02-002776BID All American Companies vs. Department Of Environmental Protection Status: Closed Recommended Order on Tuesday, September 24, 2002.

Summary: Department`s rejection of all bids was not illegal, arbitrary, dishonest, or fraudulent where bid specifications were ambiguous and confusing.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ALL AMERICA COMPANIES, )

)

Petitioner, )

)

vs. ) Case No. 02 - 2776BID

)

DEPARTMENT OF ENVIRONMENTAL )

PROTECTION, )

)

Respondent. )

___________________ ________________)

ALL AMERICA HOMES OF )

GAINESVILLE, INC., a Florida )

Corporation, individually and )

d/b/a ALL AMERICA COMPANIES, )

)

Petitioner, )

)

vs. ) Case No. 02 - 2777BID

)

DEPARTMENT OF ENVIRONMENTAL )

PROTE CTION, BUREAU OF DESIGN )

AND RECREATION SERVICES, )

)

Respondent. )

___________________________________)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings,

by its duly designated Administrative Law Judge, Cha rles A.

Stampelos, held a hearing in the above - styled case on August 8,

2002, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Allen E. Stine, President

All America Homes of Gainesville, Inc.

818 Southwest 105th Terrace

Gainesvill e, Florida 32607

For Respondent: Jerome I. Johnson, Esquire

Suzanne B. Brantley, Esquire

Department of Environmental Protection

3900 Commonwealth Boulevard

Mail Station 35

Tallahassee, Florida 32399 - 3000

STATEMENT OF THE ISSUE

At issue in this proceeding is whether the Department of

Environmental Protection's decision to reject all bids submitted

for the project entitled BDRS 52 - 01/02 was illegal, arbitrary,

dishonest, or fraudulent.

PRELIMINARY STATEMENT

In or around November 2001, the Department of Environmental

Protection (Department), by and through its Bureau of Design and

Recreation Services (Bureau), prepared an Invitation to Bid (ITB)

and published notice of the ITB in the Florida Administrative

Weekly. The ITB requested bids from contractors to provide the

necessary labor, supervision, equipment and materials to

construct a new concession building at the Hillsborough River

State Park, along with the alteration of the existing concession

building.

Five bids were timely submitted, and the bids were opened on

December 18, 2001. The Bid Tabulation Form was posted on

December 20, 2001, at 2:00 p.m. Nelco Diversified, Inc. (Nelco)

was the apparent low bidder with a Base Bid of $355,478.00.

Petitioner, All America H omes of Gainesville, Inc. (All America)

was second, with a Base Bid of $362,000.00. Three other

companies submitted bids, but their Base Bids far exceeded the

bids of Nelco and All America. (No bidders, other than All

America, are parties to this proceed ing, nor has any other bidder

participated in this proceeding in any manner.)

In January, 2002, All America filed a timely written protest

to the Department's intended award of the contract to Nelco. The

Department did not refer the matter to the Division of

Administrative Hearings (Division).

On May 13, 2002, the Department posted notice of its intent

to reject all bids. All America filed a timely written protest

to this agency action. All America filed two petitions with the

Department and both were referred to the Division and assigned

Case Nos. 02 - 2776BID and 02 - 2777BID, respectively.

On July 26, 2002, and after a pre - hearing conference, All

America filed a Petition to Prevent Rejection of Bids and Award

Contract to Petitioner, essentially combini ng and refining the

two prior - filed petitions, and alleged that the Department

violated Section 120.57(3), Florida Statutes, by allowing

additional information from Nelco when determining the low bidder

and that the Department’s action of rejecting all bid s was

contrary to competition and arbitrary. All America requested

attorney's fees but did not cite to a specific statutory

provision. In its proposed recommended order, All America

requested fees and costs up to $15,000.00.

At hearing, All America cal led five witnesses: Marvin

Allen, an architect and project manager with the Bureau of Design

and Recreation Services; Mike Renard, Contracts Manager with the

Bureau of Design and Recreation Services; Ed Bowman, Chief of the

Bureau of Design and Recreation Services; and Allen E. Stine,

President of All America. All America also presented 14

exhibits.

The Department called Marvin Allen, Mike Renard, and Ed

Bowman as witnesses. In addition, the Department presented five

exhibits.

All of the 19 exhibits o ffered by the parties were admitted

as Joint Exhibit 1.

The two - volume transcript was filed with the Division on

September 6, 2002. Each party filed a proposed recommended

order, and each proposed recommended order has been considered in

preparing this R ecommended Order.

FINDINGS OF FACT

Parties

1. Petitioner, All America Homes of Gainesville, Inc. (All

America), is a corporation doing business in the State of

Florida. All America submitted a timely written bid in response

to the Department's ITB and fil ed timely protests to the

Department's actions.

