based upon the bid documents, takes out of that subcontractor definition "a materialman or laborer." The preponderant credible evidence shows that when Haycook purchases materials and provides the labor, whether or not the labor is on Haycook's payroll, which Haycook then directly supervises, this, by definition, is not a subcontractor situation under the definition of that concept in the bid documents themselves. The bid documents provide no definition for self- performance, but simply contain the following requirements: "a contractor may not list himself as performing a type of work unless he is self-performing and is a Florida licensed contractor for that type of work." Therefore, if a contractor meets these two requirements, he is responsive to this specification concerning when subcontractors should be listed or need not be listed in the bid response. Haycook meets both of the two requirements for self- performing. Haycook's definition of self-performing work is consistent with and does not conflict with the definition of "subcontractor," which excludes materialmen and laborers. Haycook's expert witness, Mr. Harold Goodemote, is a general contractor with 20 years experience, including 8 years as a project engineer and chief estimator for Foley and Associates Construction Company for many public school projects in the Orlando, Melbourne, and Daytona Beach area. Mr. Goodemote is also Vice-President of "Coleman-Goodemote" which has been in existence for approximately 10 years and has built projects worth multi-millions of dollars for Daytona Speedway related entities. It was established through Mr. Goodemote's testimony that it is customary in the construction industry to self- perform work by the contractor's purchasing of materials and using the contractor's own employees, along with "third party labor," to complete work under the direct supervision and control of the general contractor. The testimony of Mr. Reed Hadley and Mr. Haycook likewise establishes that it is common practice in the construction industry to self-perform work in the manner in which Haycook has performed it in the past. For example, both the Lake County and Seminole County School Boards allowed Haycook to list itself as self-performing where Haycook purchased masonry materials and used contract labor to install the masonry materials and components. "Bid shopping" is a practice whereby a contractor submits a bid for a project and, after winning the bid, goes to its subcontractors or even to new subcontractors, not considered in the bid process, and attempts to get lower prices from them, versus the prices the contractor had when it submitted its bid. This allows more profit to be built into the job for the contractor or, if the contractor artificially bid low in order to get the job, tends to allow the contractor to restore profit to the job for itself. The school board's rationale for requiring pre-bid opening listing of subcontractors is to prevent bid shopping after the bid is awarded in order to protect the competitive integrity of the bidding process. The listing of subcontractors is a practice of the Volusia County School Board and some other school boards in Florida. Ms. Drago, in her testimony, acknowledged that a substantial number of school boards in Florida do not require a list of subcontractors to be provided with bid proposals, and she acknowledged that this does not mean that those school boards' bid processes lack credibility and competitive integrity. She was unaware of any examples in the Volusia County School Board's experience where a contractor listed itself as self-performing and then shopped subcontractors after the bid opening to obtain a better price. The preponderant evidence of record does not establish that this has been the case with Haycook or other contractors on past Volusia County School Board jobs. This is in accord with Mr. Haycook's testimony, who described the detrimental effects such a practice could have on future relationships between a contractors and subcontractors in terms of having them available for later jobs, if a contactor became known for "beating down" subcontractors' prices. If a contractor had a reputation for engaging in that practice, in the future subcontractors' bids to that general contractor would likely be higher, if he could get their bids, and this might result in that contractor having difficulty rendering bid proposals that were low enough to have a chance of being successful. The bid documents give the school board the right to determine if each subcontractor listed by the bidders is qualified to perform the work and if not, to reject that subcontractor and require a replacement subcontractor. It is noteworthy that neither the architect nor the school board rejected Haycook as being unqualified to perform the work in any of the areas in which Haycook, in effect, listed itself as the subcontractor. The bid documents do not provide that the school board may reject "sub-subcontractors" engaged by a subcontractor, nor does the school board examine the history and capabilities of sub-subcontractors that a subcontractor intends to use. Once a subcontractor is acceptable to the Board, there is no further review to determine what means, methods, and procedures the subcontractor uses to perform the work. The subcontractor can contract out all of the work to sub-subcontractors who are actually performing the work, and the Board might not even be aware of it. Therefore, its method or rationale of listing subcontractors and then investigating the subcontractors is no guarantee of ensuring quality of work. In fact, the more areas of work that the general contractor does itself, the more direct control over performance the school board would have. The school board apparently uses a different approach in the instance where a general contractor lists itself as a subcontractor for one or more types of work, i.e. is self- performing. The Board's practice in that situation requires the general contractor to list each contractor who may perform parts of the work. Therefore, the general contractor must list each contractor who will perform the work in each area while this standard is not applied to listed subcontractors. The bid documents do not disclose to bidders the school board's unwritten definition and interpretation of "self- performance." They do not reveal that under the Board's interpretation a contractor must self-perform only with employees on its payroll; that a pre-qualified contractor licensed to perform work in a given area must prove that it has self-performed such work in the past with its own employees only; that general contractors will be treated differently from subcontractors on the subcontractors list, as to the listing of contract labor, and that even though the term "subcontractor" in the bid documents excludes "materialmen" and "laborers," the school board still considers contract labor as a subcontractor or subcontracting, that must be listed for self-performance work. Haycook has substantial experience in bidding and performing work on public school projects, as does Mr. Haycook himself, with both Haycook and a prior company with which he was associated. Haycook had prepared a bid three or four months earlier on a prototype school project similar to Elementary School "X" and had extensive cost information obtained from its work on that project and from subcontractors, including those "bidding" Elementary School "X." Haycook maintains a large database of subcontractors and suppliers experienced in performing work and portions of the work necessary for the Elementary School "X" project, including cost information. It has a database of over 3,000 names useful in obtaining and providing labor for use on parts and subparts of any self- performed work. Prior to the bid, Haycook received the plans and specifications enabling it to determine the quantities of materials needed and the costs per unit for installing the materials and performing the necessary work. Haycook had received subcontractor bids in each of the four areas that it later determined it would self-perform (earthwork, structural steel, concrete, and masonry). Because Haycook's "takeoffs," historical pricing information and recent bid information from another Volusia County prototype school indicated that it could self-perform the work at less cost than using the bids of subcontractors in those four work areas, Haycook elected to self-perform the work and listed itself as the subcontractor in those four work areas. This was not a case where Haycook simply ran out of time to get subcontractors' bids in those four work areas and therefore simply listed itself as performing in the four work areas at issue due to time expediency. It was also not because Haycook intended listing itself as performing in the four subject work areas so that it would create an opportunity to get lower bids from unknown subcontractors after bid opening, in order to enhance its profitability and support a low bid, in terms of putting enough money in the job for itself. As general contractor for the entire project, Haycook intended to provide general supervision of the entire project including subcontractors. With respect to self-performed work, Haycook intended to supply materials and components and to directly supervise and control the means, methods, and procedures of the self-performed work with contract labor. Haycook's definition of "self-performance" for earthwork involved Haycook's renting equipment, retaining contract laborers to clear the site, place the fill (paid by the hour or by the yard), compact the fill, and grade the site. Haycook directly supervises self-performed work and schedules and manages it with Haycook's project manager and on-site superintendent. The testimony of Reed Hadley and Dennis Haycook on behalf of Haycook established that Haycook had self-performed earthwork on other projects in the same manner as described above, satisfactorily for the owners. Specific project names and other project information showing earthwork self-performance by Haycook was provided to the architect as referenced above. Mr. Haycook established that Haycook had "self-performed" earthwork on 50 to 60 percent of its projects in the past. Haycook's definition of self-performance of structural steel included engaging a licensed fabricator, as required by the bid specifications in this instance, hiring experienced labor erection crews, purchasing the materials and component parts, and directly supervising and managing the work, including scheduling of the labor crews. Haycook had performed structural steel on 10 to 15 percent of its past projects. Four examples of projects, self-performed in structural steel, were provided to the architect along with related detailed information. Haycook's self-performance of concrete work included its purchasing of materials, hiring contract labor for footings, paid by the lineal foot, and concrete slabs paid by the square foot, and directly supervising, coordinating, and scheduling the concrete work activities with Haycook's own project managers and superintendent. Haycook has self-performed concrete work on approximately 80 percent of its past projects. The architect was provided a project listing of self-performed concrete work and detailed information showing Haycook's experience in this area. Concrete work is the area of work most commonly self- performed by general contractors in the construction market area in and around Volusia County. Haycook's self-performance of masonry includes Haycook's purchasing of concrete blocks, and reinforcing steel placed within the block, hiring labor on a unit price basis to install it (as, for instance, paid by the block laid), directly supervising the work, and coordinating and scheduling the masonry work activities with Haycook's project manager and superintendent. Haycook has self-performed masonry on approximately 70 percent of its past projects. The architect was provided examples of projects listing self-performed masonry work by Haycook, as well as detailed information depicting Haycook's experience in this work area. Mr. Goodemote, as referenced above, is a local general contractor with school board project experience and is Haycook's expert witness. He established that it is common practice in the construction industry in the Volusia County area for contractors to self-perform work in the manner that Haycook had self-performed it in the past and proposes to do on Elementary School "X." He established with reference to the Board's definition of "subcontractor," which excludes "materialmen" and "laborers," that a contractor's purchase of materials and the hiring of contract labor to install the materials does not come within the definition of "subcontractor" or "subcontracting." He established that a subcontractor is the one who provides all labor, material, equipment, and supervision necessary to complete a work operation. "It's a total turnkey operation. They provide everything to finish the work." Mr. Goodemote's opinion establishes that "self-performance" of the subject work includes a general contractor hiring contract labor to perform a part of the work, because many times there are multiple vendors associated with a portion of the work, and the contractor is still directing and supervising the work and assuming all the risks associated with the work. Mr. Goodemote himself has self- performed as a general contractor and observed other contractors self-perform earthwork, masonry, concrete work, and structural steel work. He demonstrated that if a general contractor uses contract labor to perform a portion of the work, it still remains a "self-performance" by