05-004454BID Merkury Corporation, D/B/A Merkury Development vs. Department Of Management Services Status: Closed Recommended Order on Monday, July 10, 2006.

Summary: Intervenor`s bid did not materially deviate from the project specifications. Thus, Respondent`s preliminary decision to award Intervenor the construction contract at issue was not clearly erroneous, arbitrary, capricious or contrary to competition.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

MERKURY CORPORATION, d/b/a )

MERKURY DEVELOPMENT, )

)

Petitioner, )

)

vs. ) Case No. 05 - 4454BID

)

DEPARTMENT OF MANAGEMENT )

SERVICES, )

)

Respondent, )

)

and )

)

E.L.C.I. CONSTRUCTION GROUP, )

INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

This case came before Administrative Law Judge John G.

Van Laningham for final hearing on April 27, 2006, in Miami,

Florida.

APPEARANCES

For Petitioner: Jose ph K. Hall, Esquire

Law Office of Joseph K. Hall,

Esquire, P.A.

5721 Southeast 17th Street

Plantation, Florida 33301

For Respondent: Clifford A. Taylor, Esquire

Department of Management Services

4050 Esplanade Way, Suite 160D

Talla hassee, Florida 32399 - 0950

For Intervenor: Joel M. Aresty, Esquire

Joel M. Aresty, P.A.

11077 Biscayne Boulevard

Penthouse

Miami, Florida 33161

STATEMENT OF THE ISSUES

The issues in this bid protest are whether Intervenor's bid

materi ally deviated from the project specifications and, if so,

whether Respondent's preliminary decision to award Intervenor

the construction contract at issue was clearly erroneous,

arbitrary or capricious, or contrary to competition.

PRELIMINARY STATEMENT

R espondent Department of Management Services issued an

Invitation to Bid for the purpose of soliciting proposals from

contractors interest ed in building classrooms for the ICARE

Baypoint School, a Department of Juvenile J ustice facility. Six

bids were rece ived and opened on September 22, 2005. On

October 17, 2005, Respondent announced its intent to award the

construction contract to Intervenor E.L.C.I. Construction Group,

Inc.

Petitioner Merkury Corporation filed a formal written

protest of the intended award on October 20, 2005. The case was

referred to the Division of Administrative Hearings, where the

protest petition was filed on December 8, 2005.

At a scheduling conference on December 16, 2005, the

parties agreed that the case could probably be deci ded without

an evidentiary hearing, and it was decided —— with the parties'

input and consent —— that the undersigned would defer setting a

final hearing until after the parties had filed a joint

stipulation of facts, which would be due no later than

January 6, 2006. 1 That date was nearly a month after the

undersigned's receipt of the protest petition; by agreeing to

it, as they did, the parties waived their right to an expedited

hearing. 2

On December 29, 2006, Respondent filed a Motion to

Relinquish Jurisdic tion. That particular motion gave rise to a

briefing schedule that extended into February 2006. The

parties, who had input into this schedule, consistently told the

undersigned that they continued to believe the case probably

could be resolved without a formal hearing.

On February 1, 2006, while Respondent's Motion to

Relinquish Jurisdiction was pending, Petitioner moved for leave

to amend its formal protest and, on February 21, 2006, was

granted permission to do so. Petitioner's Amended Bid Protest

r aised new protest grounds, giving rise to genuine disputes of

material fact. Consequently, Respondent's Motion to Relinquish

Jurisdiction was denied and the final hearing scheduled.

On March 16, 2006, Intervenor filed a Petition in

Intervention, which th e undersigned granted on March 27, 2006.

The final hearing took place on April 27, 2006, as

scheduled, with all parties present. In its case, Petitioner

elicited testimony from its corporate president, Paul A. Tolles,

as well as from Moises Bichachi, t he vice president of

Intervenor. In addition, Petitioner's Exhibits 1 and 2 were

received in evidence.

Respondent offered the testimony of its Project Manager,

Jere Lahey. Respondent also offered 347 Bates - numbered pages of

exhibits, which were admitted into evidence without objection.

The final hearing transcript was filed on May 26, 2006,

making the proposed recommended orders due on June 1, 2006,

pursuant to the schedule established at the conclusion of the

final hearing. Respondent timely filed a Pro posed Recommended

Order. Petitioner's late - filed Proposed Recommended Order was

accepted out - of - time, as was Intervenor's. All of the parties'

post - hearing submissions were carefully considered during the

preparation of this Recommended Order.

