Findings Of Fact Petitioner, M & J Construction Company of Pinellas County, Inc. (M & J) is a contractor prequalified to bid on FDOT construction projects in excess of $250,000. Mayo Contracting, Inc. (Mayo) is a contractor prequalified to bid on FDOT construction projects in excess of $250,000. Bid solicitation notices for state project no. 75280-3416 were mailed out to prospective bidders, including M & J, on August 26, 1994; and bid packages were mailed to firms requesting them on September 26, 1994. M & J received a bid package. On September 28, 1994, bids were submitted for a bridge repair contract in Orange County. Mayo submitted the lowest bid for the contract in the amount of $426,860.75 which was $54,060.05 lower than the second low bidder. M & J submitted the third lowest bid for the contract in the amount of $499,103.40. (Exhibit 5) The bid documents included the following notice which is printed in two different places in the bid package; once in double spaced bold capital letters, and once in standard size font. UNLESS OTHERWISE NOTIFIED IN WRITING, RETURN RECEIPT, THE SUMMARY OF BIDS FOR THIS PROJECT WILL BE POSTED WITH THE CLERK OF AGENCY PROCEED- INGS, FLORIDA DEPARTMENT OF TRANSPORTATION, 605 SUWANEE STREET, ROOM 562, TALLAHASSEE, FLORIDA 32399-0458, ON OCTOBER 20, 1994 OR NOVEMBER 7, 1994. BY CALLING THE CLERK OF AGENCY PROCEEDINGS, FLORIDA DEPARTMENT OF TRANSPORTATION, (904) 488-6212, DURING EACH POSTING PERIOD, INFORMATION CONCERNING THE POSTED PROJECTS CAN BE OBTAINED. INTERESTED PARTIES THAT HAVE A COMPUTER AND A MODEM CAN ACCESS INFORMATION FROM THE CONTRACTS ADMINISTRATION ELECTRONIC BULLETIN BOARD CONCERNING PROJECTS WHICH WERE POSTED WITH THE CLERK OF AGENCY PROCEEDINGS DURING EACH POSTING PERIOD BY DIALING (904) 922-4158 OR 922-4159. POSTING WILL PROVIDE NOTICE OF THE DEPARTMENT'S INTENT TO AWARD A CONTRACT OR TO REJECT ALL BIDS. THE DEPARTMENT'S NOTICE OF INTENT REGARDING THIS PROJECT WILL BE POSTED ON ONLY ONE OF THE ALTERNATE POSTING DATES. BIDDERS ARE SOLELY RESPONSIBLE FOR TIMELY MONITORING OR OTHERWISE VERIFYING ON WHICH OF THE SPECIFIED ALTERNATE POSTING DATES THE POSTING OF AWARD OR REJECTION OF ALL BIDS ACTUALLY OCCURS. (Exhibits 1 and 2). This notice is included in all FDOT bid packages. M & J has been bidding for FDOT contracts for seven years and submits approximately 40 bids to FDOT per year. M & J admits it did not heed the notices in the bid documents advising bidders that (1) the posting dates identified in the bid documents would not be changed unless written notice was provided, and (2) that the bidders are solely responsible for monitoring the posting dates. Mr. Boutzoukas and Mr. Leone said they were aware that the bid documents contained information regarding posting but they did not made any special note of the time frames nor did they double check after Mr. Leone's conversation with an FDOT employee. The day after the bid was submitted, M & J personnel became concerned about some alleged irregularities in the bid specifications or the bidding process. Mr. Leone called the FDOT contract office to find out the posting date. He is not certain of the identity of the person with whom he spoke, but he believes that it was Michael Schafenacher because of his "distinct, eloquent voice". The FDOT staff person, according to Mr. Leone, told him the posting was November 17 or December 5, 1994. This information was in conflict with the printed information in the bid package described in paragraph 5, above. No one at M & J bothered to look at the dates in the bid package, either before or after the telephone call to FDOT. Instead, Mr. Leone put the November 17/December 5 dates on the office chalkboard and continued with his investigation of the alleged irregularities, as directed by Mr. Boutzoukas. On October 20, 1994, consistent with the requirements of Section 120.53, F.S. and as provided in the notices in the bid packages, FDOT posted the notice of intent to award the contract to Mayo. On or about November 4, 1994, during the course of collecting data on the project, Mr. Boutzoukas realized that posting must have already occurred. He told Mr. Leone to call FDOT again and they then learned that the posting had occurred on October 20. Michael Schafenacher has worked in the FDOT contracts administration office for nine years. He maintains the critical dates chart for various projects and is involved in the pre- and post-bidding process. He and at least four or five other staff respond to numerous telephone inquiries each day regarding dates and the posting process. He remembers the early November call from M & J but nothing sooner, and he does not believe that he would have given erroneous dates from the critical dates chart. The chart reflects the same dates for the project as stated in the bid packages. FDOT keeps track of its contracts by the "letting" date, that is, the month in which bids are opened for a particular project. The project at issue, No. 75280-3416, was in the September letting. Mr. Schafenacker keeps his critical dates chart taped to his desk for easy reference. With or without the letting date, Mr. Schafenacher can quickly and easily find dates in response to telephone inquiries. If Mr. Schafenacher had given the wrong dates and had been told that the dates were inconsistent with the bidding documents, he would have investigated further to resolve the discrepancy. FDOT did not change the dates for the award of the project at issue; if it had, M & J and the other bidders would have received written notice. When there was no timely protest after the October 20 letting, FDOT awarded the contract to Mayo on or about October 26, 1994. As soon as it found out on November 4th that the bid was let, M & J filed its notice of protest by FAX on November 4, 1994. It did not follow up this notice with a formal protest, but rather filed a document called "Request for Opportunity to Protest More than Ten Days after the Post of the Intent to Award Bid, on or about November 30, 1994, after discussions with FDOT's legal staff. At no time did M & J file a protest bond. M & J's reliance on erroneous verbal information by an unidentified FDOT employee was unreasonable since M & J had the proper information readily in hand and ignored it. M & J waived its right to protest the bid award when it failed to timely file notice of the protest, a proper protest bond or a formal protest.
Recommendation Based on the foregoing, it is hereby RECOMMENDED: That the Florida Department of Transportation enter its final order denying the bid protest of M & J. DONE AND ENTERED this 24th day of January, 1995, in Tallahassee, Florida. MARY CLARK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 24th day of January, 1995. APPENDIX The following constitute specific rulings on the findings of fact proposed by the parties. Petitioner's Proposed Findings M & J filed a memorandum and a four paragraph order. The findings proposed in that order are rejected as unsupported by the weight of evidence. However, the finding proposed in paragraph 3 is adopted to the extent that it establishes that M & J filed a notice as soon as it learned from FDOT that the bid was let on October 20. Respondent's Proposed Findings 1. Adopted in paragraph 3. 2.-4. Adopted in paragraph 5. Adopted in paragraph 3. Adopted in paragraph 5. Rejected as unnecessary. 8. Adopted in paragraph 1. 9. Adopted in paragraph 6. 10.-11. Rejected as unnecessary. 12.-13. Adopted in substance in paragraph 6. 14. Adopted in paragraph 3. 15.-16. Adopted in substance in paragraph 7. 17. Adopted in paragraph 11. 18.-20. Adopted in paragraph 12. 21. Adopted in paragraph 11. 22. Rejected as unnecessary. 23. Adopted in paragraph 12. 24. Adopted in paragraph 13. 25. Adopted in substance in paragraph 16. 26.-27. Adopted in paragraph 14. 28.-29. Adopted in paragraph 15. 30. Adopted in paragraph 14. 31. Adopted in paragraph 15. 32. Adopted in paragraph 16. Intervenor's Proposed Findings 1.-7. Adopted in paragraphs 1-6. Adopted in paragraph 7. Adopted in paragraph 9. Adopted in paragraph 14. 11.-12. Adopted in paragraph 15. COPIES FURNISHED: Michael E. Boutzoukas, Esquire Post Office Box 2731 Dunedin, Florida 34697-2731 Thomas H. Duffy, Esquire Department of Transportation 605 Suwannee Street Tallahassee, Florida 32399-0450 Mary M. Piccard, Esquire Post Office Box 589 1004 DeSoto Park Drive Tallahassee, Florida 32302-0589 Ben G. Watts, Secretary ATTN: Deidre Grubbs Department of Transportation Haydon Burns Building, MS 58 605 Suwanee Street Tallahassee, Florida 32399-0450 Thornton J. Williams, General Counsel Department of Transportation 562 Haydon Burns Building Tallahassee, Florida 32399-0450
Findings Of Fact Respondent HRS published ITB 590:2306 for existing rental space in the central area of Brooksville, Florida. The bid solicitation specified a bid opening time and date of 2:00 p.m. July 17, 1991. Petitioner and Intervenor timely submitted sealed bids. They were the only two bidders. Neither they nor anyone else timely filed any protest of the bid specifications, and therefore the specifications are not subject to attack in this proceeding. Petitioner received a notice of intent to award the bid for lease 590:2306 to Intervenor by letter from Respondent dated August 27, 1991 and timely filed its notice of intent to protest and formal bid protest. Petitioner accordingly has standing to bring this proceeding. Intervenor is the intended awardee and as such has standing to intervene. Petitioner submitted the property located at 7348 Broad Street, Brooksville, Florida, and showed in his bid submittal form that his proposed property contained 22,500 net square feet, with future expansion of 2,100 square feet available. When Petitioner submitted his bid, it included a floor plan, site plan, and a PUR 7068 form. A PUR 7068 form is a "Public Entity Crime Certification Statement," a sworn statement under Section 287.133(a) F.S. The ITB included two separate requirements for bidders to establish that they have control over the property that they submit to HRS. HRS' purposes in requiring bidders to demonstrate control are to prevent bids based on total speculation, to establish a reasonable expectation that the bidder can meet his obligations if awarded the bid, and to establish a reasonable expectation that the property can be occupied on time. Item 1 on page 3 provides as follows: Control of property - This pertains to both the structure(s) and proposed parking areas. To submit a responsive bid, a prospective lessor must meet one of the following qualifications: a.) Be the owner of record of the facility and parking areas (submit copy of deed). b.) Be the lessee of space being proposed and present with bid, a copy of lease with documen- tation of authorization to sublease the facility and parking areas through the base lease term and all renewal option periods. c.) Submit documentation of an option to purchase the facility and/or parking areas. d.) Submit documentation of an option to lease the facility with authorization to in turn, sublease. Any lease must encompass the entire time period of the basic lease and any renewal option periods as required the state. e.) Submit form PUR. 7068 Sworn Statement of Public Entity Crimes (Attachment H). Page 12 provides, in part, as follows: In order for a bid proposal to be accepted the items 1 through 6 must be included in the bid proposal. Items 7 through 11 must be included, if applicable. [Items 11 and 13 state:] 11. Documentation showing bidder as controller of property. 13. Public Enemy [sic] Crime Certification Statement A pre-bid conference attended by Petitioner made clear that evidence of control and the PUR 7068 form were two different items. Petitioner testified that he attached the PUR 7068 form as his sole basis for evidencing control of the building and parking spaces he submitted for lease, and acknowledged that, in fact, the form did not provide any information with regard to his control of the buildings or parking spaces offered for lease. Petitioner's assertion that his name on some of his site plans, etc. constitutes evidence of control is not persuasive. Such assertion is not in line with the ITB requirements or even common sense. Petitioner Proctor owned the buildings he offered HRS in his bid submittal. Petitioner offered multiple buildings separated by parking areas and driveways. The property offered by Petitioner was to have built an awning- covered walkway between buildings but the walkway would have to be placed through the driveway area of the property. The expansion area for Petitioner's property designated in its bid submittal was composed of approximately 10 gated warehouse units which would be converted to office space. Petitioner had leased a portion of the same premises to HRS for 15 years, and HRS was still leasing that portion at the time of the bid opening. At the time of the bid opening, another portion of the property Petitioner proposed to be leased to HRS was also already rented to other tenants, including a lease to the Florida Department of Labor which was not scheduled to expire until December 31, 1991, one day prior to HRS' proposed first day of occupancy under the ITB. The space leased to the Department of Labor would require some renovation for HRS' use, at least to connect it on the interior with the rest of the building. The remainder of the second, adjacent, building to be rented under Petitioner's bid would require more extensive renovation to create office spaces to meet HRS' needs. In addition to the Department of Labor, Petitioner was also renting space in the second building to a beauty salon, a book store, an office supply store, a clothing store, and a barber at the time of bid submittal and opening and at the time of the formal hearing. These latter tenants were on month-to-month leases. In order to ensure that there would be time for necessary renovations before January 1, 1992 and further to ensure that the property would be available for occupancy on January 1, 1992, the ITB required in the following unequivocal language that all bidders file tenant acknowledgments of the bid/proposed lease with their bid submittal: Existing Tenants: If the offered space or any portion thereof (including parking areas) is at present occupied or will be covered by an active lease(s) at the stated availability date, written documentation by the tenant indicating acknowledgment of the bid and ability to vacate premises by the proposed date must be included with the bid submittal. [Emphasis added] Petitioner submitted no tenant acknowledgments from any of his tenants with his bid to HRS. Even though Petitioner failed to submit evidence of control in the form of a deed and further failed to submit the required acknowledgments from tenants occupying the premises on the bid date, HRS did not immediately disqualify Petitioner's bid as nonresponsive. Instead, HRS evaluated Petitioner's bid simultaneously with Intervenor TCC's bid. HRS relied on old leases in its files and actual knowledge that monthly rent was paid to Petitioner for its own currently leased space, and HRS ignored the absence of tenant acknowledgments with Petitioner's bid. HRS followed this course of action despite the requirement of the ITB on page 7, item 1 under EVALUATION OF BIDS which unequivocally provides: Bids received are first evaluated to determine technical responsiveness. This includes submittal on bid submittal forms, inclusion of required information, data, attachments, signatures and notarization, etc. Non responsive [sic] bids will be withdrawn from further consideration. The portion of the ITB designated, Documents Required To Be Submitted With Bid Submittal For Existing Buildings on page 12, item 4. required bidders to submit "Scale Floor Plans showing present configurations with dimensions." Page 3 of 22, Item 9.(b) further required that, as a part of the bid submittal, bidders were to provide "A scaled (1/16" or 1/8" or 1/4" = 1'0") floor plan showing present configuration with measurements." Contrary to the ITB requirement, Petitioner submitted a floor plan scaled at 1/20" = 1', which also failed to reflect the present configurations with all measurements. Petitioner's scaled floor plan submitted with his bid was prepared prior to the present addition to one building and contained a hand- drawn configuration without accurate measurements for the northwest corner of one building. The term of the lease as shown on the ITB and Bid Submittal Form was 9 and one-half years with an option to renew for 2-5 year renewal periods. At the time of the bid opening on July 17, 1991, the bid submitted by Petitioner failed to have any proposed rental rates shown for "Renewal Options: Option II years 1 through 5." HRS permitted Petitioner to correct or supplement its bid after the bid opening (same date and place) to cover this material omission. Page 6, item 4 of the ITB provided for the property owner or other bidding entity to sign the bid submission. The pertinent part states: 4. Each bid submitted shall be signed by the owner(s) corporate officers, or legal representative(s). The corporate, trade, or partnership title must be either stamped or typewritten beside the actual signature(s). If the Bid Submittal is signed by an Agent, written evidence from the owner of record of his/her authority must accompany the proposal. ALL BID SUBMITTAL SIGNATURES MUST BE WITNESSED BY TWO PERSONS. [Emphasis appears in ITB] Petitioner Proctor signed his bid submittal in proper person. TCC's bid submittal was signed by Sharon K. Lane, "Executive Director," of TCC Number 3 Ltd. Inc., Intervenor herein. At all times material, TCC Number 3 Ltd. Inc. has been a Florida corporation. At the time of the bid opening, Ms. Lane was TCC's sole shareholder and "all officers." At the time of formal hearing, Ms. Lane remained the sole shareholder, but others had assumed some of the corporate offices. Her status at the time of the bid submittal was sufficient for her to bid on behalf of the TCC corporation and to execute the PUR 7068 form on that corporation's behalf. Intervenor TCC submitted the required PUR 7068 form, but TCC submitted as sole evidence of control an undated, unrecorded "Contract for Sale and Purchase" by and between Hernando Plaza Ltd. as Seller and Intervenor TCC as Buyer, for the property which Intervenor was offering for lease to HRS. The best date assignable to this document is April 29, 1991. It was executed on behalf of Hernando Plaza Ltd. by Edward M. Strawgate and Harold Brown representing themselves as general partners of the limited partnership. TCC's obligation to proceed to closing under the foregoing contract was contingent upon TCC's securing an anchor tenant. However, the contract requires TCC to take steps to secure an anchor tenant. By its terms, TCC may purchase the property with or without an anchor tenant, but the contract requires TCC, in seeking an anchor tenant, to set time limits for the lease arrangement with the proposed anchor tenant which do not necessarily accord with the timing of HRS' bid process. HRS accepted TCC's contract to purchase from Hernando Plaza Ltd., as evidence of TCC's control of the premises offered by TCC for lease, believing it to constitute an option to purchase and the necessary evidence of control as required by the ITB. (See, Finding of Fact 6, supra.) At the time of the bid opening, HRS had no reliable information as to what entity actually owned the property offered by TCC, and TCC had not disclosed to HRS that its contract to