the general contractor, and that the laborers do not have to be on the contractor's payroll in order for the work to constitute self-performance, according to the general practice and usage in the construction industry. When requested by the architect to provide examples of past projects that it had self-performed in the four subject work areas, Haycook listed five projects as to earthwork; four projects in structural steel; seven projects as to masonry; and seven projects as to concrete. In consideration of his restrictive view of what self-performance means (i.e. that self- performance can only mean performance of work by salaried employees on the general contractor's own payroll), the architect (evaluator) requested payroll records and workers' compensation information on two projects only, the Goldsboro Elementary School and Eustis Elementary School. The bid documents do not provide unbridled discretion in the architect/evaluator, or in the school board, to define self-performance in a manner not provided for or inconsistent with the bid documents or to define "subcontractor," to include contract labor and thus require the labor to be listed as a subcontractor on the bid response. There was no notice to any of the bidders that such a restrictive definition would be employed, nor that a contractor listing itself as self- performing, and therefore standing in same position as other subcontractors as to the areas of work it would self-perform, would be treated differently from other subcontractors by, in effect, having to list such persons or entities as those providing contract labor as "sub-subcontractors." There was no evidence that the architect was provided sole discretion to verify self-performance experience as to the two projects only and ignore verification information of self-performance as to the other listed projects provided by Haycook. Although the architect and the Board contended that Haycook's listing of itself as self-performing in the four work areas at issue might allow Haycook to "buy out" subcontractors or to "bid shop," there was no evidence offered to substantiate that this was Haycook's intent or that Haycook or any other identified contractor in Volusia County or the surrounding area had ever attempted to "buy out" subcontractors on Volusia County school projects. Contrarily, Mr. Haycook testified that he does not engage in a practice of "buying out" subcontractors after he has obtained contracts with a winning bid. He explained, as referenced above, that subcontractors and the business relationships that he has with them are crucial to the success of his business. If Haycook made a practice of engaging in such inappropriate operational and pricing conduct when bidding for projects, or entering into related contracts, then subcontractors would either elect not give bids to Haycook at all when Haycook was, in the future, attempting to formulate bid responses, or would not give Haycook their lowest or best price because of their knowledge of such a practice, if Haycook engaged in it. This would obviously have an adverse effect on Haycook's ability in the future to be successful in competitive bid procurements or projects. Haycook has self-performed in the manner intended as to Elementary School "X" for years, as have his competitors. Although the Board apparently feared that Haycook's listing itself as self-performing in the areas of work in question gave it a competitive advantage over other bidders, the evidence does not bear out that fear. The competing bidders had the same opportunity to look at their past cost knowledge and experience, their knowledge of materialmen and suppliers in the area, their knowledge of the labor market and available labor and other data by which they might arrive at an independent evaluation of what a particular area of the work should cost, as well as the methods and means necessary to perform it. They had the same opportunity to evaluate any such knowledge base they have and elect to self-perform one or more areas of the work, as did Haycook. Since they had the same opportunity to do so, the evidence does not show there is any competitive advantage gained by Haycook in this situation which was not available to other bidders as well. As addressed above, the architect's recommendation to reject the Haycook bid was based upon his interpretation that "self-performance" required all work to be accomplished by employees on Haycook's payroll. Using that restrictive definition, the architect concluded that Haycook did not demonstrate, as to the Goldsboro and Eustis projects only, that Haycook had self-performed work with its own employees in the past and therefore that Haycook would self-perform with its own employees on the project at issue. The architect concluded that Haycook's subsequent engagement of contract labor in lieu of using his own payroll employees "could potentially give D. J. Haycook Construction Company an unfair advantage over the other bidders." Neither the architect's testimony nor the Board's other evidence explained, however, how that would give the Petitioner an unfair advantage over other bidders who, as found above, were free to engage in the same proposed self-performance as Haycook. The evidence did not establish how it would harm the public's strong interest in getting the best possible price for a quality construction effort that was completed on time, within the authorized budget, and in accordance with all the contractual terms. The architect's and Board's conclusion in this regard is based upon incorrect and unreasonable interpretations of what is meant by "subcontractor" and the concept of "self-performance." The rationale for finding that Haycook's putative self-performance would give Haycook an unfair advantage, vis a vis, other bidders or would promote bid shopping or buy-out of subcontractors has been shown by the evidence to be based upon speculation and conjecture. Haycook's bid response has been shown to be responsive to the specifications as they were stated, published and furnished to the bidders, including Haycook, in the bid documents at issue. The definition of self-performance employed by the architect and the Board is not supported by the language of the bid documents and has been shown by the preponderant, most credible evidence of record to be an unreasonable definition and manner of evaluating the bids and particularly Haycook's bid. Haycook has been shown to be responsive to the specifications and the relevant portions of the bidding documents and to have the lowest bid by a significant amount, some $241,000.00 dollars as to the base bids of Haycook versus that of Clancy and Theys.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore, RECOMMENDED that a final order be entered by the School Board of Volusia County awarding the contract for Elementary School "X" to the Petitioner, D. J. Haycook Construction Company, Inc. DONE AND ENTERED this 8th day of March, 2004, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with Clerk of the Division of Administrative Hearings this 8th day of March, 2004. COPIES FURNISHED: S. LaRue Williams, Esquire Kinsey, Vincent, Pyle, L.C. 150 South Palmetto Avenue, Box A Daytona Beach, Florida 32114 Theodore R. Doran, Esquire Michael G. Dyer, Esquire Doran, Wolfe, Rost & Ansay 444 Seabreeze Boulevard, Suite 800 Post Office Drawer 15110 Daytona Beach, Florida 32115 William E. Hall Superintendent Volusia County School Board Post Office Box 2118 Deland, Florida 32721-2118
Findings Of Fact The Respondent has been employed with the Brevard County School Board for approximately nineteen years. Before he was suspended in connection with this proceeding, he held the position of Warehouse Coordinator. The warehouse maintained by the School Board houses various operations. Its basic function is to store and distribute goods. The School System's film library, textbooks, courier service, media center, and transportation and maintenance parts department are all operated at the warehouse. Among specific warehouse functions is the sale of salvage goods. The job description for the Warehouse Coordinator was developed sometime during the period 1972 to 1974. The Respondent has held the position since that time. Prior to then, the Respondent served as the "Storekeeper" with essentially the same duties. The job description for the Warehouse Coordinator lists the position's major functions as follows: This involves the supervision over the operations of a portion of a large-sized warehouse or complex pertaining to stock and supplies and their distribution. This supervision also includes movement of all foods and surplus property items. The employee is responsible for the efficient operation of the warehouse complex and performs his/her duty under the general direction of the Director of Warehousing and Distribution and in accordance with established procedure and regulations. The description lists illustrative duties as follows: Supervises the receipt and storage of a large variety of supplies, materials, and equipment; supervises the proces- sing of requisitions and issuance of supplies in accordance with prescribed procedures; supervises the maintenance of perpetual inventories and the prepa- ration of detailed stores, records and reports; keeps superior notified of stock on hand and suggests purchases of designated commodities and materials; recommends and supervises the mainte- nance of proper minimum and maximum stock amounts. Coordinates and supervises the receipt, storage and delivery of surplus com- modities for the school lunchrooms; negotiates with carrier representa- tives concerning payment for goods damaged in shipping; supervises the movement of all surplus items and equipment between the schools and warehouse. Performs related work as required. Among the Respondent's specific duties was responsibility for disposing of scrap metal. The Respondent was responsible for supervising the loading of scrap metal onto trucks, the transporting of it to a salvage dealer, collecting money from the dealer and turning money in to the accounting clerk. During the years that the Respondent served as Warehouse Coordinator and Storekeeper, he received consistently high evaluations, generally in the "exceptionally high" range. It does not appear that he has ever been the subject of any disciplinary proceedings prior to this matter, and it appears that he has been regarded as a very capable and trusted employee. In disposing of scrap metal, the Respondent would supervise the loading of the material onto trucks at the warehouse. The drivers, who were generally classified as "storage clerks," would drive the trucks to a scrap metal dealer. The scrap metal dealer would issue an invoice and typically pay the drivers in cash. The drivers would return to the warehouse. On most occasions, the drivers would deliver the invoice and cash directly to the Respondent. On some occasions, however, because the Respondent was otherwise occupied, the money would be left on the Respondent's desk in his office, or in one of his desk drawers. The Respondent's office was located in the center of the warehouse. It was generally open to all employees, and employees frequently used the office to make telephone calls. Once the cash was delivered to the Respondent, he would deliver it to the warehouse accounting clerk, or to his supervisor, who would then be responsible for delivering it to the accounting clerk. Whether the money was delivered by the Respondent or by some other person, the accounting clerk would issue a receipt. The receipt would indicate that the funds were received from the scrap metal dealer. The receipt would not reveal whether Respondent or some other person delivered money to the accounting clerk. The receipts were numbered and issued in order. Receipt books were maintained so that copies of all receipts that were issued were preserved. During the early part of 1981, an investigation was initiated by the School Board respecting warehouse funds. The investigation was conducted under the supervision of the Board's Chief of Plant and Personnel Security, Bill H. Schwartz. Among other things, Mr. Schwartz compared invoices from the scrap metal dealer with the receipts maintained by the School Board and came to the conclusion that some money reflected on invoices had not been receipted. He interviewed numerous witnesses, including the Respondent. Schwartz came to the conclusion that the unreceipted funds ended with the Respondent. Based upon the demeanor of Mr. Schwartz on the witness stand, and upon statements of the witness that were clearly inaccurate, the witness Schwartz's testimony and conclusions have not been deemed credible. Schwartz testified, for example, that receipts issued by the School Board reflected who delivered the cash to the accounting clerk. This testimony is inaccurate. The receipts issued by the accounting clerk reflected only that funds were received from the scrap metal dealer. That fact is not a minor aspect of the investigation respecting the missing funds, and the witness Schwartz's faulty memory about it cannot be lightly regarded. This error and the witness's demeanor otherwise reveal that Schwartz focused his investigation initially upon the Respondent, considered the Respondent the culprit, and was not open to other conclusions during his investigation, or as a witness. Schwartz's testimony respecting statements made to him by the Respondent has been similarly deemed not credible. During the investigation, an invoice from the scrap metal dealer, together with some cash, was found in Respondent's desk drawer. The Respondent delivered the money to the accounting clerk. The invoice was