Unless o therwise indicated, citations to the Florida

Statutes refer to the 2005 Florida Statutes.

FINDINGS OF FACT

1. Pursuant to an Invitation to Bid (the "ITB"),

Respondent Department of Management Services ("DMS") solicited

bids on a project known as the ICAR E Baypoint School Classroom

Addition (the "Project"). 3 Bids were due on September 22, 2005.

2. As a condition of submitting a bid, interested

contractors needed first to be "prequalified" by DMS. DMS

prequalified Petitioner Merkury Corporation ("Merku ry") and

Intervenor E.L.C.I. Construction Group, Inc., ("ELCI"), among

several others.

3. Each bidder was required to submit a "Base Bid" ( i.e.

the total price for all work, including labor and materials,

specified in the ITB), together with a price fo r each of six

numbered "Alternates." 4 The contract would be awarded to the

responsive bidder offering the lowest bid, the latter being

defined as, generally speaking, the bid proposing the lowest

aggregate price on the Base Bid plus the cost(s) of any

Alt ernate(s) chosen by DMS. 5

4. Of interest in this case is Alternate No. 1, which, in

the ITB as originally issued, appeared as follows:

Alternate No. 1 — Allowance for Owner [=DMS]

contribution for buried feeder conduit to

the electrical transformer (O wner will

provide number).

Alternate No. 1 referred to the work —— described in the

Electrical Site Plan (which was part of the ITB) —— that would be

necessary to bring electricity to the Project (hereafter, the

"electric service connection"). In brief, esta blishing the

electric service connection entailed installing the wiring

between the electrical panel in the new building and the nearest

transformer, which latter belonged to the local electric

company, Florida Power & Light ("FP&L").

5. DMS knew that the Project would need power. Thus,

Alternate No. 1 was not optional, as the nomenclature might

suggest. But the cost of establishing the electric service

connection would be largely dependent on factors exclusively

within FP&L's control. And as of the time the ITB was issued,

DMS had been unable to obtain from FP&L sufficient information

to allow bidders accurately to estimate the cost of this

particular item. The purpose of Alternate No. 1, therefore, was

to make the electric service connection a non - competitive item.

This would be accomplished by DMS's providing prospective

bidders with a cost estimate based on information to be obtained

from FP&L. DMS expected that each competing contractor would

bid the same amount on Alternate No. 1, namely, the amount that

DMS had provided.

6. As initially defined, however, Alternate No. 1 was

somewhat confusing, and at the pre - bid meeting in early

September 2005, an issue was raised about DMS's intent regarding

this item. As a result, Addendum No. 1 to the I TB, which was

issued on September 8, 2005, to address questions raised at the

pre - bid meeting, included the following:

ADDENDUM NO. 1 — ITEM NO. 5: An allowance

shall be carried for the cost of new service

connection from new transformer to nearest

FP & L point of service. Owner will provide

budget number to be carried for this

allowance.

This addendum amended the description of Alternate No. 1, making

clearer (it was believed) DMS's intent that the electric service

connection not be a point of competi tion between the bidders, as

each would carry, as an allowance, the Owner - provided budget

number for this item.

7. Unfortunately for everyone concerned, DMS never

provided the interested contractors the budget number reflecting

the estimated cost of esta blishing the electric service

connection. 6 Consequently, none of the bidders proposed a dollar

figure for Alternate No. 1. Instead, each responded to

Alternate No. 1 by stating, in effect, that the requested

allowance could not be provided according to t he specifications

(which unambiguously instructed that DMS would provide the

number to be carried for this allowance).

8. To be sure, the bidders' respective responses to

Alternate No. 1 were not identical. Merkury, for example, wrote

"N/A," which is co mmonly understood to mean "not applicable."

ELCI's bid proposal, on the other hand, stated, "By Owner."