purchase the property was with a legal entity other than the record title owner of the property, which record title owner was and is the Victor and Lillian Brown Foundation (Brown Foundation). See, infra. Up to that date, at least, Hernando Plaza Ltd. had represented itself to TCC as the owner of the property. The ITB did not require that an abstract of title be submitted with the bid, and HRS normally does not require an abstract from successful bidders, although the ITB contains provisions for future disclosure from successful bidders. (See, ITB item 5 under Requirements for Bidders to Submit Bids.) Absent some reason to "go behind" facial evidence of control, HRS attempts to protect itself by requiring successful bidders to put up an irrevocable letter of credit for one-half of one percent of the proposed lease rental obligation over the basic lease term as a penalty in the event a successful bidder cannot perform. (See, ITB page 4, item 10.) Hernando Plaza Ltd.'s certificate from the Florida Secretary of State expired December 31, 1981. That fact was advertised and the certificate cancelled July 16, 1982. At that time, Edward M. Strawgate was listed as a general partner and Harold Brown was listed as a limited partner of Hernando Plaza Ltd. Hernando Plaza Ltd. had been administratively dissolved for failure to file its annual report. Subsequent to the time that Intervenor submitted its bid proposal, but prior to formal hearing, Hernando Plaza Ltd. was reinstated by the Florida Secretary of State. Once reinstated, the limited partnership's ability to act related back and validated its prior actions. At all times material, the record title of the property offered by Intervenor TCC for lease to HRS was owned by "Harold Brown, Lillian Brown and Muriel Kahr as Trustees of the Victor and Lillian Brown Foundation." This title is derived from a recorded June 30, 1967 warranty deed from Hernando Plaza Ltd., which deed was admitted in evidence at formal hearing. The warranty deed was not attached to TCC's bid submittal. Neither TCC, the corporation, nor Sharon K. Lane, individually, held any authority as agent to submit a bid to HRS on behalf of the record title owner, the Brown Foundation. There is also in evidence a recorded December 18, 1985 Amendment to Lease between the Brown Foundation and City National Bank. That Amendment to Lease also was not attached to TCC's bid submittal to evidence control of the premises TCC was offering to lease to HRS. That Amendment to Lease also recites that Hernando Plaza Ltd. leased back the subject property from the Brown Foundation by a lease dated June 30, 1967. The June 30, 1967 lease was not recorded, was not part of TCC's bid submittal, and is not in evidence. The December 18, 1985 Amendment to Lease goes on to recite that Hernando Plaza Ltd. has assigned its lessee interest under the June 30, 1967 lease to City National Bank by a March 14, 1978 assignment. There is also in evidence a recorded March 14, 1978 "Assignment of Lessee's Interest in Lease from Hernando Plaza Ltd. to City National Bank." This assignment was not part of TCC's bid submittal. The December 18, 1985 Amendment to Lease goes on to further recite that the Brown Foundation has "agreed to give and grant to [Hernando Plaza Ltd.] an option to purchase the property." The remainder of the December 18, 1985 Amendment to Lease details the terms or conditions of the option to purchase granted by the Brown Foundation to Hernando Plaza. For instance, in order to exercise that option to purchase the subject property from the Brown Foundation, Hernando Plaza Ltd., among other requirements, would have to demonstrate that all the terms of the unrecorded June 30, 1967 lease are "in good standing." One may reasonably infer that "in good standing" would at a bare minimum mean that the rents under the lease are paid current at the time the option is exercised, but what the other terms of the lease might be are subject to pure conjecture. TCC's bid submittal did not include documentation that the June 30, 1967 lease was "in good standing." There is also in evidence a recorded June 7, 1989 Trustee's Deed (quitclaim deed of the trustee's interest) from City National Bank's successor bank/trustee to Hernando Plaza Ltd. The Trustee's Deed also was not attached to TCC's bid submittal. On the date of bid submittal/opening neither TCC, the corporation, nor Sharon K. Lane, individually, held any authority as agent to submit a bid on behalf of Hernando Plaza Ltd. or City National Bank's successor. At formal hearing, TCC submitted an October 24, 1991 written hearsay statement by Harold Brown as Trustee of the Brown Foundation to the effect that Hernando Plaza Ltd.'s December 18, 1985 option to purchase the property from the Brown Foundation was "in full force and effect" and that the June 30, 1967 lease back from the Brown Foundation to Hernando Plaza Ltd. was "in full force and effect and that the lessee is in good standing thereunder." Assuming these items may be considered in this proceeding pursuant to Section 120.58 (1) F.S. as supplementing or explaining direct evidence, they still do not clarify in any way what all the terms of the unrecorded 1967 lease are or that those terms will remain in good standing on the date in the future that Hernando Plaza Ltd. elects to exercise its option, if it elects to exercise its option to purchase the property from the Brown Foundation so that Hernando Plaza Ltd. may, in turn, convey the property to TCC, pursuant to Hernando Plaza Ltd. and TCC's April 29, 1991 contract for sale and purchase. Oddly enough, there is further explanatory hearsay that on October 24, 1991, Harold Brown was a trustee of the Brown Foundation and that he also was the sole limited partner of Hernando Plaza Ltd., although TCC's contract with Hernando Plaza for sale and purchase previously indicated Harold Brown was one of two general partners. Hernando Plaza Ltd.'s option to purchase the property from the Brown Foundation must be exercised by Hernando Plaza Ltd. before Hernando Plaza Ltd. can honor its contract to purchase/sell to TCC. Since there is no record evidence that the June 30, 1967 lease from the Brown Foundation as lessor to Hernando Plaza Ltd. as lessee will be in good standing on whatever future date Hernando Plaza Ltd. attempts to exercise its option with the Brown Foundation, one may only speculate both as to when and if TCC will be able to purchase the property from Hernando Plaza Ltd. TCC has only an option to become owner of the subject property at some unspecified date conditioned upon Hernando Plaza Ltd.'s first successfully exercising its option from the Brown Foundation and further conditioned upon all the terms of TCC's contract with Hernando Plaza Ltd. Apparently, TCC's only recourse to enforce its contract with Hernando Plaza Ltd. is a Circuit Court action for specific performance. TCC also submitted a site plan and floor plan with its bid submittal. The ITB required that offices on outside walls must provide windows. TCC's plans did not reflect windows in two sides of the building, but given HRS' retaining the right to partially design and locate its own halls and offices during the building's renovation, TCC's failure to show windows in the two outside walls is not, in and of itself, a material, disqualifying deviation from the ITB so as to unilaterally render TCC's bid nonresponsive. HRS staff member Donald J. Cerlanek prepared a bid synopsis of each bid. This involved completing a form from the HRS leasing manual which illustrates the characteristics of each of the bids. The bid requirements included evaluation criteria and a maximum amount of points which could be awarded for each criteria item. Five HRS bid evaluation committee members executed no conflict of interest forms. These were: Thomas C. Little Jr., David Thomley, Sylvia Smoot, Harvey Whitesides, and Mary Hawks. All committee members were given copies of the bid synopsis form to use in evaluating the properties submitted by Petitioner and Intervenor. Some of the committee members did not obtain or review the actual bid submissions of each of the bidders, but all of them had access to the bid submissions and read the bid synopsis forms for both Petitioner's and Intervenor's bid submittals. The bid evaluation committee members, except for Mary Hawks, made site visits to the properties submitted by Petitioner and Intervenor. Ms. Hawks essentially acted only as a facilitator or conduit for the evaluations of the other four evaluators as set out infra. The four site evaluators took notes regarding each location. The four site evaluators each assigned numerical weights to each item of evaluation criteria except for the rent and renewal rent portions of the evaluation criteria. Although on their site visits some committee members visiting TCC's site may have seen a color version of an artist's rendering of what TCC's project could look like after renovation was complete, a black and white version of the same artist's rendering was attached to TCC's bid submittal to which all committee members had access, and it is found that this situation in and of itself presented no false or misleading information nor constituted any prejudice to a fair bid process/evaluation. Likewise, although some evaluators discussed expansion prospects with TCC's and/or Proctor's on-site representatives, the evidence is credible and persuasive that each evaluator who visited the sites assessed the projects' respective expansion prospects substantially upon what they saw on each site and had experienced in Proctor's existing facility. The points awarded and reasons for the recommendations of each evaluator who visited the sites were reasonably based on specific needs of HRS. These specific needs of HRS were reasonably articulated by the two evaluators who made on-site inspections and who also testified at formal hearing and were reasonably set out in writing in the written notes of the two other evaluators who did not testify. Thomas C. Little, Jr., testified that he found the Intervenor's property superior as a result of the security problems at Petitioner's locations, the closer proximity of the courthouse, hospital, and health department to Intervenor's property and the superiority of a single building offered by Intervenor versus multiple buildings offered by Petitioner. Additionally, he found the esthetics of Petitioner's buildings lacking and expansion offered by Petitioner limited and was concerned that HRS would outgrow the space due to the fact that their service area is one of the most rapidly growing in Florida. His contemporaneous notes were to the same effect. Sylvia Smoot, also a member of the evaluation committee, testified that she found Intervenor's facility superior based on its proximity to the courthouse, hospitals, and other key locations, and its flexibility of design and concentration of space in one building. She further found Petitioner's location lacking as a result of the three separate buildings, its limited expansion room, and the necessity for redirecting clients between buildings, and the difficulty for elderly and handicapped clients accessing Petitioner's building. Her contemporaneous notes were to the same effect. Evaluators Whitesides and Thomley made substantially similar contemporaneous notes justifying their scoring of the two bidders. Three of the four site evaluators met as a group following the site visits and discussed the properties submitted by Petitioner and Intervenor. All four of the site evaluators made recommendations to accept the property for lease proposed by Intervenor, but they did not all confer and jointly develop a single recommendation to the facilities manager. The points assigned by each of the four site evaluators for the properties proposed by Petitioner and Intervenor were as follows: Evaluation Committee TCC Number Member's Names Proctor's Points 3's Points Thomley 75 98 Little 78 93 Whitesides 74 95 Smoot 80 91 307 377 The rent portion of the evaluation criteria was ascertained by applying present value methodology as set forth in the HRS leasing manual to the annual rents offered by the bidders. The discount factor was 8.32 percent. The present value of Proctor's bid was $1,934,038 and the present value of TCC's bid was $2,028,316. The leasing manual is considered advisory only. It advises present values be made, a determination of the difference in amounts be calculated and a comparison of the difference be made to determine a percentage. Thereafter, the percentage is applied to the maximum amount of points allocated for rent in the evaluation criteria. The lowest present value receives the maximum number of points allocated, and, thus, Proctor was awarded 35 points. TCC received 33 points, based upon the fact that its present value of rent was close to the present value submitted by Proctor. No penalty is imposed to a bidder whose rental amounts is higher than the lowest bidder. No benefit is conferred upon the lowest cost bidder over the next lowest bidder. Mary Hawks, Manager for Administrative Services, Department of Health and Rehabilitative Services, received each of the individual evaluation recommendations from Thomley, Little, Whitesides and Smoot. As a result of travel restrictions placed on the HRS, the four site evaluators and Ms. Hawks, who was also a fifth committee member, did not meet as a group following the site visits although three of the four site evaluators did meet collectively following the site visits. (See Finding of Fact 43-44, supra.) The committee members could have met by telephone conference call but Mary Hawks found it unnecessary to do so because there was such a clear evaluation in favor of Intervenor based on the total composite evaluation scores of 377 for Intervenor and only 307 for Petitioner, out of a total of 400 points. She assigned no points herself but approved their recommendations and forwarded a single recommendation in favor of TCC for ultimate approval by HRS management. Mary Hawks had spoken to the evaluation committee members subsequent to the evaluation and no member had expressed any reservation regarding his/her evaluation or a need to meet to discuss anything additional regarding the bid evaluation. The HRS Intent to Award to TCC subsequently issued. The evaluation process and formula for rent evaluation are not among the more commonly used methods but were reasonable and rational and fairly applied to the bids in this case. No conflict of interest in the evaluation committee members was demonstrated by Petitioner in these proceedings.
Recommendation Upon the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Health and Rehabilitative Services enter a Final Order finding that: The bid of TCC Number 3 Ltd. is nonresponsive; The bid of Derick Proctor is nonresponsive; Declining to award the bid for Lease No. 590:2306 to either bidder. RECOMMENDED this 20th day of December, 1991, at Tallahassee, Florida. ELLA JANE P. DAVIS, 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 20th day of December, 1991. APPENDIX TO RECOMMENDED ORDER, CASE NO. 91-5963BID The following constitute specific rulings pursuant to Section 120.59(2) F.S. upon the parties' respective proposed findings of fact (PFOF): Proctor's 74 PFOF: The following PFOF are accepted, except to the extent they are unnecessary, subordinate, or cumulative to the facts as found in the recommended order (RO). Unnecessary, subordinate, or cumulative material has not been utilized: 1-3, sentence 1 of PFOF 4, 5-6, 9, 11-12, sentence 1 of PFOF 13, sentence 1 of PFOF 16, 17-26, sentence 1 of PFOF 29, 30-33, 35-36, sentences 1 and 4 of PFOF 38, 39-41, 44-54, 56-57, 60-61, 63. The following PFOF are rejected because they are not FOF as framed but constitute a proposed conclusion of law (PCOL) or are rejected because they constitute mere legal argument: sentences 2 and 3 of PFOF 4, sentence 2 of PFOF 16, 34, 43. The following PFOF are rejected because, as framed, they constitute mere recitation of isolated, unreconciled testimony or other record evidence or are not supported by the greater weight of the credible record evidence as a whole. However, the subject matter is covered in the RO as proven and supported by the competent, substantial evidence in the record: 10, sentence 2 of PFOF 13, 14- 15, sentence 2 of PFOF 29, sentences 2 and 3 of PFOF 38, 55, 58. PFOF 7-8 are accepted as modified because parts are unnecessary, subordinate, or cumulative to the facts as found and other parts are mere recitations of unreconciled portions of the record and legal argument. The following PFOF are accepted in part but not utilized because parts are unnecessary, subordinate, or cumulative to the facts as found, and other parts are rejected as immaterial to the dispositive issues herein, although correctly quoted from the record: 68-73. The following PFOF are rejected as immaterial or not dispositive: 27-28, 37, 42, 59, 62, 65, 67, 74. The following PFOF are covered in preliminary material: 64, 66. HRS 21 PFOF: The following PFOF are accepted except to the extent they are unnecessary, subordinate, or cumulative to the facts as found in the RO. Material unnecessary, subordinate, or cumulative has not been utilized: 1-4, 6-8, 11-12, 16-19. The following PFOF are rejected because they are not FOF as framed but constitute PCOL or are rejected because they constitute mere legal argument: 5, 9-10, 14-15, 21. The following PFOF are rejected because, as framed, they constitute mere recitation of isolated, unreconciled testimony or other record evidence or are not supported by the greater weight of the credible record evidence as a whole. However, the subject matter is covered in the RO as proven and supported by the competent, substantial evidence in the record: 20. PFOF 13 is accepted as modified to correctly reflect the credible record evidence as a whole. TCC Number 3 75 PFOF: The following PFOF are accepted except to the extent they are unnecessary, subordinate, or cumulative to the facts as found in the RO. Material unnecessary, subordinate, or cumulative has not been utilized: 1-31, 34-38, 42- 45, 47-48, 56, 58-60, 64-69, 71-75. The following PFOF are rejected because they are not FOF as framed but constitute PCOL or are rejected because they constitute mere legal argument: 32. The following PFOF are rejected because, as framed, they constitute mere recitation of isolated, unreconciled testimony or other record evidence or are not supported by the greater weight of the credible record evidence as a whole. However, the subject matter is covered in the RO as proven and supported by the competent, substantial evidence in the record: 33, 40-41, 53-55, 57, 61-63, 70. The following PFOF are rejected as immaterial or as not dispositive: 39, 46, 49, 51-52. PFOF 50 is not a sentence, but the subject matter is covered in the RO as understood. COPIES FURNISHED: Thomas V. Infantino, Esquire Infantino & Berman Post Office Drawer 30 Winter Park, FL 32790 Ralph McMurphy, Esquire HRS District 3 Legal Office 1000 Northeast 16th Avenue Gainesville, FL 32609 B. Gray Gibbs, Esquire Sam Power, Clerk Bette B. Lehmberg, Esquire Department of Health and Suite 800 Rehabilitative Services One 4th Street North 1323 Winewood Boulevard St. Petersburg, FL 33701 Tallahassee, FL 32399-0700
The Issue Whether Respondent acted contrary to the agency's governing statutes, rules, or policies or the bid specifications in its proposed decision to award Contract No. T7380 to Astaldi Construction Corporation ("Astaldi").
