18-004498BID Helicopter Applicators, Inc. vs. Coastal Air Service, Inc., And South Florida Water Management District Status: Closed Recommended Order on Thursday, November 15, 2018.

Summary: Petitioner did not prove that the District's intended award of the contract to Respondent, Coastal, was contrary to the bid specifications.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HELICOPTER APPLICATORS, INC.,

Petitioner,

vs. Case No. 18 - 4498 BID

COASTAL AIR SERVICE, INC., 1 / AND

SOUTH FLORIDA WATER MANAGEMENT

DISTRICT,

Respondents.

_______________________________/

RECOMMENDED ORDER

A final hearing was held in this case on September 28,

2018, in West Palm Beach, Florida, before Suzanne Van Wyk,

Administrative Law Judge for the Division of Administrative

Hearings (ÐDivisionÑ).

APPEARANCES

For Petitioner: Mi chael W. Marcil, Esquire

Lawrence G. Horsburg h , Esquire

Gunster, Yoakley & Stewart, P.A.

450 East Las Olas Boulevard, Suite 1400

Fort Lauderdale, Florida 33301

For Respondent s : Timothy B ruce Elliott, Esquire

Geoffrey D. Smith, Esquire

Smith & Associates

3301 Thomasville Road, Suite 201

Tallahassee, Florida 32308

Julia G. Lomonico, Esquire

Frank M. Mendez, Esquire

South Florida Wa ter Management District

3301 Gun Club Road, MSC 1410

West Palm Beach, Florida 33406

STATEMENT OF THE ISSUE S

Whether the South Florida Water Management DistrictÓs

(ÐDistrictÑ) intended award of a contract for aerial spraying

services, granular applic ation services, and aerial transport

services, to Coastal Air Services, Inc. (ÐCoastalÑ), is

contrary to the DistrictÓs governing statutes, rules, policies,

or the bid specifications; and, if so, whether the decision was

clearly erroneous, contrary to comp etition, arbitrary, or

capricious.

PRELIMINARY STATEMENT

On February 7, 2018, the District issued Request for Bids

Number 6000000880 (the ÐRFBÑ), seeking bids from contractors to

provide spraying of aquatic, ditch bank, and invasive vegetation

by helicopte r, aerial flight services for site inspection and

plant surveys, and related services , including spot spraying .

The District received timely bids from both Coastal and

Helicopter Applicators, Inc. (ÐPetitionerÑ or ÐHAIÑ). The

District deemed both bids re sponsive and responsible under the

terms of the RFB. The District deemed Coastal the lowest

responsive and responsible bidder for aerial spraying, granular

application, and aerial transport services. The District deemed

HAI the lowest responsive and resp onsible bidder for spot

spraying services. On May 11, 2018, the District posted its

Notice of Intent to Award the respective contracts to Coastal

and HAI.

HAI timely protested the award to Coastal for aerial

spraying, granular application, a nd aerial tr ansport. On

August 27, 2018, 2 / the District referred HAIÓs Formal Written

Protest (ÐPetitionÑ) to the Division, which was originally

assigned to Administrative Law Judge Francine Ffolkes. The case

was transferred to the undersigned on September 4, 2018.

The undersigned conducted a telephonic scheduling

conference with the parties on September 6, 2018, and the final

hearing was scheduled for September 28, 2018, in West Palm

Beach, Florida.

The final hearing commenced as scheduled. The partiesÓ

Joint Exh ibits 1, 2, and 3, were admitted in evidence.

Petitioner presented the testimony of its co - owner, Michael

Page; Dorothy Bradshaw, District Director of Administrative

Services; Johanna Labrada, District Bureau Chief of

Procurement; and Gary Hansen, Distric t Chief Pilot. Coastal

presented the testimony of its owner, Greg Clubbs. The

District did not present any witness testimony.

The one - volume Transcript of the final hearing was filed

on October 15, 2018. The parties timely - filed Proposed

Recommended Or ders on October 25, 2018, which have been

considered in the preparation of this Recommended Order.

Except as otherwise provided, all Florida Statutes

references herein are to the 2017 version.

