00-005142BID Sunshine Towing vs. Department Of Transportation Status: Closed Recommended Order on Friday, April 13, 2001.

Summary: Contract should not be awarded to a bidder that is a dissolved corporation.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SUNSHINE TOWING , )

)

Petitioner , )

)

vs. ) Case No. 00-5142BID

)

DEPARTMENT OF TRANSPORTATION , )

)

Respondent. )

___________________________________)

RECOMMENDED ORDER

Pursuant to notice, a final hearing was conducted in this

case on February 9, 2001, at Fort Lauderdale, Florida, before

Michael M. Parrish, an Administrative Law Judge of the Division

of Administrative Hearings.

APPEARANCES

For Petitioner : Andrew S. Atkins, Esquire

Barry T. Shevlin, Esquire

Law Offices of Barry T. Shevlin, P.A.

1111 Kane Concourse, Suite 605

Bay Harbor Islands, Florida 33154

For Respondent : Brian A. Crumbaker, Esquire

Department of Transportation

Haydon Burns Building, Mail Station 58

605 Suwannee Street

Tallahassee, Florida 32399-0458

STATEMENT OF THE ISSUES

The basic issue in this case concerns whether, upon

consideration of the responses to ITB-DOT-00-01-4004, the

Department of Transportation's ("Department's") intended action

to award the subject contract to All-American Towing, Inc., "is

contrary to the agency's governing statutes, the agency's rules

or policies, or the bid or proposal specifications."

PRELIMINARY STATEMENT

In response to the Department's Invitation to Bid in

connection with Road Ranger Service Patrol on Interstate 95,

Interstate 595, and Interstate 75 in Broward County, ITB-DOT-00-

01-4004 ("ITB"), the Department received bids from seven firms.

On November 3, 2000, the Department opened the bid proposals

that were submitted in response to the ITB. The Department

posted its tabulation on November 21, 2000, announcing its

intent to award the contract to All-American Towing, Inc. In

response to the bid tabulation, Sunshine Towing timely filed a

Notice of Protest with the Department's Clerk of Agency

Proceedings on November 27, 2000. A Formal Written Protest and

a Protest Bond were subsequently filed on December 4, 2000,

within the time provided by law.

After the Department determined that there were material

issues of fact in dispute, the matter was referred to the

Division of Administrative Hearings ("DOAH") on December 28,

2000, for assignment of an Administrative Law Judge to conduct

the final hearing. By agreement of the parties, the final

hearing was scheduled for February 9, 2001.

At the final hearing on February 9, 2001, the Petitioner

presented the testimony of four witnesses and offered sixteen

exhibits, all of which were received in evidence.

The Respondent presented the testimony of five witnesses

and offered two exhibits, both of which were received in

evidence. At the conclusion of the final hearing, the parties

requested, and were granted, ten days from the filing of the

transcript within which to file their proposed recommended

orders. The transcript of the final hearing was filed with DOAH

on February 23, 2001. Thereafter, both parties filed timely

proposed recommended orders containing proposed findings of fact

and conclusions of law. 1 The proposals of both parties have been

carefully considered during the preparation of this Recommended

Order.

FINDINGS OF FACT

Stipulated Facts

1. In their Prehearing Stipulation the parties admitted

that the following facts are true without the need for proof at

hearing. 2

a. The Department issued an invitation to

bid entitled ITB-DOT-00-01-4004, for road

ranger service patrol along I-95, I-595, and

I-75 in Broward County.

b. The Department held a mandatory pre-

bid meeting for this Project.

c. The mandatory pre-bid meeting for this

Project was held on Friday, October 20,

2000.

d. All-American Towing Services, Inc., is

a Road One Company.

e. All-American Towing Services, Inc .,

has been registered with the Florida

Department of State, Division of

Corporations, since July 18, 1997.

f. Road One, Inc ., is registered with the

Florida Department of State, Division of

Corporations.