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing, and on the entire record of the proceeding, the following Findings of Fact are made: The Department is a state agency authorized by section 337.11 to contract for the construction and maintenance of roads within the State Highway System, the State Park Road System, and roads placed under its supervision by law. The Department is specifically authorized to award contracts under section 337.11(4) to “the lowest responsible bidder.” On April 15, 2016, the Department advertised a bid solicitation for Contract T7380, seeking contractors for the widening of a 3.8 mile portion of U.S. Highway 301 in Hillsborough County from two lanes to six lanes between State Road 674 and County Road 672 and over Big Bull Frog Creek. The advertisement provided a specification package for the project and the “Standard Specifications for Road and Bridge Construction” (“Standard Specifications”) used on Department roadway projects. The work included seven components: bridge structures (Section 0001), roadway (Section 0002), signage (Section 0003), lighting (Section 0004), signalization (Section 0005), utilities (Section 0006), and intelligent transportation systems (Section 0007). The advertisement identified 666 individual items of work to be performed and quantity units for each item. The project was advertised as a low-bid contract with a budget estimate of $51,702,729. The Department’s bid proposal form contains five columns with the following headings: Line Number; Item Number and Item Description; Approximate Quantities and Units; Unit Price; and Bid Amount. The bid proposal form contains line items for the seven components of the project. The utilities component contains 42 line items, each with an Item Number and Item Description. For example, Line Number 1410 corresponds with the following Item Number and Item Description: “1050 11225 Utility Pipe, F&I, PVC, Water/Sewer, 20–40.9 [inches].” Each bidder inserts a Unit Price for the line item in the corresponding “Unit Price” column. The “Bid Amount” column for each line item is an amount generated by multiplying a bidder’s Unit Price by the Quantities (determined by the Department) for each Line Number. The Bid Amount for each Line Number is then added together to generate the “Total Bid Amount” representing the bid for the entire project. Astaldi, Prince, Hubbard, and other potential bidders attended the mandatory pre-bid meeting. Prequalified contractors were given proposal documents that allowed them to enter bids through Bid Express, the electronic bidding system used by the Department. Plan revisions were issued by addenda dated May 10, 2016, and June 7, 2016. A Question and Answer Report was published and updated as inquiries were addressed. Bids were opened on the letting date of June 15, 2016. Bids for Contract T7380 were received from Astaldi, Prince, Hubbard, the DeMoya Group (“DeMoya”), Ajax Paving Industries of Florida, LLC (“Ajax”), and Cone & Graham, Inc. (“Cone & Graham”). The bids were reviewed by the Department’s contracts administration office to ensure they were timely, included a Unit Price for each line item, and contained the completed certifications required by the specifications. Bidders were checked against the Department’s list of prequalified bidders to confirm they possessed a certification of qualification in the particular work classes identified by the bid solicitation. Each bidder’s total current work under contract with the Department was examined to ensure that award of Contract T7380 would not place the bidder over its Department-designated financial capacity limit. Astaldi submitted the lowest bid, a total amount of $48,960,013. Prince submitted the next lowest bid, a total amount of $57,792,043. Hubbard’s total bid was the third lowest at $58,572,352.66. The remaining bidders came in as follows: DeMoya, $63,511,686.16; Ajax, $68,617,978.10; and Cone & Graham, $70,383,697.74. All bidders were prequalified in the appropriate work classes and had sufficient financial capacity, in accordance with section 337.14 and Florida Administrative Code Chapter 14-22. The Department’s construction procurement procedure, from authorization to advertisement through contract execution, is outlined in the Department’s “Road and Bridge Contract Procurement” document (“Contract Procurement Procedure”). The scope statement of the Contract Procurement Procedure provides: “This procedure applies to all Contracts Administration Offices responsible for advertising, letting, awarding, and executing low bid, design-bid-build, construction, and maintenance contracts.” Limited exceptions to the procedure may be made if approved by the assistant secretary for Engineering and Operations. If federal funds are included, the Federal Highway Administration division administrator, or designee, must also approve any exceptions from the procedure. The stated objectives of the Contract Procurement Procedure are: “to standardize and clarify procedures for administering low-bid, design-bid-build, construction, and maintenance contracts” and “to provide program flexibility and more rapid response time in meeting public needs.” The Department’s process for review of bids is set forth in the “Preparation of the Authorization/Official Construction Cost Estimate and Contract Bid Review Package” (“Bid Review Procedure”). The scope statement of the Bid Review Procedure states: This procedure describes the responsibilities and activities of the District and Central Estimates Offices in preparing the authorization and official construction cost estimates and bid review packages from proposal development through the bid review process. Individuals affected by this procedure include Central and District personnel involved with estimates, specifications, design, construction, contracts administration, work program, production management, federal aid, and the District Directors of Transportation Development. The Bid Review Procedure contains a definitions section that defines several terms employed by the Department to determine whether a bid or a unit item within a bid is “unbalanced.” Those terms and their definitions are as follows: Materially Unbalanced: A bid that generates reasonable doubt that award to that bidder would result in the lowest ultimate cost or, a switch in low bidder due to a quantity error. Mathematically Unbalanced: A unit price or lump sum bid that does not reflect a reasonable cost for the respective pay item, as determined by the department’s mathematically unbalanced bid algorithm. Official Estimate: Department’s official construction cost estimate used for evaluating bids received on a proposal. Significantly Unbalanced: A mathematically unbalanced bid that is 75% lower than the statistical average. Statistical Average: For a given pay item, the sum of all bids for that item plus the Department’s Official Estimate which are then divided by the total number of bids plus one. This average does not include statistical outliers as determined by the department’s unit price algorithm. For every road and construction project procurement, the Department prepares an “official estimate,” which is not necessarily the same number as the “budget estimate” found in the public bid solicitation. The Department keeps the official estimate confidential pursuant to section 337.168(1), which provides: A document or electronic file revealing the official cost estimate of the department of a project is confidential and exempt from the provisions of s. 119.07(1) until the contract for the project has been executed or until the project is no longer under active consideration. In accordance with the Bid Review Procedure, the six bids for Contract T7380 were uploaded into a Department computer system along with the Department’s official estimate. A confidential algorithm identified outlier bids that were significantly outside the average (such as penny bids) and removed them to create a “statistical average” for each pay item. Astaldi’s unit pricing was then compared to the statistical average for each item. The computer program then created an “Unbalanced Item Report,” flagging Astaldi’s “mathematically unbalanced” items, i.e., those that were above or below a confidential tolerance value from the statistical average. The unbalanced item report was then reviewed by the district design engineer for possible quantity errors. No quantity errors were found.1/ The Department then used the Unbalanced Item Report and its computer software to cull the work items down to those for which Astaldi’s unit price was 75 percent more than or below the statistical average. The Department sent Astaldi a form titled “Notice to Contractor,” which provided as follows: The Florida Department of Transportation (FDOT) has reviewed your proposal and discovered that there are bid unit prices that are mathematically unbalanced. The purpose of this notice is to inform you of the unbalanced nature of your proposal. You may not modify or amend your proposal. The explanation of the bid unit prices in your proposal set forth below was provided by ASTALDI CONSTRUCTION CORPORATION on ( ) INSERT DATE. FDOT does not guarantee advanced approval of: Alternate Traffic Control Plans (TCP), if permitted by the contract documents; Alternative means and methods of construction; Cost savings initiatives (CSI), if permitted by the contract documents. You must comply with all contractual requirements for submittals of alternative TCP, means and methods of construction, and CSI, and FDOT reserves the right to review such submittals on their merits. As provided in section 5-4 of the Standard Specifications for Road and Bridge Construction you cannot take advantage of any apparent error or omission in the plans or specifications, but will immediately notify the Engineer of such discovery. Please acknowledge receipt of this notice and confirmation of the unit bid price for the item(s) listed below by signing and returning this document. Section 5.4 of the Bid Review Procedure describes the Notice to Contractor and states: “Contracts are not considered for award until this form has been signed and successfully returned to the Department per the instruction on the form.” State estimating engineer Greg Davis testified that the stated procedure was no longer accurate and “need[s] to be corrected” for the following reason: Since the procedure was approved back in 2011, we’ve had some subsequent conversations about whether to just automatically not consider the award for those that are not signed. And since then we have decided to go ahead and just consider the contract, but we are presenting a notice, of course, unsigned and then let the technical review and contract awards committee determine. Astaldi signed and returned the Notice to Contractor and noted below each of the ten listed items: “Astaldi Construction confirms the unit price.” Mr. Davis explained that the purpose of the Notice to Contractor form is to notify the contractor that items have been identified as extremely low and to ask the contractor to confirm its understanding that in accepting the bid, the Department will not necessarily approve design changes, methods of construction, or maintenance of traffic changes. Section 6.6 of the Contract Procurement Procedure sets forth the circumstances under which an apparent low bid must be considered by the Department’s Technical Review Committee (“TRC”) and then by the Contract Awards Committee (“CAC”). Those circumstances include: single bid contracts; re-let contracts; “significantly mathematical unbalanced” bids; bids that are more than 25 percent below the Department’s estimate; 10 percent above the Department’s estimate (or 15 percent above if the estimate is under $500,000); materially unbalanced bids, irregular bids (not prepared in accordance with the Standard Specifications); other bid irregularities2/; or “[a]ny other reason deemed necessary by the chairperson.”3/ Bids that are not required to go before the TRC and CAC are referred to as “automatic qualifiers.” Because it was mathematically unbalanced, the Astaldi bid was submitted to the TRC for review at its June 28, 2016, meeting. The TRC is chaired by the Department’s contracts administration manager, Alan Autry, and is guided by a document entitled “Technical Review Committees” (“TRC Procedure”). The TRC Procedure sets forth the responsibilities of the TRC in reviewing bid analyses and making recommendations to the CAC to award or reject bids. The TRC voted to recommend awarding Contract T7380 to Astaldi. The TRC’s recommendation and supporting paperwork was referred to the CAC for its meeting on June 29, 2016. The duties of the CAC are described in a document entitled “Contracts Award Committees” (“CAC Procedure”). Pursuant to the CAC Procedure, the CAC meets approximately 14 days after a letting to assess the recommendations made by the TRC and determines by majority vote an official decision to award or reject bids. Minutes for the June 29, 2016, CAC meeting reflect 21 items before the committee including: two single bid contracts; four bids that were 10 percent or more above the official estimate; one bid that was 15 percent or more above the official estimate on a project under $500,000; three bids that were more than 25 percent below the official estimate; and 11 bids with significantly unbalanced items, including Contract T7380 with an intended awardee of Astaldi. The CAC voted to award Contract T7380 based on the low bid submitted by Astaldi. A Notice of Intent to award the contract to Astaldi was posted on June 29, 2016. As noted at Finding of Fact 2, supra, Contract T7380 consisted of seven components: structures, roadway, signage, lighting, signalization, utilities, and intelligent transportation system. The Department does not compare bids by component, but looks at the total bid amount to find the lowest bidder. The Department also reviews the bids for discrepancies in individual unit items using the process described above. Astaldi’s bid of $48,960,013 was approximately $8.8 million below Prince’s bid of $57,792,043, $9.6 million less than Hubbard’s bid of $58,572,352, and $2.7 million below the Department’s public proposal budget estimate of $51,702,729. As part of its challenge to the intended award, Prince performed a breakdown of bids by individual components and discovered that nearly all of the differences between its bid and Astaldi’s could be attributed to the utilities component. Astaldi’s bid for the utilities component was $7,811,720, which was roughly $8.5 million below Prince’s utilities bid of $16,305,903 and $5.8 million below Hubbard’s utilities bid of $13,603,846.4/ The utilities component was included pursuant to an agreement between the Department and Hillsborough County, the owner of the water and sewer lines, relating to the improvement of water and sewer lines along the roadway limits of the project. The utility work consists of installing a new water- line and force main sewer. The existing water main and the existing force main conflict with the proposed location of the new storm drainage system. The new water main and force main must be installed, tested, and approved before being put into active service. To prevent water utility outages to customers, the new system must be installed and approved before the existing waterline and existing force main can be cut off and removed. Utility work is therefore the first task to be performed on Contract T7380. Once the utility component is completed, the contractor will furnish and install the stormwater system, the roadway, the bridgework, and all other components. Article 3-1 of the Standard Specifications5/ reserves to the Department the right to delete the utility relocation work from the contract and allow the utility owner to relocate the utilities. Utilities are the only portion of a Department contract subject to deletion because the funding is provided by the utility owner, which usually has allocated a certain dollar figure to contribute towards the contract prior to the bidding. If the bid for utilities comes in over the utility owner’s budget, the owner can opt out of the contract and self-perform. In this case, Hillsborough County had contracted with the Department to contribute $8.9 million for utility relocation work. The Department did not exercise the option to delete the utilities portion of the contract. Jack Calandros, Prince’s chief executive, testified that Prince uses a computer program called HeavyBid, created and supported by a company called HCSS, to build the cost components of its bids. Every witness with industry knowledge agreed that HeavyBid is the standard program for compiling bids in the construction field. Mr. Calandros testified that cost components include material quotes provided by third-party vendors and quotes from potential subcontractors. Labor and equipment costs are ascertained by using historical rates and actual cost estimates that are tracked by the HeavyBid software. Prince maintains its own database of costs derived from 20 years’ experience. Mr. Calandros stated that Prince’s internal labor and equipment rates are checked and adjusted at least once a year to ensure they are current and accurate based on existing equipment and personnel. Prince received three vendor quotes for the materials to perform the utility work on Contract T7380. In compiling its bid, Prince ultimately relied on a final quote from Ferguson Waterworks (“Ferguson”) of $8,849,850. Based on this materials quote and Prince’s overall utilities bid of $16,305,903, Mr. Calandros opined that it would not be possible for Astaldi to perform the utilities component for its bid amount of $7.8 million. Prince’s estimating expert, John Armeni, reviewed Astaldi’s bid file, read the deposition testimony of Astaldi’s chief estimator, Ed Thornton, and spoke to Mr. Thornton by telephone. Mr. Armeni also reviewed Prince’s bid and the bid tabulation of all bidders’ utilities component line items. Based on his review and his extensive experience in the industry, Mr. Armeni concluded that Astaldi’s bid does not include all costs for labor, material, and equipment necessary to construct the utilities portion of this project. Mr. Armeni reviewed the materials quote from Ferguson that Prince used in its bid. He noted that Astaldi’s bid file contained an identical quote from Ferguson of $8.8 million for materials, including some non-utilities materials. Mr. Armeni noted that the Ferguson quote for utilities materials alone was approximately $8 million, an amount exceeding Astaldi’s entire bid for the utilities portion of the project. Mr. Armeni also noted that Astaldi’s overall bid was 18 percent below that of the second lowest bidder, Prince. He testified that 18 percent is an extraordinary spread on a bid where the Department is providing the quantities and all bidders are working off the same drawings and specifications. Mr. Armeni believed that the contracting authority “should start looking at it” when the difference between the lowest and second lowest bidder is more than 10 percent. In his deposition, Mr. Thornton testified he was not aware of how Astaldi arrived at its bid prices for the utility section of the project. Mr. Thornton indicated multiple times that he was not Astaldi’s most knowledgeable person regarding the bid submitted by Astaldi on Contract T7380 project. He testified that Astaldi intended to subcontract the utilities work and acknowledged that the company received a subcontractor quote of $14.9 million after the bids were submitted. Mr. Thornton did not know if Astaldi had solicited the quote. He said it is not unusual for a company to receive subcontractor bids after it has been named the low bidder on a project. Mr. Thornton conceded that Astaldi’s bid did not include all the costs necessary to construct the utilities portion of Contract T7380. At his deposition, he did not have before him the materials needed to determine which items of cost Astaldi had omitted. Mr. Thornton testified that Astaldi was not missing any information it needed at the time of bid submission and understood that its price was to include all labor, materials, and subcontracting costs to perform the contract. After the proposed bid award, Astaldi used HeavyBid to produce a report indicating that the company now estimates its cost of performing the contract at $53,708,129.03, or roughly $4.75 million more than its winning bid. Mr. Thornton testified that Astaldi nonetheless stood ready to execute the contract and perform the work at its bid price. Central to the dispute in this case is Standard Specifications Section 9, “Measurement and Payment,” article 9-2 of which is titled “Scope of Payments.” In particular, subarticle 9-2.1 provides: 9-2.1 Items Included in Payment: Accept the compensation as provided in the Contract as full payment for furnishing all materials and for performing all work contemplated and embraced under the Contract; also for all loss or damage arising out of the nature of the work or from the action of the elements, or from any unforeseen difficulties or obstructions which may arise or be encountered in the prosecution of the work until its final acceptance; also for all other costs incurred under the provisions of Division I. For any item of work contained in the proposal, except as might be specifically provided otherwise in the payment clause for the item, include in the Contract unit price (or lump sum price) for the pay item or items the cost of all labor, equipment, materials, tools and incidentals required for the complete item of work, including all requirements of the Section specifying such item of work, except as specially excluded from such payments. Prince contends that the second paragraph of subarticle 9-2.1 renders Astaldi’s bid nonresponsive because Astaldi admittedly failed to include “the cost of all labor, equipment, materials, tools and incidentals” in its bid. Prince points out that the “Technical Special Provisions” governing the utilities portion of the project reinforce the requirement that each bidder include all costs for the work. Technical Special Provisions Section 1-7.1 provides that “[p]ipe installation cost shall include all necessary work, equipment, and labor needed for installing the pipe, such as, coordination with existing utilities and support during construction and support of existing power poles during construction.” Technical Special Provisions Section 1-8.1 goes on to say that “[n]o separate payment will be made for the following items for work under this Technical Special Provision and the cost of such work shall be included in the applicable contract pay items of work,” followed by a comprehensive list of 30 items. Prince concludes that the requirement that each bidder include all costs, including costs of all necessary labor, equipment, and materials, in the Unit Price for each work item is “manifest” in the bid specifications and requires rejection of any bid that does not include all costs. Mr. Armeni opined that if one bidder excludes a portion of its costs, the other bidders are placed at a competitive disadvantage. Alan Autry, the Department’s central contracts administration manager, testified that five other projects were let as part of the bid package that included Contract T7380. He stated that it is typical for the Department to list multiple projects on one day. Mr. Autry’s office usually performs one bid letting per month, with the holiday months of November and December rolled together in a single letting. Mr. Autry stated that his office lets between 200 and 300 projects per year, not counting contracts that are let at the district level. Twenty other contracts were before the CAC at the June 29, 2016, meeting at which the Astaldi award in this case was approved. As noted at Finding of Fact 2, supra, Contract T7380 included 666 line items. Six companies submitted bids, meaning there were a total of 3,996 line items in this single contract. Assuming that the 200 to 300 other projects let by the Department’s Tallahassee office contain similar numbers, there are more than one million line items bid in any given year. If Prince’s reading of the bid specifications is correct, the Department is required to examine each of these line items and somehow make a determination whether the item includes all of the bidder’s costs. This problem of determining bidder cost is complicated by the presence of “companion” or “sister” items in bids, i.e., two items that must be considered in tandem to arrive at something like the actual cost of the work. Prince provided an example of such companion items in its analysis of the bids in this project. Two bid items included in the structures section of the bid proposal form were concrete culverts and reinforcing steel. The contractor may cast the culverts in place at the worksite or purchase them precast. If the concrete culvert is cast in place at the worksite, then reinforcing steel must be used to strengthen the culvert. If the concrete culvert is precast by a materials supplier, then the reinforcing steel has already been incorporated into the culvert at the time of installation. Mr. Calandros explained that when a contractor uses precast culverts, there is no need to list a separate additional cost for reinforcing steel; all costs are captured in the line item for concrete culverts. In this bid, Prince used precast culverts and therefore bid a penny per unit for reinforcing steel.6/ Bidders who cast the culverts in place showed a much higher cost for reinforcing steel but a lower cost for the concrete culverts. When the “companion items” were considered in tandem, the total cost for each vendor was fairly consistent. Prince’s explanation for companion items was coherent but did not explain how the Department is supposed to know which items are companion items as it undertakes the line-by-line cost examination of each bid in accordance with Prince’s reading of the bid specifications. Prince also failed to provide an explanation as to how the Department is to determine a bidder’s costs for any one line item or, for that matter, for its overall bid on a project. Bidders consider their cost information and the processes by which they build bids to be confidential proprietary information. In the instant case, Prince disclosed its own information (aside from materials costs) only under seal during litigation. In its ordinary course of business, the Department does not have access to this information. In fact, as noted at Finding of Fact 23, supra, the Department does not compare bids by component. It looks only at the total bid amount in determining the lowest bidder. Standard Specifications Article 3-8 reserves to the Department the right to perform an audit of the contractor’s records pertaining to the project upon execution of the contract. No authorization is provided to audit records of bidders prior to contracting. Standard Specifications Subarticle 2-5.1 allows bidders to indicate “free” or “$.00” for items that will be supplied at no cost to the Department. Though the Department’s practice, according to Mr. Autry, is to include zero bid items on the Notice to Contractor for confirmation of the price, subarticle 2-5.1 requires no Department investigation as to whether the bidder’s cost for a zero bid is actually zero. Bidders often bid a penny on items, as Prince did on reinforcing steel in this case. Standard Specifications Article 3-5 requires all contracts to be secured by a surety bond such that, in the event of a default by the contractor, the surety company will indemnify the Department on all claims and performance issues. Standard Specifications Section 4 provides that the scope of work is to be determined within the contract, including the furnishing of all labor, materials, equipment, tools, transportation, and supplies required to complete the work. The Department is authorized to make changes to the scope of work and make equitable adjustments of payments. If necessary, the Department may enter into supplemental agreements for additional or unforeseen work. Prince cautions that these change provisions could become relevant because Astaldi’s bid contains no information explaining how Astaldi will cover the $4.75 million difference between its bid price and its actual cost to perform the contract. Prince accurately states that nothing in Astaldi’s bid demonstrates that it has cash reserves to cover the loss and still complete the entire scope of the work.7/ Prince contends that this lack of demonstrable reserves renders Astaldi nonresponsible as to this project. Prince argues that it is error for the Department to rely on Astaldi’s certificate of qualification as proof of the company’s responsibility. The certificate of qualification process considers a contractor’s financial status at the time it submits its financial statements and other information regarding company resources. Prince contends that the Department’s assessment of the contractor’s financial statements and issuance of a certificate of qualification is insufficient to determine the contractor’s responsibility on a given bid. Prince argues that the Department is required by its governing statutes and the Standard Specifications to award a particular contract to the particular bidder that is the lowest, responsive, and responsible bidder, and that “responsible” for a given project is not synonymous with “prequalified.” Prince hypothesizes that under the Department’s practice, a bidder could possess a certificate of qualification issued in January, be indicted in another state for fraud and bribery in February, submit the lowest bid for a Department project in March, and be awarded the contract. By relying solely on the bidder’s certificate of qualification to determine responsibility, the Department could award a contract to a nonresponsible bidder. Section 337.14 provides that any person desiring to bid on any construction contract in excess of $250,000 must first be certified by the Department. Mr. Autry explained that the Department prequalifies contractors to submit bids on certain types of contract, such as major bridges and structures. Contractors applying for certification are required to submit their latest annual financial statements. The Department is charged with reviewing applications to determine “whether the applicant is competent, is responsible, and possesses the necessary financial resources to perform the desired work.” § 337.14(3), Fla. Stat. The Department assigns the contractor work classes and a total capacity after evaluating its experience and financials. The Department’s certificate is good for 18 months, though the contractor’s capacity is reviewed annually. At the time of a particular bid, the Department verifies the contractor’s available capacity, which is simply its total assigned capacity minus current work the contractor is performing for the Department. Mr. Autry testified that the Department does not go back and look at a bidder’s financials to determine whether it can sustain a loss on a given project. The Department does not repeat its capacity analysis during the year, regardless of how many projects the company bids on. The Department’s analysis is limited to whether the company’s current capacity is sufficient for the project on which it is bidding.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is RECOMMENDED that the Department of Transportation enter a final order dismissing Prince Contracting, LLC’s, second amended formal written protest and awarding Contract T7380 to Astaldi Construction Corporation. DONE AND ENTERED this 22nd day of December, 2016, in Tallahassee, Leon County, Florida. S LAWRENCE P. STEVENSON Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 22nd day of December, 2016.
The Issue The issue in this case is whether Respondent properly rejected the bid of Petitioner.