approximately four months old at the time that it was delivered. The Respondent was expected to deliver money to the accounting clerk immediately upon its receipt. The four- month delay in an isolated case, however, does not reflect impropriety on the Respondent's part. Clearly, procedures followed by the Respondent in allowing employees that he supervised to leave money on his desk or in his desk drawers were lax. These procedures, however, had been followed for many years in the warehouse and were well known to at least some of the persons who held the position of Respondent's supervisor. Despite that knowledge, the Respondent received consistently outstanding evaluations. To the extent that the procedures Respondent followed violated School Board regulations, he could and should have been informed of it many years prior to the incidents which gave rise to this proceeding. After the investigation conducted by Mr. Schwartz, an audit was conducted of the scrap metal invoices and receipts. The audit revealed that approximately $230 was reflected as being paid to the School Board that was not reflected as being received. There are many possible explanations for this discrepancy. One possible explanation is that the Respondent received the cash from the employees that he supervised and failed to turn it in to the accounting clerk. Among other possible explanations are that employees of the scrap metal dealer falsely issued invoices and retained the cash for their personal purposes; that truck drivers improperly failed to turn money over to the Respondent; that money left by drivers on the Respondent's desk was taken by some other person; that the Respondent's supervisor, to whom the Respondent from time to time delivered the money so that it would be later turned over to the accounting clerk, failed to turn it over; or that the accounting clerk issued erroneous receipts. The evidence reveals no more than that the Respondent is one of numerous persons who could be responsible for the discrepancy. Paul Green was formerly employed by the School Board at its warehouse as a storage clerk. He testified at the hearing that the Respondent told him to pick up storage sheds at a commercial outlet and deliver them to a third party. The witness Green testified that this was done for the Respondent's private benefit. Green testified that the loading was accomplished by him and another School Board employee while they were on duty as School Board employees and that a School Board truck was used. The witness Green's testimony has been deemed not credible. This conclusion is based upon Green's demeanor as a witness, upon inherent contradictions in his testimony, and upon statements in his testimony that were shown to be untrue. Green was a very guarded witness. At times he wanted to reveal information but not reveal the source of the information. Green had at one time been terminated from his employment with the School Board, and he displayed hostility about that and toward the Respondent. Green testified that on one occasion he personally conducted an investigation about food being delivered by School Board employees on other than refrigerated trucks that were required for such use. He testified that he conducted the investigation while he was not on duty. His cohort, however, who assisted in the "investigation" testified to the contrary. Even if Green's testimony were credited, the evidence would not reveal who owned the sheds, whether the Respondent had been instructed by some other person to deliver them, and whether the School Board employees and trucks were or were not properly used to deliver them. The Respondent has been under suspension from his employment with the School Board since May 12, 1981.
Findings Of Fact Background And Overview Respondent was first employed by Petitioner, School Board Of Palm Beach County, Florida (the "School Board"), in 1964 as a teacher. Respondent was promoted to principal in 1971, Assistant Superintendent for the School Board in 1978, and Associate Superintendent of Schools for Planning and Operations on July 1, 1984. Respondent was one of three Associate Superintendents in the Palm Beach County school district. There was also an Associate Superintendent of Instruction and an Associate Superintendent of Administration. Each Associate Superintendent reported to the Deputy Director who reported to the Superintendent. Respondent served as Associate Superintendent of Planning and Operations until he was demoted to principal on November 5, 1991. Respondent served under an annual contract as an Associate Superintendent and maintains a continuing contract as a teacher. While employed as an Associate Superintendent, Respondent never received notice of an allegation of incompetent conduct, was never disciplined, and never received a negative performance evaluation prior to this proceeding. In the Summer of 1991, Respondent was a finalist for the position of Superintendent. The position of Associate Superintendent of Planning and Operations was subsequently abolished effective July 1, 1992. Planning And Operations: Organization And Regular Duties The organization of Planning and Operations has changed in specific regards during the years Respondent was its Associate Superintendent. 1/ For the purposes of this proceeding, however, Planning and Operations employed approximately 1,500 people and was organized and operated in three subdivisions: Growth Management; Facilities Planning and Management; and Personnel Relations. Personnel Relations is not at issue in this proceeding. 2/ Growth Management responsibilities included: identifying school district demographics; determining racial balance; and site acquisition for development of schools and other facilities. Facilities Planning and Management responsibilities included: building new schools; renovations; improvements; and maintenance. Each of the three subdivisions of Planning and Operations was supervised directly by an Assistant Superintendent. The Assistant Superintendents supervised one comptroller and nine directors. Directors had direct responsibility for assistant directors. Assistant directors supervised first-line managers. First-line managers supervised numerous employees who regularly worked on: major school center projects; new school construction; facility design and contract services; facility operations; maintenance and renovations; personnel administration; information management; recruitment and selection; and human resources. Additional Duties In addition to their regular duties, Respondent and other senior administrative supervisors were required by Mr. Thomas Mills, the former Superintendent, to promote and solicit the involvement of members of the local business community in the Palm Beach County school system. The school system faced student overcrowding, a lack of materials, a lack of adequate funding, and a rising drop out rate. Members of the business community were recruited to help raise money for operating expenses and to support a bond issue for which the School Board sought voter approval in 1986. Many members of the local business community were also vendors to the School Board. Respondent was directed by former Superintendent Mills and Dr. James Daniels, the Deputy Superintendent, to contact and network with as many members of the business community as possible. Such activities were considered by former Superintendent Mills to be a high priority. Respondent complied with the directives of the former Superintendent and Deputy Superintendent. The efforts of Respondent and other senior managers proved successful. The business community in Palm Beach County raised funds to supplement the operating expenses of the school system and supported a bond issue for construction of new facilities and capital improvements to existing facilities. In 1986, the majority of registered voters in Palm Beach County approved a Special Referendum authorizing a $678 million bond issue for the construction of educational facilities in the Palm Beach County School District. The School Board established a five year plan for the construction of educational and ancillary facilities (the "five year construction plan"). A portion of the bond money was allocated to capital improvement projects to renovate or remodel existing facilities. Planning and Operations supervised all bond issue projects, including capital improvement projects. In the 1986- 1987 school year, such projects, including capital improvement projects, were supervised by the division of New School Construction. In the Fall of 1987, supervision of capital improvements was transferred to Maintenance and Renovations. Maintenance and Renovations was also organized within Planning and Operations. Approximately 39 new schools were constructed in Palm Beach County while Respondent was Associate Superintendent of Planning and Operations. The total budget for construction of new schools was approximately $550 million. Thousands of construction projects, renovations, and improvement or maintenance projects were performed by Planning and Operations. Approximately $317 million of the authorized bond issue was issued from 1987 through 1989. In addition to the construction of new schools, the School Board approved a plan in 1985 to acquire land and construct four ancillary facilities. The ancillary facilities included a new administrative complex, a central warehouse, and a maintenance and operations facility. Planning and Operations supervised the site acquisition and construction of all four ancillary facilities. Deficiencies In Planning And Operations Deficiencies in the organization and operation of Planning and Operations were well known to both the School Board and Planning and Operations personnel. They were pandemic deficiencies that Respondent could not correct without the approval and financial support of the School Board and the technical assistance of experts. 3/ The School Board retained an outside consultant, Price Waterhouse, to study deficiencies in Planning and Operations and to formulate an improvement program. The improvement program was to be developed in three phases. The first phase identified deficiencies within Planning and Operations on the basis of discussions with department personnel and outside specialists. The second phase would have focused on verifying and prioritizing problems and their impacts. The third phase would have formulated a program for improvement of Planning and Operations. Deficiencies in Facilities Planning and Management were identified in interviews conducted by the accounting firm of Price Waterhouse with directors, assistant directors, and first- line managers. In 1987, Price Waterhouse issued a draft report to the School Board describing the deficiencies found in Facilities Planning and Management (the "Price Waterhouse Report"). 4/ The School Board determined that the Price Waterhouse Report merely told the School Board what was already common knowledge and that further expenditures on a program for improvement with Price Waterhouse would be a waste of money. The School Board knew of the deficiencies in Planning and Operations. The School Board knew that those deficiencies created impediments to the supervision of Planning and Operations. Known deficiencies within Facilities Planning and Management involved: financial procedures and controls; staff performance, including personnel and control; planning of operations and projects; contract administration; construction administration; and organization structure. Deficiencies in financial procedures resulted in budgeting without adequate preparation, historical data, timing, and coordination between departments. Poor cost and schedule accounting for capital improvements, maintenance, and operations made it difficult to capture and report cost information in sufficient detail and in a timely manner. Poor cost controls directly affected the control of operations, decisions to perform work by in-house staff or contractors, and the value received for money spent. Adequate project management tools and policies were not in place to contain costs and adhere to schedules for maintenance, capital improvements, and new construction. Payment of suppliers, contractors, architects, and other vendors was slow, frustrated vendors, and made them reluctant to do work for the School Board. There were deficiencies in staff performance, personnel, and control. Productivity appeared to be low. There was a lack of performance measurement and reporting mechanisms in place to accurately assess productivity. Productivity was significantly affected by: inadequate work planning and coordination; the condition and availability of equipment and materials; logistics; and geographic constraints. Many employees were uncertain as to their responsibilities and corresponding authority, particularly at the first-line manager level. Uncertainty over responsibility and authority undermined the effectiveness of first-line managers dealing with vendors, contractors, and architects. Staffing levels and management span were not adequate to maintain existing facilities and operations, control personnel growth, and prevent duplication of field personnel skills between maintenance and capital improvements. Support resources were weak in technical expertise, administrative staff, reference materials, and computer aided design equipment. Capital improvement, new construction, and maintenance tasks were frequently not scheduled in sufficient accuracy and detail to foresee and anticipate potential problems. Frequent schedule slippage allowed contractors less time to complete construction and meet schedules; adversely affecting productivity, project costs, and