Merkury argues that the phrase "By Owner" means that DMS, rather

than ELCI, should be responsible for establishing —— at DMS's

expense —— the electric ser vice connection. The undersigned

rejects this interpretation of ELCI's bid as unpersuasive and

unsupported by the greater weight of the evidence. In the

instant context, the phrase "By Owner" is most readily and

reasonably understood, objectively, as bei ng functionally the

equivalent of "N/A." ELCI was simply expressing the idea that

the budget number (not the work) would be provided by DMS —— a

reasonable response, given the language of Alternate No. 1. In

sum, despite some differences in wording, every one of the

responses to Alternate No. 1, including ELCI's, was the product

of the bidder's inability, in the absence of the Owner - provided

budget number, to carry as an allowance the Owner - provided

budget number.

9. Of the five contractors who timely sub mitted a bid

proposal, Merkury's Base Bid of $2,874,597 was the lowest,

followed closely by ELCI's Base Bid of $2,877,000. DMS decided

to take all six Alternates, however, and after the additional

costs were added, ELCI was deemed the lowest responsive bi dder,

Merkury the second lowest. Accordingly, on October 17, 2005,

DMS announced its intent to accept ELCI's bid in toto and award

ELCI the contract for the Project.

10. Protesting the intended award, Merkury takes the

position that DMS's failure to pr ovide the budget number for

Alternate No. 1 effectively rendered this item a nullity,

compelling the bidders to include in their respective Base Bids

the cost of the electric service connection, which work remained

a part of the Project, by virtue of the b id specifications,

notwithstanding the loss of Alternate No. 1. Consistent with

this understanding of the effect of DMS's silence regarding the

budget figure, Merkury took into account the anticipated cost of

establishing the electric service connection w hen working up its

Base Bid, ultimately adding $33,388 to the bottom line as a

result. ELCI, in contrast, assuming that DMS eventually would

provide the figure for the allowance, did not factor into its

Base Bid calculation the cost of the electric servic e

connection.

11. ELCI guessed correctly, for in choosing Alternate

No. 1, DMS decided that it would provide the successful bidder

with the budget number when such became available and thereafter

pay the cost of establishing the electric service connect ion via

a change order. Merkury maintains that DMS should have rejected

ELCI's bid as materially non - responsive (because the costs that

were used in preparing ELCI's Base Bid did not include the cost

of establishing the electric service connection) and aw arded the

contract to Merkury as the lowest responsive bidder.

12. In light of Merkury's argument, it is relevant to note

that the ITB called for the Base Bid to be given as a lump sum,

without breaking out individual costs; that is, in fact, how

each of the six responding contractors presented their

respective Base Bids. Thus, there was no way for DMS to know,

upon opening the bids, that Merkury's Base Bid included a cost

component relating to the electric service connections, while

ELCI's did not.

CONCLUSIONS OF LAW

13. DOAH has personal and subject matter jurisdiction in

this proceeding pursuant to Sections 120.569, 120.57(1), and

120.57(3), Florida Statutes, and the parties have standing.

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

the burden of proof rests with the party opposing the proposed

agency action, here Merkury. See State Contracting and

Engineering Corp. v. Department of Transp. , 709 So. 2d 607, 609

(Fla. 1st DCA 1998). Merkury must sustain its burden of proof

by a prep onderance of the evidence. Florida Dept. of Transp. v.

J.W.C. Co., Inc ., 396 So. 2d 778, 787 (Fla. 1st DCA 1981).

15. Section 120.57(3)(f), Florida Statutes, spells out the

rules of decision applicable in bid protests. In pertinent

part, the statute pr ovides:

In a competitive - procurement protest, 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 statutes, the agency's

rules or policies, or the bid or proposal

specifications. The standard of proof for

such proceedings shall be whether the

proposed agency action was clearly

erroneous, contrary to competition,

arbitrary, or capricious.

16. The First District Court of Appeal has construed the

term "de novo proceeding," as used in Section 120.57(3)(f),

Florida Statutes, to "describe a form of intra - agency review.

The judge may receive evidence, as with any formal hearing under

section 120.57(1), but the object of the pr oceeding is to

evaluate the action taken by the agency." State Contracting ,

709 So. 2d at 609. In deciding State Contracting , the court

followed Intercontinental Properties, Inc. v. State Dept. of

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

1st DCA 1992), an earlier decision —— it actually predates the

present version of the bid protest statute —— in which the court

had reasoned:

Although the hearing before the hearing

officer was a de novo proceeding, that

simply means that there was an evi dentiary

hearing during which each party had a full

and fair opportunity to develop an

evidentiary record for administrative review

purposes. It does not mean, as the hearing

officer apparently thought, that the hearing

officer sits as a substitute for th e

Department and makes a determination whether

to award the bid de novo. Instead, the

hearing officer sits in a review capacity,

and must determine whether the bid review

criteria . . . have been satisfied.

