04-003248BID Betancourt-Castellon And Associates vs. Miami-Dade County School Board Status: Closed Recommended Order on Tuesday, December 14, 2004.

Summary: Respondent violated statute requiring the award to the lowest responsible bidder when Respondent rejected protester`s bid for violation of an ill-defined, previously undisclosed conflict-of-interest prohibition.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BETANCOURT CASTELLON )

ASSOCIATES, INC., )

)

Petitioner, )

)

vs. ) Case No. 04 - 3248BID

)

MIAMI - DADE COUNTY SCHOOL )

BOARD, )

)

Respondent, )

)

and )

)

MAGNUM CO NSTRUCTION )

MANAGEMENT CORPORATION, )

)

Intervenor. )

______________________________)

RECOMMENDED ORDER

Robert E. Meale, Administrative Law Judge of the Division

of Administrative Hearings, conducted the final hearing in

Miami, Florida, on Octob er 13, 2004.

APPEARANCES

For Petitioner: Ira Libanoff

Ferencik Libanoff Brandt

Bustamante and Williams, P.A.

150 South Pine Island Road, Suite 400

Fort Lauderdale, Florida 33324

For Respondent: Luis M. Garcia

Miami - Dade County School Board

1450 Northeast 2nd Avenue, Suite 400

Miami, Florida 33132

For Intervenor: J. Alfred o de Armas

Alvarez, Armas & Borron, P.A.

3211 Ponce De Leon Boulevard, Suite 302

Coral Gables, Florida 33134

STATEMENT OF THE ISSUE

Pursuant to Section 120.57(3)(f), Florida Statutes, the

issue is whether Respondent's proposed rescission of an award of

a design - build contract to Petitioner for the construction of

additions to two high schools was contrary to the Respondent's

governing statutes, rules or policies or contrary to the

specific ations of Respondent's request for qualifications.

PRELIMINARY STATEMENT

On March 30, 2004, Respondent issued a Request for

Qualifications of design - build firms for the design and

construction of additions to two high schools. Petitioner and

Intervenor t imely submitted responses.

On July 18, 2004, Respondent's School Board awarded the

contract to Petitioner. Intervenor timely protested the award,

claiming that a conflict of interest existed between

Petitioner's design - build team and Respondent's design criteria

professional team.

Following receipt of Intervenor's protest, Respondent's

legal counsel concluded that the conflict precluded the award to

Petitioner, and he recommended that Respondent's School Board

rescind the award, evidently implying that t he School Board

should award the contract to Intervenor. Petitioner timely

protested the proposed agency action of rescinding the award of

the contract to Petitioner, and the case proceeded on the issue

set forth above.

At the hearing, Petitioner called three witnesses and

offered into evidence four exhibits: Petitioner Exhibits 1 - 4.

Respondent called no witnesses and offered into evidence seven

exhibits: School Board Exhibits 0 - 6. Intervenor called two

witnesses and offered into evidence four exhibit s: Intervenor

Exhibits 1 - 4. All exhibits were admitted except School Board

Exhibit 4, which was not admitted for the truth. Respondent

proffered the exhibit for all purposes for which it was not

admitted.

The court reporter filed the transcript on Dece mber 2,

2004. The parties filed their proposed recommended orders on

December 13, 2004.

FINDINGS OF FACT

1. On March 30, 2004, Respondent issued a Request for

Qualifications (RFQ) for design - build firms to design and

construct additions at Southwest Miami Senior High School and

Miami Killian Senior High School. The RFQ invites parties to

submit proposals, if they are interested in performing the

design and construction of three - story additions at each school

(the subject projects).

2. Respondent had used the design - build approach for

school construction for the past seven to ten years. In this

process, the contractor assumes the responsibility for most of

the project, as well as, of course, the project construction.

3. For the subject projects, Respondent entered into a

contract with a Design Criteria Professional (DCP) to represent

Respondent, as the owner, in certain aspects of the construction

project. The DCP for these projects is Santos/Raimundez

Architects, P.A.