2. The Respondent, the Department of Environmental

Protection, is an agency of the State of Florida which manages

and operates state parks under its jurisdiction, and solicits

construction projects in state pa rks, pursuant to Chapter 258,

Part I, Florida Statutes, through its Division of Recreation and

Parks, Bureau of Design and Recreation Services.

The ITB

3. In November, 2001, the Department issued an ITB on a

construction project entitled Hillsborough Rive r State Park

Concession Building, project number BDRS 52 - 01/02. The ITB

included the Bid Specifications for the project. Bids were

required to be submitted no later than 3:30 p.m. on Tuesday,

December 18, 2001, at the Bureau's Tallahassee, Florida, offic e.

4. The written Specifications define several terms,

including, but not limited, to the following:

ADDENDUM : A written explanation,

interpretation, change, correction, addition,

deletion, or modification, affecting the

contract documents, including drawin gs and

specifications issued by the OWNER

[Department] and distributed to the

prospective Bidders prior to the bid opening.

ALTERNATE BID : Separate optional bid item for

more or less project requirement used for

tailoring project to available funding. Als o

may consist of alternate construction

techniques.

BASE BID : Formal bid exclusive of any

alternate bids.

BID FORM : The official form on which the

OWNER requires formal bids to be prepared and

submitted.

ORAL STATEMENTS : Verbal instruction.

NOTE: No or al statement of any person,

whomever shall in any manner or degree

modify or otherwise affect the

provisions of the contract documents. [ 1 ]

SEALED BID : The formal written offer of the

Bidder for the proposed work when submitted

on the prescribed bid form, properly signed

and guaranteed.

5. The Bid Specifications also contained the following

relevant sections:

B - 8 Alternatives

If the OWNER wishes to learn the relative or

additional construction cost of an

alternative method of construction, an

alternative u se of type of material or an

increase or decrease in scope of the project,

these items will be defined as alternates and

will be specifically indicated and referenced

to the drawings and specifications.

Alternates will be listed in the bid form in

such a m anner that the Bidder shall be able

to clearly indicate what sums he will add to

(or deduct from) his Base Bid. The OWNER

will judge for himself that such alternates

are of comparable character and quality to

the specified items.

The Order of the alterna te may be selected by

the Department in any sequence so long as

such acceptance out of order does not alter

the designation of the low bidder.

B - 9 ADDENDA

If the Consultant [ 2 ] finds it would be

expedient to supplement, modify or interpret

any portion of t he bidding documents during

the bidding period, such procedure will be

accomplished by the issuance of written

Addenda to the bidding documents which will

be delivered or mailed by the OWNER'S

Contracts section to all bidders who have

requested bidding doc uments.

B - 10 Interpretation

No interpretation of the meaning of the

drawings, specifications or other bidding

documents and no correction of any apparent

ambiguity, inconsistency or error therein

will be made to any Bidder orally. Every

request for such interpretation or correction

should be in writing, addressed to the

Consultant. All such interpretations and

supplemental instructions will be in the form

of written Addenda to the bidding documents.

Only the interpretation or correction so

given by the Consultant in writing and

approved by the OWNER shall be binding, and

prospective Bidders are advised that no other

source is authorized to give information

concerning, or to explain or interpret, the

bidding documents.

B - 16 Bid Modification

Bid mod ification will be accepted from

Bidders, if addressed as indicated in

Advertisement for Bids and if received prior

to the opening of bids. No bid modification

will be accepted after the close of bidding

has been announced. Modifications will only

be acce pted if addressed in written or

printed form submitted with the bid in sealed

envelopes. Telegrams, facsimiles, separate

sealed envelopes, written on printed

modifications on the outside of the sealed

envelopes will not be accepted. All bid

modifications must be signed by an authorized

representative of the Bidder. Modification

will be read by the OWNER at the opening of

formal bids.

B - 21 Rejection of Bids

The OWNER reserves the right to reject any

and all bids when such rejection is in the

interest of the State of Florida, and to

reject the bid of a bidder who the OWNER

determines is not in a position to perform

the work.

B - 23 Award of Bid

. . .The qualified Bidder submitting the

lowest bid will be that Bidder who has

submitted the lowest base bid pl us any

selected alternates. . . .

The OWNER reserves the right to waive any

minor irregularities in bids received when

such waiver is in the interest of the OWNER.

The Award of Bid will be issued by the OWNER

only with responsible Bidders, found to meet

all requirements for Award of Bid, qualified

by experience and in a financial position to

do the work specified. Each bidder shall, if

so requested by the OWNER, present additional

evidence of his experience, qualifications

and ability to carry out the te rms of the

Agreement.

(Emphasis in original, except for Section B - 10.)

6. The Bid Form is included with the Specifications and

provides in part:

Base Bid : Furnish labor, equipment, Lump Sum $__

supervision and material

to construct a new co ncession

building of 2940 square feet

located at the Hillsborough

River State Park along with

the alteration of the existing

concession building according

to plans and specifications.