the ability to plan for and manage project issues and achieve targeted completion dates. Shortages of materials and supplies often caused project delays. Coordination of work between and within departments failed to determine the optimal sequence in which work was to be performed to maximize the utilization of trade employees and avoid conflicts and rework. Deficiencies in contract administration led to lack of clarification in the responsibilities, requirements, and expectations of parties to contracts. Contract documents and conditions were too vague and resulted in frequent disputes, delays, and occasional change orders. To avoid delays caused by change orders, contractors sometime proceeded without proper authorization at their own risk. The definition of authority and responsibility and the guidelines for quality control and inspection for in-house employees and contractors needed to be improved. Such deficiencies in construction administration resulted in project delays, poor construction, and higher facility life cycle costs. A lack of consistency in procedures and policies for project management exacerbated the deficiencies in construction administration. Deficiencies in organization structure directly affected problems in other areas of Planning and Operations. Continuity of work was lacking on new construction. Project managers changed when responsibility passed from one division to the next; resulting in a start-stop effect on the project and a loss of specific project knowledge. Improvement was needed in communications between and within departments and in upper management support of lower management authority. There was a need for a long range organization structure and staffing strategy which addressed alternatives such as internal staffing and contracted services. The presence of deficiencies described in the Price Waterhouse Report in 1987 was confirmed in 1993 in a Report On Audit Of The Palm Beach County District School Board For The Fiscal Year Ended June 30, 1992 Dated: June 24, 1993 issued by the State of Florida, Office Of The Auditor General (the "Auditor General's Report"). The Auditor General's Report found that deficiencies similar to those described in the Price Waterhouse Report for Facilities Planning and Management also existed in Growth Management. Problems reported in the Price Waterhouse Report and in the Auditor General's Report described a deficient organizational and operational system in which the School Board required Respondent to supervise unprecedented growth and activity. Respondent was required to: supervise a $550 million construction plan involving thousands of projects and four ancillary facilities; 5/ promote involvement of the business community in the school system; and perform the duties he was otherwise required to perform in the absence of the five year construction plan established by the School Board and associated promotional responsibilities. In 1987, the Price Waterhouse Report stated that supervisors and assistant directors were stretched very thin, and their roles needed to be more clearly defined. Communication between and within departments and from directors and similar supervisors was poor. 6/ Many of the deficiencies described in the Price Waterhouse Report and the Auditor General's Report created impediments to Respondent's supervision of Planning and Operations irrespective of his additional duties associated with the five year construction plan. Petitioners' Allegations Petitioners' allegations against Respondent are based on two separate investigations conducted by Petitioners. 7/ Petitioners' allegations involve: acquisition of a site for a central warehouse for $3.161 million (the "District Warehouse Site"); acquisition of a site for a west bus compound for $750,000 (the "West Bus Compound"); construction of an addition to a new maintenance and operations building on Summit Boulevard in West Palm Beach for Maintenance and Renovations and Facility Operations and construction of an addition to a north maintenance building (the "Summit Facility"); requests for additional services on form G-604 (the "G-604" issue); acceptance of gratuities from members of the business community who were also vendors of the School Board; and evaluation of two employees. Petitioners' allegations of incompetency primarily involve the five year construction plan and ancillary facilities. Few of the alleged acts of incompetence involve other aspects of Respondent's job performance from July 1, 1984, through November 5, 1991. The District Warehouse Site The School Board determined in 1985 that a need existed for a centralized warehouse site in Palm Beach County. 8/ The School Board determined that approximately 10 acres would be adequate. Since the value of land in Palm Beach County was appreciating, the School Board also approved the policy of former Superintendent Mills that encouraged the acquisition of land for future expansion if the land could be acquired at a desirable price, i.e., "warehousing" land for future use. Respondent had advocated a decentralized warehouse system in which separate warehouse functions would be carried out in various regions of Palm Beach County. Others in Planning and Operations supported the concept of a centralized warehouse site. The centralized warehouse concept was accepted and approved by former Superintendent Mills and the School Board. On October 11, 1989, the School Board purchased approximately 16 acres of real property as a site for a centralized district warehouse. The property was purchased for $3.161 million from KEI Palm Beach Center, Ltd. ("KEI"), a limited partnership in which Mr. William Knight was a limited partner and Knight Enterprises, Inc., a corporation controlled by Mr. William Knight, was the general partner (the "Knight property"). Respondent did not act incompetently and did not violate any statute, rule, policy, instruction, or directive, or circumvent normal acquisition procedures (collectively referred to hereinafter as "applicable standards") with regard to the evaluation and purchase of the Knight property. Respondent neither proposed nor advocated the purchase of a particular warehouse site. Respondent did not propose or advocate the identification, evaluation, selection, and purchase of the Knight property. Respondent showed no favoritism to Mr. William Knight, to his son, Mr. Jim Knight, or to any entity owned by the Knights. Respondent committed no act or omission which impaired his business judgment, compromised his independence, or which was otherwise improper in connection with the acquisition of the District Warehouse Site. Initial Site Selection And Evaluation Prior to the acquisition of the Knight property, the School Board attempted to acquire property owned by Palm Beach County and known as Section 6. Negotiations for the acquisition of Section 6 terminated when Section 6 became unavailable. A site search for the District Warehouse property was conducted by Growth Management. Ten separate sites, including the Knight property, were initially identified and reviewed by a site acquisition team within Growth Management. The site acquisition team was headed by Mr. William Hukill, Assistant Superintendent for Growth Management. The site acquisition team also included Mr. Robert Skakandy, a real estate acquisition coordinator in Growth Management, and Mr. David Williams, Assistant Director of Growth Management. Respondent was not significantly involved in identifying the 10 properties considered by the site acquisition team, including the Knight property. Each property was placed on the list by the site acquisition team because it was within or proximate to the geographical area preferred by the site acquisition team or possessed other targeted location characteristics. 9/ Site selection procedures typically did not involve Respondent. Site selection procedures were described in detail in the Auditor General's Report: . . . upon identification of potential sites, the sites were evaluated by the District's Growth Management Center. A description of each site was presented to the Assistant Superintendent, Growth Management and to the Assistant Director, Growth Management for their review, after which the descriptions were . . . presented to the Superintendent. Following the Superintendent's review, the preliminary site investigations and site descriptions with the Superintendent's recommendation were to be presented to the School Board for their review and approval. (emphasis supplied) Auditor General's Report at 63. Growth Management first considered the Knight property in August, 1988. Mr. Jim Knight communicated the availability of the Knight property to Ms. Linda Howell, a real estate coordinator in Growth Management. Ms. Howell and Mr. Jim Knight conducted further discussions. Ms. Howell identified the Knight property as a potential site and relayed the site information to Mr. Skakandy. The site acquisition team reduced the list of ten sites to a list of three final sites. The Knight property was not one of the three final sites selected. The three final sites were all less expensive than the Knight property. The three final sites were the Riviera Beach site, the Boyton Beach site, and the Farmer's Market site. Feasibility problems developed with each of the three final sites. The Riviera Beach site was sold to another party. The Boyton Beach site was objected to by other staff not on the site acquisition team. It was 15-20 miles south of the center of the county and failed the express criteria for a "central" warehouse. Environmental problems and costs associated with the disposal of building materials caused Maintenance and Renovations to recommend against purchase of the Farmer's Market site. 10/ Reconsideration Of Knight Property On or about January 11, 1989, former Superintendent Mills sent a memorandum to Mr. Hukill indicating that Mr. William Knight had called the Superintendent to express his interest in having the Knight property reconsidered for the District Warehouse Site. Respondent received a copy of that memorandum but was not otherwise involved significantly in the reconsideration of the Knight property. On or about January 20, 1989, Mr. Hukill sent a letter to the former Superintendent indicating that the Knight property was still under consideration and that the Knight property location was quite good under the circumstances. Mr. Hukill indicated that appraisals had been ordered and that a site recommendation would be forthcoming. 11/ The Knight property was reconsidered in accordance with procedures customarily followed in Growth Management. There was no formalized procedure followed in Growth Management for the evaluation of property for site acquisition. Sites were discussed in a free form fashion. Except for a recommendation of the final site selected, written records for recommendations on specific properties were not customarily prepared by staff in Growth Management. 12/ Mr. Hukill made the ultimate decision to add or drop sites from consideration. Acquisition sites were added or deleted from site acquisition lists without notifying Respondent. The Knight property was evaluated by the entire staff in Growth Management. The evaluation of the Knight property included a review of environmental issues, utilities, zoning, and road use. Mr. Jim Knight had more than 20 meetings with Growth Management staff including Mr. Hukill, Mr. Skakandy, and Mr. Williams. Respondent was not significantly involved in those discussions. 13/ The Knight property was recommended by staff because of its suitability for the District Warehouse and because of the unavailability or unsuitability of the first three sites originally selected by the site acquisition team. The Knight property was located in almost the exact center of the county. It was also located on Southern Boulevard, a roadway that runs directly to western communities in Palm Beach County where many new schools were scheduled for construction. Respondent properly relied on staff recommendations for the Knight property in accordance with his customary practice. At no time prior to the time the property was acquired did any employee within Growth Management state to Respondent that the Knight property was not a suitable site or that the purchase of the Knight property would be detrimental to the School Board. Mr. Hukill did not sign the written recommendation for the Knight property. The reason for his refusal, however, had nothing to do with the suitability of the Knight property for the District Warehouse. Mr. Hukill believed, as a philosophical matter, that the School Board should spend its money on schools rather than on additional warehouse sites. Mr. Hukill, in effect, objected to a determination made by the School Board in 1985. Mr. Hukill agreed with the recommendation that the Knight property was suitable based on the marketplace, location, and ease of distribution for servicing schools. Respondent neither identified nor advocated the Knight property. Respondent had no conversations with either Mr. William Knight or Mr. Jim Knight concerning the evaluation of the Knight property as a site for the District Warehouse except as previously described. Except for the price paid for the Knight property, Respondent's involvement in the acquisition of the Knight property was limited to a review of staff recommendations and the acceptance of those recommendations. Additional Acreage The initial search for a District Warehouse site focused on the acquisition of 10 acres of property. However, the Knight property included 16 acres. The additional acreage was purchased to overcome access problems that would have occurred if only 10 acres had been purchased. Unanticipated problems in site selection was one of the deficiencies known to the School Board and discussed in the Price Waterhouse Report in 1987. Engineering involvement frequently did not occur early enough in site acquisition. As a result, sites selected by the site acquisition team required unanticipated expenses, and the full cost of the project was not properly assessed. 