4. The contract between Respondent an d the DCP states that

Respondent has selected the DCP based, in part, on its

designation of specialists, including Fraga Engineers for the

mechanical and electrical work. The contract provides that any

such specialists that are subconsultants to, rather t han

employees of, the DCP will enter into subcontracts with the DCP,

but not Respondent.

5. The DCP and its designated specialists form the DCP

Team, which performs various tasks in connection with each

project. These tasks include site investigations to determine

project feasibility, the production of project - specific Phase I

or schematic drawings from the master specifications that

Respondent maintains for school construction, and the issuance

of a building permit for the schematic design.

6. Once the contractor commences construction, the DCP

Team visits the site to protect Respondent, as the owner, from

deviations from the approved design. The DCP Team also approves

draws based on the percentage of work completed and change

orders, as appropriate.

7. The DCP Team performs about 10 - 15 percent of the

overall design for a project. For the subject projects, the DCP

Team spent seven months in performing its responsibilities prior

to Respondent's selection of a contractor.

8. The only involvement of Fraga En gineers with the

subject projects is for the mechanical and electrical work noted

above, as well as plumbing and fire - suppression work of a

similar nature for which the DCP also contracted.

9. For the subject projects, Petitioner retained Silva

Architects as its architect and primary team member, and Silva

Architects entered into a subcontract with Louis Aguirre for the

mechanical, electrical, plumbing, and fire - suppression design

and construction.

10. The principal of Silva Architects and the principal of

Fra ga Engineers are, respectively, husband and wife. There is

no indication in this record of any improper communications

between Mr. Silva and Ms. Fraga concerning the contents of the

RFQ or the Phase I drawings, as prepared by Respondent, or the

contents o f the proposal, as prepared by Petitioner. However,

at the time of this solicitation, Fraga Engineers was serving as

the engineering firm on at least two of Petitioner's projects,

although her firm probably was under contract with Silva

Architects, not Pe titioner.

11. Except for the following provision, the RFQ does not

address potential conflicts between an offeror and Respondent.

RFQ Paragraph I.H provides:

Any proposer desiring to participate in this

process must not have as part of its team an

A/E [archit ectural/engineering] firm

presently under contract with the Board for

a specific project for which the proposer,

or any member thereof, is performing as the

general contractor. The Board considers

this a conflict of interest and such

proposals will not be eligible for award

under this RFQ.

12. Petitioner and Intervenor submitted timely proposals

to Respondent. Among several offerors submitting proposals,

Petitioner submitted the lowest bid, at $17,536,000, followed

closely by Intervenor's second - lowest bid, at $17,556,000.

13. Finding Petitioner's proposal acceptable in all

respects, Respondent's School Board awarded the contract to

Petitioner at its meeting of June 16, 2004. On the same day,

Intervenor filed a notice of protest, followed by a timely

formal wr itten protest.

14. The formal written protest, which is in the form of an

undated letter from Intervenor's counsel to Respondent and

Respondent's counsel, states that Intervenor was not allowed to

bid on projects where its architect/engineer was on Respondent' s

DCP Team for another project. The formal written protest argues

that Ms. Fraga, or her company, is part of Petitioner's team on

other pending projects while she, or her company, is part of

Respondent's DCP Team.

15. Respondent conducted an informal confer ence with

Intervenor and later with Petitioner in an attempt to resolve

the matter. Failing in that effort, Respondent's counsel issued

a letter, dated August 25, 2004, in which he recommended that

Respondent's School Board rescind the proposed award to

P etitioner. In his letter, Respondent's counsel reasoned that

the spousal relationship between Petitioner's architect and the

engineering firm under contract with Respondent's architect

"would create a continuing and unavoidable conflict of interest

that w ill inure to the benefit of either of these parties in

violation of the General Requirements of the Bid, or at a

minimum, could create a perceived or potential conflict of

interest."

16. In his letter, Respondent's counsel stated that "we

disagree" with the recommended order entered in SBR Joint

Venture v. Miami - Dade County School Board , DOAH Case No.