g. Road One, Inc ., has been registered

with the Florida Department of State,

Division of Corporations, since April 1997.

h. Wareham Enterprises, Inc.'s, principal

place of business was 4971 SW 34th Place,

David, Florida 33314.

i. Wareham Enterprises, Inc., was a

Florida corporation registered with the

Florida Department of State, Division of

Corporations.

j. Wareham Enterprises, Inc., was

registered with the Florida Department of

State, Division of Corporations, from 1986-

1998.

k. John Wareham was the president and

director of Wareham Enterprises, Inc.

l. John Wareham was a director of All-

American Towing, Inc.

m. All-American Towing, Inc ., was

administratively dissolved on September 22,

2000, prior to the date of bid submission.

n. Gary Pasborg was present at the

mandatory pre-bid meeting for this project.

o. Road One/All-American failed to enter

the firm's SPURS vendor number in its

response to the Invitation to Bid.

p. Road One/All-American may not be

excluded from bidding for failure to list

the firm's SPURS vendor number.

q. Road One/All-American's failure to

list the firm's SPURS vendor number is a

minor irregularity.

r. Road One/All American's bid indicated

a total annual estimated cost of $1,893,369.

s. Road One/All-American made a

mathematical error in computing the bid's

total annual estimated cost.

t. The Department corrected the total

annual estimated cost in All-American's bid.

u. The Department did not modify the

hourly rate per service patrol vehicle

contained in All-American's bid.

v. The Department's correction of All-

American's mathematical error is a minor

irregularity.

w. The corrected total annual estimated

cost in All-American's bid is $1,893,440.

x. The corrected total annual estimated

cost did not alter the order of award.

y. Sunshine Towing is a sole

proprietorship owned and operated by Alexis

Ramos and Ann Margaret Ramos.

z. Every company who appeared at the

mandatory pre-bid conference received, at

the conclusion of the meeting, a sign in

sheet which did not contain the name All-

American, or All-American Towing.

aa. The Department contacted Road

One/All-American to request copies of

licenses and registrations.

bb. Ann Margaret Ramos, Alexis Ramos,

Monica Savits, George Gonzalez, and Lourdes

Zapata were all present at the mandatory

pre-bid conference.

Facts Proved at Hearing

2. In response to the subject ITB, the Department received

bids from seven firms by the deadline of October 27, 2000. The

bids were opened on November 3, 2000. The only bids relevant to

this proceeding are the bids of All-American Towing, Inc. , 3 and

Sunshine Towing. All-American Towing, Inc., was the low bidder

with a bid in the amount of $1,893,440.00 . Sunshine Towing was

the second lowest bidder with a bid in the amount of

$2,135,000.00.

3. Sunshine Towing is currently under contract with the

Department in District VI to provide services similar to those

requested in the ITB at issue in this case.

4. All-American Towing, Inc., is a wholly owned subsidiary

of a corporation named Road One, Inc . At all times material to

this case, All-American Towing, Inc., has been a dissolved

Florida corporation. Notwithstanding its dissolved status, All-

American Towing, Inc., appears to have continued to engage in

the towing business in Florida. All-American Towing, Inc ., has

engaged in the towing business in Florida for more than five

years. All-American Towing, Inc ., has employees and managers

who have engaged in the towing business in Florida for more than

five years. Although Road One, Inc., is the sole owner of All-

American Towing, Inc., it continues to operate All-American

Towing, Inc., as a separate, but related, company.

5. All bidders were required to attend a mandatory pre-bid

meeting. Representatives of All-American Towing, Inc., attended

the meeting. 4 Representatives of Sunshine Towing also attended

the mandatory pre-bid meeting.

6. The ITB in this case requires bidders to have "a

minimum of five (5) years of experience in the towing industry

in the State of Florida." 5

7. Section 5.0 of the ITB requires that each bidder have

at least fourteen service patrol vehicles and that it include

with the bid a photocopy of the vehicle registration for each

such vehicle. At all times material to this proceeding, All-

American Towing, Inc., had the required number of service patrol

vehicles.