Alternate #1 : Furnish labor, equipment, Add Amt.$ __

supervision and material

to renovate the existing

concession building

according to plans and

specifications.

7. There is a separate section for "Allowances," i.e. ,

Section 01210, for the Hillsborough State Park. This sect ion

provides in part:

SECTION 01210 – ALLOWANCES

* * *

1.2 SUMMARY

A. This Section includes administrative and

procedural requirements governing allowances.

1. Certain materials and equipment are

specified in the Contract Documents and

are defined by th is [sic] specifications

as material and labor to be provided

against a pre - determined allowance.

Allowances have been established in lieu

of additional requirements and to defer

selection of actual materials and

equipment to a later date when

additional in formation is available for

evaluation. If necessary, additional

requirements will be issued by Change

Order.

* * *

3.3 SCHEDULE OF ALLOWANCES

A. Allowance #1: Include in the base bid an

allowance for the purchase and installation

of. . . kitchen equipm ent. . . .

The total dollar amount of the allowance to

be included shall be $12,000.00.

8. There is also a separate section for "Alternates," i.e. ,

section 01230, for Hillsborough River State Park, which provides

in part:

SECTION 01230 – ALTERNATES

* * *

1.3 DEFINITIONS

A. Alternate: An amount proposed by bidders

and stated on the Bid Form for certain work

defined in the Bidding Requirements that may

be added to or deducted from the Base Bid

amount if OWNER decides to accept a

corresponding change eithe r in the amount of

construction to be completed or in the

products, materials, equipment, systems, or

installation methods described in the

Contract Documents.

1. The cost or credit for each alternate

is the net addition to or deduction from the

Contr act Sum to incorporate alternate into

the Work. No other adjustments are made to

the Contract Sum. . . . .

3.1 SCHEDULE OF ALTERNATES

A. Alternate No. 1 : Renovate the existing

concession building in its entirety as shown

in the drawings and specified herein .

(emphasis added.)

9. At this stage of the bidding documents, the

contractor/bidder is requested to provide a Base Bid/Lump Sum on

the Bid Form to "[f]urnish labor, equipment,. . .to construct a

new concession building," and to provide an additiona l and

separate amount for Alternate No. 1 to "[f]urnish labor,

equipment, . . . to renovate the existing concession building."

10. On December 13, 2001, the Bureau issued "Addendum No.

One (1)" (written by the architect) to the ITB on the

"Hillsborough River S tate Park – Concession Building." The

Addendum contained the following relevant sections:

A. Specification Section 01210: Allowances

Add the following new paragraph 3.3.B:

”Allowance #2: Include in the base bid an

allowance for the renovations of the e xisting

concession building; renovations shall be

defined by the Owner.

The total dollar amount of the allowance to

be included shall be $25,000 ."

B. Specification Section 01230: Alternates

Modify paragraph 3.1.A. as follows :

"Alternate No. 1: Renovate the existing

concession building as defined by the Owner,

and as provided for under Section 01210,

Allowances ."

(emphasis added.) Each contractor was required to sign the

Addendum and attach it to the bid.

11. By definition, and pertinent here, an addendum is an

additional written instruction to a contractor during the bidding

process. Based on the weight of the evidence, the purpose of

this Addendum was to require the contractor to include a

$25,000.00 Allowance (for Allowance # 2) in the Base Bid, for the

work which might be performed if the Department requested the

work to be performed for Alternate No. 1, i.e. , for the

renovation of the existing concession building. 3 (The

Department's architect decided it would cost approximately

$25,000.00 to renovate the existing concession building, hence

Allowance # 2.) In other words, the Addendum does not have a

specific dollar amount to be included for Alternate No. 1.

Rather, the $25,000.00 is an Allowance for the work described as

Alternate No. 1, but the amou nt is to be included in the Base Bid

and not as a separate line item, dollar amount. But,

importantly, the Addendum did not delete the potential work to be

performed as described in Alternate No. 1, although Mr. Bowman

and others believed that the Addendu m deleted Alternate No. 1.

It deleted the necessity to place a specific dollar amount on the

Bid Form for Alternate No. 1. (Mr. Bowman is a registered

Professional Engineer and a licensed contractor. He has worked

for the Department for 15 years and has served as Bureau Chief

for two years. He supervises the contract section and the design

section, which was responsible for preparing the technical plans

and specifications and bidding out the job.)

12. Mr. Bowman offered the following explanation why he

beli eved the Addendum was confusing:

Okay. I think the confusion that was

created, you know, I think the addendum in

itself, you know, said add $25,000 to the

base bid, but then on the bid form, it still

had the space down there for alternate

number one , which alternate number one,

which alternate number one had become

$25,000 that was to be allowed for the

concession building, and I think that's

where the confusion came in because I think

they were still confused, that they weren't

really sure that they should not put that 25

down there but they knew they had been told

in the addendum to do it and I think that's

the reason for the notes and we got to the

correspondence on the bid form, was they

wanted to make sure that that's what we were

wanting to do. And I think that's where the

confusion came in. Like I said, it's

always, if you could go back and do it

again, it would be much wiser just to issue

a whole new bid form and then we wouldn't be

here today. But, we didn't do that. Okay.