03 - 1102BID (August 1, 2003), in which the Administrative Law

Judge concluded, among other things, that a bidding contractor's

team did not include subcontracto rs under contract with the

contractor's architect, rather than directly with the

contractor. Unless the pronoun refers to the legal counsel's

office or a committee formed to resolve the bid dispute, the

"we" in the letter of Respondent's counsel is unclea r because

Respondent's School Board entered a final order on August 20,

2003 -- one year and five days before the letter of Respondent's

counsel -- adopting the recommended order.

17. Another confusing part of counsel's letter is an

explanatory footnote, in whic h Respondent's counsel

unsuccessfully distinguishes the present case, in which Silva

Architects is directly under contract with Petitioner, from SBR

Joint Venture , in which the third - tier subcontractor was under

contract with the general contractor's archi tect, not the

general contractor. (In SBR Joint Venture , as in the present

case, the so - called "third tier" subcontractor has a contract

with the "second tier" architect, but not the "first tier"

contractor.) The question in this case is not whether the

second - tier Silva Architects is part of Petitioner's team --

clearly, it is. A major question in this case is whether Fraga

Engineers is part of Petitioner's team -- clearly, it is not,

unless Ms. Fraga and Mr. Silva are interchangeable due to their

marriage or her company's third - tier participation in other

projects of Petitioner is attributed to the subject projects.

18. In any event, before Respondent's School Board could

take up its counsel's recommendation, Petitioner protested the

recommendation, and this ca se ensued.

CONCLUSIONS OF LAW

19. The Division of Administrative Hearings has

jurisdiction over the subject matter. §§ 120.569 and

120.57(3)(e), Fla. Stat. (2004).

20. Section 120.57(3)(f) provides:

In a competitive - procurement protest, other

than a rejection of all bids, proposals, or

replies, 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 statutes,

the agency's rules or policies, or the

solicitation specific ations.

21. Pursuant to Section 120.57(3)(f), Florida Statutes,

the burden of proof is on "the party protesting the proposed

agency action," and the standard of proof is: "whether the

proposed agency action was clearly erroneous, contrary to

competition, a rbitrary, or capricious."

22. Section 1013.46(1)(a), Florida Statutes, requires

Respondent to award the contract to the "lowest responsible

bidder." Section 1013.45(1)(b), Florida Statutes, provides that

Respondent may use the design - build procedure, as desc ribed in

Section 287.055, Florida Statutes, for the construction of new

facilities or major additions to existing facilities.

23. This case is unusual because of the existence of two

proposed agency actions opposing each other (or, in the

alternative, the abse nce of the proposed agency action on which

this case is purportedly based). Initially, the agency

tentatively awarded the contract to Petitioner, as the lowest

offeror. Intervenor protested this action. Subsequently, the

agency's counsel agreed with Int ervenor's contention that

Petitioner should be disqualified due to a conflict of interest,

and he recommended the rescission of the agency's earlier

action. Petitioner protested this action.

24. Although Respondent's School Board has never taken up

its counse l's recommendation, the parties agree that this case

is ripe and presents for determination the sustainability of the

recommendation of Respondent's counsel, rather than the

sustainability of the proposed agency action of Respondent's

School Board.

25. The A dministrative Law Judge has accepted the parties'

agreement on the procedural posture of this case, but

respectfully points out shortcomings of the procedure in which a

bid protest concerns the recommendation of legal counsel or a

committee formed to resol ve bid protests informally, rather than

the proposed action of the contract - awarding entity -- here, the

School Board. The parties have effectively denied the School

Board the opportunity to consider counsel's recommendation prior

to an administrative heari ng. The School Board might have

rejected counsel's recommendation, perhaps on grounds including

those set forth in this recommended order. The School Board

might have accepted counsel's recommendation, perhaps awarding

the contract to Intervenor -- an acti on, at best, implied by

counsel's letter, but necessary to Intervenor's standing -- or

rebidding the subject projects, with more explicit conflict - of -

interest provisions addressing the tiers of participants and the

effect of marriage between two principals o f any of the

participants, at whatever tier. The incompleteness of counsel's

recommendation in selecting one of these two options, if

Petitioner's proposal were rejected, would have been even more

problematic in this case, if Intervenor had prevailed.