17. In framing the ultimate issue to be decide d in this de

novo proceeding as being "whether the agency's proposed action

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

rules or policies, or the bid or proposal specifications," the

statute effectively establishes a standard of conduct fo r the

agency, which is that, in soliciting and accepting bids or

proposals, the agency must obey its governing statutes, rules,

and the project specifications. If the agency breaches this

standard of conduct, its proposed action is subject to

(recommended ) reversal by the administrative law judge in a

protest proceeding.

18. Consequently, the party protesting the intended award

must identify and prove, by the greater weight of the evidence,

a specific instance or instances where the agency's conduct in

t aking its proposed action was either: (a) contrary to the

agency's governing statutes; (b) contrary to the agency's rules

or policies; or (c) contrary to the bid or proposal

specifications.

19. It is not sufficient, however, for the protester to

prove m erely that the agency violated the general standard of

conduct. By virtue of the applicable standards of "proof,"

which are best understood as standards of review, 7 the protester

additionally must establish that the agency's misstep was: (a)

clearly erro neous; (b) contrary to competition; or (c) an abuse

of discretion.

20. The three review standards mentioned in the preceding

paragraph are markedly different from one another. The abuse of

discretion standard, for example, is more deferential (or

narrow er) than the clearly erroneous standard. The bid protest

review process thus necessarily entails a decision or decisions

regarding which of the several standards of review to use in

evaluating a particular action. To do this requires that the

meaning and applicability of each standard be carefully

considered.

21. The clearly erroneous standard is generally applied in

reviewing a lower tribunal's findings of fact. In Anderson v.

City of Bessemer City, N.C. , 470 U.S. 564, 573 - 74 (1985), the

United States Supreme Court expounded on the meaning of the

phrase "clearly erroneous," explaining:

Although the meaning of the phrase "clearly

erroneous" is not immediately apparent,

certain general principles governing the

exercise of the appellate court's power to

o verturn findings of a [trial] court may be

derived from our cases. The foremost of

these principles . . . is that "[a] finding

is 'clearly erroneous' when although there

is evidence to support it, the reviewing

court on the entire evidence is left with

th e definite and firm conviction that a

mistake has been committed ." . . . . This

standard plainly does not entitle a

reviewing court to reverse the finding of

the trier of fact simply because it is

convinced that it would have decided the

case differently . The reviewing court

oversteps the bounds of its duty . . . if it

undertakes to duplicate the role of the

lower court. "In applying the clearly

erroneous standard to the findings of a

[trial] court sitting without a jury,

appellate courts must constantl y have in

mind that their function is not to decide

factual issues de novo. " . . . . If the

[trial] court's account of the evidence is

plausible in light of the record viewed in

its entirety, the court of appeals may not

reverse it even though convinced that had it

been sitting as the trier of fact, it would

have weighed the evidence differently.

Where there are two permissible views of the

evidence, the factfinder's choice between

them cannot be clearly erroneous. . . . .

(Citations omitted)(emphas is added).

22. The Florida Supreme Court has used somewhat different

language to give this standard essentially the same meaning:

A finding of fact by the trial court in a

non - jury case will not be set aside on

review unless there is no substantial

evid ence to sustain it, unless it is clearly

against the weight of the evidence, or

unless it was induced by an erroneous view

of the law. A finding which rests on

conclusions drawn from undisputed evidence,

rather than on conflicts in the testimony,

does not carry with it the same

conclusiveness as a finding resting on

probative disputed facts, but is rather in

the nature of a legal conclusion. . . . .

When the appellate court is convinced that

an express or inferential finding of the

trial court is without support of any

substantial evidence, is clearly against the

weight of the evidence or that the trial

court has misapplied the law to the

established facts, then the decision is

'clearly erroneous' and the appellate court

will reverse because the trial cou rt has

'failed to give legal effect to the

evidence' in its entirety.

Holland v. Gross , 89 So. 2d 255, 258 (Fla. 1956)(citation

omitted).