FINDING S OF FACT

The Parties

1 . The District is an independent taxing authority created

pursuant to section 373.069, Florida Statutes, with the

authority to contract with private entities to maintain real

property controlled by the District. See § 373.1401, Fla. Stat.

2 . HAI is a Florida corporation duly authorize d to do

business in the State of Florida with a business address of

1090 Airglades Boulevard in Clewiston, Florida.

3 . Coastal is a Florida corporation duly authorized to do

business in the State of Florida with a business address of

7424 Coastal Drive in Panama City, Florida.

The RFB

4 . On February 7, 2018, the District issued the RFB,

soliciting bids for qualified respondents to provide the

following:

[F]urnish all labor, equipment, perform data

entry and perform a ll operations for

spraying of a quatic, ditchbank and invasive

vegetation by helicopter and provide aerial

flight services for site inspection and

plant surveys.

5 . Both HAI and Coastal submitted timely bids, which the

District deemed responsive and responsible under the terms of

the RFB.

6 . The District deemed Coastal the lowest responsive and

responsible bidder for aerial spraying, granular application,

and aerial transport services. The District deemed HAI the

lowest responsive and responsible bidder for spot spraying

services.

7 . On Ma y 11, 2018, the District posted its Notice of

Intent to Award the respective contracts to Coastal and HAI.

8 . HAI challenges the award to Coastal because it is not a

responsible bidder under the terms of the RFB. HAIÓs challenge

focuses on two items r equired to document the bidderÓs

responsibility to perform the requested services.

9 . First, the RFB requires the bidder to provide at least

two helicopters certified pursuant to 14 CFR Part 133, Rotocraft

External - Load Operations; and 14 CFR Part 137, A gricultural

Aircraft Operations (Part 137 Certificate).

10 . Second, the RFB requires the bidder to demonstrate its

ability to obtain required insurance coverage.

Part 137 Certificate

11 . HAI contends that CoastalÓs bid does not meet the

responsibility provisions of the RFB because it did not include

sufficient Part 137 Certificates for its subcontractor, HMC

Helicopters (ÐHMCÑ). HAI contends the Part 137 Certificates are

required to expressly state that aircraft are certified to

dispense economic poiso ns.

12 . PetitionerÓs argument fails for three reasons.

13 . First, the RFB does not require the bidderÓs Part 137

Certificate to expressly endorse aircraft to dispense economic

poisons. 3 /

14 . Second, assuming the express endorsement was required,

the requirement does not apply to HMC.

15 . The RFB defines the term ÐBidderÑ and ÐRespondentÑ as

Ð[a]ll contractors, consultants, organizations, firms or other

entities submitting a Response to this RFB as a prime

contractor .Ñ (emphasis added).

16 . In i ts bid, Coastal is listed as the prime contractor,

and HMC as a subcontractor.

17 . The RFB requires each Respondent to list at least

two aircraft which are Part 133 and 137 certified. The

requirement applies to Coastal as the primary contractor, not t o

its subcontractor.

18 . CoastalÓs bid listed five aircraft with both Part 133

and 137 Certificates, actually ex ceeding the requirement for

two such certified aircraft.

19 . Third, assuming an express endorsement for dispensing

economic poisons was requ ired, and that the requirement applied

to HMC, HMCÓs Part 137 Certificate documents HMCÓs authority to

dispense economic poisons.

20 . Pursuant to 14 CFR 137.3, ÐAgricultural aircraft

operationÑ is defined as follows:

[T]he operation of an aircraft for th e

purpose of (1) dispensing any economic

poison, (2) dispensing any other substance

intended for plant nourishment, soil

treatment, propagation of plant life, or

pest control, or (3) engaging in dispending

activities directly affecting agriculture,

horticu lture, or forest preservation, but

not including the dispensing of live

insects.

21 . To obtain a Part 137 Certificate, the operator must

pass a knowledge and skills test , which includes the safe

handling of economic poisons and disposal of used containe rs for

those poisons; the general effects of those poisons on plants,

animals , and persons and precautions to be observed in using

those poisons; as well as the primary symptoms of poisoning in

persons, appropriate emergency measures in the case of

poisoni ng, and the location of poison control centers. See

14 CFR § 137.19.

22 . However, if the operator applies for a Part 137

Certificate which prohibits dispensing of economic poisons, the

applicant is not required to demonstrate the knowledge and

skills li sted above. See Id.