So, that's why w e are here.

13. The language in this Addendum, when read with the

original Bid Specifications, apparently caused confusion with

some of the bidders on the project. Several bidders called

Marvin Allen (an architect and project manager for the

Department's Bur eau of Design and Recreation Services) prior to

the submission of the bids, to clarify how the $25,000.00

Allowance should be shown on the Bid Form. (Mr. Allen did not

author any of the specifications, including the Addendum.) He

was listed as a contact person. He did not contact any bidders.

But, Mr. Allen recalled telling each bidder who asked that the

Allowance of $25,000.00 should be included in the Base Bid. But,

he does not recall the names or numbers of the bidders who

called, "possibly" three, four or five. Mr. Allen believed the

Addendum was clear. According to Mr. Allen, the bidders who

called him found the Addendum confusing.

14. The oral responses to the bidders can be construed as

interpretations of the Addendum. However, pursuant to Section B -

10 of the Specifications, any such interpretations were required

to "be in the form of written Addenda to the bidding documents."

Also, any such questions should have been in writing. If Section

B - 10 were complied with, all bidders would have been pot entially

on the same footing, or, at the very least, would have had access

to a written clarifying document.

Opening of the Bids

15. On December 18, 2001, the bids were opened by Mike

Renard, Contracts Manager with the Bureau of Design and

Recreation Services, and Susan Maynard, Administrative Assistant.

Mr. Dwight Fitzpatrick, a representative of All America, also

attended the bid opening.

16. The Bid Form submitted by Nelco showed a Base Bid of

$355,478.00 (Lump Sum $355,478.00 ), and also showed an amount of

$25 ,000.00 on the Alternate # 1 line (Add Amt. $25,000.00 ). See

Finding of Fact 6. (It was clear to Mr. Renard that the

$25,000.00 should have been included on Nelco's Base Bid. But

Mr. Renard believed that Nelco submitted a responsive bid because

the Depa rtment only accepted the Base Bid. Mr. Bowman agreed.)

Nelco was the only one of five bidders to have a dollar amount in

the Alternate #1 line under "Add Amt. $___."

17. All America submitted the second lowest Base Bid of

$362,000.00. There was also a han d - written note on the All -

America Bid Form that stated: " Addenda # 1 instruction to place

$25,000 allowance in both Base Bid and as alternate # 1."

Another hand written note was located below the "Add Amt. $ - 0 - "

line: "amount added in Base Bid with $25,00 0 allowance per Marvin

Allen." The Department considered All America's bid responsive.

18. It is a fair inference that three out of five of the

other Bid Forms contained language indicating that the bidders

were relying on Addendum No. One by placing the $2 5,000.00

Allowance in the Base Bid. 4 It is uncertain whether they did so

in light of the instructions of Mr. Allen concerning how to

complete the Bids Forms. However, given the nature of the calls

to Mr. Allen, there is a reasonable inference that there was some

confusion among some of the bidders.

19. The Department determined that Nelco submitted the

lowest Base Bid, but the Department's staff had a question as to

whether Nelco had included the $25,000.00 in its Base Bid.

20. After conferring with his superio rs, Mr. Renard was

instructed to call Nelco to make certain that its Base Bid

included the Allowance amount ($25,000.00). Mr. Renard spoke

with Steve Cleveland, Nelco's Project Manager, "to verify the

fact that [Nelco] had the allowance in their base bid. " Mr.

Cleveland orally confirmed that Nelco's Base Bid included the

$25,000.00 Allowance. Mr. Renard asked Mr. Cleveland to send him

a letter verifying this statement. Mr. Renard viewed this

inquiry as a request for clarification or verification, not an

opportunity for Nelco to modify its bid. Mr. Bowman agreed.

(Mr. Renard did not believe Addendum No. 1 was confusing.)

21. In a letter dated December 20, 2001, Mr. Cleveland

confirmed that Nelco’s Base Bid of $355,478.00 included the

Allowance amount and th at Nelco could still perform the contract

if the $25,000 Allowance was removed from its Base Bid pursuant

to the ITB, i.e. , that Nelco would perform the contract for

$355,478.00 less $25,000.00, or $330,478.00, if the Department

did not accept Alternate # 1 and the Allowance. (An alternate

does not have to be accepted by the Department.) According to

Mr. Renard, Mr. Cleveland never mentioned modifying, changing, or

altering Nelco's bid.