23. Because administrative law judges are the triers of

fact charged with resolving disputed issues of material f act

based upon the evidence presented at hearing, and because bid

protests are fundamentally de novo proceedings, the undersigned

is not required to defer to the letting authority in regard to

any findings of objective historical fact that might have been

made in the run - up to preliminary agency action. It is

exclusively the administrative law judge's job, as the trier of

fact, to ascertain from the competent, substantial evidence in

the record what actually happened in the past or what reality

presently e xists, as if no findings previously had been made.

24. If, however, the challenged agency action involves an

ultimate factual determination —— for example, an agency's

conclusion that a proposal's departure from the project

specifications was a minor irre gularity as opposed to a material

deviation —— then some deference is in order, according to the

clearly erroneous standard of review. 8 To prevail on an

objection to an ultimate finding, therefore, the protester must

substantially undermine the factual pred icate for the agency’s

conclusion or convince the judge that a defect in the agency's

logic led it unequivocally to commit a mistake.

25. There is another species of agency action that also is

entitled to review under the clearly erroneous standard:

inte rpretations of statutes for whose administration the agency

is responsible, and interpretations of the agency's own rules.

See State Contracting and Engineering Corp. v. Department of

Transp. , 709 So. 2d 607, 610 (Fla. 1st DCA 1998). In deference

to the agency's expertise, such interpretations will not be

overturned unless clearly erroneous. Id. 9

26. This means that if the protester objects to the

proposed agency action on the ground that it violates either a

governing statute within the agency's subst antive jurisdiction

or the agency's own rule, and if, further, the validity of the

objection turns on the meaning, which is in dispute, of the

subject statute or rule, then the agency's interpretation should

be accorded deference; the challenged action sho uld stand unless

the agency's interpretation is clearly erroneous (assuming the

agency acted in accordance therewith). 10

27. The statute requires that agency action (in violation

of the applicable standard of conduct) which is "arbitrary, or

capricious" be set aside. Earlier, the phrase "arbitrary, or

capricious" was equated with the abuse of discretion standard,

see endnote 7 , supra , because the concepts are practically

indistinguishable —— and because use of the term "discretion"

serves as a useful reminde r regarding the kind of agency action

reviewable under this highly deferential standard.

28. It has been observed that an arbitrary decision is one

that is not supported by facts or logic, or is despotic. Agrico

Chemical Co. v. State Dept. of Environme ntal Regulation , 365 So.

2d 759, 763 (Fla. 1st DCA 1978), cert. denied , 376 So. 2d 74

(Fla. 1979). Thus, under the arbitrary or capricious standard,

"an agency is to be subjected only to the most rudimentary

command of rationality. The reviewing court is not authorized

to examine whether the agency's empirical conclusions have

support in substantial evidence." Adam Smith Enterprises, Inc.

v. State Dept. of Environmental Regulation , 553 So. 2d 1260,

1273 (Fla. 1st DCA 1989). Nevertheless,

the reviewing court must consider whether

the agency: (1) has considered all relevant

factors; (2) has given actual, good faith

consideration to those factors; and (3) has

used reason rather than whim to progress

from consideration of each of these factors

to its final decision.

Id.

29. The second district framed the "arbitrary or

capricious" review standard in these terms: "If an

administrative decision is justifiable under any analysis that a

reasonable person would use to reach a decision of similar

importance, it would seem that the decision is neither arbitrary

nor capricious." Dravo Basic Materials Co., Inc. v. State Dept.

of Transp. , 602 So. 2d 632, 634 n.3 (Fla. 2d DCA 1992). As the

court observed, this "is usually a fact - intensive

determination." Id. at 6 34.

30. Compare the foregoing "arbitrary or capricious"

analysis with the test for reviewing discretionary decisions:

"Discretion, in this sense, is abused when

the judicial action is arbitrary, fanciful,

or unreasonable, which is another way of

saying that discretion is abused only where

no reasonable man would take the view

adopted by the trial court. If reasonable

men could differ as to the propriety of the

action taken by the trial court, then it

cannot be said that the trial court abused

its discre tion."

Canakaris v. Canakaris , 382 So. 2d 1197, 1203 (Fla. 1980),

quoting Delno v. Market St. Ry. Co. , 124 F.2d 965, 967 (9th Cir.