23 . HMCsÓ certificates do not contain an express

prohibition against dispensing economic poisons.

24 . The authorization for HMCÓs aircraft to dispense

economic poisons is inherent in its Part 137 Certificate.

25 . CoastalÓs bid me ets the solicitation requirement for

at least two aircraft with Part 137 Certificates.

Insurance Requirements

26 . The RFB requires each Respondent to Ðprovide evidence

of the ability to obtain appropriate insurance coverage.Ñ

Respondents may meet the in surability requirement by having

their insurance agent either (1) complete and sign an insurance

certificate which meets all of the requirements of Exhibit H to

the RFB; or (2) issue a letter on the insurance agencyÓs

letterhead stating that the Respondent qualifies for the

required insurance coverage levels and that an insurance

certificate meeting the DistrictÓs requirements will be

submitted prior to the execution of the contract.

27 . In response to this requirement , Coastal submitted a

letter from Ste rlingrisk Aviation, dated March 6, 2018, stating,

ÐAll required coverage amounts are available to Coastal Air

Service, Inc. to fulfill the requirements of this contract.Ñ In

the Re: line, the letter refers to the specific RFB at issue in

this case.

28 . Coastal also submitted a certificate of insurance from

Sterlingrisk Aviation demonstrating the levels of insurance

coverage in effect at the time the bid was submitted, although

the coverages are less than the amounts required under the RFB. 4 /

29 . HAI t akes issue with CoastalÓs evidence of ability to

obtain the required coverage because the letter from

Sterlingrisk does not state Ðan insurance certificate reflecting

the required coverage will be provided prior to the contract

execution.Ñ

30 . Based on t he totality of the evidence, the undersigned

infers that SterlingriskÓs letter omits the language that a

certificate Ðwill be providedÑ prior to contract execution,

because Sterlingrisk will issue an insurance certificate only

when Coastal applies, and pay s the premium, for the increased

coverage limitations.

31 . The letter from Sterlingrisk substantially complies

with the insurance requirements of the RFB, and constitutes

competent, substantial evidence of CoastalÓs ability to obtain

the required insuran ce coverage.

32 . HAI introduced no evidence that Coastal obtained an

economic advantage over HAI by failing to include language from

its insurance agent that Ðan insurance certificate reflecting

the required coverage will be provided prior to the contrac t

execution.Ñ

33 . Instead, HAI argued that by failing to enforce that

provision of the RFB, the District cannot ensure the winning

bidder will be responsible to undertake the contract. HAI

argued that the DistrictÓs failure to adhere to this RFB

require ment may create inefficiencies that Ðwould result in the

event that Coastal were unable to obtain the required insurance

coverageÑ before execution of the contract.

34 . CoastalÓs bid documents its eligibility for insurance

coverage in the amounts require d by the RFB. If Coastal does

not provide said certificates, it will not be qualified for

final execution or issuance of the contract.

CONCLUSIONS OF LAW

35 . The Division has jurisdiction over the subject matter

and the parties to this action. §§ 120.56 9 and 120.57(3), Fla.

Stat. (2018).

36 . Petitioner has the burden to prove, by a preponderance

of the evidence, the DistrictÓs intended award of the RFB to

Coastal is contrary to the District's governing statutes, rules,

or policies; or the RFB specific ations. § 120.57(3)(f), Fla.

Stat. (2018).

37 . Although section 120.57(3) provides that this is a

de novo proceeding, it is not a Ðde novoÑ proceeding in the

traditional sense. See State Contracting & EngÓg Corp. v. DepÓt

of Transp. , 709 So. 2d 607, 609 (Fla. 1st DCA 1998). That is,

this is not a forward - looking proceeding to formulate agency

action, and the Division may not substitute its judgment for

that of the District . See IntercontÓl Props., Inc. v. State

DepÓt of HRS , 606 So. 2d 380, 386 (Fla. 3 d DCA 1992); R.N.