Findings Of Fact Respondent issued on February 28, 1990, an invitation to bid concerning the installation of bleachers at a high school ("ITB"). The ITB was duly advertised. Among the bidders was Interkal, Inc., which is a manufacturer of bleachers. The Interkal bid, which was timely submitted, was executed by its president. The Interkal bid contained a bid bond naming Interkal as principal and a certification from the secretary of Interkal reflecting a corporate resolution authorizing the execution of all bid documents on behalf of Interkal by its corporate officers. The Interkal bid disclosed two subcontractors. The supplier was shown as Interkal, and the erector was shown as Petitioner. Petitioner is the authorized factory representative for Interkal in Florida. As such, Petitioner solicits business and installs and removes bleachers on behalf of Interkal. As compensation, Petitioner receives commissions for such work from Interkal. However, the shareholder and chief executive officer of Petitioner is not a shareholder or officer of Interkal. In addition, Petitioner is not authorized to execute bid documents on behalf of Interkal. Petitioner is no more than a Subcontrator of Interkal. The bidder in this case was Interkal, not Petitioner, even though Petitioner handled much of the paperwork or its manufacturer. When an unrelated bidder was awarded the contract, Petitioner filed a formal written protest in its name. Interkal has not participated as a party in the subject proceeding.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that Respondent enter a Final Order dismissing the petition of Diversified Design Enterprises. ENTERED this 22nd day of May, 1990, in Tallahassee, Florida. ROBERT D. MEALE Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of May, 1990. COPIES FURNISHED: Ned N. Julian Stenstrom, McIntosh, et al. P.O. Box 1330 Sanford, FL 32772-1330 William Merkel, President Diversified Design Enterprises 321 N.E. Second Avenue Delray Beach, FL 33444 Robert W. Hughes, Superintendent Seminole County School Board 1211 Mellonville Avenue Sanford, FL 32771
The Issue The ultimate issue for determination is whether the School Board's proposed award of a construction contract to Federal Construction Company is fraudulent, arbitrary, illegal or dishonest. See Department of Transportation v. Groves- Watkins Constructors, 530 So.2d 912 (Fla. 1988). Also at issue is whether Gulf, as fifth lowest bidder, has standing to bring this action and, if so, whether it is entitled to award of the contract. STIPULATED FACTS In their Prehearing statement, filed on December 13, 1988, the parties have stipulated to the following facts: The SCHOOL BOARD placed [sic] for bids pursuant to bid documents on elementary school project known as "Elementary School "E". At a Pre-Bid Meeting on September 27 the bidders were told that the subcontractor's list must list one and only one subcontractor per item and include all subcontractors with no open blanks. If the general contractor was going to list himself as doing that particular piece of work he must so indicate. Bids were submitted to the SCHOOL BOARD on October 13, 1988, by six general contractors with the lowest bid being submitted by FEDERAL followed by PHILLIPS, INDUS, BARTON-MALOW and GULF. Required to be attached to each bid was a Bid Bond, Unit Price List, and List of Subcontractors. The List of Subcontractors Form required the bidder to list the names of subcontractors and suppliers who would perform the phases of the work indicated with the assumption that any work item (trade) not included would be performed by the Bidder's own forces. The lowest bidder, FEDERAL, left some of the items of work blank or had a horizontal line drawn beside them. FEDERAL's bid bond did not contain a penal sum and the Power of Attorney did not contain an original signature, but had a typed in date October 13, 1988 next to the copy of the signature. No Power of Attorney was filed in the Public Records of Sarasota County PHILLIPS' bid listed no subcontractors for any work items. INDUS' bid materially deviated in that it did not agree to complete the work in the time specified, left some work items blank on the subcontractor's list and listed itself as doing work items not normally done by a general contractor. BARTON-MALOW'S bid listed a steel supplier who did not bid the project to BARTON-MALOW and the bid bond was not on the specified form. GULF's bid was in conformance with the bid documents. On October 20, 1988, the SCHOOL BOARD Construction Staff recommended to the SCHOOL BOARD that the FEDERAL bid be accepted and that the contract be awarded to FEDERAL.
Findings Of Fact The bid specifications and related items for construction of Sarasota County School Board's Elementary School "E" and bus depot are dated July 1, 1988. (Joint Exhibit #1.) The Invitation for Sealed Bids was advertised on September 4, 11 and 18, 1988. Among the requirements included in the instructions to the invitation for sealed bids is the direction that each bid must be accompanied by a bid bond, written on the form satisfactory to the Board, or a cashier's check in the amount of five percent of the total base bid as a guarantee that, if successful, the bidder would enter into a written contract with the Board. (Joint Exhibit #1, P.C-1.300.) The instruction also includes the requirement that if a bid bond is submitted it must be "...written on the form bound within these bidding documents...". (Joint Exhibit #1, P.C-1.600.) Among other specifics related to the bond are the requirements that the dollar amount of the bond, or "5 percent of the bid", be typed or printed in the space provided, and that the surety's agent's power of attorney either be recorded in Sarasota County or include an original signature. (Joint Exhibit #1, P.C- 1.610.) Two addenda were issued to the July 1, 1988 bid specifications. Addendum No. 1 is dated September 30, 1988, and includes a revised bid form and list of subcontractors form. The material change in the list of subcontractors form was to delete language at the end of the form allowing changes or substitutions with written consent of the architect and owner prior to signing the agreement, and substituting this language: "The contractor shall not remove or replace subcontractors listed above except upon good cause shown and written approval by Owner". (Joint Exhibit #1, P.C-2.430.) Both the revised and former subcontractor list provide "Any work item (trade) not included will be assumed by the Owner as being performed by the Bidder's own forces". (Joint Exhibit #1, p.C-2.400.) A mandatory pre-bid conference was held on September 27, 1988. In order to have a valid bid proposal, all bidding contractors had to attend the conference. Gulf, Federal and the other bidders had representatives at the conference. Charles Collins, the School Board project manager, also attended and reviewed the specifications. He reminded the conference participants that the subcontractors list must be included with the bid and that one and only one subcontractor could be listed for each item. He also told the participants that if the contractor was going to do a particular item, he had to so indicate. He said that any deviation would result in the bid being rejected. (Transcript pp.316,319.) The bids were submitted and opened on October 13 1988. Six bids were received, with the following totals for both the school and bus depot: Federal $7,243,000.00 Phillips $7,322,155.00 Indus $7,390,000.00 Barton-Malow $7,398,000.00 Gulf $7,448,000.00 Carlson (amount not included in the record -- the highest bidder) (Joint Exhibits #2,3,4,5 and 6) The immediate reaction of Charles Collins and other School Board staff was that the lowest bid, Federal, was a very sloppy bid. There were problems, in fact, with the four lowest of the six bids. (Transcript pp.215 and 324.) Federal's bid bond was on the proper form, but the penal sum space was left blank. In addition, the power of attorney signature was not an original, but was rather part of the printed form. There was no power of attorney for its surety, American Home Assurance Company, on record in Sarasota County. The list of subcontractors form required by the School Board is divided into two columns. The first column lists the work item and in some cases, includes subcategories, such as "supplier", "installer", "manufacturer", "dealer/contractor", and similar designations. For some work items more than one, and as many as three, separate subcategories are included, indicating the need to fill in more than one blank for that work item. The heading over the second column is titled "Subcontractor or Material Supplier". The bidder is supposed to write in the space in this column the subcontractor or supplier for each of the work items and subcategories listed in the first column. Federal's list of subcontractors had either blank spaces or a line drawn in the second column for approximately twenty-two work items or subcategories under the work items. In several cases a single name was listed only once next to the work item, even though there were several subcategories under that item. For example, under the work item, "Pre-Engineered Metal Roof System", are three subcategories: "Manufacturer", "Dealer/Contractor (Supplier)" and "Erector". Federal has handwritten one name next to the "Dealer/Contractor (Supplier)" subcategory: "Hammer & Howell". (Joint Exhibit #3.) Dr. Melvin Pettit is the School Board's director of facilities and is responsible for the bidding process and construction of new schools. He is Charles Collins' supervisor. After the bid opening, Dr. Pettit and his other staff met with the bidders individually to make sure they understood the bid. Gulf's bid was very complete and there was not that much to interpret. (Transcript p.217.) Federal's bid was not complete and needed considerable explanation. Dr. Pettit took notes of the explanations on his copy of Federal's bid form. (Joint Exhibit #10.) Federal drew a line next to the work item "site concrete work" because it intended to do than work itself. Although it listed "United" only once for the two subcategories under "Sanitary Sewer Lift Station", it intended that United be both the supplier and installer. Under the work item, "Termite control", Federal drew a line because it did not have a bid or a subcontractor to list. "Underground Fuel Tanks (Bus Depot) and Accessories" with two subcategories, "Supplier" and "Installer", were left blank. Federal intended that J. H. Pump Services do the work, as they were also doing the fuel dispensing equipment, a separate work item on another page of the form. No supplier nor installer was listed under "Concrete Work" because the Federal representative could not remember the supplier's name when the bid was prepared. Federal had quotations for the "Chalkboard and tackboard" work item, but did not list a supplier. They also had quotations for the specialty signs but did not list a supplier for that work item. No subcontractor was listed under the work item, "Waste Handling Equipment"; Federal intended to use the same subcontractor for that and a separate item, "Food Service Equipment". For the separate items, "Dark Room Equipment" and "Library Equipment", no supplier was listed. Federal explained that it had quotes but did not list them because of the rush of bidding. No subcontractor nor supplier was listed for the separate items, "Intercommunications System" or "Public Address System". Federal explained that it intended to use the same subcontractor as that indicated for the electrical work because these items were included in the electrician's bid. For those items including separate subcategories, where only one name is listed, Federal intended in most cases to use the same firm for all subcategories. However, for the roof system example cited in paragraph #9, above, Federal assumed that Hammer and Howell would supply and erect a roof manufactured by Butler. In other words, Hammer and Howell would not also be the manufacturer of the system. The bid specifications list approved manufacturers, and Hammer and Howell is not one of them, nor were they certified as an approved manufacturer one week prior to the bid date, as required in the specifications. Bid opening day in a general contractor's office is a frantic time. Depending on the size of the job and its competitive nature, literally hundreds of phone calls are made. In this case there were over fifty line items that had to be filled in with names on the subcontractors list. Although quotations from subcontractors and suppliers are obtained in the weeks prior to opening, last minute confirmations are obtained in an effort to get the best and most accurate estimates. Preparation of the subcontractor list is time-consuming and critical to competition among bidders. If the bidder is allowed to leave an item blank, he may continue to "shop around" after the bid opening, if he is awarded the bid, to improve his profit margin. The owner, on the other hand, is deprived of the opportunity to consider the subcontractors or suppliers when the bids are evaluated. The bid opening was at 2:00 p.m. Federal, like many other contractors, dispatched an employee to the bid opening with a blank bid. While the staff were at the contractor's office compiling estimates, the representative at the opening was on the phone taking down last minute information. Rick Furr, Vice-President of Federal for eight years, did not give specific instructions to his representative regarding leaving blanks or drawing a line. In some cases, the blanks or lines were intended to mean that Federal was going to do the work itself; in most cases, however, Federal intended that someone else would do the work. After hearing Federal's explanation of its bid, Dr. Pettit and his staff discussed it and came to the conclusion that even though there were a "goodly number of irregularities", that it was "poorly done" and "sloppy" (transcript, p.219), in their opinion Federal did not gain significant material advantage, so they recommended the award go to Federal, as lowest bidder. Dr. Pettit explained at hearing that because of the language on the subcontractor list form, that ". . . any work item not included would be assumed by the owner as being performed by the Bidder's own forces", the School Board intended to require Federal to use their own forces for those work items which they left blank. By "their own forces", he means the work would be done by Federal employees on Federal's payroll, for whom workers' compensation is paid. (Transcript, pp.228-9.) This stated intention is so conflicting with Federal's intention and capabilities as to be utterly disingenuous. Although Federal can do its own site concrete work, just as most contractors do, it is not licensed to do termite control. It does not have a batch plant to supply concrete. It cannot manufacture a metal roof system, chalkboards and tackboards, specialty signs, darkroom equipment, an intercommunications system, or a public address system. Even if it could, it is not one of the approved manufacturers listed in the bid specifications for most of these items list. It is apparent, therefore, that Federal will either be unable to perform under the contract or that changes must be made to its subcontractors list. The approximate combined value of the work items left blank, or partially blank, by Federal is $1 million. Federal gained a competitive advantage by failing to complete all the blanks on the subcontractors list form. It gained precious minutes of time to concentrate on other aspects of the bid preparation; it is not bound to a given supplier, manufacturer or installer and can continue to bid shop. Phillips' bid, the second lowest, was non-responsive as it failed to list any subcontractors. It left blank the entire four-page attachment to the bid. (Joint Exhibit #4.) Indus' bid materially deviated from the specifications, as stipulated by the parties. (See stipulated Facts, above, and Joint Exhibit #5.) Barton-Malow's subcontractors list included Aetna Steel as the steel fabricator/supplier, but Aetna Steel verified in writing that they did not bid the structural steel on this job. Barton-Malow also used its surety's bid bond form, rather than the form required in the specification. The form provided by Barton-Malow lacked several provisions found on the required form, including the payments of expenses and attorney's fees in the event of a suit on the bond. (Joint Exhibits #1 and 6; Transcript, pp.89-90) Barton-Malow did fill in all of the blanks on the subcontractors list in accordance with the instructions at the pre-bid conference. In its bid specifications and accompanying documents and instructions, the School Board reserves the right to reject any and all bids received and to waive any and all irregularities in regard thereto. (Joint Exhibit #1, p.C- 1.310.) Since the only recommendation the School Board was given is to award the contract to Federal, the lowest bidder, it has not taken any action on the remaining bids.
Recommendation Based on the foregoing, it is hereby RECOMMENDED that the School Board of Sarasota County award the contract to Gulf Constructors, Inc., as the lowest responsive bidder. DONE and ENTERED this 1st day of March, 1989, in Tallahassee, Leon County, Florida. MARY CLARK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 904/488-9675 Filed with the Clerk of the Division of Administrative Hearings this 1st day of March, 1989. APPENDIX The following constitute my rulings on the findings of fact submitted by the parties: Petitioner's Proposed Findings Addressed in Background. Adopted in paragraphs 2. and 7. Adopted in paragraph 2. Adopted in paragraph 7. Adopted in paragraph 4. Rejected as irrelevant. Adopted in paragraphs 12. and 17. 8.-10. Rejected as unnecessary. 11.-13. Adopted in paragraph 3. 14.-19. Adopted in substance in paragraph 11. 20. Adopted in summary in paragraph 16. 21.-30. Adopted in substance in paragraph 16. 31.-36. Adopted in substance in paragraph 17. 37.-41. Addressed in conclusions of law. Rejected as cumulative. Adopted in paragraph 18. Adopted in paragraph 19. Adopted in paragraph 20. 46.-58. Rejected as cumulative and unnecessary 59.-61. Adopted in paragraph 12. 62.-90. Rejected as cumulative, unnecessary or a restatement of testimony, rather than a finding of fact. 91.-96. Although credible, Mr. Cannon's opinion on the enforceability of the bond is not competent. This is basically a legal opinion. 97.-149. Rejected as cumulative, unnecessary, or a restatement of testimony, rather than a finding of fact. Respondent's Proposed Findings Addressed in Background. Adopted in paragraph 3. Adopted in paragraph 21. 4.&5. Adopted in paragraph 3. 6.&7. Rejected as statement of testimony, not a finding of fact. 8.&9. Rejected as immaterial. 10.&11. Adopted in paragraph 4. 12.&l3. Rejected as immaterial. 14.-16. Rejected as contrary to weight of evidence. 17. Adopted `in paragraph 11. 18.-45. Rejected as unnecessary or subordinate to the findings in paragraph 11. Adopted as a legal conclusion. 47.-52. Rejected as unnecessary. Adopted in paragraph 14. Rejected as unnecessary; this is addressed in the conclusions of law. 55.-59. Rejected as contrary to the weight of evidence. Rejected as unnecessary. Rejected as contrary to the weight of evidence. COPIES FURNISHED: DARYL J. BROWN, ESQUIRE MICHAEL S. TAAFFE, ESQUIRE ABEL, BAND, BROWN, RUSSELL & COLLIER 1777 MAIN STREET POST OFFICE BOX 49948 SARASOTA FLORIDA 34230-6948 JOHN V. CANNON, III, ESQUIRE ELVIN W. PHILLIPS, ESQUIRE WILLIAMS, PARKER, HARRISON & DIETZ 1550 RINGLING BOULEVARD POST OFFICE BOX 3258 SARASOTA, FLORIDA 34230 HONORABLE BETTY CASTOR COMMISSIONER OF EDUCATION THE CAPITOL TALLAHASSEE, FL 32399 DR. CHARLES W. FOWLER SUPERINTENDENT SCHOOL BOARD OF SARASOTA COUNTY 2418 HATTON STREET SARASOTA, FL 33577
The Issue The issues concern the question of the responsiveness of Intervenor's bid to the invitation to bid (ITB) 92-66BC. If the Intervenor is not responsive, then Petitioner asserts that it should be awarded the contract as the second ranked bidder. In particular Petitioner alleges that there are certain irregularities in the response by the Intervenor and that they constitute material deviations from the bid requirements. They are in turn: Whether Intervenor failed to submit its price on the second addendum bid sheet as required or to acknowledge that its bid was being submitted in accordance with Addendum No. 2. Whether Intervenor failed to include its references with its bid response. Whether Intervenor failed to fill in the space on the bid form calling for cash discount terms. Whether Intervenor failed to fill in the space on the bid form calling for delivery days. Whether Intervenor failed to initial changes or corrections to its price quotation.