1942). Further,

[t]he trial court's discretionary power is

subject only to the test of reasonableness,

but that test requi res a determination of

whether there is logic and justification for

the result. The trial courts' discretionary

power was never intended to be exercised in

accordance with whim or caprice of the judge

nor in an inconsistent manner. Judges

dealing with ca ses essentially alike should

reach the same result. Different results

reached from substantially the same facts

comport with neither logic nor

reasonableness.

Canakaris , 382 So. 2d at 1203

31. Whether the standard is called "arbitrary or

capricious" or "abuse of discretion," the scope of review, which

demands maximum deference, is the same. Clearly, then, the

narrow "arbitrary or capricious" standard of review cannot

properly be applied in evaluating all agency actions that might

be challenged in a bid protest; rather, this highly deferential

standard appropriately applies only to those decisions which are

committed to the agency's discretion.

32. Therefore, where the protester objects to agency

action that entails the exercise of discretion, but onl y in such

instances, the objection cannot be sustained unless the agency

abused its discretion, i.e. acted arbitrarily or capriciously.

33. The third standard of review articulated in Section

120.57(3)(f) is unique to bid protests. The "contrary to

com petition" test is a catch - all which applies to agency actions

that do not turn on the interpretation of a statue or rule, do

not involve the exercise of discretion, and do not depend upon

(or amount to) a determination of ultimate fact.

34. Although the c ontrary to competition standard, being

unique to bid protests, is less well defined than the other

review standards, the undersigned concludes that the set of

proscribed actions should include, at a minimum, those which:

(a) create the appearance of and o pportunity for favoritism; (b)

erode public confidence that contracts are awarded equitably and

economically; (c) cause the procurement process to be genuinely

unfair or unreasonably exclusive; or (d) are unethical,

dishonest, illegal, or fraudulent. See , e.g. , R. N. Expertise,

Inc. v. Miami - Dade County School Bd., et al. , Case No. 01 -

2663BID, 2002 WL 185217, *21 - *22 (Fla.Div.Admin.Hrgs. Feb. 4,

2002 ); see also E - Builder v. Miami - Dade County School Bd. et

al. , Case No. 03 - 1581BID, 2003 WL 22347989, *10

(Fl a.Div.Admin.Hrgs. Oct. 10, 2003)

35. Turning to the merits of this case, Merkury's argument

that ELCI's bid was materially non - responsive proceeds from the

premise that, notwithstanding DMS's failure to provide the

budget number as promised in the descri ption of Alternate No. 1,

the successful bidder is obligated under the bid specifications

to perform all work necessary to complete the electric service

connection. Building on this proposition, Merkury reasons that

because installation of the electric se rvice connection was an

essential aspect of the Project, bidders were bound to estimate

the cost of this work in computing their respective Base Bids ——

and to include such cost in their bids . ELCI's failure to

include the cost of the electric service conne ction in its Base

Bid, Merkury concludes, constituted a material deviation from

the bid specifications, for which its bid should have been

rejected as non - responsive.

36. Merkury's initial premise is based on an

interpretation of the bid specificati ons that, while contrary to

DMS's, is at least plausible and perhaps reasonable. It is not

necessary to determine whether DMS's interpretation is clearly

erroneous, however, because the next step in Merkury's

reasoning —— the assertion that bidders were bou nd to include in

their Base Bids the cost of performance associated with the

electric service connection —— is a non sequitur. That the

successful bidder will be contractually obligated to perform a

particular piece of work does not logically compel the

con clusion that, to be responsive, a bidder must include the

cost of such work in its bid. To the contrary, where an "out

the door" bid price is solicited, as here, practically any bid

that proposes a lump - sum total cost within reason must be

considered resp onsive, regardless of how the bidder computed its

bid, or what expenses were included (or not included) therein. 11

37. Thus, even if Merkury were correct about the meaning

of the bid specifications vis - à - vis the electric service

connection, the upshot wou ld be that ELCI underbid on the

Project by mistakenly omitting a material cost from its bid

computation —— but its bid would be responsive nonetheless . The

downside for ELCI in that event would be possibly having to

install the electric service connection a t a loss, because as a

general rule, bidders on public contracts must bear the

consequences of their bid computation errors. Department of

Transp. v. Ronlee, Inc. , 518 So. 2d 1326, 1328 (3rd DCA 1987) ,

rev. denied , 528 So. 2d 1183 (Fla. 1988) ; Graham v. C lyde , 61

So. 2d 656, 658 (Fla. 1952)("After the bid is accepted, the

bidder is bound by his error and is expected to bear the

consequence of it.") .