26. How ever, accepting the parties' understanding of the

posture of this case, Petitioner bears the burden of proving

that the rescission of the award to it, and implicit award to

Intervenor, would be contrary to statutes, rules, or policies or

the RFQ.

27. The mater ial facts of this case are not in dispute.

Petitioner submitted the lowest bid and would have received the

award, but for the issue raised by Intervenor concerning a

conflict of interest involving Fraga Engineers.

28. Fraga Engineers works indirectly with Res pondent on

the subject projects and works with Petitioner on other

projects, but does not work even indirectly with Petitioner on

the subject projects, unless Ms. Fraga and Mr. Silva are

interchangeable due to their marriage. For these projects,

Fraga Eng ineers is a second - tier consultant to Respondent's DCP.

Although Fraga Engineers is on Respondent's DCP Team for the

subject projects and Respondent retains the right not to allow

its DCP to remove Fraga Engineers, the DCP, not Fraga Engineers,

is under c ontract with Respondent for these projects.

Contractually, Fraga Engineers' only relationship with these

projects is under a subcontract with the DCP.

29. Fraga Engineers serves as a third - tier consultant to

Silva Architects on projects for which Petitioner is the first -

tier contractor. However, as noted above, for the subject

projects, Fraga Engineers' only relationship with Petitioner's

team is that Ms. Fraga -- claimed by Intervenor to be better known

as Mrs. Silva -- is married to Mr. Silva.

30. None of these r elationships among Petitioner,

Respondent, Silva Architects, and Fraga Engineers violates any

applicable statutes, rules, or policies or any specifications of

the RFQ, with respect to the creation of a conflict of interest

that would necessitate or justify the disqualification of

Petitioner or the rejection of its proposal.

31. The only conflict - of - interest provision in the RFQ is

Paragraph I.H. This conflict - of - interest provision requires two

conditions for a determination of the ineligibility of the

offeror or rejection of its proposal. In this case, neither of

these conditions is met.

32. First, Fraga Engineers is not part of Petitioner's

team for these projects. For these projects, the little -

mentioned Mr. Aguirre, not Fraga Engineers, serves as the

mechani cal, electrical, plumbing, and fire - suppression engineer.

RFQ Paragraph I.H covers the current members of Petitioner's

team for the two high - school additions that are the subject of

this RFQ. Nothing in the RFQ or Respondent's rules or policies

extends t he disqualification from the members of the offeror's

team on the subject projects to members of its team on past

projects or other ongoing projects. Nor do the RFQ or

Respondent's rules and policies require or permit Respondent to

treat Silva Architects as though it were Fraga Engineers due to

the marriage of the principals of the two entities. The RFQ and

Respondent's rules and policies contain no attribution rules,

under which Ms. Fraga would be treated as the principal of Silva

Architects due to her m arriage with Mr. Silva.

33. Second, Fraga Engineers is not presently under

contract with Respondent for any project, including the subject

projects, for which Petitioner is the general contractor. The

participation of Fraga Engineers on the DCP Team for the se

projects is irrelevant under RFQ Paragraph I.H, which limits its

scope to entities under contract with Respondent. Fraga

Engineers is not under contract with Respondent, so its

involvement fails to trigger the RFQ's conflict - of - interest

provision.

34. Th e parties stipulated at the start of the hearing

that Respondent had no rule or policy that would define a

conflict of interest based on a spousal relationship, except for

such a relationship with an employee of Respondent. So, the

sole remaining source o f authority for disqualifying Petitioner

or rejecting its proposal, on the basis of a conflict of

interest, would be a state statute or rule.

35. The only applicable conflict - of - interest provision in

the statutes is Section 287.055(9)(b), Florida Statutes, whi ch

Section 1013.45(1)(b), Florida Statutes, applies to design - build

contracts for School Board building construction. Section

287.055(9)(b), Florida Statutes, states: "A design criteria

professional who has been selected to prepare the design

criteria pa ckage is not eligible to render services under a

design - build contract executed pursuant to the design criteria

package." Respondent's Rule 6Gx13 - 7B - 1.021(III)(A) states the

same prohibition.