Findings Of Fact On September 14, 1992, Respondent mailed ITB No. 92-66BC to prospective bidders. The ITB called for "A bid for supplied items related to HRS data processing operations-Florida Project." Within the ITB was given the following explanation concerning bid items and bid prices: ITEM Unit Bid NO. Quantity Description Price 1 each IBM 4234 Print Ribbon (per month) (no substitutes) $ ea. 30 each IBM 4202 Ribbon (per month) (no substitutes) $ ea. 50 each IBM 4019 Laser Toner (per month) (no substitutes) $ ea. 650 each IBM 2380/2381 Print Ribbon (per month) (no substitutes) $ ea. 5 boxes Continuous Self-adhesive (per month) Labels $ ea. (labels are blank with no printing) overall size 5 3/4" x 6" including pin feed holes, label size 5" x 17/16", white labels, 1,000 per box $ per 1 each IBM 6262 Mylar Film Ribbon (per month) (no substitutes) $ ea. 650 each IBM 6262 5 Mil. Ribbon (per month) (no substitutes) $ ea. 8 boxes IBM 3800 Toner (3/box) (per month) (no substitutes) $ ea. 1 roll IBM Splicing Tape (per month) (no substitutes) $ ea. 2 boxes IBM 3800 Developer (2/box) (per month) (no substitutes) $ ea. On September 24, 1992, Addendum No. 1 was prepared related to the items that were being bid. It stated: The purpose of this Addendum #1 to the above referenced HRS bid invitation is to: (a) Clarity the individual IBM product specifications with IBM stock numbers (b) increase the quantity for item #1, and (c) extend the bid opening date. These changes are as follows: ITEM Unit Bid NO. Quantity Description Price Increase quantity IBM 4234 Print Ribbon of IBM 4234 Print Auto-Inking Ribbon (Auto-Inking) IBM Stock #1380160 from 1 ea./mo. to "30 ea./mo.". $ ea. Same Quantity IBM 4202 Ribbon as previously IBM Stock #1040150 specified $ ea. Same Quantity IBM 4019 Laser Toner High Yield IBM Stock #1380200 $ ea. Same Quantity IBM 2380/2381 Print Ribbon IBM Stock #1040930 $ ea. Same Quantity Continuous Self-Adhesive Labels $ ea. Same Quantity IBM 6262 Mylar Film Ribbon IBM Stock #1040400 $ ea. Same Quantity IBM 6262 5 Mil. Ribbon High Contract IBM Stock #1040300 $ ea. Same Quantity IBM 3800 Toner IBM Stock #1669122 $ ea. Same Quantity IBM Splicing Tape IBM Stock #4165880 $ /cn. of 72 rolls Same Quantity IBM 3800 Developer 2/box IBM Stock #1162223 $ /box Addendum No. 1 also moved the bid opening date from September 24, 1992, until September 30, 1992. Addendum No. 2 was issued on September 28, 1992, concerning bid items. It stated: The purpose of this 2nd Addendum to the above referenced bid invitation is to incorporate the "packaging" (3 per box) on item #8 and to add/clarify the individual "units" on which "Unit Bid Prices" shall be based. These changes are as follows: ITEM Unit Bid NO. Quantity Description Price Increase quantity IBM 4234 Print Ribbon of IBM 4234 Print Auto-Inking Ribbon (Auto-Inking) IBM Stock #1380160 from 1 ea./mo. to "30 ea./mo.". $ ea. Same Quantity IBM 4202 Ribbon as previously IBM Stock #1040150 specified $ ea. Same Quantity IBM 4019 Laser Toner High Yield IBM Stock #1380200 $ ea. Same Quantity IBM 2380/2381 Print Ribbon IBM Stock #1040930 $ ea. Same Quantity Continuous Self-Adhesive Labels $ ea. Same Quantity IBM 6262 Mylar Film Ribbon IBM Stock #1040400 $ ea. Same Quantity IBM 6262 5 Mil. Ribbon High Contract IBM Stock #1040300 $ ea. Same Quantity IBM 3800 Toner IBM Stock #1669122 $ ea. Same Quantity IBM Splicing Tape IBM Stock #4165880 $ /cn. of 72 rolls Same Quantity IBM 3800 Developer 2/box IBM Stock #1162223 $ /box The second addendum changed the bid opening date to October 9, 1992. Petitioner and Intervenor received the addenda. Notwithstanding the attempts at clarification concerning the bid items, Item No. 6 continued to be problematic in that the description of the ribbon type was Mylar Film; however, the stock number shown opposite the item identified was for nylon ribbon. Respondent intended to purchase Mylar ribbon. Intervenor was made aware that the agency desired Mylar ribbon by its Item No. 6. This information was imparted before the bid opening. Although William F. Cox, Respondent's employee who was responsible for the ITB has no specific recollection of discussing the problem about Item No. 6 with a representative from Petitioner's corporation, John C. Lyons, a representative for Petitioner's corporation does recall a discussion. Lyons' understanding in conversation with Cox was that disposition would be made concerning item 6 after a winning vendor had been selected, that disposition having to do with rectification of the confusion surrounding the item description and stock number. Prior to bid opening Cox had reached as many bidders as he felt time would allow him to contact concerning the problem with Item No. 6. Time was of the essence in that the contract which Respondent had with the existing vendor who supplied the items sought by the ITB was expiring and the federal government from whom funding for this activity was being received was insisting on moving the project forward. This reason for bidding was to change from a sole source purchasing arrangement to a purchase under competitive bidding. The existing vendor was a sole source and the ITB was designed to substitute competitive bidding for that approach. Cox was unsure how he would deal with responses pertaining to Item No. One alternative was that if he had two responsive bids which included reference to Mylar ribbon that would suffice. Another option would be to throw out Item No. 6 and consider the award on the basis of the other nine items. Intervenor bid Mylar ribbon on Item No. 6 together with a number of other vendors who submitted responsive bids for Mylar ribbon on Item No. 6. Petitioner bid nylon ribbon on Item No. 6. All ten vendors who submitted responses were found responsive to the ITB. Because Intervenor had bid Mylar ribbon on Item No. 6 and other vendors had also bid Mylar ribbon on Item No. 6, Cox elected the option to leave Item No. 6 in the price quotation for determining the ranking for vendors. The decision to award the overall contract was decided on the basis of price in the aggregate for the ten items in question. Although Petitioner had bid nylon ribbon on Item No. 6, this was to the Petitioner's advantage in comparison to other vendors concerning the price competition. The reason for this finding is that nylon ribbon is a less expensive ribbon than Mylar ribbon. When the bids were opened on October 9, 1992, the basis for assessing compliance with the terms of the ITB was controlled by the terms of the ITB; Chapter 287, Florida Statutes; Chapter 13A, Florida Administrative Code, and Chapter 13A, Florida Administrative Code, as interpreted by Mr. Cox without benefit of any additional guidelines which Respondent may have established for assessing responsiveness. That approach was not irregular. The price quotations for line items within the bid blank offered by Intervenor were set out in the ITB and Addendum No. 1. Addendum No. 2 was not attached. Petitioner attached both addenda to its response and set out the prices on the addenda. Petitioner did not set out the prices on the ITB. Notwithstanding the failure to submit Addendum No. 2 with its response, Intervenor was aware of its requirements when submitting its response. While it is the ordinary expectation that Addendum No. 2 would have been submitted, this oversight does not constitute a material deviation from the requirements set out in the ITB. The basic description of the ten items that were being bid remained consistent beginning with the ITB and continuing through the addenda. An examination of the price responses by the Intervenor when compared to Petitioner's responses and those made by other vendors does not lead to the conclusion that the failure to use the blank for Addendum No. 2 compromised the Intervenor's response. This finding is made with the knowledge of the language under general conditions to the ITB referring to sealed bids where it says "all bid sheets and this form must be executed and submitted in a sealed envelope. . . . Bids not submitted on attached bid form shall be rejected. All bids are subject to the conditions specified herein. Those which do not comply with these conditions are subject to rejection." Because of what Mr. Cox perceived as possible confusion by the vendors concerning the number of attempts to clarify the terms of the items to be bid, he did not feel that a vendor should be penalized for not recording the price quotations on the addenda. This perception is acceptable. Finally, additional evidence concerning the underlying similarities between the initial invitation to bid and the addenda is borne out by the fact that both the Petitioner and Intervenor in recording the price quotations in two places in their responses were consistent in those quotations. Included within the ITB was a section entitled "Background Statement." It stated: The computer related supplies which will be purchased from this bid/contract will be used by the department's data center in Tallahassee and statewide district service centers in the timely provision of a range of critical client services. The ability of the department's statewide data processing network to deliver these services in a responsive manner is critical to the very livelihood of many of these individuals. For this reason, the department will require that responding vendors provide a minimum of three (3) company references and provide other pertinent information, as required, to substantiate that the company is capable by experience and resources, to fulfill the provisions of this contract in a timely, competent and professional manner. The requirement for providing three company references was not one which made it incumbent upon the vendor to submit the references with the response to the ITB. The ITB is silent on the use of the information concerning references, that is to say the verification of those references and how that might be achieved. The vendor is only responsible for providing the information. Respondent may then use the information in any manner it desires. Although it is the ordinary practice of the Respondent to check the references prior to posting the intent to award, nothing in the ITB makes it incumbent upon the Respondent to do so and the vendor will not be held accountable for the Respondent's failure to comply with its customary practice by not checking the references prior to the posting of the intent to award. Intervenor did not provide the references with its response to the ITB. When Cox reminded Intervenor that it had not provided the references, the references were faxed to Cox on the day that the results concerning the ITB were posted. Two of the three references were checked on the day of posting following the posting. The third reference was not available to confirm the suitability of this vendor to supply the bid items in question. Moreover, the items being bid were from a single manufacturer, IBM. The vendors who were participating in the response, including Petitioner and Intervenor, were companies who had business affiliations with IBM that allowed necessary access to the bid items being sought. In summary, there was no requirement to provide references with responses and Intervenor did supply information about its references in a timely manner and the treatment of those responses by Respondent was appropriate. Within the general conditions to the bid is language to the affect that "all corrections made by bidder to his bid price must be initialled." Intervenor in Item No. 5 found within the basic bid blank and Addendum No. 1 changed bid by obliterating information and substituting the price $3.95 per box. This was an irregularity. The manner in which the irregularity was addressed by Mr. Cox minimized its influence and caused it to be other than a material deviation from the terms of the ITB. When Mr. Cox opened the Intervenor's response and discovered this change to Item No. 5 which had not been initialled he held up the response and said, "I have a bid with a change here I want to show it." This was presented in front of other vendors who were in attendance at the bid opening. Petitioner was not in attendance. A member of Respondent's staff other than Cox also saw this display and heard the remarks. This approach demonstrated that the Respondent had not made the changes in the person of its employee and by inference verified that the change had been made by the Intervenor. The nature of the change does not leave ambiguity concerning the intention by the Intervenor in that the prior entry on Item No. 5 within the basic invitation to bid blank and Addendum No. 1 had been obliterated leaving only the price quotation in the amount of $3.95 thus this problem is a minor irregularity and not a material deviation from the terms concerning the ITB. The delivery time contemplated for providing the bid items was ten working days by shipment FOB destination. This was as announced in Paragraph Although the front page to the ITB carries with it a blank for recording the delivery date where it says "delivery date will be days after receipt of purchase order", it was not necessary for a vendor to fill that number of days in. The reason is that the number of days had already been established by the terms of the ITB and no latitude was presented to a vendor to suggest otherwise. If a vendor chose to fill in the ten days required by Paragraph 11 by placing the number ten on the lead sheet to the ITB, this was a redundant act. Likewise on the lead sheet to the ITB is found a blank for recording the "cash discount terms". Reference to cash discount terms was not a specific requirement within the ITB, especially as it relates to a comparison of responses by the vendors in deciding who would be awarded the contract. Therefore, the failure by the Intervenor to record its cash discount terms on the lead sheet to the ITB in a setting in which Petitioner had offered such information is not a deviation from the requirements set out in the ITB. Under general conditions at Paragraph 4.b. concerning discount, it is stated "cash discounts for prompt payment shall not be considered in determining the lowest net cost for bid evaluation purposes." Nothing in the remaining text found in the ITB was contrary to that statement. The price difference between the responsive bid by the Intervenor and the responsive bid by the Petitioner was $102 in a setting in which Intervenor had the lowest price and Petitioner had the second lowest price.
Recommendation Upon consideration of the findings of facts found and the conclusions of law reached, it is, recommended that a Final Order be entered which dismisses the bid protest of the Petitioner and awards the contract to Intervenor, together with costs in the amount of $764. RECOMMENDED this 14th day of January, 1993, in Tallahassee, Florida. CHARLES C. ADAMS 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 14th day of January, 1993. APPENDIX CASE NO. 92-6824BID The following discussion is given concerning the proposed facts of the parties: Petitioner's Facts Paragraphs 1 through 5 with the exception of the last subparagraph to Paragraph 5 are subordinate to facts found. The last subparagraph to Paragraph 5 is rejected as the reason for deciding that the Intervenor had complied with the requirements for references. Paragraph 6 is subordinate to facts found with the exception of the discussion related to Mr. Lyons and his understanding of what must be done in making changes through the initialling process. Mr. Lyons insights do not set aside the perception that the failure to initial by Intervenor was a minor irregularity. Paragraph 7 is subordinate to facts found. As to Paragraph 8, the fact that Mr. Cox did not make a specific determination about Item No. 6 related to the response by the Petitioner did not disadvantage the Petitioner in a way that should cause a change in the outcome. Paragraphs 9 through 11 are subordinate to facts found. Respondent's Facts Paragraphs 1 through 8 are subordinate to facts found. Paragraph 9 is not necessary to the resolution of the dispute. Paragraphs 10 through 28 are subordinate to facts found. COPIES FURNISHED: John C. Pelham, Esquire Pennington, Wilkinson & Dunlap, P.A. 3375-A Capital Circle, N.E. Tallahassee, Florida 32308 Robert L. Powell, Esquire Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32301 James Cody, Jr. IT Products, Inc. 5303 East Colonial Drive Orlando, Florida 32807 John Slye, General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, FL 32399-0700 John C. Lyons, Senior Account Manager 321 West Exchange Street Akron, OH 44302 Associated Computer Stipulations 1801 North Meridian Road Tallahassee, FL 32303 SAI/Delta, Inc. Suite 1014 670 North Orlando Avenue Maitland, FL 32751 Best Line Office Machines, Inc. Post Office Box 37381 Pensacola, FL 32526-0381 FRC Office Products Post Office Box 10163 Jacksonville, FL 32247-0163 Matrix Data Corporation Post Office Box 36150 Cleveland, OH 44136 Center Office Products 625 West Gaines Street Tallahassee, FL 32304 Computer Solutions/Connecting Point 4405 Bayou Boulevard Pensacola, FL 32503 Forms Management, Inc. Post Office Box 4004 Tallahassee, FL 32315
The Issue The Department of Corrections sought bids for construction of a health services building for a correctional facility. A discrepancy existed between the written specifications and the architectural drawings for the project. An addendum was issued to clarify the matter. The low bidder (Intervenor) did not acknowledge receipt of the addendum until several hours after the opening of bids. The Department accepted the Intervenor's bid. The Petitioner timely protested the action. The issue in this case is whether, in accepting the Intervenor's bid, the Department acted contrary to the requirements of law.
Findings Of Fact On July 31, 1990, the Department of Corrections (hereinafter "Department") issued an Invitation To Bid ("ITB") for PR-35-JRA, Project #90015, consisting of the construction of a Health Classification Building at the Columbia County Correctional Institution. In relevant part, the ITB requested price proposals for said construction, provided that the bid would be awarded to the responsive bidder submitting the lowest cost proposal, provided that "in the interest" of the Department, "any informality" in bids could be waived, and provided space on the bid form for acknowledgment of receipt of all addenda to the ITB. Bids were to be filed no later than 2:00 p.m. on September 11, 1990, the time scheduled for bid opening. Documents issued with the ITB included architectural drawings and written specifications for the building. The architectural firm of Jim Roberson and Associates, (hereinafter "JRA") had been employed by the Department to prepare the drawings and specifications. JRA was responsible for preparation and distribution of related addenda. Further, a JRA representative presided over the opening of bids on behalf of the Department. Following release of the ITB and supporting documents, JRA became aware of a conflict between sink faucets required by the drawings and those required by the written specifications. The specifications provided that sink faucets operated by hand levers or foot pedals were to be installed in the facility. The architectural drawings JRA indicated that sink faucets were to operate by means of "electric-eye" activators, rather than by hand levers or foot pedals. On September 10, 1990, JRA issued an addendum (identified as Addendum #2) 1/ to clarify that "electric-eye" type operators were to be included in the bids. The addendum was sent by telephone facsimile machine to all anticipated bidders. In part the addendum provides as follows: "This Addendum forms a part of the Contract Documents and modifies the original Specifications and Drawings, dated 31 July 1990, as noted below. Acknowledge receipt of this Addendum in the space provided on the Bid Form. Failure to do so may subject the Bidder to Disqualification." On September 11, 1990, the eight bids submitted in response to the ITB were opened by the JRA representative. The Intervenor, Custom Construction (hereinafter "Custom"), submitted the lowest bid at $898,898. The Petitioner, David Nixon (hereinafter "Nixon"), submitted the next lowest bid at $900,000. The bid form provided by the Department as part of the ITB materials to prospective bidders provided space for acknowledgment of addenda to the ITB documents. Upon opening the bid submitted by Custom, the JRA representative officiating at the opening noted that the Custom bid failed to acknowledge Addendum #2 in the appropriate space on the bid form. 2/ Robert L. Harris, president of Custom Construction, attended the bid opening. When the JRA representative noted the lack of acknowledgment of Addendum #2, Mr. Harris stated that he was unaware of the addendum. At hearing, Mr. Harris testified that his secretary told him that Addendum #2 was not received by his office. The JRA representative testified that his review of JRA's FAX transmission records indicated that the FAXed Addendum #2 was received by all bidders. The greater weight of the evidence establishes that Addendum #2 was transmitted to and received by, all bidders. Upon leaving the bid opening, Mr. Harris immediately contacted his plumbing subcontractor, Jerry Stratyon, and discussed the situation. Approximately two hours after the bid opening, and after talking with Mr. Stratton, Mr. Harris notified JRA, in a letter transmitted by FAX machine to JRA, that his bid price did include plumbing fixtures required by Addendum #2. Mr. Harris concluded the letter, "[w]hen can we start work. I know you don't want the alternate." On October 8, 1990, JRA recommended to the Department, that the Custom bid be accepted. The letter of recommendation, in part, provides: The apparent low bidder however, did not verify receipt of Addendum No. 2 on the Bid Proposal. Our office did receive a, facsimile after the bid verifying Addendum NO. 2 receipt from the Contractor's Office." However, the actual letter from Custom to JRA states, not that Addendum #2 was received, but that it was included in the price bid by Custom's plumbing subcontractor. Both Nixon and Custom obtained plumbing bids from the same subcontractor, Jerry Stratton. The cost increase attendant to the requirements of Addendum #2 is approximately $2,400 over the plumbing fixtures indicated in the written project specifications. Mr. Stratton was aware of Addendum #2 and testified that the requirements of Addendum #2 were reflected in his price quotes to both bidders. Mr. Stratton provided the same price bid to Nixon and Custom. Mr. Stratton also provided bids to Nixon and Custom for HVAC work. Mr. Stratton was accepted as Custom's HVAC subcontractor. Nixon's bid indicates that another HVAC subcontractor will perform the cork should Nixon receive the contract. The ITB provided that bid modification or withdrawal was permitted on written or telegraphic request received from a bidder prior to the time fixed for opening. Mr. Harris did not attempt to either withdraw or modify Custom's bid prior to bid opening. No bid modification was permitted subsequent to the bid opening. The Department's policy is to waive minor irregularities when to do so would be in the best interests of the State and would not be unfair to other bidders. The evidence does not establish that Custom Construction's failure to acknowledge the addendum was purposefully designed to permit withdrawal of their bid subsequent to the public bid opening. The omission of acknowledgment of Addendum #2 provided Custom an opportunity to withdraw the bid that was not available to other bidders. Custom could have informed the Department that the bid price did not include the requirements of Addendum #2, and the bid could have been withdrawn. Custom was therefore provided with a substantial advantage or benefit not enjoyed by the other bidders. The other bidders, all of whom acknowledged receipt of Addendum #2, had no opportunity to, and would not have been permitted to, withdraw their aids. The fact that Custom did not withdraw the bid is irrelevant.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby RECOMMENDED that the Department of Corrections enter a Final Order rejecting the bid submitted by Intervenor as nonresponsive and awarding the contract to the Petitioner. DONE and RECOMMENDED this 15th day of January, 1991, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, FL 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 15th day of January, 1991.