38. In sum, DMS did not err in deeming ELCI's bid

responsive. Indeed, because DMS had no way of knowing, at the

time the bids were opened, what costs ELCI or the other bidders

had included in (or omitted from) their Base Bids, it was not

possible for DMS to reject ELCI's bid on the basis of the

alleged deviation about which Merkury has complained. That

being the case , accepting ELCI's bid was not contrary to any

governing statute, rule, or bid specification, and it is

concluded that DMS did not violate the applicable standard of

conduct in the manner that Merkury has urged. 12

39. There having been no cogni zable violation of the

standard of conduct, it is concluded that the intended award

should stand.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that a Final Order be entered directing

that the proposed awa rd to ELCI be implemented in accordance

with DMS's intentions.

DONE AND ENTERED this 10th day of July, 2006, in

Tallahassee, Leon County, Florida.

S

___________________________________

JOHN G. VAN LANINGHAM

Administrative Law Judge

Division of Admini strative Hearings

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 Admin istrative Hearings

this 10th day of July, 2006.

ENDNOTES

1 / The parties ultimately filed a Joint Stipula tion on January

23, 2006. The stipulated facts, being thus memorialized in the

record, were taken as established without need of further proof.

2 / Section 120.57(3)(e), Florida Statutes, requires that bid

protests be heard within 30 days after the admin istrative law

judge's receipt of the formal written protest, unless the

parties waive the right to a prompt hearing.

3 / The Project entails the construction of additional classrooms

at a facility operated by the Department of Juvenile Justice.

4 / The c ost of an Alternate can be either positive (an increase

in the Base Bid) or negative (a deduction from the Base Bid).

In this instance, each Alternate was expected to add an

additional cost to the Base Bid, if accepted.

5 / The ITB permitted DMS to selec t any, all, or none of the six

Alternates. If, however, DMS chose fewer than all six, then the

lowest bid would belong to the bidder offering the lowest price

for the Base Bid plus each Alternate (if any) taken in numerical

order . For example, if DMS wer e to select Alternate Nos. 1, 2,

and 4, then the relevant respective bid prices, for the purpose

of determining the lowest bid, would be each bidder's Base Bid

plus its proposed costs for Alternate Nos. 1 and 2, Alternate

No. 4 having been taken out of ord er.

In its original protest, Merkury alleged that DMS had

chosen Alternates out of order, effectively starting with

Alternate No. 2. Because Merkury (as will be seen) had

submitted the lowest Base Bid, Merkury alleged that DMS should

have designated Merkury the lowest bidder, according the ITB's

instructions for determining the lowest bid. Later, however,

Merkury moved for, and was granted, leave to file an amended

protest petition. The gravamen of Merkury's amended petition

was not, as before, DMS' s alleged miscalculation of the lowest

bid, but rather DMS's alleged failure to reject ELCI's bid as

non - responsive.

At hearing and in its Proposed Recommended Order, Merkury

focused exclusively on the alleged non - responsiveness of ELCI's

bid. The und ersigned has determined, therefore, that Merkury

abandoned its original protest ground, and accordingly that

issue will not be discussed further herein.

6 / DMS blames its failure to furnish the figure on FP&L, on whom

DMS was still waiting, as of the dat e the bids were due, to

provide information believed necessary for developing a

reasonable cost estimate.

7 / The term "standard of proof" as used in § 120.57(3)(f)

reasonably may be interpreted to reference standards of review .

This is because, while th e "standard of proof" sentence fails to

mention any common standards of proof, it does articulate two

accepted standards of review: (1) the "clearly erroneous"

standard and (2) the abuse of discretion (="arbitrary, or

capricious") standard. (The "contrar y to competition"

standard —— whether it be a standard of proof or standard of

review —— is unique to bid protests.)

8 / An ultimate factual determination is a conclusion derived by

reasoning from objective facts; it frequently involves the

application of a legal principle or rule to historical facts:

e.g. the driver failed to use reasonable care under the

circumstances and therefore was negligent; and it may be infused

with policy considerations. Reaching an ultimate factual

finding requires that judgmen t calls be made which are unlike

those that attend the pure fact finding functions of weighing

evidence and choosing between conflicting but permissible views

of reality.