14/ The decision to purchase additional acreage was not made by Respondent. Former Superintendent Mills wanted the additional acreage to accommodate future expansion for office space on the warehouse site. The former Superintendent believed that a larger site was desirable to properly accommodate future expansion needs and directed the purchase of the additional acreage. The issue of whether to increase the site for the District Warehouse from 10 acres to 16 acres was discussed at a Superintendent's staff meeting. The former Superintendent, the School Board attorney, Respondent, and a dozen other members of the former Superintendent's staff attended the meeting and participated in the discussion. The decision and recommendation to purchase the additional acreage was made by the former Superintendent. Purchase Price The final purchase price for the Knight property was reasonable and beneficial for the School Board. Respondent was responsible for the final purchase price. Two separate appraisals for the Knight property were obtained by Growth Management in accordance with its customary practice and applicable law. 15/ Respondent did not select the appraisers. They were selected by Mr. Skakandy with the approval of Mr. Williams. The appraisers were qualified and had been used many times in the past by Planning and Operations. The two appraisals for the Knight property differed by $1.00 a square foot. The higher appraisal was for $5.50 a square foot. The lower appraisal was for $4.50 a square foot. 16/ Respondent refused to accept Mr. William Knight's offer to split the difference between the two appraisals and insisted on a sales price of $4.42 a square foot. The price paid for the Knight property was reasonable and less than the lowest appraised value. Contract Negotiations Respondent was not involved in contract negotiations for the Knight property and did not dictate any of the terms of the contract for the purchase of the Knight property; except the final purchase price discussed in the preceding paragraph. Site acquisition personnel typically negotiated site acquisition contracts in concert with the School Board attorney. Site acquisition personnel did not customarily report the status of contract negotiations to Respondent. No established procedure required such reports. Contract negotiations for the acquisition of the Knight property were carried out entirely by site acquisition personnel within Growth Management and Mr. Robert Rosillo, the School Board attorney. Negotiations by staff and the School Board attorney for the Knight property were within the scope of normal functions for site acquisition. The School Board attorney did not confer with Respondent during the three months in which contract negotiations for the Knight property were conducted. Respondent never gave the School Board any direction or other information concerning the acquisition of the Knight property. It is the responsibility of the School Board attorney and technical staff in Growth Management to draw acquisition contracts, address zoning requirements, and determine contingencies for closing. Any problems associated with the final contract for purchase of the Knight property were the responsibility of the School Board attorney and staff negotiators. Road Improvements: Allocation Of Costs Between The Parties The contract for the Knight property addressed road improvements, right-of-way, and relocation measures necessary for the use of the property. Engineering drawings reflected the right-of-way issues, the need to relocate water and sewer lines and a lift station, and the need for road improvements. The parties to the contract agreed to share the cost of road improvements proportionally. The contract required the seller to place $70,000 in a separate escrow account to be used to fund the necessary road improvements. While Petitioners now complain that the amount escrowed by the seller was inadequate, the terms of the contract were prepared by the School Board attorney and recommended by Growth Management staff in accordance with long standing practice. In 1987, The Price Waterhouse Report stated that contract documents did not delineate specific responsibilities. The result was confusion, disagreements, and additional costs to the School Board or outside parties. 17/ Adverse impacts from the purchase of the Knight property on October 11, 1989, reflected deficiencies reported in the Price Waterhouse Report in 1987. Those deficiencies were well known to the School Board at least two years before the acquisition of the Knight Property. The School Board chose not to expend additional funds on a program of improvement suggested by Price Waterhouse. Financial Ability Of Seller To Comply With Repurchase Option The contract for the Knight property contained a provision which gives the School Board the right to require the seller to repurchase the property if conditions pertaining to zoning are not satisfied (the "repurchase option"). The repurchase option was drafted by the School Board attorney. A decision not to enforce the repurchase option was made by the School Board, the School Board attorney, and the former Superintendent. If the School Board had elected not to proceed with closing, the contract afforded the seller to right to sue for specific performance. A foreclosure suit was filed against the Knight property a few days prior to the closing on October 11, 1989. Mr. Rosillo discussed the impact of the foreclosure suit on the purchase with former Superintendent Mills. The issue was not discussed with Respondent. The contract did not require the seller to evidence its financial ability to perform the terms of the contract. Nor did the contract require Mr. William Knight to personally guarantee the obligation of the seller under the repurchase option. Temporal Considerations The time required for the evaluation and purchase of the Knight property was reasonable and adequate. The transaction was not "rushed." The evaluation and purchase of the Knight property required approximately 14 months to complete. Once the decision to purchase the property was made, approximately three months were required to finalize the terms of the contract and close the transaction. Even if the evaluation and purchase of the Knight property was rushed, Respondent did not act as an impetus to rush the transaction. Respondent was not significantly involved in the identification, evaluation, and purchase of the Knight property except for the final purchase price. Mr. Jim Knight actively negotiated the transaction with Mr. Rosillo, Mr. Hukill, Mr. Williams, and Mr. Skakandy. The entire transaction was discussed fairly and adequately by Growth Management staff and the School Board attorney. Respondent did not propose or advocate the Knight property. Respondent did not negotiate the terms of the contract to purchase the Knight property except for the final purchase price. Respondent did not decide whether to close the transaction or whether to enforce the repurchase option. Bifurcated Funding For Land Acquisition And Construction The fact that the Knight property was acquired prior to the time that money was available to construct the District Warehouse does not make Respondent incompetent. Property was customarily purchased first and a building constructed out of budget appropriations in subsequent years. In 1987, The Price Waterhouse Report included such practices in its list of deficiencies. The capital budgeting process lacked sufficient coordination, timing, and input. Adequate cost accounting tools were not available. Existing reports lacked sufficient detail, accuracy, and timeliness. Capital improvement funding sources were not clearly identified. The fact that priorities for capital improvements were not easily or accurately tracked was a source of frustration for administrators including Respondent. 18/ Those deficiencies were known to the School Board prior to 1987. In 1987, the School Board chose not to pursue a program of improvement with Price Waterhouse. In 1993, the Auditor General's Report found that originally designated capital outlay moneys had been expended on projects, land purchases, and other purposes which were not contemplated in the 1986 school construction plan. Expenditures not contemplated in the five year construction plan included the District Warehouse Site. 19/ The notice of tax levy for capital improvements had not been prioritized within categories as required by Section 200.065(9)(a), Florida Statutes. Failure to prioritize the projects contributed to delays in undertaking some of the projects at issue. Furthermore, the School Board did not segregate and account for the proceeds and related expenditures of each respective year's levy. 20/ The decision to purchase the Knight property and rely on budget appropriations in subsequent years for construction was made by former Superintendent Mills. The former Superintendent's policy was to purchase land at a reasonable price if there was a future need for the property. Land values in Palm Beach County were appreciating rapidly. The money to construct the buildings on such properties typically came from budget appropriations in subsequent years. The Knight property was purchased for less than its lowest appraised value. 2.10 Gratuities And The Knight Property Respondent went fishing in 1986 and 1987 on Mr. William Knight's fishing boat in St. Thomas, U.S. Virgin Islands, and in Bimini, Bahama Islands. Respondent reported both fishing trips on his annual financial disclosure forms. The two fishing trips did not adversely affect Respondent's business judgment or create the appearance of impropriety. Respondent was not significantly involved in the acquisition of the Knight property in October, 1989. In 1986, Respondent accepted an invitation from Mr. Robert Howell, a member of the School Board at the time, to go fishing in St. Thomas. The invitation was made to Respondent through former Superintendent Mills. The former Superintendent joined Respondent on the fishing trip. Respondent had never met Mr. William Knight before that time. The fishing trip lasted two days. Respondent paid for his own transportation to St. Thomas. In 1987, Respondent and former Superintendent Mills accepted an invitation from Mr. William Knight to fish with their children in Bimini. The fishing trip lasted one day. The West Bus Compound On or about April 24, 1990, the School Board purchased property in Royal Palm Beach for $750,000 (the "West Bus Compound"). The property was purchased from Mr. John Bills. Site selection procedures typically did not involve Respondent. 21/ Respondent did not act incompetently or violate applicable standards with regard to the identification, evaluation, and purchase of the West Bus Compound. Respondent did not propose or advocate the West Bus Compound or the evaluation, selection, and purchase of the West Bus Compound. Respondent showed no favoritism to Mr. Bills, or any entity owned by Mr. Bills. Respondent committed no act or omission which impaired his judgment, compromised his independence, or which was otherwise improper in connection with the evaluation and acquisition of the West Bus Compound. The need for a site to service the western portion of Palm Beach County was identified by Mr. George Baker, the Director of Transportation. Transportation was a division of the Department of Administration. The Associate Superintendent of Administration was Dr. Henry Boekhoff. Respondent had no authority or responsibility over Transportation. The need for a site to service the western portion of Palm Beach County was uncontroverted. Due to westward population migration, several new schools were built in the western regions of the County. Mr. Baker determined that it was not cost effective to transport buses back and forth from compounds in the eastern portion of the County for maintenance and storage. Mr. Baker and Dr. Boekhoff determined that a West Bus Compound would result in significant savings in the operating budget. The need for a West Bus Compound was well known within the school district administration, including Growth Management. Mr. Baker had repeatedly stated to everyone "within earshot" that the need for a West Bus Compound was urgent. Mr. Baker identified a site location in Royal Palm Beach owned by Mr. Bills. Mr. Baker told Mr. Williams, who worked in Growth Management, that Transportation wanted the site owned by Mr. Bills for the West Bus Compound. Mr. Bills was trying to sell his property. Mr. Bills submitted a brochure on the property to Mr. Hukill and other staff in Growth Management. Mr. Hukill recommended the property owned by Mr. Bills to Respondent. Respondent discussed the site with former Superintendent Mills. At Mr. Hukill's request, the former Superintendent authorized Mr. Hukill to proceed with negotiations for the property owned by Mr. Bills. Respondent advised Mr. Williams of the availability of the property owned by Mr. Bills. Respondent instructed Mr. Skakandy to follow normal procedures regarding the West Bus Compound site. The West Bus Compound site was evaluated by Mr. Skakandy and Mr. Williams. They also negotiated the contract for acquisition. Such action on the part of Mr. Skakandy and Mr. Williams was consistent with customary practice within Growth Management and