Findings Of Fact Petitioner is a corporation organized under the laws of Florida with its principal place of business in Tampa, Florida. It was formed in October, 1973 and is in the business of building bridges throughout west/central Florida. It is an independent construction company which specializes solely in bridge and fender construction. Its business relies solely on contracts from public authorities, especially the Respondent herein. On March 19, 1984, in the United States District Court, Northern District of Florida, Petitioner and its president, Gerald H. Stanley were convicted of violating Title 15, United States Code, Section 1 of the Sherman Antitrust Act, for participating in a conspiracy to rig bids by DOT on June 27, 1979. Petitioner was fined $50,000.00 and Mr. Stanley was fined $20,000.00, ordered to perform 200 hours of community service and placed on three years unsupervised probation. Petitioner did not renew its Certificate of Qualification to bid on Florida bridge projects when it expired on or about April 30, 1984. However, on June 12, 1984, both Petitioner and Mr. Stanley filed a Petition for a determination that they are eligible to apply for and hold a Certificate of Qualification under the provision of Section 337.165(2)(d), Florida Statutes, alleging such reapplication to be in the public interest. Marine Structures, Inc. adopted a formal, written antitrust compliance policy in July, 1984, and the record fails to show any instance of bid rigging or antitrust involvement since the one incident in June, 1979. Because of the limited number of companies involved in the road and bridge construction business, the existing companies, who were formerly involved in bidding misconduct, must, of necessity, deal with each other, but there is no indication or reason to assume that such necessary dealings will result in future misconduct. In addition to the written antitrust compliance policy referenced above, Marine has also taken remedial action to assure that all of its employees conduct their business activities in strict compliance with the law and the rules and regulations of both the state and federal governments. Due to Marine's inability to bid on DOT contracts, it has suffered and continues to suffer extreme financial hardship. In its past dealings with DOT, it has performed quality work and has cooperated fully with the Department. DOT indicates it has not been made aware of any particular circumstances involving Marine's or Mr. Stanley's participation in the instant bid rigging incident which would make that incident any more detrimental to DOT than any of the bid rigging conspiracies by the 26 other companies which have been reinstated by the Department. These 26 companies which have been reinstated, submitted themselves to DOT's independent investigations and agreed to comply with the safeguards required in their individual cases to help to assure that contract crimes would not occur on Department projects. Mr. Stanley, on behalf of Marine Structures, Inc., has offered the same assurances. In a letter dated May 1, 1985, to the Secretary, Department of Transportation, the Honorable Jim Smith, Attorney General of the State of Florida, indicated that though Respondent has, in a confidential sworn statement to attorneys for the State, denied any involvement in bid rigging activities other than in connection with that of which he was convicted in federal court, the State investigation, in the opinion of the Attorney General, raises substantial doubt as to the truth of Mr. Stanley's denials of misconduct. The Attorney General indicates that in an effort to resolve this apparent inconsistency, Mr. Stanley was asked, through his counsel, to take a polygraph examination which he refused. Mr. Stanley denies having refused to take the polygraph at any time. Further, the Attorney General relates that Marine Structures, Inc. has not offered to pay any amount of damages to the State, yet Mr. Stanley contends that he has never, to this day, been asked to make any reimbursement or restitution to the State. Mr. Stanley, on behalf of the Petitioner, does not deny that he committed error and that this error constituted an offense against the state and federal governments. He tells a story, however, regarding it which puts it in a somewhat less serious light than is described by the State. According to Mr. Stanley, he gave a bid figure to two other contractors, who he had previously asked to subcontract in his bid, over which they should bid in order to assure Petitioner of having the lowest bid of the three on this particular contract. Both other contractors, Mr. Carroll and Mr. Conner, submitted bids which were higher than that of Petitioner as did a four potential contractor, Square G, and notwithstanding this, Petitioner's bid was lower than the State estimate. In light of this factor he contends that his misconduct, while technically a violation for which he was tried and convicted, did not cost the State one extra cent. He regrets having done it and would not do it again. Both Carroll and Conner, the two other contractors involved with Petitioner in this incident, pleaded guilty and were convicted, but both have been reinstated as eligible bidders on State work. As to the letter of the Attorney General, Mr. Stanley contends that the comment regarding his veracity relates to a situation involving his testimony before the Attorney General's staff about the Citrus County project. Though he had been advised he would be asked about that specific project, in reality, the questions he was asked related to a different project in Alachua County on which he had bid but which involved no bid rigging on his part. Mr. Stanley contends he told his interrogators what he knew but they were not satisfied as to his knowledge regarding another bidder by the name of Hewitt. His denials of any knowledge of Hewitt's bid were not believed and Mr. Stanley feels he was somewhat threatened by members of the Attorney General's staff who reportedly indicated they would keep him off the bidder's list for some time and would "break" him. He contends that he has cooperated fully with state and federal prosecutors not only because of his desire to be reinstated, but also because the terms of his federal probation require him to cooperate fully. He has, in fact, met with state and federal attorneys on two occasions without being subpoenaed, has made his records available to investigative authorities, and has made copies of any documents desired by the investigators. Other than the one incident involved herein, Mr. Stanley contends that neither he nor his company have ever been involved in any other bid rigging situation. He has given statements to both the Florida Attorney General's office and the Antitrust Division on many occasions other than those referenced in the paragraph above. He has given testimony to a U.S. grand jury and the documents and files which he released to the investigative agencies were released prior to his being granted any immunity from State prosecution by the Attorney General. In short he has cooperated fully with state and federal authorities without holding back any information and will continue to do so even if he is reinstated. He feels, therefore, that it is unnecessary for his reinstatement to be withheld as a threat over his head to coerce testimony from him regarding Mr. Hewitt. Admittedly, neither his personal fine nor that assessed against the company have been paid. He has not, however, been dunned for payment and this is just as well because having been barred from bidding on State business, he is finding it difficult to meet his monthly bills much less pay $70,000.00 in fines. As to the purpose behind the State's manner of handling those companies identified as being involved in bid rigging, the Attorney General very clearly established the action philosophy in a statement made to Florida Trend Magazine on May 29, 1984. In the press release in question he stated: "If we forced these companies into bankruptcy we would not be cleaning up the industry, we'd be abolishing it, putting thousands of employees on the streets and destroying competition in a multi-million dollar industry in which the State is a major purchaser . . . . By obtaining the cooperation of settling defendants we greatly facilitated botch the investigation and the willingness of subsequent defendant to . . . (settle)." Respondent has not shown by any evidence that Petitioner was any worse in its misconduct than any other bidder which has already been reinstated, nor has it exhibited any justification for treating Petitioner more harshly than others.
Findings Of Fact A request for bids to remodel and make additions to Washington Elementary School was issued by Respondent on August 15, 1990, for Project No. 0191-8210. The request for bids included requests for a base work (the "base bid") and additional work described in various alternates (the "total bid"). Respondent had the option of selecting one or more alternates or none of the alternates. Bids were filed by four bidders on January 15, 1990. Bid tabulations were posted on January 23, 1991. Petitioner was the lowest bidder, and Select Contracting, Inc. ("Select"), was the second lowest bidder. Petitioner's base bid was in the amount of $1,406,500. Petitioner's bid for the alternates eventually selected by Respondent was in the amount of $1,594,300. 2/ The bid documents required bidders to include a bid bond in an amount not less than five percent of the bid. Petitioner included a bid bond with its bid in the amount of $75,000 which was more than five percent of its base bid but less than five percent of the total bid calculated after taking into account the alternates selected by Respondent. Respondent recommended to its Superintendent that the contract should be awarded to Petitioner. Select filed a bid protest on January 25, 1991, seeking an informal hearing. Select alleged that Petitioner's bid was not responsive because it failed to include a bid bond for five percent of Petitioner's total bid, including the alternates selected by Respondent. Select included a bid bond for five percent of its total bid, including the alternates selected by Respondent. Respondent conducted an informal hearing on February 6, 1991, and proposed that all bids should be rejected and the project re-advertised. Respondent determined that Petitioner's bid was non-responsive in that it failed to include a bid bond in an amount equal to five percent of the total bid, including all alternates selected by Respondent. Respondent further determined that relevant language in the bid documents is ambiguous and may create an economic advantage for bidders who provide a bid bond in an amount less than that provided by other bidders. In a written analysis of the basis for recommending the rejection of all bids, the General Counsel stated: In the instant case, since bid amount is not specifically defined by the SCHOOL BOARD, one bidder may receive an unfair economic advantage over another by only including in its bid amount the cost for obtaining a bond which was less than the actual bid amount, (i.e. base bid plus alternates). The only reason that Respondent did not regard the amount of Petitioner's bid bond as a minor irregularity was that Respondent wanted to assure that all bidders were placed on ". . . an equal playing field . . ." by avoiding an unfair economic advantage for one or more bidders. 3/ Relevant language in the bid documents which defines the amount of the required bid bond is ambiguous. The Advertisement For Bid, in relevant part, requires that bids ". . . must be accompanied by a bid bond or cashier's check in an amount not less than five percent (5%) of the bid . . . ." Section 3.05(d) of the Instructions to Bidders refers bidders to Section 3.08 for purposes of the bid bond. Section 3.08 in relevant part requires bids to be accompanied by a bid bond ". . . of not less than five percent (5%) of the amount of the Bid . . . ." The bid proposal form, however, provides that the bidder ". . . further agrees that the security in the form of a Bid Bond, or Cashier's Check in the amount of not less that five percent (5%) of the total Bid Price . . . accompanies this Bid " A bid bond in an amount equal to five percent of the base bid satisfies the requirements in the bid documents for a bid bond in all but one instance. A bid bond in an amount not less than five percent of the base bid is not consistent with the representation in the proposal form that a bidder has included a bid bond equal to five percent of the total bid price. Respondent's bid documents have historically required a bid bond for only five percent of the base bid. The reference in the bid proposal form to a bid bond equal to five percent of the total bid is a recent change made by Respondent and is limited to the bid proposal form. The inclusion of a bid bond for only five percent of the base bid is consistent with Petitioner's historical practice in bidding previous jobs offered by Respondent. Petitioner obtained no unfair economic advantage over Select by including a bid bond for only five percent of the base bid while Select included a bid bond equal to five percent of the total bid, including the alternates selected by Respondent. The uncontroverted evidence establishes that both Petitioner and Select obtained their respective bid bonds at no cost to either bidder. Companies that issue bid bonds, including the companies that issued bid bonds to Petitioner and Select, do not impose a charge for issuing a bid bond in the ordinary course of doing business. Such companies make their money if and when they issue a performance and payment bond for the successful bidder. 4/ Respondent did not know at the time it formulated its proposed agency action that no unfair economic advantage was gained by a bidder who submitted a bid bond for five percent of the base bid rather than five percent of the total bid. Respondent was uncertain of the economic advantage derived from submitting a lower bid bond, if any. Counsel for Select represented that an economic advantage was gained by Petitioner. Respondent decided to reject all bids and look ". . . for . . . direction from a Hearing Officer. " Petitioner is ready, willing, and able to contract for and perform the work necessary to complete the Project. Petitioner is a pre-qualified contractor for projects undertaken by Respondent. Petitioner has a bonding limit substantially in excess of that required to complete the Project and substantial experience in similar projects for the Broward County School Board. Respondent is confident and has no concern over Petitioner's ability to complete the Project. 5/
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner's written formal protest be GRANTED and the contract awarded to Petitioner. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 3rd day of April, 1991. 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 3rd day of April, 1991.
The Issue The issue is whether Respondent lawfully awarded the main-line food contract to Mutual Distributors, Inc., and, if not, whether Respondent is required by law to award the contract to Petitioner.
Findings Of Fact Background This case arises out of Respondent's award of contracts for main-line food and snack foods and beverages. Through these contracts, Respondent obtains the delivery of 334 different items--297 items of main-line food and 37 items of snack foods and beverages--to over 160 sites for preparation and service to Respondent's students, teachers, and noninstructional staff. During the school year, Respondent serves over 150,000 meals daily, and the Director of Respondent's Food Service Operations manages an annual budget of $55 million. The two relevant bidders in this case are Petitioner and Mutual Distributors, Inc. (Mutual). These are the only bidders that submitted nondisqualified bids for the main-line food contract. Petitioner and Mutual also submitted bids for the snack foods and beverages contract. A third bidder, Magic Vending, also submitted a bid for the snack foods and beverages contract. Mutual has held Respondent's main-line food contract in the past. However, for at least the past seven years, Petitioner has held the main-line food and snack foods and beverages contracts. Petitioner was the only bidder for the main-line food contract for the 1996-97 school year, and, pursuant to a provision of that contract, Respondent renewed this contract for the 1997-98 school year. Petitioner presently supplies school food for the school districts in Dade, Palm Beach, Collier, Lee, Indian River, Martin, St. Lucie, Hardee, Hendry, DeSoto, and Glades counties. The size of the Hillsborough school district limits the number of vendors capable of handling the main-line food contract, although nothing in the record suggests that either Petitioner or Mutual lacks the resources to provide the specified food in a timely fashion. Invitation to Bid By Invitation to Bid dated April 30, 1998, concerning Bid Number 3743-HM (ITB), Respondent solicited bids for two product groups: main-line food, which consists of frozen entrees, frozen foods, canned goods, and staples, and snack foods and beverages. The cover sheets to the ITB advise all interested parties that Respondent would accept sealed bids until 3:00 P.M. on May 26, 1998. The cover sheets state that, on or about June 16, 1998, Respondent would award the contract, which would be in effect August 6, 1998, to August 5, 1999. The cover sheets state that Respondent would make its decision "in the best interest of the District " The cover sheets require that all bids incorporate the following language: POSTING OF RECOMMENDATIONS/TABULATIONS Recommendations and Tabulations will be posted at the Hillsborough County School District, Purchasing Department, 901 East Kennedy Boulevard, 3rd Floor, Tampa, Florida 33602 at 10:30 A.M. on 06/11/98 for seventy-two (72) hours. Actions against the specifications or recommendations for award shall follow F.S. 120.53. Procedures are available and on file in the Purchasing Office at the address listed above. The cover sheets identify the schedule of bidding events. The month of April would be for testing new products and evaluating the nutritional information of approved brands. April 30 would be the date of mailing draft copies of the ITB to all interested persons. May 8 would be the date of the pre-bid conference, at which interested persons could bring product information forms for possible approval of other products than those tentatively specified in the ITB. The cover sheets reserved a couple of days immediately after the pre-bid conference for testing any additional new products. The schedule listed May 13 as the date on which Respondent would mail the final copy of the ITB to interested persons. The schedule states that Respondent would review bids and conduct a "pre-award audit," if necessary, from May 26 through June 3. Part I of the ITB contains "general terms and conditions." Part I states: When an item appearing in this bid document is listed by a registered trade name and the wording "no substitute, bid only or only" is indicated, only that trade-named item will be considered. The District reserves the right to reject products that are listed as approved and wa[i]ve formalities. Should a vendor wish to have products evaluated for future bid consideration, please contact, in writing, the buyer listed on the 2nd page of this bid. If the wording "no substitute, bid only or only" does not appear with the trade name, bidders may submit prices on their trade-named item, providing they attach a descriptive label of their product to this proposal. Sample merchandise bid hereunder as "offered equal" may be required to be submitted to purchase in advance of bid award. Substitutions of other brands for items bid, awarded and ordered is prohibited except as may be approved by the supervisor of purchasing. Part I of the ITB includes a number of "stipulations" that are deemed a part of all bids. The stipulations provide: Tabulations of this bid will be based only on items that meet or exceed the specifications given in Part III. All other lesser items will not be considered. Failure to submit, at time of bid opening, complete information as stated in Part III can and may be used as justification for rejection of a bid item. The bidders will not be allowed to offer more than one product/price/service on each item even though the vendor feels that they have two or more types or styles that will meet specifications. If said bidder should submit more than one product/price on any item, all prices for that item will be rejected. . . . The District reserves the right to reject any and all bids or parts thereof, and to request a re-submission. The District further reserves the right to accept a bid other than the lowest bid, which in all other respects complies with the invitation to bid and the bid document, provided that, in the sole judgement and discretion of the District, the item offered at the higher bid price has additional value or function, including, but not limited to: life cycle costing, product performance, quality of workmanship, or suitability for a particular purpose. . . . All bids shall be evaluated on all factors involved, including the foregoing, price, quality, delivery schedules and the like. Purchase orders or contracts shall be awarded to the responsible offeror whose proposal is determined to be advantageous to the District, taking into consideration the factors set forth above and all other factors set forth in the request for bid as "lowest or lowest and best bid." The information called for on the item must be on the line with the item. When omitting a quotation on an item, please insert the words: no quotation, no bid or n/b. to eliminate any confusion about the item(s) being bid. . . . Any requirement by the bidder that certain quantities, weights, or other criteria must be met, in order to qualify for bid prices, will result in disqualification of the bid. Likewise, expiration dates or other constraints, which are in conflict with bid requirements, will result in disqualification. Bids may not be changed after the bid closing time. The exception would be if there was a misinterpretation of the unit for which the bid was requested. In which case, no dollar amount change would be allowed, and only a clarification as to the unit your bid represents will be considered. This must be done in writing 24 hours after notification to the bidder from the supervisor of purchasing. The submittal of a bid proposal shall constitute an irrevocable offer to contract with the District in accordance with the terms of said bid. The offer may not be withdrawn until or unless rejected or not accepted by the District. . . . 13. The District shall be the sole judge as to the acceptability of any and all bids and the terms and conditions thereof, without qualifications o[r] explanation to bidders. 27. This bid and the purchase orders issued hereunder constitute the entire agreement between the School District and the vendor awarded the bid. No modification of this bid shall be binding on the District or the bidders. 