22. The Department only accepted the Base Bid for each bid.

23. Mr. Renard did not consider it unusual to call a bidder

or contractor to verify information to determine whether they can

or cannot perform the work at the stipulated price. He

considered it common to make this inquiry. Also, it was common

in Mr. Bowman's experienc e to call a bidder to get clarification.

Mr. Renard was not aware of any statute or rule which authorizes

the Department to request clarification from a bidder after the

bids are opened. Mr. Renard was more familiar with the bid forms

than Mr. Allen.

24. Afte r receiving Mr. Cleveland's letter, the Department

determined that Nelco submitted the lowest Base Bid and that the

$25,000.00 amount that Nelco wrote on the Bid Form Alternate # 1

line, was a minor irregularity in the bid which the Department,

as the Owne r, could waive pursuant to the ITB.

25. On December 20, 2001, the Department posted the

Tabulation of Bids showing the anticipated award of the contract

to Nelco.

26. At the hearing, an unsigned letter on Department

letterhead was introduced, which was addresse d to Nelco and

stated that Nelco submitted the apparent low bid. However, Mr.

Renard testified that these letters are prepared routinely, but

not mailed out without his signature. Mr. Renard did not recall

signing the letter or ever sending out such a le tter to Nelco.

27. On December 21, 2001, the Department received a Notice

of Intent to Protest letter from Allen E. Stine, the President of

All America. In his letter, Mr. Stine stated that Nelco’s bid

should have been rejected for failure to follow the sp ecified

format as per Addendum No. 1, or adjusted to have the $25,000.00

amount added to their Base Bid.

Bid Protests

28. All America filed a written formal bid protest on

January 4, 2001. On January 9, 2001, Cindy Otero of All America,

notified Mr. Renard b y letter, and stated that Mr. Stine was

available for a hearing regarding the bid protest.

29. On January 28, 2002, Mr. Renard returned All America's

check for the bond, stating that it was unnecessary. Mr. Stine

recounted a number of unanswered telephone cal ls after the first

protest was filed. During one conversation, Mr. Renard recalled

Mr. Stine saying to him, "You can't do this, you can't do this."

30. After receiving the first formal protest, the

Department staff consulted with legal staff and reviewed the

documents and bid procedures. Based on the number of questions

received concerning the Addendum and the hand - written notes on

several of the bid forms, Mr. Bowman, Bureau Chief, determined

that the bid documents were confusing and ambiguous. (Mr. Bowman

stated that this was their first bid protest in his 15 years with

the Department.) Therefore, Mr. Bowman decided that it would in

the best interest of the State of Florida to reject all of the

bids pursuant to the Bid Specifications. Mr. Bowman felt that

the ITB should be re - written in order to make it clearer and

allowing all of the bidders to re - bid the project without any

confusion or ambiguity.

31. Mr. Stine stated that his "senior estimator" told him

that the bid language "could be confusing." He an d his "senior

estimator" had a discussion about whether the Allowance should

have been placed in the Base Bid or not. At the time of

submission of All America's bid, Mr. Stine was clear that the

Allowance should be placed in the Base Bid, especially after

calling Mr. Allen. But, his senior estimator was not so clear.

In order to appease him, Mr. Stine placed the hand - written note

on All America’s proposal. Mr. Stine essentially, "cleaned" up

his proposal.

32. At the hearing, Mr. Bowman testified Rule 60D - 5 .0071,

Florida Administrative Code, see Conclusion of Law 59, does not

list "confusing or ambiguous bid specifications" as one of the

circumstances allowing for the rejection of all bids. However,

Mr. Bowman later stated during the hearing that he believe d the

circumstances listed in Rule 60D - 5.0071 were not the only

circumstances authorizing the Department to reject all bids.

Mr. Bowman testified that he believed that general confusion

among the bidders caused by the ambiguous ITB constituted

sufficient grounds for rejecting all bids.

33. Mr. Bowman was advised by legal counsel that rejecting

all of the bids would probably result in another bid protest by

Nelco, All America, or both. Thus, the Department decided to

delay addressing All American’s first prote st until after posting

the rejection of all bids and receiving the subsequent protests,

so that all of the protests could be resolved at once in an

efficient and economical manner.

34. Notwithstanding the Department's justifications for

rejecting all bids an d not proceeding on All America's initial

protest, the record is unclear why the Department waited several

months to reject all bids.

35. On May 13, 2002, the Department posted the rejection of

all bids.

36. On May 16, 2002, the Department received a formal

wri tten protest of the rejection of all bids filed by All

America.

37. On May 17, 2002, Jerome I. Johnson, attorney for the

Department, contacted Mr. Robert A. Lash, All America's counsel

at the time, concerning the resolution of All America’s formal

protest. (Before the final hearing, Mr. Lash, with All America's

consent, withdrew as counsel for All America.) The parties

agreed to suspend formal bid protest procedures until a meeting

could be held between the parties in an attempt to resolve the

protests. Mr . Johnson sent a letter dated May 21, 2002, to Mr.