was within the scope of their regular duties and responsibilities. Two appraisals were obtained for the West Bus Compound. The higher appraisal was for $810,000. The lower appraisal was for $703,000. The property was purchased for $750,000. Respondent properly relied on the recommendations and advice of technical staff in Growth Management with respect to the acquisition of the West Bus Compound site. Respondent was never informed by anyone within Growth Management that there were any limitations on the use of the site. Certain zoning and easement requirements reduced the usable area for the site below that originally projected by Growth Management. Mr. Baker recommended the site even though the usable area was less than originally projected. Respondent was not acquainted with Mr. Bills at the time that the West Bus Compound was evaluated and acquired. Subsequently, however, Respondent developed a friendship with Mr. Bills. Respondent never showed any favoritism to Mr. Bills in connection with the West Bus Compound. The Summit Facility On July 1, 1989, employees of Maintenance and Renovations and employees of Facility Operations were housed in a leased facility at 3323 Belvedere Road, West Palm Beach, Florida (the "Belvedere" site). A new ancillary facility was nearing completion in the Fall of 1989. The new facility was located at 3300 Summit Boulevard in West Palm Beach (the "Summit Facility"). The Summit Facility included a second building known as the north building. The landlord for the Belvedere site exercised its rights under the lease to obtain use of the Belvedere site sooner than originally anticipated by the School Board. Electronics employees housed at the Belvedere site were moved to Northshore High School ("Northshore") on a temporary basis until the Summit Facility was completed. Residents of the neighborhood adjacent to Northshore complained to some members of the School Board about increased traffic. The School Board took the matter up at a public meeting during the Fall of 1989. Approval Of Day Laborers In Trades Sections At the public meeting conducted in the Fall of 1989, the School Board specifically authorized Mr. David Lord, Director of Maintenance, and former Superintendent Mills to use day- laborers in the trades sections 22/ to construct additions to buildings at the Summit Facility and to relocate electronics employees from Northshore to the Summit Facility by January 1, 1990. Mr. Lord and the former Superintendent discussed the matter with the School Board in detail. 23/ At the public meeting, the School Board instructed Mr. Lord to use whatever resources were available to him to make needed capital improvements to the Summit Facility by January 1, 1990. Confusion over when to use contractors or in-house personnel was one of the deficiencies discussed in the Price Waterhouse Report in 1987. Criteria for determining when to perform work on a contract basis and when to perform work in- house were not clearly established. This made planning difficult and increased project costs. 24/ Lack of communication and agreement between project managers and construction personnel concerning time and cost of in-house projects resulted in incorrect decisions concerning the desirability of building in-house or by contract, caused delays, cost overruns. 25/ Comparative cost analyses of in- house and contract maintenance construction were not available. 26/ In 1993, the Auditor General's Report found that established procedures did not provide reasonable safeguards to monitor day-labor projects to ensure that goods and labor were used only for authorized projects. The Auditor General's Report recommended that such procedures be established. 27/ Mr. Lord used day-laborers from his trades sections to make the capital improvements mandated by the School Board in accordance with the School Board's instructions. The work was begun in December, 1989, and completed in March, 1990. Code Violations In 1991, after considerable time for discussion and analysis among attorneys and technical staff within the Department of Education and Planning and Operations, it was determined that some additions to the Summit Facility were not in compliance with applicable safety code regulations. Respondent properly relied on Mr. Lord and Mr. Lord's immediate supervisor for technical compliance with applicable code provisions. Florida Administrative Code Chapter 6A-2 contains the State Uniform Building Code. Part A of Chapter 6A-2 ("Part A") applies in some circumstances, and Part B of Chapter 6A-2 ("Part B") applies in other circumstances. In July, 1990, officials of the Department of Education, Educational Facilities Department, in Fort Lauderdale, Florida, were invited to a demonstration of fire alarms at the Summit Facility. Mr. Russell Smith, Director of Facilities Design, determined that life/safety code violations existed in the two buildings at issue in the Summit Facility. Mr. Smith's determination of code violations was based on the assumption that Part A applied to the capital improvements at the Summit Facility. Mr. Lord had determined that Part B applied to the capital improvements. The capital improvements at the Summit Facility complied with the requirements of Part B but not Part A. Mr. Smith did not report the alleged code violations to Respondent until December, 1990. Respondent directed Mr. Smith to obtain a determination from the Department of Education. Mr. Smith pursued the matter with representatives of the Department of Education as well as Mr. Lord in Growth Management. Ms. Abbey Hairston, General Counsel for the School Board, concluded that there was a strong likelihood that Part B applied. Mr. Lord suggested that an outside consulting firm be retained to determine the applicability of Part A or Part B to the capital improvements at the Summit Facility. Respondent could not have detected the existence of the alleged code violations in the capital improvements to the Summit Facility. Respondent did not have the expertise to make such a determination. Respondent's regular duties and responsibilities did not require that Respondent maintain such expertise, conduct inspections for the purpose of detecting code violations, or correct code violations. Respondent did not act incompetently and did not violate applicable standards with regard to the capital improvements to the Summit Facility. Respondent did not propose or advocate that capital improvements be made to the Summit Facility in compliance with Part B. Respondent properly relied on his staff for technical compliance with applicable code requirements. When Respondent received notice of alleged code violations, Respondent acted in a competent and timely manner. In 1987, The Price Waterhouse Report discussed several deficiencies in staff performance, personnel, and control. The Price Waterhouse Report stated: Internal expertise is limited. Knowledge of specialized areas is limited, project quality suffers, life cycle costs are higher. . . . Training programs and budgets are insufficient, especially with respect to technical and safety training. Employees are not as efficient or effective as they could be. Knowledge of project managers is less than they feel is necessary Project managers are resistant to new management techniques. . . . Inadequate technical library. . . . Price Waterhouse Report, Staff Performance, Personnel And Control, Issues 5, 7, and 9, and corresponding Impacts. In 1993, the Auditor General's Report recommended that: . . . District personnel strengthen procedures to provide that, prior to occupancy in the future, the required approvals for occupancy are obtained to ensure that the facilities meet the prescribed safety standards. Auditor General's Report at 64. Tracking And Reporting Costs The computer codes and accounting approach used to track and report the cost of capital improvements to the Summit Facility complied with applicable standards. The computer codes and accounting approach recorded each transaction and were subject to separate retrieval in accordance with established procedures. Required object, fund, and function codes were used to document the expenditure of funds for the capital improvements to the Summit Facility. In 1987, the Price Waterhouse Report stated: Adequate cost accounting tools are not available. Existing reports lack sufficient detail, accuracy and timeliness. [There is] . . . [n]o ability to manage and control project cost. This results in true project cost being unknown and lack of problem identification on a timely basis. . . . Capital Improvement Requests are not easily or accurately tracked. Priorities are difficult to track and coordinate. This is a source of school administration frustration. . . . Project management tools are not available. Project cost containment suffers. Control and reporting is lacking. . . . Accountability is difficult to enforce. Price Waterhouse Report, Financial Procedures And Controls, Issues 4, 8, and 17, and corresponding Impacts. The day-labor hours billed for additions to the Summit Facility totaled approximately 6,373. In the three fiscal years from 1989 through 1992, approximately 566,853.75 day-labor hours were paid and approximately 454,701.75 were billed. Day-labor hours paid exceeded day-labor hours billed by approximately 112,152 hours. 28/ As the Price Waterhouse Report indicated in 1987, adequate cost accounting tools were not available. The cost accounting and reporting procedures that were in fact utilized for the additions to the Summit Facility complied with available cost accounting procedures. Respondent did not act incompetently and did not violate applicable standards in connection with the method used to track and report the cost of capital improvements to the Summit Facility. Respondent did not propose or advocate any particular accounting procedure. Respondent properly relied on technical staff to track and record the cost of capital improvements to the Summit Facility, and staff properly utilized the accounting tools available to them. Purchase Orders Purchase orders for mezzanine and modular offices were originated by staff in lower levels of Maintenance and Operations. The purchase orders were processed in accordance with normal procedure and approved by Ms. Betty Helser, Director of Purchasing. Ms. Helser was under the supervision of the Associate Superintendent of Administration and was not subject to the authority of Planning and Operations. Planning and Operations had no authority over Purchasing. Respondent did not participate in the purchase order approval process. Respondent was not responsible for that process. Several names were listed on the purchase orders as resource or contact persons in connection with the purchase order. Respondent was not one of those named. Funding Source For Capital Improvements Respondent did not act incompetently and did not violate applicable standards in connection with the funding source for capital projects, including acquisition of the District Warehouse site, the West Bus Compound, and additions to the Summit Facility. Funding sources for such projects were approved by the School Board. The funds used to pay for the District Warehouse, the West Bus Compound, and the Summit Facility were not misappropriated or misapplied. The School Board approved those capital projects and their corresponding budgets. The budget for each capital project provided for the transfer of capital outlay moneys to the general fund. 29/ Taxes had been levied for capital improvements pursuant to Section 236.25(2), Florida Statutes. Funds were transferred from this special millage money and not from general obligation bond money. Such transfers occurred in prior years and were consistent with customary procedure. Moreover, no funds were used for capital projects without the prior knowledge and consent of the School Board. Deficiencies in the budget reporting and control process impeded full consideration by the School Board of the impact of capital projects and budget transfers on the 1986 school construction plan. As a result, originally designated capital outlay moneys were expended on capital projects not contemplated in the 1986 school construction plan. Accordingly, some originally contemplated projects were not undertaken in the five year plan due to lack of funds. 30/ Deficiencies in financial processes and controls reported by Price Water House in 1987 and known to the School Board prior to that time created impediments to proper budgeting and resulted in poor budget quality. In 1987, the Price Waterhouse Report stated: Performance measurement (feedback) needed to assess and improve budget accuracy is lacking. Poor budget accuracy, control, and forecasting [results]. . . . The capital budgeting process lacks sufficient coordination, timing and department input. Budget priorities may not be sufficiently addressed and quality of actual budgets may suffer. Priorities for improvements are defined by construction and remodeling, but they may not be consistent with the school's needs. High priority projects may not be addressed on a timely basis. Price Waterhouse Report, Financial Procedures And Controls, Issues 2, 16, and corresponding Impacts; Price Waterhouse Report, Planning Of Operations And Projects, Issue 9 and corresponding Impact. Projects funded by the capital outlay millage derived under Section 236.25(2), Florida Statutes, were not prioritized within categories in the notice of tax levy as required by Section 200.065(9)(a). Failure to prioritize the projects to be funded by the capital outlay millage contributed to delays in undertaking some of the projects contemplated in the 1986 construction plan. In addition, the proceeds and related expenditures of each year's levy was not segregated and accounted for. 31/ Reports reviewed by the School Board consisted of monthly financial statements containing analyses of revenues by source of funds and analyses of expenditures by function. Status reports showed comparisons of projected revenues designated for the 1986 school construction plan with actual revenues received. Comparisons of projected construction costs anticipated in the five year construction plan with actual construction costs were not available. Like the notice of tax levy, available status reports did not prioritize projects within categories. The failure to prioritize projects and reporting inadequacies constituted some of the pandemic deficiencies known to the School Board prior to 1987 and did not result from Respondent's alleged incompetence. In 1993, the Auditor General's Report recommended several procedures for rectifying deficiencies in the budgeting process. First, quarterly status reports on capital projects should be revised to show the projected costs of projects, current expenditures, and the variances over or under projected costs. Second, proposed budget amendments should include an explanation of the possible effects on capital construction plans and operating budgets. Third, the ". . . Board and the Superintendent. . ." 