Expertise, Inc. v. Miami Î Dade Cnty. Sch. Bd. , Case No. 01 -

2663BID (Fla. DOAH Feb. 4, 2002; MDCSB Mar. 13, 2002)

(explaining the DivisionÓs role in procurement - protest

proceedings). Instead, the Division engages in a form of

Ðinter - agency reviewÑ in which the ALJ makes findings of fact

about the action already taken by the District . See State

Contracting , 709 So. 2d at 609. The Division does not evaluate

the District Ós decision anew; instead the Division looks to see

if the District foll owed its governing statutes, its rules, and

the RFP specifications during the procurement process. See R.N.

Expertise , DOAH Case No. 01 - 2663BID.

38 . Agencies enjoy wide discretion when it comes to

soliciting and accepting proposals, and an agency's decis ion,

when based upon an honest exercise of such discretion, will not

be set aside even where it may appear erroneous or if reasonable

persons may disagree. Baxter's Asphalt & Concrete, Inc. v.

DepÓt of Transp. , 475 So. 2d 1284, 1287 (Fla. 1st DCA 1985);

C apeletti Bros., Inc. v. State DepÓt of Gen. Servs. , 432 So. 2d

1359, 1363 (Fla. 1st DCA 1983). Section 120.57(3)(f)

establishes the standard of proof: whether the proposed action

is clearly erroneous, contrary to competition, arbitrary or

capricious.

Pa rt 137 Certificate

39 . The DistrictÓs approval of CoastalÓs bid , without

express language that its subcontractorÓs aircraft was approved

to dispense economic poisons , was neither clearly erroneous,

arbitrary, capricious, n or contrary to competition.

40 . A decision is considered to be clearly erroneous when,

although there is evidence to support it, after review of the

entire record, the tribunal is left with the definite and firm

conviction that a mistake has been committed. U.S. v. U.S.

Gypsum Co. , 333 U.S. 354, 395 (1948).

41 . No mistake was made in this case. The RFB did not

require the bidderÓs Part 137 Certificate to contain the express

statement that the aircraft was approved to dispense economic

poisons. The DistrictÓs reliance on the certific ate was not

clearly erroneous. Coastal listed five aircraft which were each

Part 133 and 137 certified, which exceeded the RFB requirements.

42 . An agency action is capricious if the agency takes the

action without thought or reason, or irrationally. Ag ency

action is arbitrary if it is not supported by facts or logic.

See Agrico Chem. Co. v. State DepÓt of Envtl. Reg. , 365 So. 2d

759, 763 (Fla. 1st DCA 1978). HAI submits that the District did

not engage in meaningful review of the Part 137 Certificates

included with CoastalÓs bid, in part because Mr. Hansen, the

DistrictÓs pilot , had not previously reviewed District bids and

was not previously familiar with Part 137 Certificates.

However, the evidence demonstrated that Mr. Hansen checked both

biddersÓ responses for listed aircraft with the required

certifications, and double - checked that information by accessing

a website which utilizes FAA data.

43 . Far from being taken without thought or reason, the

DistrictÓs acceptance of CoastalÓs, and its subcont ractorÓs,

Part 137 Certificates was based on review of the submitted

documents and an independent review to verify the aircraft were

Part 137 certified. The DistrictÓs action is supported by the

facts contained in the documents submitted with CoastalÓs bi d.

Further, the DistrictÓs action is supported by the logical

conclusion, based on a review of the federal regulations, that

HMCÓs aircraft are authorized to dispense economic poisons

because the certificates do not include any prohibition to that

effect.

Insurance Requirements

44 . Finally, HAI argues that the DistrictÓs award of the

bid to Coastal is contrary to competition because its insurance

agency letter does not contain the specific language that Ðan

insurance certificate meeting the DistrictÓs req uirements will

be submitted before final execution or issuance of the

contract.Ñ

45 . An agency decision is contrary to competition if it

unreasonably interferes with the objectives of competitive

bidding. See Wester v. Belote , 138 So. 721, 723 - 24 (1931).