Lash confirming this conversation.

38. On June 26, 2002, a meeting was held among the

Department staff, legal staff, and Mr. Lash and Mr. Stine,

representing All America. The parties were unable to resolve t he

protests. At the conclusion of the meeting, the parties agreed

that formal protest procedures would not be implemented until Mr.

Stine could confer further with his counsel.

39. In a letter dated July 5, 2002, Mr. Lash stated that

his client wished to pro ceed with formal protest procedures and

requested an administrative hearing on the protests.

Are the Specifications and Bid Documents Ambiguous and Was

There Confusion?

40. The parties stipulated that "[t]he Addendum language

was confusing," notwithstanding the testimony of several

witnesses that they were not confused.

41. The Department's determination that the bid

Specifications, including the Addendum, and the Bid Form, which

remained unchanged after the Addendum was issued, were confusing

and ambiguous, is supported by the weight of the evidence. This

is particularly true regarding the Bid Form. The Addendum

required the bidder to include an Allowance of $25,000.00 in the

Base Bid for work described as Alternate # 1. But the Bid Form

was unchanged to r eflect the Addendum changes. The Bid Form

retained a line for the bidder to submit an additional amount for

Alternate # 1. Further, it appears that several bidders were

confused, including, Mr. Stine, who spoke with Mr. Allen and

requested and received c larification. Further, it is unclear

whether all of the bidders, including Nelco, were aware of the

oral interpretations or clarifications of the Addendum rendered

to some of the bidders.

Rejection of All Bids

42. Based upon the foregoing, given the standard of review

in this proceeding discussed in the Conclusions of Law, the

weight of the evidence indicates that the Department's action, in

rejecting all bids, was not illegal, arbitrary, dishonest, or

fraudulent. The Department's staff was well - intended and made

some mistakes along the way, e.g. , by not changing the Bid Form,

which they readily admit. But there was a rationale for

rejecting all bids under the circumstances.

CONCLUSIONS OF LAW

43. The Division of Administrative Hearings has

jurisdiction over the parties and the subject matter. Sections

120.569 and 120.57(3), Florida Statutes.

44. All America alleges that the Department’s action of

rejecting all bids was arbitrary and contrary to competition.

"In any bid - protest proceeding contesting an intended agen cy

action to reject all bids, the standard of review by an

administrative law judge shall be whether the agency's intended

action is illegal, arbitrary, dishonest, or fraudulent. See

Section 120.57(3)(f), Florida Statutes. All America has the

burden of p roof. See Sections 120.57(1)(j) and 120.57(3)(f),

Florida Statutes. See also Department of Transportation v.

Groves - Watkins Constructors , 530 So. 2d 912, 913 (Fla. 1988);

Gulf Real Properties, Inc. v. Department of Health and

rehabilitative Services , 687 So. 2d 1336, 1338 (Fla. 1st DCA

1997). 5

45. All America did not prove that the Department acted in

a way that was illegal, arbitrary, dishonest, or fraudulent.

46. Although the original Bid Specifications called for an

Alternate # 1, this Alternate was modified by the issuance of

Addendum No. 1, which required the bidder to include an Allowance

of $25,000.00 (for Alternate # 1 work) in the Base Bid. The

bidder was no longer required to submit a separate dollar amount

for Alternate # 1 on the Bid Form, which rem ained unchanged after

the Addendum was issued.

47. The Department’s decision to reject all the bids was

rationally based on the facts revealed at the time. After

receiving All America’s first protest, the Department reviewed

all of the documents and procedu res related to the bid protest.

Mr. Allen provided the first evidence of confusion in the bidding

process by discussing the number of calls concerning the

Addendum. The manifest problem with this procedure is that it is

unclear whether all five bidders w ere aware of the oral

interpretations or clarifications of the Addendum. Further

evidence of the confusion on the part of the bidders is

demonstrated by the hand - written notes on three of five of the

bidders’ forms, and one type - written note. In fact, Al l

America's bid form included a hand - written note stating it was

under the impression that the $25,000 Allowance should be added

in its Base Bid ("per Marvin Allen"). All America also provided

a handwritten note with an instruction to place the $25,000

al lowance in both the Base Bid and as Alternate # 1, per

"Addenda # 1."

48. After reviewing this evidence, and the bid documents,

the Department reasonably determined that the language in the ITB

and the Addendum, and importantly, the Bid Form, when read

toget her, was ambiguous and confusing to the bidders. Having

reached this conclusion, the Department felt that it would be

unfair to award the contract to any of the bidders under these

conditions. The evidence does not prove that the Department

acted fraudul ently, arbitrarily, illegally, or dishonestly in

rejecting all of the bids.