32/ should develop written management reporting guidelines. Finally, the School Board should re- examine the remaining bond plan projects to ensure that they reflect current needs. G-604s: Requests For Additional Services Respondent did not act incompetently and did not violate applicable standards with regard to the use of requests for additional services or change orders on form G-604. Requests for additional professional services or for change orders are made on form G-604. Palm Beach County requires that such requests be reviewed by the School Board. Respondent never attempted to hide requests for architectural services from the School Board or to prevent their review by the School Board. In August of 1986, Mr. Hukill wrote a memorandum to Respondent requesting that directors be allowed to review and approve appropriate requests for additional services in an amount no greater than $20,000 per request and then submit the G-604 to the School Board for subsequent review. Respondent approved the procedure requested by Mr. Hukill. Two weeks later, Mr. Larry Mione, Contract Administrator, erroneously wrote a memorandum to four assistant directors authorizing requests for additional services of up to $20,000 per request without the need to have such requests subsequently reviewed by the School Board. As a result of the erroneous memorandum from Mr. Mione, some G-604s were approved by directors and were not subsequently reviewed by the School Board. This practice was in derogation of the memorandum issued by Respondent. When the discrepancy was discovered, several investigations were ordered by former Superintendent Mills and Deputy Superintendent Daniels. There were approximately 30 people at staff meetings two times a month. All of them review School Board reports. None of them discovered the discrepancy in the conflicting memoranda until after the violations had occurred. Respondent was not charged with wrongdoing or incompetence and was not found incompetent. An independent outside consultant confirmed the need for the G-604s and the procedure authorized by Respondent. Gratuities Former Superintendent Mills established a policy that required all senior administrative personnel, including Respondent, to promote the involvement of members of the business community in the school system. The policy was designed to obtain the aid of business in solving problems such as overcrowding, lack of materials and text books, a lack of funding, and an increasing drop out rate. The policy was a high priority for former Superintendent Mills. Respondent performed the duties required under the policy established by former Superintendent Mills. Respondent entertained members of the business community and was entertained by them. The gratuities accepted by Respondent generally involved free lunches, dinners, and golf outings. Policy Directive Respondent's activities did not violate the policy directive of former Superintendent Mills. Former Superintendent Mills knew of Respondent's activities and approved of those activities. Upper management was encouraged to socialize with members of the business community, including contractors and architects, in an effort to get them involved in solving problems facing the school system. Business Judgment And Impropriety Respondent's business judgment was not adversely affected by his association with vendors of the school system. Respondent's association with such members of the business community did not create the appearance of impropriety. The award of contracts to vendors was the responsibility of Purchasing. Purchasing was under the control of Dr. Boekhoff, the Associate Superintendent of Administration. Ms. Helser was the Director of Purchasing. Respondent did not have the authority to influence decisions made in Purchasing. Incompetence Respondent carried out the policy directive of former Superintendent Mills competently with no adverse affect on his business judgement and without the appearance of impropriety. The business community became actively engaged in solving problems of the school district. Companies such as Motorola, Pratt Whitney, and IBM provided opportunities for speakers to address employees to promote the bond issue. The bond issue was approved by the voters. A program known as "Cities in Schools" was developed as a business partnership to prevent drop out. Funds were raised for programs and materials. Respondent did not improperly promote a particular vendor or product in connection with the business of the School Board. Respondent never violated any administrative directive or established standard of conduct of the Department of Education. Evaluations 128. The Amended Petition For Demotion alleges that Respondent was incompetent in evaluating two employees. Those employees were Mr. Goode and Mr. Hukill. No credible and persuasive evidence was submitted by Petitioners to support their allegations in this regard. Attorney Fees And Costs The parties' request for attorney fees and costs are addressed in the Conclusions of Law.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Palm Beach County School Board enter a Final Order finding Respondent not guilty of any of the allegations in the Amended Petition For Demotion, award Respondent back salary with applicable interest for the entire period of his demotion, immediately reinstate Respondent to a salary level comparable to that received as Associate Superintendent of Planning and Operations in accordance with Section 231.36(6)(b), Florida Statutes, dismiss the request to return Respondent to annual contract status under Section 231.35(4)(c), and maintain Respondent on continuing contract. RECOMMENDED this 23rd day of July, 1993, in Tallahassee, Florida. DANIEL MANRY 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 23rd day of July, 1993.
The Issue The issue is whether the specifications in the request for qualifications advertised by Respondent on May 21, 2002, are inconsistent with the provisions of Section 287.055, Florida Statutes, arbitrary, or otherwise contrary to competition.
Findings Of Fact Based upon the testimony and evidence received at the hearing, the following findings are made: Parties Petitioner is an engineering firm. Joe Robinson, a professional engineer, is the majority owner and president of Petitioner. Petitioner is a certified minority-owned business because Mr. Robinson and at least one of his partners are African-American males. Respondent is a local school district, and is responsible for the management and operation of the approximately 200 public schools in Hillsborough County. Respondent's annual budget for construction and renovation of schools is between $160 million and $200 million per year, with an unspecified but large portion of that amount attributable to the cost of competitively procured architectural, engineering and construction services. Petitioner has done very little engineering work for the School Board in the past. It worked on a study for the School Board in 1986, and worked on a warehouse project for the School Board in 1994. Over the past four years, Petitioner has applied for only one engineering project with the School Board. At the request of the School Board staff, Mr. Robinson provided comments to Ernst & Young, a consulting firm hired by the School Board to conduct "a forensic evaluation and analysis of the District's construction and maintenance policies, practices, and procedures” and to review the School Board's minority business enterprise program. The findings and recommendations in the report prepared by Ernst & Young (discussed below), along with Petitioner's "insights" and input, led to revisions in the School Board’s policies and procedures for procuring architectural and engineering services. Those revisions, adopted by the School Board on July 30, 2002, are not at issue in this proceeding; they are being challenged by Petitioner in DOAH Case No. 01- 3138RP. Ernst & Young Report On May 17, 2002, Ernst & Young submitted a 121-page report based upon its evaluation. The report was critical of many aspects of the School Board's procurement, construction, and maintenance policies, practices, and procedures. With respect to the procurement of architectural and engineering services, the report included the following assessment which is pertinent here: Our review of [the District's] vendor's [sic] selection process indicates, in many respects, that the process follows traditional requirements established by SREF and Florida Statute [sic]. Furthermore, in many instances, the procedures mirror those utilized by peer and contiguous school districts. However, we have identified significant shortcomings related to ranking the professional service providers that have submitted bids for either architectural design, engineering, or construction management services. * * * Interviews with the A/E/C [architectural/engineering/construction] community have indicated that the vendor selection process is generally understood by the professional community. However, the architects and construction managers within the community do not understand how vendors are evaluated or ultimately rank ordered [sic] by the District to arrive at a list of the three highest ranked respondents. As a matter of fact, the District has moved away from using a score sheet or "score card" with pre-established evaluation criteria and a weighted point structure, and toward a rather subjective process whereby a selection committee simply appoints professional service providers either based upon past performance on a similar type of project (i.e. replicate design) or based upon the District's desire to equitably distribute work amongst the A/E/C community. This type of evaluation and selection process, as currently utilized by the District, while effective at distributing work amongst the A/E/C community, does not ensure that the best or most qualified vendor will be selected for each of the proposed school district projects. The current vendor selection process could permit abuse and favoritism as the selection committee could be influenced by School Board input, personal relationship [sic] and lack of objective criteria. Although we found no evidence of undue influence, the subjective nature of the process offers the District little credibility. * * * E&Y [Ernst & Young] found that the vendor selection process being utilized by [the District] lacks credibility in that it remains highly subjective as new projects are allocated without respect to numerical analysis of prior performance, company financial condition, proposed project management team, etc. Moreover, the selection committees do not rotate sufficiently to eliminate the possible influence from senior [District] Administrators or Board Members. Ernst & Young Report, at 27-29 (emphasis supplied). On these points, the report concluded: Upon comparison to each of the peer and contiguous school districts, Ernst & Young found that only [the District] engages in a vendor selection process in the absence of pre-established or pre-determined evaluation criteria and a numerically-based scoring system which permits a numerical ranking of each interested professional service provider. E&Y found that the vendor selection process being utilized by [the District] lacks credibility in that it remains highly subjective as new projects are allocated without respect to numerical analysis of proper performance, company financial condition, proposed project management team, etc. . . . Ernst & Young Report, at 107 (emphasis supplied). The report's description of the School Board's current evaluation and selection process is consistent with the testimony at the hearing, as more fully discussed below. The report included the following recommendations relevant to the procurement of architectural and engineering services: The District's vendor selection process can be more objective and better understood within the A/E/C community by developing standard evaluation criteria and a numerically-based scoring system. Such a system will permit the District to numerically rank each interested professional service provider and thus eliminate bias and potential favoritism of the [District] selection committee. Evaluation criteria should include, among other things, prior performance, company financial condition, proposed project management team, etc. Moreover