8. All-American Towing, Inc ., submitted with its bid only

twelve photocopies of vehicle registrations. After the bids

were opened, the Department contacted All-American Towing, Inc.,

and requested photocopies of two additional vehicle

registrations. 6 The two additional photocopies were promptly

provided.

9. Section 9.6 of the subject ITB reads as follows:

The Department may waive minor informalities

or irregularities in proposals received

where such is merely a matter of form and

not substance, and the correction or waiver

of which is not prejudicial to other

proposers. Minor irregularities are defined

as those that will not have an adverse

effect on the Department's interest and will

not affect the price of the Proposals by

giving a proposer an advantage or benefit

not enjoyed by other proposers.

10. Sunshine Towing is a responsible bidder, and it

submitted a responsive bid. Sunshine Towing meets all of the

requirements of the ITB.

CONCLUSIONS OF LAW

11. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of these

proceedings pursuant to Sections 120.569 and 120.57, Florida

Statutes.

12. In 1996, the Legislature enacted substantial revisions

to Chapter 120, Florida Statutes. In a competitive-procurement

protest, such as the matter at bar, the proceedings are

conducted pursuant to Section 120.57(3)(a)-(f), Florida

Statutes. Section 120.57(3)(f), Florida Statutes (1997),

provides in pertinent part:

In a competitive procurement contest, other

than a rejection of all bids, the

Administrative Law Judge shall conduct a de

novo proceeding to determine whether the

agency's proposed action is contrary to the

agency's governing statues, the agency's

rules, or policies, or the bid or proposal

specifications. The standard of proof for

such proceeding shall be whether the

proposed agency action was clearly

erroneous, contrary to competition,

arbitrary, or capricious.

See also Intercontinental Properties, Inc. v. Department of

Health and Rehabilitative Services , 606 So. 2d 380, 386 (Fla. 3d

DCA 1992) ; State Contracting & Engineering Corp. v. Department

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

(citing Intercontinental Properties ).

13. The burden of proof is on Sunshine Towing to

demonstrate by a preponderance of the evidence that the

Department's proposed agency action is clearly erroneous,

contrary to competition, arbitrary, or capricious. Section

120.57(3)(f), Florida Statutes (2000).

14. The purpose of the competitive bidding process is to

avoid favoritism and fraud, to allow the government to acquire

the best values at the lowest possible expenses, and to afford

an equal opportunity to all wishing to do business with a

governmental entity. Department of Transportation v. Groves-

Watkins Contractors , 530 So. 2d 913 (Fla. 1988) ; Webster v.

Belote , 138 So. 721, 723 (Fla. 1931).

15. In the course of the competitive bid process, an

agency is afforded wide discretion in soliciting and accepting

bids, and its decision, when based on an honest exercise of this

discretion, will not be overturned by the court event if it may

appear erroneous and even if reasonable persons may disagree.

Liberty County v. Baxter's Asphalt & concrete, Inc. , 421 So. 2d

505, 507 (Fla. 1982).

16. In determining whether to waive an irregularity, an

agency must consider whether the error or omission at issue is a

material irregularity or a technical or minor irregularity.

Rule 60A-1.001(16), Florida Administrative Code, defines "minor

irregularity" as:

[a] variation from the invitation to

bid/request for proposal terms and

conditions which does not affect the price

of the bid/proposal, or give the bidder or

offeror an advantage or benefit not enjoyed

by the other bidders or offerors, or does

not adversely impact the interests of the

agency.