46 . Not all irregularities in bid submissions or deviations

from the terms of an invitation to bid are considered material

enough to require rejection of a bid submittal. Tropabest Foods,

Inc. v. DepÓt of Gen. Servs. , 493 So. 2d 50 (Fla. 1st DCA 1986);

see also Fla. Admin. Code R. 60A - 1.002(13). A deviation from the

requirements of an invitation to bid Ðis only material if it

gives the bidder a substantial advantage over the other bidders

and thereby restricts or stifles competition.Ñ Tropabest Foods ,

493 So. 2d at 52; see also Robinson Elec. Co. v. Dade Cnty. ,

417 So. 2d 1032, 1034 (Fla. 3d DCA 1982).

47 . In Florida, the following two criteria are applied to

determine whether a deviation is material:

[1] whether the effect of a waiver would be

to deprive the [ District ] of its assurance

that the contract will be entered into,

performed and guaranteed according to its

specified requirements, and [2] whether it is

of such a nature that its waiver would

adversely affect competitive bidding by

placing a bidder in a position of advantage

over other bidders or by otherwise

undermining the necessary common standard of

competition.

Robinson Electric , 417 So. 2d at 1034.

48 . HAI asserts that the omission in CoastalÓs bid falls

within the first prong of the Robinson Electric inquiry -- an

irregularity that would deprive the District of its assurance

that the contract will be entered into, performed, and guaranteed

according to its specified requirements.

49 . In its Proposed Recommended Order, HAI cites to

Sysl ogic Technology Services, Inc. v. South Florida Water

Management District , Case No. 01 - 4385 (Fla. DOAH Jan. 18, 2002;

SFWMD Feb. 14, 2002). In Syslogic , the District awarded a

contract despite the bidderÓs failure to include independently -

audited financia l statements in its proposal, as required by the

relevant request for proposals. In that case, Administrative Law

Judge John Van Laningham found that the requirement for audited

financial statements was rendered meaningless by awarding the

contract to a b idder who did not submit independently - audited

financial statements.

50 . HAI argues that the facts are Ðprecisely the same

here,Ñ and that the District rendered meaningless the instant

phrase , Ðan insurance certificate meeting the DistrictÓs

requirements will be submitted before final executi on or issuance

of the contract . Ñ

51 . In reality, the facts are distinguishable. In

Syslogic , the water management district was seeking proposals for

a single qualified information systems/technology contracting

firm. Proposers were required to demonstrate financial stability

by submitting audited financial statements for the previous

two years and the district reserved the right to perform its own

detailed review of financial information to determine whether or

not t he respondent is financially stable for successful

performance of any ensuing contract award. Proposers had sole

responsibility to have their financial statements audited by a

third party and to submit those audited statements with their

response.

52 . He re, the RFB requires a bidder to submit evidence of

its Ðability to obtain appropriate insurance coverageÑ if its

existing coverage does not meet the amounts required by the RFB.

The RFB requires a statement from the bidderÓs insurer that a

certificate of insurance will be issued prior to execution of the

contract. The insurer does not have sole control over whether

such a certificate will be issued. 5 / Unless the bidder applies,

and pays the premium, for said coverage, the insurer will not

issue the cert ificate. It is understandable that an insurer may

not be comfortable including a blanket statement that it will

issue a certificate of insurance without any further

prerequisite.

53 . In Syslogic , without audited financial statements, the

district had no assurance that its contractor had the financial

wherewithal to perform the contract. By waiving the requirement

for audited financial statements, the district assumed the risk

of entering into a contract for complex technology services with

a company that might not be around to complete the term of the

contract. Here, CoastalÓs insurer provided evidence that Coastal

not only has an existing policy with the insurer, but also is

eligible for the required coverage amounts. Coastal owns the

equipment, has th e certifications, and the past history with its

insurer to determine it is eligible for increased coverage. The

insurerÓs letter verifies CoastalÓs ability to obtain appropriate

insurance coverage. Coastal needs to do little more than execute

the paperwo rk and pay for the coverage. By the terms of the RFB,

the District is not required to enter into a contract with

Coastal unless , and until , it presents the required certificate

of insurance.