49. Another issue raised by this case is whether the

Department exceeded its statutory authority under Section

120.57(3), Florida Statutes, by rejecting all bids after All

America had submitted its first formal protest. The general rule

is that "[u]pon receipt of the formal written protest which has

been timely filed, the agency shall stop the bid solicitation

process or the contract award process until the subject of the

protest is r esolved by final agency action. . . ." Section

120.57(3)(c), Florida Statutes. But the agency is not generally

precluded from rejecting all bids upon discovery of valid grounds

to do so. See Caber Systems Inc. v. Department of General

Services , 530 So. 2d 325 (Fla. 1st DCA 1988).

50. In Caber , the Department of General Services (DGS) had

issued an ITB that contained ambiguous and confusing language.

After reviewing the bids submitted, the DGS posted an Anticipated

Award to the apparent low bidder. However , after receiving a

formal protest, DGS determined the bid documents were flawed and

rejected all the bids. The company which had filed the formal

protest of award then filed a second protest of the rejection of

all bids. Id. at 327.

51. The court held for the DGS. In its opinion, the court

stated: "[T]here is no limitation in the statutory language

restricting the Department's power to immediately reject all bids

and start the bid process anew with a valid ITB, rather than

locking up the entire process p ending hearing on the protest so

that nothing could proceed. Once DGS had decided to reject all

bids for the reason specified, to first await the outcome of a

hearing on Caber's first protest before taking action would be a

complete waste of time and taxp ayers' money." Id. at 336. The

court stated further that an agency cannot reject all bids for

reasons that are arbitrary or capricious, but under then existing

Section 125.53, an agency can reject all bids for a valid reason

before a protest to another b idder has been heard in a Section

120.57 hearing. Id. at 338.

52. As previously stated, the Department determined that

the confusion caused by the Bid documents constituted valid

grounds for rejecting the bids. The Department also felt that

rejecting the bid s would quite probably result in the filing of

one or more additional protests. Thus, the decision to reject

all the bids before conducting a hearing on All America’s initial

formal protest was not arbitrary, but was made in an attempt to

streamline the a dministrative process for all of the parties.

53. All America also contends that the Department's

decision to reject all bids should be rejected for the

Department's failure to strictly comply with the time

requirements specified in Section 120.57(3), Florida Statutes.

The Department did not adhere to the time requirements or provide

a reasonable explanation for waiting several months to reject all

bids. It was not shown that the Department's failure to comply

with the time requirements impaired the fairness of the

proceeding or the correctness of the Department's decision to

reject all bids. See Caber , 530 So. 2d at 338 - 339.

54. All America also alleges that the Department violated

Section 120.57(3)(f), Florida Statutes, by calling Nelco for

clarification or ver ification of its bid.

55. Section 120.57(3)(f) states: "In a competitive -

procurement protest, no submissions made after the bid or

proposal opening amending or supplementing the bid or proposal

shall be considered."

56. It is unnecessary to decide this issue be cause the

issue before the undersigned is whether the Department properly

rejected all bids, not whether Nelco's bid was responsive, nor

whether Nelco's telephone and written responses were

"submissions," nor whether All America should be awarded the

contr act.

57. Another issue raised by All America concerns Rule 60D -

5.0071, Florida Administrative Code, "Rejection of Bid(s)." This

Rule states:

(1) The Agency shall reserve the right to

reject any or all bids or portions thereof

under any of the following cir cumstances:

(2) When the bidding process, including the

procedure followed by the agency, involves a

material conflict with a rule or statutory

or case law;

(3) When the Agency has evidence to

indicate that collusion exists among the

bidders;

(4) When t he base bid or the base bid minus

all deductive alternates exceeds the funds

available for construction;

(5) When the Agency has evidence to

indicate the bidder is not in a position to

perform the contract in accordance with Rule

60D - 5.004;

(6) When the Agency has evidence to

indicate the bidder has interest in more

than one proposal for the same work;

(7) When the Agency finds the unit price

provided with a bid proposal is not

approximately the same as the unit cost for

the same work provided as a lump sum for a

specified quantity in the base bid, or

alternate;

(8) When the Agency determines that the bid

is not valid according to the bid

specifications;

(9) When the Agency determines that a

conflict of interest exists.

(10) The Owner also reserves the right to

reject a bid that is unreasonably low.

"Unreasonably low" means that requiring the

contractor to perform the contract at that

price would be reasonably expected to result

in unacceptable quality of performance or

abandonment of the project; howeve r, this

subsection is not applicable unless the bid

is at least 20% less than the next low

bid. . . .

58. All America argues that the ten reasons listed in this

Rule are the only circumstances under which an agency can reject

all bids. However, Florida case law shows that agency decisions

to reject all bids have been affirmed when the evidence supports

the agency's determination that it has issued an ITB that is

ambiguous and confusing. See , e.g. , Caber Systems, Inc. v.