17. The courts have reached similar conclusions as to what

constitutes a minor irregularity:

In determining whether a specific non-

compliance constitutes a substantial and

hence nonwaivable irregularity, the courts

have applied two criteria-first, whether the

effect of a waiver would be to deprive the

municipality of its assurance that the

contract will be entered into, performed and

guaranteed according to its specified

requirements, and second, 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 Electrical Company, Inc. v. Dade County , 417 So. 2d

1032 (Fla. 3d DCA 1982)( citing Glatstein v. City of Miami , 399

So. 2d 1005 (Fla. 3d DCA 1981).

18. The difficulty lies in determining when a public

authority should exercise this discretion in the competitive bid

process. The court in Intercontinental Properties, Inc. , 606

So. 2d at 387, stated that "there is strong public policy in

favor of awarding contracts to the low bidder, and an equally

strong public policy against disqualifying the low bidder for

technical deficiencies which do not confer an economic advantage

on one bidder over another." Furthermore, in exercising the

wide discretion afforded the agency in waiving minor

irregularities, there is a strong public policy that the agency

use this authority for the purpose of saving tax dollars. The

court in Overstreet Paving v. Department of Transportation , 608

So. 2d 851, 853 (Fla. 2d DCA 1992), declared that "there is a

strong public interest in favor of saving tax dollars in

awarding public contracts."

19. "Although a bid containing a material variance is

unacceptable . . . not every deviation from the invitation is

material." Robinson Electrical Co. v. Dade County , 417 So. 2d

1032, 1034 (Fla. 3d DCA 1982) ; Tropabest Foods, Inc. v. State

Department of General Services , 493 So. 2d 50, 52 (Fla. 1st DCA

1986). "It is only material if it gives the bidder a

substantial advantage over the other bidders and thereby

restricts or stifles competition." Id. ; See also Harry Pepper &

Associates, Inc. v. City of Cape Coral , 352 So. 2d 1190, 1193

(Fla. 2d DCA 1977).

20. When All-American Towing, Inc., submitted its bid, it

enclosed copies of only twelve motor vehicle registrations. The

ITB clearly required copies of fourteen motor vehicle

registrations. This omission in the bid submitted by All-

American Towing, Inc., is a "minor irregularity" within the

meaning of Rule 60A-1.001(16), Florida Administrative Code,

quoted above. The omission of photocopies of two motor vehicle

registrations did not affect the price of the bid, did not give

All-American Towing, Inc., an advantage or benefit not enjoyed

by the other bidders, and did not adversely impact the interests

of the agency. Such being the case, the omission of the two

photocopies is an irregularity which may properly be waived by

the Department.

21. With regard to the issue concerning the mandatory pre-

bid meeting, the facts in this case sufficiently show that All-

American Towing, Inc., was represented at the pre-bid meeting.

Accordingly, there is no factual basis for the Petitioner's

arguments on this issue. 7

22. With regard to the issue of whether All-American

Towing, Inc., meets the experience requirements set forth in the

ITB, the facts in this case sufficiently show that All-American

Towing, Inc., has been in the towing business in Florida for

more than five years. The facts also show that All-American

Towing, Inc., has employees and managers who have worked in the

towing business in Florida for more than five years.

Accordingly, under any reasonable interpretation of the

experience requirements in the ITB, All-American Towing, Inc.,

meets the experience requirements.

23. The final issue which requires disposition is the

issue of whether All-American Towing, Inc., has the legal

capacity to enter into and perform the contract for which it

submitted a bid. All-American Towing, Inc., is a Florida

corporation . At the time it submitted its bid in this case, its

legal status was that of a dissolved Florida corporation, its

having been administratively dissolved by the Florida Department

of State. As of the date of the hearing there was no evidence

that All-American Towing, Inc., had been reinstated by the

Florida Department of State. Pursuant to Section 607.1405,

Florida Statutes, "a dissolved corporation continues its

corporate existence but may not carry on any business except

that appropriate to wind up and liquidate its business and

affairs. . . ." As a result of its status as a dissolved

corporation, All-American Towing, Inc., lacks the legal

authority to engage in the business for which it seeks to obtain

a contract. Such being the case, All-American Towing, Inc.,

fails to meet the requirements of section 8.0 of the ITB, and

its bid should be rejected. Stated otherwise, it would be

arbitrary and capricious for the Department to award the subject

contract to a business entity that is no longer authorized to do

business in Florida.