54 . CoastalÓs bid does not deprive the District of

assurance th at the contract will be entered into, performed, or

guaranteed according to the terms of the RFB. Thus, the award is

not contrary to competition.

55 . In summary, HAI did not prove that the DistrictÓs

intended action to award the contract for aerial spray ing

services, granular application services, and aerial transport

services to Coastal was contrary to the RFB specifications or was

otherwise clearly erroneous, contrary to competition, arbitrary,

or capricious.

RECOMMENDATION

Based on the foregoing Findin gs of Fact and Conclusions of

Law, it is RECOMMENDED that the Southwest Florida Water

Management District enter a final order dismissing Helicopter

Applicator, Inc.Ós Petition.

DONE AND ENTERED this 15th day of November , 2018 , in

Tallahassee, Leon County, Florida.

S

SUZANNE VAN WYK

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 15th day of November , 2018 .

ENDNOTE S

1 / Du ring the final hearing, counsel for Coastal moved to amend

the case style to use the correct name of the business, Coastal

Air Service, Inc., rather than Coastal Helicopters, Inc., as it

had been improperly identified by Petitioner. That motion was

repeated in CoastalÓs Proposed Recommended Order, is granted,

and the case style is amended to reflect the entityÓs correct

name.

2 / The Di strict dismissed HAIÓs original timely Petition on

May 23, 2018, with leave to amend. HAI requested, and was

granted, an extension of time to file an Amended Petition, which

it did on June 11, 2018. Between June 25 and August 24, 2018,

the parties engage d in settlement negotiations, waiving the 15 -

day timeframe, pursuant to section 120.569(2)(a), Florida

Statutes, to transmit HAIÓs Amended Petition to the Division.

3 / HAI points to CoastalÓs certificates, which expressly state,

ÐDispensing of Economic P oisons Allowed,Ñ to support its

argument that HMCÓs certificates are invalid since they do not

contain that express language.

4 / The evidence suggests this certificate was included to

document that Sterlingrisk is CoastalÓs current insurance agent.

5 / To accomplish the DistrictÓs intention, the RFB should have

been structured to require a statement from the insurer that the

bidder qualifies for the insurance coverages, and from the

bidder that it will submit a certificate of insurance meeting

those requ irements prior to execution of the contract.

COPIES FURNISHED:

Julia G. Lomonico, Esquire

South Florida Water Management District

MSC 1410

3301 Gun Club Road

West Palm Beach, Florida 33406

(eServed)

Brian Joseph Accardo, Esquire

South Florida Water Ma nagement District

MSC 1410

3301 Gun Club Road

West Palm Beach, Florida 33406

(eServed)

Timothy Bruce Elliott, Esquire

Smith & Associates

Suite 201

3301 Thomasville Road

Tallahassee, Florida 32308

(eServed)

Michael W. Marcil, Esquire

Gunster, Yoakley & Stewart, P.A.

Suite 1400

450 East Las Olas Boulevard

Fort Lauderdale, Florida 33301

(eServed)

Stephen B. Burch, Esquire

Smith and Associates

Suite 202

1499 South Harbor City Boulevard

Melbourne, Florida 32901

(eServed)

Frank M. Mendez, Esquire

South Flo rida Water Management District

MSC 1410

3301 Gun Club Road

West Palm Beach, Florida 3340 6

(eServed)

Lawrence G. Horsburgh, Esquire

Gunster Yoakley & Stewart, P.A.

Suite 1400

450 East Las Olas Boulevard

Fort Lauderdale, Florida 33301

(eServed)

Geoffrey D. Smith, Esquire

Smith & Associates

Suite 201

3301 Thomasville Road

Tallahassee, Florida 32308

(eServed)

Ernest Marks, Executive Director

South Florida Water Management District

3301 Gun Club Road

West Palm Beach, Florida 33406 - 3007

(eServed)

Brian A ccardo, General Counsel

South Florida Water Management District

3301 Gun Club Road

West Palm Beach, Florida 33406 - 3007

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

1 0 days from the date o f this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.