E&Y recommends that the District augment its vendor selection committees with community members, business leaders, school principals, and other external stakeholders as appropriate. In conjunction, [the District] should also increase its rotation of the selection committees [sic] members to eliminate possible influence from senior Administrators or Board Members. Ernst & Young Report, at 117. The Request for Qualifications The School Board has five in-house architects and six in-house inspectors who are responsible for overseeing all of the District's planning and construction projects. The primary function performed by the architects is project management, i.e., "rid[ing] herd" over construction schedules and overseeing the work of the project architects and construction managers. The primary functions of the inspectors are code enforcement, quality assurance management, and contract compliance. In addition to the recommendations quoted above, the Ernst & Young report recommended that the School Board augment its in-house staff to provide more on-site supervision and inspection of construction projects. Specifically, the report recommended: [T]o protect the District's interest, it would be beneficial to have a full-time on- site owner's representative, which could be either a District employee, a licensed architect, independent engineer or experienced construction manager with a demonstrated history of successfully completing quality construction projects. The result of the full time [sic] on-site representative is better control of the quality of the work being performed, a working knowledge of the project, the ability to identify and solve problems when they first arise, and promotes the accountability amount the parties involved to deliver the highest quality product. Since capital project expenditures are expected to peak within the next three years, E&Y recommends using either an outsourcing strategy or contract employee to serve this need. Ernst & Young Report, at 118-19. In an effort to implement this recommendation, the School Board published the following notice in the Tampa Tribune on May 21, 2002: THE SCHOOL BOARD OF HILLSBOROUGH COUNTY, Florida, announces that professional architectural and/or professional engineering services will be required. These services will consist of providing architectural and/or engineering project management personnel to supplement existing district staff. Duties may include design reviews, project coordination, administration, on-site observation and quality control. Applicants will be expected to provide personnel possessing recent relevant project management experience on K-12 educational facilities. Any applicant interested in providing services shall submit a completed G.S.A. Form 254. Said form shall be separate and apart from any accompanying materials. All material must be submitted to J. Thomas Blackwell, Director of Planning & Construction, 901 East Kennedy Boulevard, Tampa, Florida 33602 by 4:00 p.m. on May 31, 2002. Applicants are encouraged to submit electronically by emailing pdf documents to tom.blackwell@rossac2.sdhc.k12.fl.us. No additional information was made available to potential respondents regarding the nature or extent of the services sought to be procured by the RFQ. However, at the hearing, it was explained that the School Board expected to procure the services of five project coordinators or project managers through the RFQ. The five positions could be filled by different firms on a full-time or half-time basis or by a single firm, depending upon the submittals and the outcome of the evaluation process. The G.S.A. Form 254 referenced in the advertisement solicited general information about the applicant, including whether the applicant is a "small disadvantaged business." The form also required the applicant to provide a list of its projects over the past five years, including information relating to the type of project, cost of the project, and completion date. Neither the RFQ nor any other information provided to potential respondents in advance explains how the responses will be evaluated. Neither the RFQ nor any other information provided to potential respondents in advance identifies the factors that the School Board will consider in evaluating the response or the weight that the School Board will give to such factors. Petitioner's Protest Petitioner received notice of the RFQ on May 21, 2002, through the newspaper advertisement. The evidence does not establish the time of day that Petitioner received such notice. By letter dated May 24, 2002, Petitioner provided the School Board notice of its intent to protest the specifications in the RFQ. By letter dated June 3, 2002, Petitioner formally protested the "selection methods" for the RFQ. The record does not reflect when the School Board received the letters. However, Mr. Robinson testified that he "filed" the notice of protest letter on May 24, 2002, and "filed" the formal protest letter on June 3, 2002. Petitioner, as an engineering firm, is qualified to submit a response to the RFQ. However, Petitioner did not submit a response to the RFQ. The record does not reflect how many, if any, firms responded to the RFQ by the May 31, 2002, deadline. As a result of Petitioner's protest, the School Board put the RFQ "on hold." The School Board's Procurement Process At the time the RFQ was advertised, the School Board did not have an adopted policy prescribing the procedure by which it procured professional services in accordance with the Consultants' Competitive Negotiation Act (CCNA) in Section 287.055, Florida Statutes. Moreover, the policies and procedures that were in place (discussed below) did not explain to potential respondents how the responses to the RFQ will be evaluated, nor did they prescribe the factors that the School Board will consider in evaluating the responses or the weight that will be given to each factor. Section 7.14 of the Policy Manual simply authorizes the superintendent or his or her designee to "contract for professional or educational services to complete projects or activities authorized or approved by the school board." The only other document describing the School Board's procurement process is a document entitled "Capital Projects Standard Procedures." That document was presented to but never adopted by the School Board. The document references the CCNA in connection with the selection of architects and construction managers, but not engineers; and, it only provides a general outline of the selection process: Publish legal advertisement for Professional Services (CCNA) Screen (interview/presentation) applicants Present "Order of Priority" to School Board Negotiate contract terms and identify consultants Present compensation package to School Board Prepare contract documents Secure signature of Architect and Board Chair Despite the absence of an adopted policy, the selection process described by the School Board's witnesses at the hearing generally complies with the requirements of the CCNA. That process would be used to evaluate the responses to the RFQ. The process begins with publication of the RFQ in three local newspapers, the Tampa Tribune, the Florida Sentinel Bulliten, and La Gaceta. The RFQ is also posted on a website maintained by Tom Blackwell, the Director of Planning and Construction for the School Board. In the past, Mr. Blackwell also sent e-mails to firms which had previously applied for work from the School Board or which had shown interest in obtaining such work, but he no longer does so. All of the applications received in response to the RFQ are referred to a committee for evaluation and interviews. In the past, the School Board utilized a list of certified vendors and interviewed only those applicants which had been certified. However, the School Board now interviews every applicant and uses the interview process to verify the applicant's credentials. The committee is composed of five to seven members selected by Mr. Blackwell and Jack Davis, the School Board's Assistant Superintendent for Operations. The committee members include representatives of each of the District's administrative divisions, e.g., instructional, operations, and administrative. Mr. Blackwell acts as a facilitator for the committee, but typically does not function as a voting member. Mr. Blackwell provides the committee members a copy of the CCNA, and reviews with them the factors set forth therein. Mr. Blackwell also provides the committee members "tally sheets" which are used to evaluate the applicants in specified areas. The sample "tally sheet" introduced at the hearing (Exhibit R2), identified 10 different "topics" for evaluation and assigned points to each topic: Topic Points Experience in projects of similar size, scope and quality 15 History of adherence to budget constraints and cost control mechanisms 10 History of adherence to schedule constraints and delivery dates 10 References 10 Established quality control mechanisms 5 Established scheduling program 5 History of minority business participation 10 Qualifications of key personnel, support staff and resources 5 Organization of project team 5 Interview / Presentation 25 The committee members are not required to complete the "tally sheets" in any particular manner. Indeed, there are no written guidelines prescribing the manner in which the "tally sheets" must be completed by the committee members. Mr. Blackwell and Mr. Davis both testified that committee members are given discretion as to the manner in which they record their observations of the applicants. In this regard, some committee members assign points to each applicant (as the sample "tally sheet" seems to contemplate), others use anecdotal notes, grades (i.e., A, B, C, D, or F), pluses and minuses, or check marks. The committee reviews the materials submitted by the applicants in response to the RFQ (the completed G.S.A. Form 254) and formulates questions for the applicants based the criteria in the CCNA, e.g., the applicant's minority status or its minority participation history, its experience in completing projects on-time and within budget, its quality control and assurance measures. These questions are typically provided to the applicants in advance to enable them to prepare for their presentations and interviews. Each applicant is given an opportunity to make a presentation to the committee. No guidelines are provided for the presentations. The types of presentations range from computerized presentations to display boards to bound books of information. As part of the presentation, the committee asks questions and interviews the applicant. The committee is responsible for ranking the applicants based upon their qualifications. The committee does not consider compensation issues in formulating its ranking. The committee formulates its ranking through a "consensus or group decision making process" rather than through a compilation of individual numerical scores. The decision- making process includes a discussion of each applicant's strengths and weaknesses by the committee members based upon their individual evaluations, input from District staff who worked with the applicant in the past, and visits to prior projects in which the applicant has been involved. The committee's ranking is submitted to the School Board for approval. After the School Board approves the ranking, Mr. Blackwell and his staff begin negotiations with the top-ranked applicant. The negotiations include discussion of the parameters of the project in greater detail as well as the compensation package. If the negotiations with the top-ranked firm fail, then negotiations are commenced with next highest ranked firm. Typically, however, the negotiations with the top-ranked firm are successful. Once the negotiations are completed, a contract is presented to the School Board for approval. The Revised Procurement Policy On July 30, 2002, the School Board approved revisions to its procurement policy and procedure. The revisions will be codified in Sections 7.29 through 7.33 of the Policy Manual. The new Section 7.29 establishes the following policy for the acquisition of professional services: The acquisition of professional architecture, engineering, landscape architectural, land surveying, or construction management services shall be procured in accordance with Florida Statute 287.055 with the object of effecting an equitable distribution of contracts among qualified firms, provided such distribution does not violate the principle of selection of the most highly qualified firms. The other new sections establish the policies and procedures for the steps in the acquisition process, i.e., public announcement (Section 7.30), competitive selection (Section 7.31), competitive negotiation (Section 7.32), and standardized agreements (Section 7.33). As noted above, Petitioner has challenged the validity of the revised policies in DOAH Case No. 02-3138RP. However, both Mr. Robinson and the School Board's witnesses agree that the revised policy is an improvement on the School Board's existing policy.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the School Board issue a final order that rescinds the request for qualifications published May 21, 2002, and reformulates the specifications of the request in a manner that, at a minimum, advises potential respondents in advance of the factors upon which the responses will be evaluated and the weight that will be uniformly given to each factor by the selection committee. DONE AND ENTERED this 6th day of September, 2002, in Tallahassee, Leon County, Florida. T. KENT WETHERELL, II Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 6th day of September, 2002.