RECOMMENDATION

On the basis of all of the foregoing, it is RECOMMENDED

that the Department of Transportation issue a final order in

this case rejecting the bid submitted by All-American Towing,

Inc., and awarding the contract to Sunshine Towing.

DONE AND ENTERED this 13th day of April, 2001, in

Tallahassee, Leon County, Florida.

___________________________________

MICHAEL M. PARRISH

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 [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 13th day of April, 2001.

ENDNOTES

1/ Although timely served, the Department's Proposed Recommended

Order was inadvertently filed one day late. The Department's

motion seeking to have its Proposed Recommended Order treated as

though timely filed is granted.

2/ The admitted facts to which the parties stipulated are

memorialized here in the exact language of the stipulation

entered into by the parties. At several places in the

stipulation there are references to an entity described as "Road

One/All-American." By way of clarification, it is noted that

there is no entity named "Road One/All-American." there is a

corporation named Road One, Inc., that uses the business name

"Road One." There is a corporation named All-American Towing,

Inc., which is owned by Road One, Inc. All-American Towing,

Inc ., submitted a bid for the contract at issue here. Road One,

Inc ., did not submit a bid.

3/ Throughout the pleadings, the testimony, and the Proposed

Recommended Orders, there has been a great deal of inconsistency

and ambiguity in references to the entity that submitted the low

bid in response to the ITB in this case. That entity is a

corporation named All-American Towing, Inc.

4/ Gary Pasborg and Courtney McCoy attended the mandatory pre-

bid meeting. At an earlier stage in this proceeding there was

some question as to whether they had attended the mandatory pre-

bid meeting solely on behalf of Road One, Inc . The greater

weight of the evidence is to the effect that Pasborg and McCoy

attended the mandatory pre-bid meeting on behalf of both Road

One, Inc., and All-American Towing, Inc.

5/ The wording of the experience requirement in the subject ITB

is by no means a model of clarity. To reduce the possibility of

misinterpretation in the future, the Department should prepare a

more precisely worded experience requirement for use in future

ITBs.

6/ The Department also contacted several other bidders who had

omitted documents from their bids and asked those bidders to

provide the missing documents. This is a well-intentioned

practice that the Department might be well-advised to discontinue

in view of the first sentence of Section 120.57(3)(f), Florida

Statutes, which reads: "In a competitive-procurement protest, no

submissions made after the bid or proposal opening amending or

supplementing the bid or proposal shall be considered."

7/ Even if the facts were otherwise, failure to attend a

mandatory pre-bid meeting is not always a fatal flaw. Such a

failure may be waived by the agency as a minor irregularity.

Beach Construction Company, Inc. v. Department of Corrections ,

DOAH Case No. 97-3309BID (Recommended Order issued October 13,

1997).

COPIES FURNISHED:

Brian A. Crumbaker, Esquire

Department of Transportation

Haydon Burns Building, Mail Station 58

605 Suwannee Street

Tallahassee, Florida 32399-0458

Andrew S. Atkins, Esquire

Barry T. Shevlin, Esquire

Law Offices of Barry T. Shevlin, P.A.

1111 Kane Concourse, Suite 605

Bay Harbor Islands, Florida 33154

James C. Myers

Clerk of Agency Proceedings

Department of Transportation

Haydon Burns Building, Mail Station 58

605 Suwannee Street

Tallahassee, Florida 32399-0458

Pamela Leslie, General Counsel

Department of Transportation

Haydon Burns Building, Mail Station 58

605 Suwannee Street

Tallahassee, Florida 32399-0458

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

10 days from the date of this Recommended Order. Any exceptions

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.