30. Variance in condition--Any and all special conditions and specifications attached hereto which vary from general conditions shall have precedence. Part II of the ITB contains "special terms and conditions." Section A of Part II explains that the purpose of the ITB is to establish a "'cost plus fixed fee per carton' annual contract for the delivery of main-line food and snack and beverages . . .." Section A projects that the annual value of Group A and Group B will be $8.5 million. Section A explains that the "product cost" is the vendor's actual cost, including delivery to its warehouse. The "fixed fee" is the difference between the vendor's cost and its selling price to Respondent. Section A notes that, while Respondent’s cost price may vary during the term of the contract, the fixed fee shall remain unchanged. However, Section K fixes the cost prices until December 31, 1998. As used in this order, "total cost" refers either to the total costs per item (i.e., the unit costs times the projected number of units to be purchased) or the total costs of all items, and the "bottom-line cost" is the total of the total costs of all items plus the fixed fee. The fixed fee includes the bidder's profit and is calculated by multiplying the fixed fee per carton, as stated in the bid, times the number of cartons actually delivered. Section B states: Bids will be awarded on the total bottom line cost and fixed fee for each group. To be considered for an award, the vendor must bid on each item within each group. Failure to bid on each item within each group will disqualify the vendor for the bid award. A distributor may choose to bid on both groups, or on only one group. In the event of default or non- availability of product, the School District reserves the right to utilize the next rated low bidder and their stated bid prices as needed. Sections C and D explain that the term of the contract is one year, ending August 5, 1999, but the parties may extend the term, in one-year increments, through August 5, 2001. Section G provides that potential bidders "may attend a pre-bid conference," but attendance is not mandatory. Section G identifies the time, date, and place of the pre-bid conference. Section G adds: If you wish to submit additional brands within a current product description for approval, you must bring from the appropriate broker/rep, a District product information form with all requested attachments to the conference. Do not bring samples. We will evaluate the product information forms and determine if testing an additional brand is necessary at this time. Submitting a product information form does not guarantee that the product will be tested. Samples must be made immediately for any product information forms submitted. Section H states: To be considered for an award, the vendor must bid on each item within each group. Failure to bid on each item within each group will disqualify the vendor for that group bid award. Section I provides: After the opening of the bids, school officials will review the line-by-line prices. Accuracy of additions and extensions, brands, and compliance with all instructions will be reviewed in order to ascertain that the offer is made in accordance with the terms of the request for bid proposal. School officials who find any error(s) in calculations will adjust the bottom line figure accordingly. However, if errors are found which either disqualify the bidder, or will raise the bottom line offer to the point where the vendor may no longer be the apparent low bidder, school officials will review the line-item prices of the next lowest bidder. This procedure will continue until a suitable offer is selected. During the review of the low bid, school officials may audit invoices or quotations on selected items for the accuracy of cost prices quoted. The extent of this audit will be at the discretion of school officials. In reviewing bids, school officials reserve the right to waive technicalities when it is in the best interest of the school system. Section O states that vendors must deliver "the brand that is quoted on the bid sheet." If vendors are "temporarily out-of-stock of a particular item, they must deliver an equal or superior product at an equal or lower price with prior approval of the District Food Service Department." Section O warns that "[e]xcessive occurrences of out-of-stock items is cause for contract cancellation." Part III of the ITB contains "instructions for completing bid sheets," followed by 65 pages of bid specifications for main-line food and nine pages of bid specifications for snack foods and beverages. Each page of specifications contains several rows, with each row devoted to a separate item, and seven columns, with the columns labeled as item number, product descriptions, approved brands, bid unit, unit cost, estimated annual usage, and total cost. Part III provides detailed instructions for describing the items bid and listing the costs for each item. Detailed specifications describe each of the items to be bid. Under "product descriptions," the two paragraphs of Section B address the issue of domestic versus imported products. The first paragraph describes products that the winning bidder may purchase, but the second paragraph limits items than can be bid. The two paragraphs state: Except for items normally not produced in the United States commercially, the contractor should make every effort to purchase domestic products. Products may be allowed from outside the United States provided specifications are met and there is a significant price differential between imported products and those produced within the States. Written documentation of these price differentials must be provided in writing to the School District by the distributor prior to the approval of such purchases. Please note: for purposes of awarding the bid, all distributors shall bid domestic products (pineapple exempt). Under "product descriptions," Section C provides: The contractor must bid on the approved brands (Column 3), packer label or house label for all items. If Column 3 is blank, the School Board will accept the brand quoted provided it meets the product description. For example, if bidding on a distributor's choice of pasta, the contractor would enter the following: Brand: Prince Product Code: 5115 If bidding on a distributor group label for green beans, the distributor must stipulate the code designation which may be a color or label, that denotes a product as being a particular grade. For example, Brand: North American/Larson Product Code: Blue If bidding a packer label the bidder must stipulate the name of the packer and the grade label designation, for example: Brand: Larsen Product Code: Lake Region For all packer label products Hillsborough County School Food Service Form "Private Label Chart for Fruits and Vegetables" (see Attachment D) must be completed and returned with the bid. Under "product descriptions," Section D states: "Bidder shall enter the grade of the brand offered only for those line items where grade is specified. " Under "approved brands," Part III provides: The bidder must bid on the approved brand and product code that is listed. If the column states "house brand," the School Board will accept the brand quoted provided it meets the product description. Some of the code numbers listed may be obsolete or incorrect, in which case the contractor may enter the correct code and submit written documentation provided by the manufacturer, verifying the correct code number. If any inconsistency exists between the approved brands and/or code numbers and the product description, the approved brand/code number will prevail. The decision as to whether a product does or does not meet the description provided in column 2 is at the discretion of the School District. A bidder may be requested to furnish acceptable confirmation from a packer that a product meets the requirements set forth in Column 2. Whenever approved brands are listed with house brands, the distributor's choice brand should be of equal or better quality than the approved brands listed. Buying group brands and codes are acceptable on frozen and canned fruits, vegetables, and juices, however, on further processed and manufactured foods the contractor shall quote a packer's brand. For example, a contractor may quote "Ore-Ida #1234, packed under the 'Code Red Label.'" Pre-Bid Conference Hank Morbach, Principal Buyer of Respondent's Purchasing Department, conducted the pre-bid conference on May 8. Also representing Respondent at the conference were Mr. Morbach's immediate supervisor, William Borrer, who is the Supervisor of Purchasing; Sherry Ebner, who is a Supervisor of Food Service Operations and a registered dietitian; and Mary Kate Harrison, who is Director of Food Service Operations, a registered dietitian, and Ms. Ebner's immediate supervisor. Minutes of the pre-bid conference reveal that Mr. Morbach and Ms. Ebner told the persons in attendance that they did not have to bid both groups, but must bid all items within the group for which they were submitting a bid. In response to a question from Mutual's representative, Mr. Morbach said that the bottom-line cost, not the fixed fee, would be the "deciding factor." In response to a question from Petitioner's representative, Mr. Morbach stated that, where code numbers were omitted for any item, specifications would prevail. The minutes disclose a discussion regarding imported versus domestic products. Although Respondent's representatives were initially ambivalent, Mr. Morbach "clarified by stating all products must be domestic." Likely, everyone understood that pineapples could still be imported. Following the pre-bid conference, Respondent issued a revised ITB on May 13. Presumably, the ITB identified as Joint Exhibit 1 is the revised ITB, so all references in this order to the ITB are to the ITB as it was finally revised. Adverse Publicity Toward the end of the pre-bid conference, a representative of the Weekly Planet appeared. The Weekly Planet is a free weekly Tampa newspaper, and the representative was a reporter, who, since October 1997, had written several articles asserting, at least by implication, that Respondent's food program suffered from excessive costs, favoritism, and possibly even wrongdoing. Part of the adverse publicity concerned Ms. Harrison's husband, who represented several manufacturers from which Petitioner had purchased food for resale to Respondent while Petitioner had the main-line food contract. The Weekly Planet published an article asserting that the husband of Ms. Harrison had lost a civil action brought by his employer for diverted commissions. By the time of the subject procurement, an internal audit had disclosed no conflict of interest on the part of Ms. Harrison, but had suggested that Respondent add personnel in Food Service Operations to monitor vendor compliance and seek more competition in awarding the food contracts. To Ms. Harrison's credit, since her employment with Respondent in 1990, she has converted a food service program that was losing $2.5 million annually into a profitable operation. The record suggests, though, Respondent's staff was extremely sensitive during this bidding process to the adverse publicity surrounding Respondent's business relationship with Petitioner. The Bids Four bidders timely submitted sealed bids for the main-line food contract. However, Respondent promptly disqualified two of the bidders because they did not submit complete bids. One disqualified bidder submitted a bid that was incomplete, unsigned, and omitted five items in the main- line food group. The other disqualified bidder submitted an incomplete bid with only six items in the main-line food group. After submitting their bids, Petitioner and Mutual each sent Respondent letters stating that each bidder did not want the snacks and beverages contract unless it also received the main-line food contract. Respondent did not object to these late-attached conditions to the two bids and did not consider either bidder for only the snack foods and beverages contract. As provided in the ITB, Respondent's staff contacted bidders, after bid opening, to confirm that certain bid items complied with the specifications. By letter dated June 3, Respondent asked Mutual for documentation that 41 listed items met the specifications, that the Fineline/Paris brand that Mutual had bid is Grade A quality, and for a complete private label chart for all canned and frozen fruits and vegetables. The letter requests a response by June 5. By letter dated June 10, Respondent asked Petitioner for documentation that thirty-seven listed items met the specifications and for a complete private label chart for all canned and frozen fruits and vegetables. The letter requests a response by June 12. Respondent wrote each bidder follow-up letters. In a letter dated June 12, Respondent asked Petitioner to document that five items met the specifications, and, in a letter dated June 15, Respondent asked Mutual to document that the same five items met the specifications. The deadlines in both letters were June 16. Mutual and Petitioner responded to these requests for additional information. By letter dated June 5, Mutual disclosed that Items 202 (broccoli), 300 (apple slices), and 366 (raisins) were imported. After receipt of the responses from the bidders, Respondent's employees further reviewed the bids. Early in this review, Respondent's employees realized that neither bid had complied entirely with the specifications. Among the deficiencies of Mutual's bid was the failure to quote a cost for Item 114, which is chicken wings. Mutual's bid identifies only a product, but no cost. Mutual's bid includes a cost for each of the other 296 items and a total cost, presumably for all 297 items. The ITB projects annual purchases for each of the 297 items. The ITB projects the purchase of 283,044 chicken wings. Petitioner bid 12.5 cents per chicken wing for a total cost of $35,309.50. Mr. Morbach justifiably tried to deduce Mutual's quote for chicken wings from the information contained in its bid. He logically assumed that the cost for Item 114 would be the difference between the total cost shown on Mutual's bid, which is shown on the bid, and the total cost for the other 296 items, which must be calculated separately. The details of Mr. Morbach's calculations did not emerge at the hearing, but it is possible to perform these calculations. Mutual's bid shows a total cost for all 297 items of $8,131,470.29. The total costs of each of the quoted 296 items comes to $6,785,080.14. The difference is $1,346,390.15. This figure clearly does not represent Mutual's bid for chicken wings, which would be thirty-eight times greater than Petitioner's bid and would representative the extraordinary cost of $4.75 per chicken wing. The calculations in the preceding paragraph are taken from Mutual's bid, including all changes shown on the bid, as it was submitted, that were made by Mutual. Mutual's representative initialed these changes. The calculations exclude all adjustments made by Respondent's staff because these calculations, which were made after bid opening, logically have no relevance in determining what, if anything, Mutual quoted for chicken wings. These adjustments can play no role in trying to determine, on the face of Mutual's bid, what it intended to bid for chicken wings. In addition to omitting the cost of one item, Mutual failed to bid numerous other items according to the specifications. Petitioner also failed to bid certain items according to the specifications, although Petitioner's bidding errors are fewer in number and less serious than Mutual's bidding errors. Incorporating the information charted by Food Service Operations staff, the following 25 paragraphs identify the errors in both bids. Item 121 is frozen Grade A turkey roasts with a 60/40 ratio of light to dark meat. Mutual's bid does not reveal the extent of white meat or whether the turkey roast is Grade A meat. Petitioner's bid does not reveal whether its turkey roast is Grade A meat. Item 128 is frozen corn dogs. Mutual bid an unapproved code number for an approved brand. Petitioner's bid complied with the specifications. This is a relatively large component of the overall bid, representing over $160,000 in each of the bids. Item 146 is natural swiss cheese. Mutual bid processed cheese. Petitioner's bid complied with the specifications. Item 202 is Grade A cut broccoli in bulk. Mutual bid an imported product. Petitioner's bid complied with the specifications. Item 220 is shoestring French-fried potatoes. Mutual bid a shorter French-fried potato than specified. Petitioner's bid complied with the specifications. Item 223 is shredded triangle potatoes. Mutual and Petitioner bid the same products, but Mutual's bid did not contain required information regarding grade, oil, and region grown. This is a relatively large component of the overall bid, representing over $140,000 in each of the bids. Item 232 is soft eight-inch tortillas weighing 1.39 ounces per serving. Mutual and Petitioner bid the same product, which weighs only 1.29 ounces per serving. Item 300 is canned sliced apples. Mutual bid an imported product. Petitioner's bid complied with the specifications. Item 328 is light, 26-percent concentration tomato paste. Mutual bid a product that does not meet the minimum- concentration specification. Petitioner's bid complied with the specifications. Item 335 is boneless chicken meat that is predominantly white meat. Mutual and Petitioner bid the same brand, but different product code numbers. Mutual's bid is not predominantly white meat. Petitioner's bid complied with the specifications. Item 366 is seedless raisins. Mutual bid an imported product. Petitioner's bid complied with the specifications. Item 399 is 100 percent semolina, spiral macaroni. Mutual's bid complied with the specifications. Petitioner bid a twisted egg noodle, instead of eggless spiral pasta. Item 431 is sugar sprinkles from one of five approved brands. Mutual bid an unapproved brand. Petitioner's bid complied with the specifications. Item 448 is instant yeast. Mutual's bid includes information on a product that it did not bid. Petitioner's bid complied with the specifications. Item 474 is Grade A Fancy apple jelly with no less than 65 percent soluble solids, and Item 475 is Grade A Fancy grape jelly with no less than 65 percent soluble solids. Neither bid provides sufficient information to determine if it met the specifications on either of these items. Item 480 is Dijon mustard. Mutual bid Dijon-style mustard. Petitioner's bid complied with the specifications. Item 484 is whole pitted medium, ripe olives. Mutual bid an imported product. Petitioner's complied with the specifications. Item 492 is whole, kosher pickles of approximately 95 in number per five gallon pail. Mutual and Petitioner bid larger pickles than specified. Item 505 is 50-grain white vinegar. Neither Mutual nor Petitioner provided the information necessary to determine if its bid complied with the specifications. Items 301, 308, 309, 323, and 331 are, respectively, unsweetened canned applesauce, crushed canned pineapple, sliced canned pineapple, canned pumpkin, and whole canned tomatoes. For each of these items, Mutual's bid did not provide the label to prove quality. Petitioner's bid complied with the specifications. Item 325 is Grade A canned sweet potatoes. Mutual and Petitioner both bid Grade B. Item 212 is yellow frozen squash. Mutual bid an imported product. Petitioner's bid complied with the specifications. Respondent's staff also noted on the chart that the yellow frozen squash was the second item manufactured by Fineline that was imported (the other was Item 202), and staff noted that it was "unable to determine if other frozen vegetables bid by this manufacturer are domestic as grading certificates were not provided." Mutual bid Fineline products for Items 201 (lima beans), 205 (corn), 208 (okra), 209 (peas), 211 (spinach), 214 (Italian-style vegetable blend), and 215 (Oriental-style vegetable blend). Cumulatively, the Fineline frozen vegetables represent a moderately large part of the overall cost, in excess of $53,000 of Mutual's bid. Coupled with the fact that two Fineline products were imported, Mutual's failure to demonstrate affirmatively that these produce are domestic constitutes additional failures to comply with the specifications and supports the inference that the products are imported. In an earlier version of their chart showing bidding errors, Respondent's staff identified problems with Items 217-19, 221-22, and 224. These are potatoes that the ITB specifies must be from the Pacific Northwest and processed in 100 percent canola oil. Respondent's staff determined that it was impossible to identify the source of these potatoes. However, Petitioner was able to document that some, but not all, of the potatoes that it bid for these six items were from the Pacific Northwest. In addition to failing to bid a cost for Item 114 and misbidding the numerous items charted by Respondent's staff, Mutual's bid failed to comply with the specifications for four other items. Item 229 is a frozen Gyro Wrap. Mutual bid a pita- fold bread product, even though a more expensive Gyro Wrap is available from the same manufacturer. Petitioner's bid complied with the specifications Item 378 is pure almond extract flavoring. Mutual bid an imitation flavoring. Petitioner's bid complied with the specifications. Item 402 is thin spaghetti of .062-.066 thickness in diameter. Mutual bid a thin-spaghetti product of 1.6 thickness in diameter. Petitioner's bid complied with the specifications. Item 456 is pancake syrup. Mutual bid an invalid code number. Petitioner's bid complied with the specifications. The parties devoted some attention during the hearing to Item 483, which is green olives. Mutual and Petitioner bid imported green olives, but domestic green olives are not available, at least in institutional quantities, so compliance with the specification of domestic green olives was impossible. Bid Evaluation and Award When Ms. Ebner informed Mr. Morbach of the errors that she had found in both bids, he suggested that they should eliminate the same item from both bidder's bids, if one bidder improperly bid the item. For example, if Mutual misbid fruit cocktail and Petitioner properly bid fruit cocktail, Respondent would delete the cost of fruit cocktail from both bids. The purpose of this adjustment, which reportedly is not atypical in school food procurements, is to avoid the unfair result of lowering the noncompliant bidder's bid, by reducing it for the cost of the misbid fruit cocktail, and leaving the compliant bidder's bid higher by the amount of the properly bid fruit cocktail. Ms. Ebner and Ms. Harrison agreed with this suggestion, and Respondent tabulated the bid costs accordingly. Mr. Morbach also suggested that they consider the bid of one of the disqualified bidders. Ms. Ebner disagreed with this suggestion. She rightly believed that they should not reconsider a bid that did not contain all of the specified items, and Mr. Morbach did not press the matter further. Although Ms. Ebner spoke daily with Ms. Harrison and Mr. Morbach, there were three larger meetings in late June and early July concerning the bids. The first meeting was during the week of June 22, the second meeting was early in the week of June 29, and the third meeting was on the Friday of that week, July 3. The only participants at the first of the three meetings were Ms. Ebner, Ms. Harrison, Mr. Morbach, and Mr. Borrer. For the second meeting, these four persons were joined by Dr. Michael Bookman, the Assistant Superintendent for Business and Research, which includes overall responsibility for the Purchasing Department; Michelle Crouse, of the Auditing Department; and Lee Chistiansen, another of Respondent's staff. The persons present at the third and final meeting were the same as at the second meeting, except that Respondent's counsel, Mr. Few, replaced Ms. Crouse. At the first meeting, Ms. Ebner expressed her belief that Petitioner's bid was better than Mutual's bid because Petitioner's bid complied with more of the specifications. She also expressed concern about the ability of Magic Vending to service the snack foods and beverages. Ms. Ebner's preference for Petitioner's bid was partly the result of her misplaced emphasis on awarding both contracts to the same bidder. It is likely that, at the first meeting, Mr. Morbach or Mr. Borrer informed Ms. Ebner that nothing in the ITB required that Respondent award both contracts to the same bidder. At the first meeting, everyone confirmed their agreement to adopt Mr. Morbach's suggestion to discard the cost of any misbid item in both bids, even if only one bidder misbid the item. Everyone agreed that this approach would facilitate a better comparison of bottom-line prices. Respondent's decision to eliminate the cost of any misbid item from both bids, even if one bid correctly bid the item, encourages bidding abuses. A bidder knowing that a competitor can quote lower prices for a wide range, for instance, of chicken items can neutralize this advantage by misbidding each of the chicken items, forcing Respondent to award the bid without regard to the lesser costs quoted by the competitor for the chicken items. The potential destructive impact on competitive bidding is incalculable where, as here, this kind of bid-tabulation method is unaccompanied by a provision in the ITB rejecting a bid in its entirety if it misbids more than a specified number or value of items. The ITB does not authorize Respondent's method of tabulating misbid items. As already noted, Stipulation 2 allows Respondent to tabulate bids based only on items that meet the specifications, but nothing in Stipulation 2 or anywhere else in the ITB authorizes the deletion of quotes for items bid in compliance with the specifications. Part I of the ITB allows Respondent to reject approved products, but this provision is part of a discussion of items approved for bidding and does not authorized the rejection of a cost quoted for an approved product. Nor do Mr. Morbach and Ms. Ebner rely on Stipulation 2 to justify tabulating bid costs by eliminating the costs of any misbid items, even if only one bidder misbid the item. Mr. Morbach and Ms. Ebner believe that the 1998 ITB permitted this approach, but the 1996 invitation to bid for school food did not. However, both invitations to bid contain Stipulation 2. Respondent has not cited the difference between the 1996 and 1998 invitations to bid to justify the tabulation method adopted by Respondent in this procurement. Respondent's staff have relied on ITB provisions allowing Respondent to waive formalities or reject all bids for support of their tabulation method. However, even if these provisions were not in the 1996 invitation to bid, they do not authorize Respondent's tabulation method. Mr. Borrer may have implicitly acknowledged the inadequacy of the claimed authority in the ITB for Respondent's tabulation method when he sensibly deleted the following language from a draft memorandum dated June 25 and bearing his name, but drafted for his revision by another employee: Products that were inconclusive or failed to meet specification were eliminated from all bids for the purpose of data analysis. Purchasing is given this authority to eliminate products by bid specifications, statutory guidelines and Board policy. Item 4, Page 3 of the bid specifications states, "The District reserves the right to reject any and all bids or parts thereof, and request re-submission. The District further reserves the right to accept a bid other than the lowest bid. . ." In addition, Item I, Page 11 of the bid specifications states, "In reviewing bids, school officials reserve the right to waive technicalities when it is in the best interest of the school system." Also Board