Department of General Services , 530 So . 2d 325 (Fla. 1st DCA

1988); Aurora Pump, Division of General Signal Corporation v.

Goulds Pumps, Inc. , 424 So. 2d 70 (Fla. 1st DCA 1982).

59. In Aurora , an unsuccessful bidder challenged an

agency’s award of contract on the basis that the bid

specifications were vague and confusing. The court stated that

the agency’s action of awarding the bid based on vague

specifications was arbitrary and capricious and ordered the

agency to re - bid if it wished to proceed with the work. In its

opinion, the court stated "[ t]hose who we hope to encourage are

the public agencies and authorities to responsibly prepare and

disseminate clear and precise bidding instructions so the public

may be protected against collusive contracts; to secure fair

competition upon equal terms to all bidders; and to remove

temptation for favoritism and fraud at the public expense."

Aurora , 424 So. 2d at 75 (citation omitted). This holding makes

it clear that the court considered issuing ambiguous

specifications much more contrary to competition than rejecting

all bids.

60. Further in Caber , the court, quoting from the Hearing

Officer's Recommended Order, stated, "[o]n the authority of the

Aurora decision, not only was the DGS decision to reject all bids

neither arbitrary nor capricious, it may have been arbitrary and

capricious for DGS not to have rejected all bids." Caber, 530

So. 2d at 335 (emphasis in original). The court also stated:

"The ITB was fatally flawed and obviously must be re - bid. . . .

[T]he Department's rejection of all bids for thi s inherent

ambiguity was founded on a rational basis and cannot be

characterized as arbitrary and capricious." Id. at 339. (In

light of these cases, subsection 60D - 5.0071(2) applies here.)

These cases affirm that the ten circumstances listed in Rule 6 0D -

5.0071 are not the only valid grounds under which an agency can

reject all bids.

61. The final issue raised in the Petition is All America's

request for attorney’s fees and costs. Section 120.595(1)(b),

Florida Statutes, states in pertinent part: "The f inal order in

a proceeding pursuant to s. 120.57(1) shall award reasonable

costs and a reasonable attorney's fee to the prevailing party

only where the nonprevailing adverse party has been determined by

the administrative law judge to have participated in the

proceeding for an improper purpose."

62. All America is not the prevailing party in this

proceeding and has not proven that the Department has

participated in this proceeding for an "improper purpose."

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is recommended that the Department issue a final order

dismissing All America’s Petition to Prevent Rejection of Bids

and Award Contract to Petitioner and denying All America's

request for attorney’s fees and costs.

DONE AN D ENTERED this 24th day of September 2002, in

Tallahassee, Leon County, Florida.

___________________________________

CHARLES A. STAMPELOS

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 24th day of September 2002.

ENDNOTES

1 / The "contract doc uments" include, but are not limited to, the

general and special conditions, the technical specifications, and

addenda.

2 / The "consultant" is "[t]he Design professional commissioned or

employed by the OWNER."

3 / The term "Alternate # 1" is referred t o in the Bid Form.

"Alternate No 1" is referred to in Section 01230 - Alternates, and

in "Addendum No. One." The Alternate is the same, but is

referred to herein in a different manner, depending on the

context.

4 / Carr's Construction Services, Inc., Gro sz & Stamper

Construction Co., Inc., and LeChase Construction Services, LLC.

also bid on the project. None are parties in this proceeding. On

the line denoted "Add Amt. $__" on the Bid Form, Grosz placed

"N/A Per Addendum No. 1", Carr's placed "N/A Addend um 1", and

LeChase placed "Included Above."

5 / A decision is arbitrary if it is not supported by facts or

logic, or is despotic. Agrico Chemical Co. v. State, Department

of Environmental Regulation , 365 So. 2d 759, 763 (Fla. 1st DCA

1978), cert . denied , Askew v. Agrico Chemical Co. , 376 So. 2d 74

(Fla. 1979).

COPIES FURNISHED:

Jerome I. Johnson, Esquire

Assistant General Counsel

Department of Environmental Protection

3900 Commonwealth Boulevard

Mail Station 35

Tallahassee, Florida 32399 - 3000

Suzanne B. Brantley, Esquire

Senior Assistant General Counsel

Department of Environmental Protection

3900 Commonwealth Boulevard

Mail Station 35

Tallahassee, Florida 32399 - 3000

Allen E. Stine, President

All American Homes, Inc. of Gainesville

10424 Southwest 8t h Lane

Gainesville, Florida 32607

David B. Struhs, Secretary

Department of Environmental Protection

Douglas Building

3900 Commonwealth Boulevard

Tallahassee, Florida 32399 - 3000

Teri L. Donaldson, General Counsel

Department of Environmental Protection

3 900 Commonwealth Boulevard

Mail Station 35

Tallahassee, Florida 32399 - 3000

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 Reco mmended Order should be filed with the agency that will

issue the final order in this case.