36. The present arrangement does not violate Section

287.055(9)(b), Florida Statutes. The statute speaks of the DCP,

not a member of the DCP Team. This statute merely prohibits the

DCP, Santos/Raimundez Architects, P.A., from rendering design -

build services for the subject projects.

37. As Intervenor noted in its formal w ritten protest,

Florida Administrative Code Rule 60D - 5.0071(9) provides that "an

agency" may reserve the right to reject a bid when it determines

that a "conflict of interest exists." In RFQ Paragraph I.H,

Respondent reserved the right to reject a bid if a conflict

existed, and, as noted above, no such conflict exists.

38. More importantly, though, Florida Administrative Code

Rule 60D - 5.0071(9) is inapplicable to this case. This rule is

promulgated by the Florida Department of Management Services,

pursuant to Section 255.29, Florida Statutes, which applies to

the construction of state buildings, not School Board buildings.

Chapter 1013, Florida Statutes, authorizes the Florida

Department of Education to exercise certain supervisory

responsibilities over the construction of School Board

buildings. The Florida Department of Education rule applicable

to such construction is at Florida Administrative Code Rule

6 - 2.001, and it does not address conflicts of interest.

39. Lacking any authority for rejecting Petitione r's

proposal on the basis of a conflict of interest set forth in any

statute, rule, School Board policy, or the RFQ, Respondent's

counsel necessarily based his rescission recommendation on a

perceived or potential conflict of interest not stated in the

sta tutes, rules, policies, or RFQ. However, this conflict of

interest lacks any definition, even after the hearing in this

case, and emerged only after the opening of the proposals.

40. In the abstract, conflicts of interest find little

support due to the obvi ous potential for misdealing between the

persons with the conflict. Respondent's counsel was trying to

bolster the competitive - bidding process by adding this ill -

defined conflict - of - interest provision after the proposals had

been opened. Unfortunately, t he effect of counsel's action is

the opposite. Allowing agencies to add new, vague conflict - of -

interest requirements to a procurement after the bids or

proposals are opened invites manipulation of the bidding process

and subverts competitive bidding when, as here, the agency

selects a higher bid over the lowest bid of an offeror that

failed to comply with this new, vague requirement. As must

bidders, so must agencies abide by the specifications of their

bid packages and may not select a bidder that has co nformed to

an undisclosed, poorly defined bid specification, to which a

lower bidder failed to conform.

41. Petitioner has proved that no conflict - of - interest

provision requires or permits the disqualification of Petitioner

or rejection of its proposal and tha t Respondent's proposed

disqualification of Petitioner and rejection of Petitioner's

proposal subverts the competitive bidding process. Petitioner

has thus proved that the proposed agency action adverse to

Petitioner is contrary to Section 1013.46(1)(a), Florida

Statutes, which requires Respondent to award the contract to the

"lowest responsible bidder."

RECOMMENDATION

It is

RECOMMENDED that Respondent enter a final order awarding

the contract to Petitioner.

DONE AND ENTERED this 14th day of December, 2004, in

Tallahassee, Leon County, Florida.

S

___________________________________

ROBERT E. MEALE

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675 SUNCOM 278 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 14th day of December, 2004.

COPIES FURNISHED:

Dr. Rudolph F. Crew, Superintendent

Miami - Dade County School Board

1450 Northeast Second Avenue

Miami, Florida 33132 - 1394

Daniel J. Woodring, General Counsel

Department of Education

325 West Gaines Street, Roo m 1244

Tallahassee, Florida 32399 - 0400

Ira Libanoff

Ferencik Libanoff Brandt

Bustamante and Williams, P.A.

150 South Pine Island Road, Suite 400

Fort Lauderdale, Florida 33324

Luis M. Garcia

Miami - Dade County School Board

1450 Northeast 2nd Avenue, Sui te 400

Miami, Florida 33132

J. Alfredo de Armas

Alvarez, Armas & Borron, P.A.

3211 Ponce De Leon Boulevard, Suite 302

Coral Gables, Florida 33134

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 must be filed with the agency that

will issue the final order in this case.