Policy H-5.6 states, ". . ., in accepting bids the School Board shall accept the lowest and best bid". (Legal Reference Florida Statutes 230.23, 237.02) The most succinct description of Respondent's tabulation method lacks much of a justification for its use. This description occurs in a typewritten question and answer that appears at the end of Petitioner Exhibit 36, but probably does not belong with that exhibit, which is a fax from Mr. Borrer to Respondent's counsel, Mr. Few. The question is, "Why did you choose to award the contract rather than re-bid after you determined that each vendor had made errors?" The answer states: Bids may not be rejected arbitrarily, but may be rejected and re-bid when it is in the best interest of the public (School District) to do so. . . . To re-bid without changing the bid would be unfair because the vendors had exposed their competitive price structure in public. Through the efforts of our skilled Food Service staff "errors" were discovered in products bid by Mutual and [Petitioner]. Since all vendors bid products that did not meet specifications, we determined that it would be proper to build a mathematical model in which we removed all identified items that did not meet specifications from both vendors. Our analysis based the award criteria on the same set of specifications and conditions for each vendor. Achieving comparability of food products was a complex time- consuming task. The award was recommended to go to the low vendor who would agree and be held to meeting our bid specifications at the price bid. Probably not more than one or two days after the date of the first meeting, Ms. Ebner prepared a draft memorandum, dated June 25, to Mr. Borrer, through Ms. Harrison. The draft memorandum states that Mutual bid 14 items not meeting specifications, and Petitioner bid three such items. The draft memorandum states that Mutual bid 11 items for which compliance was inconclusive, and Petitioner bid five such items. The draft memorandum also states that Mutual bid five imported items, despite the "discussion at the pre-bid conference that only domestic products were allowed." In the draft memorandum, Ms. Ebner recalculated the bottom-line costs of the bids of Petitioner and Mutual after discarding all costs for items that either bidder had misbid. She determined that Petitioner had the lowest snack foods and beverages bid. She also determined that Petitioner had the lower total bid for the main-line food and snack foods and beverages contracts. Still preferring an award of both contracts to a single bidder, Ms. Ebner concluded in the draft memorandum that Respondent should award both contracts to Petitioner, and Ms. Harrison concurred with Ms. Ebner's recommendation. At the same time, Mr. Morbach and Mr. Borrer were headed in the opposite direction from Ms. Ebner and Ms. Harrison. At the direction of Mr. Borrer, Mr. Morbach elicited a letter dated June 24 from Magic Vending to Mr. Morbach, in which Magic Vending stated: "As a follow up to our conversation and subsequent to our bid submission, we are prepared to offer you a reduction in our overall bid of $15,000." The letter concludes: "The purpose of this reduction is to make the overall award process run more smoothly and to remove any potential complications." Although Petitioner had already written Respondent expressing no interest in only the snack foods and beverages contract, Respondent obtained this cost concession, which made Magic Vending's bid lower than Petitioner's bid, in case Petitioner changed its mind. By letter dated June 26 from Magic Vending to Mr. Morbach, Magic Vending assured that it would "abide by all the rules and specifications in addition to giving a $15,000.00 discount . . .." The letter concludes with a well- earned expression of gratitude by Magic Vending for Mr. Morbach's "consideration in this matter." As for the main-line food contract, Mr. Borrer obtained from Mutual a one-line letter dated June 26 from Mutual stating: "This letter is to assure you that all products quoted by [Mutual] on bid #3743-HM will meet the specifications as required." At the second meeting between the staff of Food Service Operations and the Purchasing Department, which evidently took place after the Purchasing Department had received the correspondence from Mutual and Magic Vending, Food Service Operations staff continued to recommend that the contracts be awarded to Petitioner. Everyone discussed the errors in Mutual's bid and the fact that the Magic Vending bid was $5000 more than Petitioner's bid for the snack foods and beverages contract. It is unclear if Ms. Ebner or Ms. Harrison yet knew of the price concession of Magic Vending, but everyone discussed that it would be controversial to award the contracts to a bidder that was not the lowest bidder. Apparently in anticipation of the award ultimately made, Petitioner served Respondent, on July 1, with a Notice of Intent to Protest the award of both contracts. By letter dated the same date, Respondent informed Petitioner that it would not stop the procurement process due to the "critical importance of this bid and the serious danger to the health of our children." In fact, Mutual and Magic Vending have been supplying main-line food and snack foods and beverages, respectively, since early August 1998. At the third meeting between the staff of Food Service Operations and the Purchasing Department, everyone agreed to recommend that the School Board award the contracts to Mutual and Magic Vending. The discussion at this last major staff meeting largely involved the matters that they had previously discussed. Unfortunately, no one ever discussed at these or other meetings involving Ms. Ebner how many errors a bid could contain before it should be disqualified. Likewise, no one ever discussed with her the distinction between awarding a contract on the basis of the lowest bid and on the basis of the lowest and best bid. However, Ms. Harrison discussed with Ms. Ebner the safety issues presented by imported, rather than domestic, foods. On the day prior to the July 7 School Board meeting now designated for the School Board to vote on the awards, Ms. Harrison advised Mutual by letter that Respondent's staff would recommend Mutual, "provided that any and all products found not to meet specifications will be replaced with products meeting specifications at the original bid cost." Petitioner Exhibit 13, which is a copy of this letter, lacks the attachment listing the noncompliant items. At the bottom of the July 6 letter is a signature space for Mutual's representative, indicating assent to the following sentence: "Indicate, by signing below, that you are in agreement to provide all products meeting specifications, including USDA Grade A products, at the original bid price." Petitioner Exhibit 13 contains the signature of Mutual's representative. On July 7, the School Board met and gave Petitioner's counsel and corporate representative brief opportunities to explain why Respondent should not award the main-line food contract to Mutual. However, the Board did not give Petitioner's representatives sufficient time to convey much meaningful or detailed information. Mr. Few, Dr. Bookman, and Ms. Harrison supplied the Board with more information, but unfortunately never disclosed that Mutual's bid contained more errors than did Petitioner's bid and that Mutual's bid contained more errors involving more substantive matters than did Petitioner's bid, as discussed below. Contradicting the advice given by Mr. Morbach at the pre-bid conference and ignoring the contrary provision in the ITB and ignoring the distinction in the ITB between items that the winning bidder may purchase additional items that may be bid, Mr. Few advised the Board that the ITB expressed only a preference toward domestic products and cited the unique example of olives as support for this interpretation. Dr. Bookman advised the Board that Mutual had assured them that all items bid were Grade A. He was evidently unaware that, as explained below, Mutual had still not obtained Grade A turkey roast, even though Grade A turkey roast is available. As late as the final hearing, Ms. Ebner admitted that Mutual had still not corrected one or two noncompliant items, although it is unclear if one of them is the turkey roast. Notwithstanding staff's assurances, several Board members expressed misgivings at having to absorb a lot of detailed information in a short period of time. Ms. Harrison informed the Board that they did not have time to defer action, implicitly and correctly informing them that they did not have time to rebid the main-line food contract. One Board member replied that she wanted all of the food to be USDA approved and that parents had enough to be concerned about without being concerned about what Respondent was feeding their children. A motion to award the contracts to Mutual and Magic Vending failed by a 3-4 vote. A second motion to delay awarding these contracts passed 5-2, so that, individually, Board members could talk to staff to learn more about the bids and Petitioner's claim of bidding improprieties. The record does not reveal what staff told individual Board members. After a recess during which Board members, individually, met with staff, one of the Board members who had previously voted not to award the contracts moved to award the contracts to Mutual and Magic Vending, saying that Mutual had agreed to replace noncomplying products with products meeting the specifications. Relying on Mutual's promise to deliver conforming food items, as opposed to the noncomplying items that it had bid, this Board member reasoned that it was one thing to make a mistake with a bid, but another thing to make a mistake with the schoolchildren. The School Board unanimously approved the motion, and the meeting ended. By letter dated July 9 from Mutual to Mr. Borrer, Mutual addressed each of the 25 items charted by Respondent's staff, acknowledging that Mutual's bid had not complied with the specifications for nearly every charted item, but promising that Mutual would supply a product meeting the specifications for all of these items. However, concerning the moderately large component of the bid represented by Item 121 (turkey roasts, which represented over $62,000 in Mutual's bid), the letter states only: "Currently trying to locate an item to meet specifications." Bid Protest On July 10, Petitioner served Respondent with a Protest. The Protest asserts that Mutual's bid did not contain prices on all items, did not propose all domestic products, contained unapproved brands, bid unapproved product codes, and bid products different from those specified in the ITB. The Protest asserts that Respondent allowed Mutual to provide a letter after the deadline for receiving bids assuring that it would provide all Grade A product, as specified in the ITB. The Protest did not mention the snack foods and beverages contract awarded to Magic Vending. The Protest does not allege that Petitioner's bid is responsive. Respondent has not filed any responsive pleading raising the question of the responsiveness of Petitioner's bid. Respondent's Bid Policies Following receipt of Petitioner's Notice of Intent to Protest, Mr. Borrer sent a letter dated July 1 to Petitioner that contained Respondent's rules governing bids. This document, which is part of Petitioner Exhibit 37, is the source of Respondent's bidding rules set forth in the following two paragraphs. Respondent's rules provide for the protest of specifications as follows: Specifications—Any bidder that feels that their firm is adversely affected by an specification contained in a Sealed Bid or Request for Proposal issued by the Purchasing Department may file a written notice of protest with the Supervisor of Purchasing within seventy-two (72) hours after the receipt of the bid documents. . . . A formal written protest shall be filed by the bidder within ten (10) days of the written notice of protest. . . . These rules also provide for the awarding of costs, but not attorneys' fees, as follows: If, after the completion of the Administrative Hearing process and any appellate court proceedings[,] the School District prevails, then the School District shall recover all costs and charges which shall be included in the Final Order or Judgement, including charges made by the Division of Administrative Hearings, but excluding attorney's fees. . . . If the protestor prevails then the protestor shall recover from the School District, all costs and charges which shall be included in the Final Order or Judgement, excluding attorney's fees. Another source of Respondent's rules in the record is Chapter 7 of a compilation of Board policy that was applicable to the present procurement. This document requires that Respondent award bids "on the basis of the lowest and best bid which meets specifications with consideration being given to the specific quality of the product, conformity to the specifications, suitability to school needs, delivery terms and service and past performance of the vendor." Lastly, Mr. Borrer, by memorandum to the file dated July 9, noted that the two disqualified vendors were disqualified under Board Policy H-5.10, which states: "Bids received which do not meet specifications shall not be considered valid and shall not be tabulated." Ultimate Findings of Fact Bid Tabulation Method Is Clearly Erroneous, Contrary to Competition, and Arbitrary It is irrelevant whether the standard of proof governing a protest of specifications is a preponderance of the evidence or the more deferential standard, clearly erroneous, contrary to competition, arbitrary, or capricious. Petitioner has proved that Respondent's tabulation method is clearly erroneous, contrary to competition, and arbitrary. As already noted, Respondent's tabulation method potentially penalizes compliant bidders by eliminating their compliant items from the tabulation when a noncompliant bidder misbids the same item. The anti-competitive, arbitrary effect of this tabulation method may be ameliorated somewhat by the fact that the ITB is for a cost-plus contract. However, the ITB fails to impose any minimum requirement or threshold for compliant items, in terms of number or dollar volume--e.g., if a bid contains noncompliant items totaling more than one percent of the total cost bid, then the entire bid is rejected. This means that Respondent's tabulation method can destroy the competitiveness of the procurement by allowing a bidder purposefully or unintentionally to misbid a large number of items, resulting in the effective elimination of these items from the tabulation of bids submitted by bidders with superior access to these items. Under these circumstances, Respondent's selection of this tabulation method was clearly erroneous, contrary to competition, and arbitrary. Mutual's Bid Is Nonresponsive The standard of proof governing Respondent's determination that Mutual's bid was responsive is clearly erroneous, contrary to competition, arbitrary, or capricious. As already noted, it is impossible to deduce Mutual's quote for Item 114 from the face of Mutual's bid. A failure to quote a cost for an item is little different from a failure to bid the item. In the case of a complete omission, Respondent knows nothing of the item bid; in the case of the omission of only a quote, Respondent knows what item the bidder has bid, but not the cost of the item. The omission of the cost of a single item adequately described in the bid may be a minor irregularity, if the cost can be deduced by subtracting from the total cost of all items the total cost of all but the omitted item. Here, though, the difference between these amounts is clearly wrong, so that, if Respondent overlooks the omission, it leaves open the possibility of a later dispute over the cost of Item 114. Under the present circumstances, including the disqualification of two other bidders for omitting items, Respondent's failure to disqualify Mutual's bid was clearly erroneous, contrary to competition, and arbitrary. Mutual's Bid Contains Material Variances The standard of proof governing Respondent's determination that Mutual's bid did not contain material variances from the ITB is clearly erroneous, contrary to competition, arbitrary, or capricious. Food Service Operations staff identified numerous deficiencies in Mutual's bid. For Mutual's bid, Ms. Ebner's June 25 memorandum counts 14 items not meeting specifications and 11 items for which compliance is inconclusive due to Mutual's failure to submit the required documentation. Treating the misbidding of green olives and the potatoes specified in Items 217-19, 221-22, and 224 as minor irregularities due to the impossibility of compliance with the specifications concerning the origin of these items, Mutual's bid still reveals consequential deviations from the specifications. Using only the chart prepared by Food Service Operations staff and disregarding the green olives and six potato items, Mutual's consequential deviations from the specifications include five imported foods, two meat products that fail to contain the required ratio of light to dark meat (one of the meat products and another product also failing to demonstrate the proper Grade), a lower Grade of canned sweet potatoes, shorter French Fries, excessively diluted tomato concentrate and inadequate documentation of the dilution of two jelly products, processed instead of natural cheese, and a missing ingredient from Dijon mustard. Of all the witnesses, Ms. Ebner was most capable, by training, experience, and job assignment, of understanding the significance of the deviations in Mutual's bid. For instance, addressing the seemingly inconsequential matter of excessively diluted jelly, Ms. Ebner noted that Respondent had had problems with runny jelly not remaining on peanut-butter- and-jelly sandwiches. The nutritional consequences of this seemingly harmless deviation are students discarding peanut- butter-and-jelly sandwiches that have lost their jelly. In each of these consequential deviations from the specifications, Mutual bid a cheaper product than specified, which conferred upon it an unearned competitive advantage, and a product of lower quality than specified, which jeopardized the primary purpose of the specifications to ensure that Respondent obtained food of high nutrition, safety, and taste for students and staff. Any implicit or explicit determination by Respondent dismissing the charted findings of deviations by Food Service Operations staff or treating them as minor irregularities rather than material variances would be clearly erroneous, contrary to competition, and arbitrary. Besides the findings contained in the chart prepared by Food Service Operations staff, Mutual misbid several other items. The consequential deviations from the specifications included seven imported items, a cheaper pita- fold than the specified Gyro wrap, and a cheaper imitation almond flavoring for pure almond flavoring. Any express or implied finding by Respondent discrediting these deviations would be clearly erroneous, contrary to competition, and arbitrary. Although an express or implied determination by Respondent that these deviations, standing alone, are minor irregularities would not be clearly erroneous, contrary to competition, arbitrary, or capricious, such a finding concerning these deviations, together with the previously discussed deviations charted by Food Service Operations staff, would be clearly erroneous, contrary to competition, and arbitrary. The standard of proof governing the determination that Mutual submitted written assurances, after bid opening, that it would supply product in compliance with the specifications, is the preponderance of the evidence. However, the standard of proof governing findings of the significance of the submittal of these assurances is clearly erroneous, contrary to competition, arbitrary, or capricious. Any implied or express determination by Respondent that Mutual's written assurances were not an attempt to change its bid after bid opening would be clearly erroneous, contrary to competition, and arbitrary. As already noted, Petitioner has already proved, by this deferential standard, that Mutual's bid contained material variances from the specifications. The purpose of Mutual's written assurances was to eliminate these material variances, which, in fact, were still not entirely eliminated by the time of the final hearing. Petitioner's Bid Contains Material Variances Consistent with its determination that Mutual's bid is responsive and suffers no material variances, Respondent claims in its proposed recommended order that Petitioner's bid is responsive and contains no material variances. Respondent awarded the main-line food contract to Mutual because it submitted the lower bid. However, Petitioner demands the award of the main- line food contract, so it is necessary to consider whether its bid, which is clearly responsive, contains any material variances. Because of the resolution of this issue, it is unnecessary to consider whether Petitioner's bid contains any minor irregularities, for which Respondent's implied or express refusal to waive would be clearly erroneous, contrary to competition, arbitrary, or capricious. Using the chart prepared by Food Service Operations staff and disregarding the green olives and six potato items, Petitioner misbid only seven items. In fact, the record reveals no other misbid items by Petitioner. Several of Petitioner's misbid items are relatively inconsequential. These are a tortilla slightly lighter than specified, larger pickles than specified, and omitted documentation showing the grain of vinegar. Mutual misbid these items also. However, three of Petitioner's misbid items are consequential. Although Petitioner's bid reflects the specified ratio of light and dark meat, unlike Mutual's bid, Petitioner's bid of turkey roast fails, as does Mutual's bid, to provide sufficient documentation to show that it is Grade A. Like Mutual's bid, Petitioner's bid is for Grade B canned sweet potato and fails to provide documentation that the two jelly products are not excessively diluted. The only consequential deviation in Petitioner's bid not found in Mutual's bid is Petitioner's failure to bid an eggless pasta. However, the standard of reference for determining whether Petitioner's bid contains material variances is not Mutual's bid, but the ITB. Although considerably more compliant than Mutual's bid, Petitioner's bid, when measured against the ITB and the importance of obtaining nutritious, safe, and tasty food for Respondent's schoolchildren, also falls impermissibly short of the mark. Petitioner's consequential deviations from the specifications also mean cheaper items than specified, through which Petitioner would have obtained an unearned competitive advantage, and products of lower quality than specified, which would have jeopardized the primary purpose of the ITB to ensure that Respondent obtained high-quality food. Impossible specifications, like domestic green olives or six potato items from the Northwest, or the failure to comply in some minor respect, such as sugar sprinkles from an unapproved manufacturer or excessively large pickles, may constitute minor irregularities. But the failure to ensure that each of the 297 items bid complies substantially in quality is not. Thus, an implied or expressed determination by Respondent that Petitioner's bid contains no material variances would be clearly erroneous, contrary to competition, and arbitrary. Petitioner has failed to prove that Respondent is liable for attorneys' fees. There is no direct proof of any factual basis to award fees. Perhaps Petitioner infers an improper purpose from the fact that, despite the benefit of highly deferential standards of proof, Respondent has not prevailed. Obviously, Respondent's failure to prevail is due to several express or implied determinations that were clearly erroneous, contrary to competition, arbitrary, or capricious. If this fact alone warranted a fee award, all agencies would be liable for fees in every bid case that they lost. The absence of such a statutory provision reveals the Legislative intent not to make agencies strictly liable for attorneys' fees in bid cases. The better approach is to permit an inference of improper purpose, but only if the agency were aware or reasonably should have been aware that its handling of the award was not merely clearly erroneous, contrary to competition, arbitrary, or capricious, but was so egregiously so as to support an inference of improper purpose. Such is not the case here. There is no evidence of Petitioner's costs, and Petitioner did not request the administrative law judge to reserve jurisdiction or leave the record open for a later determination of costs.
Recommendation It is RECOMMENDED that the School Board of Hillsborough County enter a final order setting aside the award of the main-line food contract to Mutual Distributors, Inc., and rebidding the contract. DONE AND ENTERED this 17th day of November, 1998, in Tallahassee, Leon County, Florida. ROBERT E. MEALE 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 Filed with the Clerk of the Division of Administrative Hearings this 17th day of November, 1998. COPIES FURNISHED: Dr. Earl Lennard Superintendent School Board of Hillsborough County Post Office Box 3408 Tampa, Florida 33601-3408 Robert W. Rasch 129 Live Oak Lane Altamonte Springs, Florida 32714 W. Crosby Few Few & Ayala, P.A. 109 North Brush Street, Suite 202 Tampa, Florida 33602