9 / From the general principle of deference follows the more

specific rule that an a gency's interpretation need not be the

sole possible interpretation or even the most desirable one; it

need only be within the range of permissible interpretations.

State Bd. of Optometry v. Florida Soc. of Ophthalmology , 538 So.

2d 878, 885 (Fla. 1st DCA 1988); see also Suddath Van Lines,

Inc. v. State Dept. of Environmental Protection , 668 So. 2d 209,

212 (Fla. 1st DCA 1996). However, "[t]he deference granted an

agency's interpretation is not absolute." Department of Natural

Resources v. Wingfield Devel opment Co. , 581 So. 2d 193, 197

(Fla. 1st DCA 1991). Obviously, an agency cannot implement any

conceivable construction of a statute or rule no matter how

strained, stilted, or fanciful it might be. Id. Rather, "only

a permissible construction" will be upheld by the courts.

Florida Soc. of Ophthalmology , 538 So. 2d at 885. Accordingly,

"[w]hen the agency's construction clearly contradicts the

unambiguous language of the rule, the construction is clearly

erroneous and cannot stand." Woodley v. Departme nt of Health

and Rehabilitative Services , 505 So. 2d 676, 678 (Fla. 1st DCA

1987); see also Legal Environmental Assistance Foundation v.

Board of County Com'rs of Brevard County , 642 So. 2d 1081, 1083 -

84 (Fla. 1994)("unreasonable interpretation" will not b e

sustained).

10 / The same standard of review also applies, in a protest

following the announcement of an intended award, with regard to

preliminary agency action taken upon the agency's interpretation

of the project specifications —— but perhaps for a reas on other

than deference to agency expertise. Section 120.57(3)(b),

Florida Statutes, provides a remedy for badly written or

ambiguous specifications: they may be protested within 72 hours

after the posting of the specifications. The failure to avail

one self of this remedy effects a waiver of the right to complain

about the specifications per se. Consequently, if the dispute

in a protest challenging a proposed award turns on the

interpretation of an ambiguous, vague, or unreasonable

specification, which could have been corrected or clarified

prior to acceptance of the bids or proposals had a timely

specifications protest been brought, and if the agency has acted

thereafter in accordance with a permissible interpretation of

the specification ( i.e. one that is not clearly erroneous), then

the agency's intended action should be upheld —— not necessarily

out of deference to agency expertise, but as a result of the

protester's waiver of the right to seek relief based on a faulty

specification. If, however, the a gency has acted contrary to

the plain language of a lawful specification, then its action

should probably be corrected, for in that event the preliminary

agency action likely would be clearly erroneous or contrary to

competition; in that situation, there s hould be no waiver,

because a reasonable person would not protest an unambiguous

specification that facially conforms to Florida procurement law.

11 / A bid conceivably might be so far below the range of

reasonable bids as to be deemed non - responsive, or t o cause the

bidder to be rejected as not responsible, but such a situation

would be unusual, and in any event would be readily

distinguishable from the present case, where none of the bids

was patently ridiculous.

12 / DMS's failure to provide the budget n umber as promised in

connection with Alternate No. 1, which seems clearly to have

been contrary to the bid specifications, is another matter. It

is unnecessary, however, and would be inappropriate to boot, to

decide whether that misstep constitutes revers ible error under

the applicable standard of review, for Merkury did not raise the

matter as a protest ground.

COPIES FURNISHED :

Joseph K. Hall, Esquire

Law Office of Joseph K. Hall, Esquire, P.A.

5721 Southeast 17th Street

Plantation, Florida 33301

Joel M. Aresty, Esquire

Joel M. Aresty, P.A.

11077 Bi scayne Boulevard

Penthouse

Miami, Florida 33161

Clifford A. Taylor, Esquire

Department of Management Services

4050 Esplanade Way, Suite 160D

Tallahassee, Florida 32399 - 0950

Tom Lewis, Jr., Secretary

Department of Management Services

4050 Esplanade Way

Tallahassee, Florida 32399 - 0950

Steven S. Ferst, General Counsel

Department of Management Services

Post Office Box 9000

Tallahassee, Florida 32399 - 9000

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions with in

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.