08-002369BID Warren Building Company, Inc. vs. Department Of Military Affairs Status: Closed Recommended Order on Wednesday, August 20, 2008.

Summary: Petitioner failed to show that the awarded vendor`s failure to examine and have subcontractors examine project site, as required by specification, was a material irregularity or deviation from bid specs, which would affect price.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

WARREN BUILDING COMPANY, INC., )

)

Petitioner, )

)

vs. ) Case No. 08-2369BID

)

DEPARTMENT OF MILITARY AFFAIRS, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice this cause came on for formal hearing

before P. Michael Ruff, a duly-designated Administrative Law

Judge of the Division of Administrative Hearings. The hearing

was conducted in Tallahassee, Florida, on June 10, 2008. The

appearances were as follows:

APPEARANCES

For Petitioner: Thayer M. Marts, Esquire

1105 Hays Street

Post Office Box 1814

Tallahassee, Florida 32302

For Respondent: Kim F. Heller, II, Esquire

Elizabeth C. Masters, Esquire

Florida National Guard

Post Office Box 1008

St. Augustine, Florida 32085-1008

STATEMENT OF THE ISSUE :

The issue to be resolved in this proceeding concerns

whether the agency action in recommending award of the contract

for a renovation of a National Guard Armory to Concrete

Services, Inc. (CSI) was "clearly erroneous, contrary to

competition, arbitrary or capricious." More specifically, it

must be determined whether a specification requiring that all

general and subcontractors visit the project site and examine

the existing site conditions prior to bid submittal, and

certifying to that fact, was a waivable or minor irregularity,

not affecting the price of the proposal by giving an unfair

competitive advantage to any bidder or proposed vendor.

PRELIMINARY STATEMENT

The cause arose upon the issuance of an invitation to bid

(advertisement number 207005) by the Florida Department of

Military Affairs (DMA) seeking bids for certain renovation work

to be performed at the National Guard Armory in Tallahassee.

The time during which bids were allowed to be submitted

elapsed without any protest of bid specifications. After the

time for submission of bids elapsed, the DMA deliberated on the

bids submitted and posted its decision on April 11, 2008. In

its decision it announced its determination to award the

contract advertised in the advertisement number 207005 to CSI,

determining CSI to be the lowest responsive and responsible

bidder.

Warren Building, Inc. (Petitioner) was the second lowest

responsive and responsible bidder as determined by the DMA.

Upon announcement of the award of the contract, on to CSI, the

Petitioner filed a formal written protest. It contested DMA's

intended award based upon its position that CSI had committed an

irregularity in its bid specification compliance and submittal

by failing to submit, on CSI's letterhead, at the time of the

bid, a certification that the general and subcontractors had

thoroughly examined the property as required by the

specifications. Warren, the Petitioner, thus asserts that this

failure or irregularity results in CSI's bid being non-

responsive and that the award should therefore be made to the

Petitioner, Warren Building, Inc.

The Petition was transmitted to the Division of

Administrative Hearings for conduct of a formal proceeding. The

cause thus came before the undersigned Administrative Law Judge

and was immediately set for hearing in Tallahassee, Florida,

scheduled for June 10, 2008.

The cause came on for hearing as noticed on the above date

on the issues referenced herein. The Petitioner called as a

witness Mr. Steven C. Warren, President of Warren Building, Inc.

The Department called Mr. Kenneth Hersey, who was project

manager for the renovation project at issue, as well as Lt. Col.

Robert Keating, who was the contract manager and the final

decision- maker for the Agency and who made the decision to

recommend

award of the project to CSI. The Respondent's Exhibits one

through eight were stipulated into evidence.

Upon conclusion of the proceeding the parties ordered a

transcript thereof and elected to submit proposed recommended

orders. The Proposed Recommended Orders have been considered in

the rendition of this Recommended Order.

FINDINGS OF FACT

1. The Department of Military Affairs (Department) issued

an invitation to bid for certain renovation work at the National

Guard Armory in Tallahassee. The invitation to bid was issued

on March 2, 2008. It was accompanied by an advertisement number

207005 and addenda No. 1-3. These were the documents that

defined the scope of the work proposed to be constructed by the

Department and the various specifications, conditions, and

criteria which were to guide and be relied upon by prospective

vendors or bidders. The invitation to bid stated that the

contract would be awarded to the lowest responsive and

responsible bidder.

2. The invitation to bid notified prospective bidders that

the Department reserved the right to waive minor irregularities

in a bid where they did not affect the price of the proposal.

Thus, the Department stated in the Invitation to Bid "the

Department reserves the right to accept or reject any or all

proposals received and reserves the right to make an award with

or without further discussion of the proposals submitted or

accept minor informalities or irregularities in the best

interest of the State of Florida, which are considered a matter

of form and not substance and the correction or waiver of which

is not prejudicial to other proposals."

3. The reasons stated in the Invitation to Bid and Addenda

for disqualification of a bidder did not include the failure of

the contractor or subcontractors to visit the project site.

Rather, the invitation to bid and advertisement list placed on

the discriminatory business list, the submission of an

electronic bid and employment of unauthorized aliens as

irregularities that would result in disqualification of a

bidder. The invitation to bid defines minor irregularities as

"those that will not have an adverse effect on the DMA's

interest and will not affect the price of the proposal by giving

a proposer an advantage or benefit not enjoyed by all other

proposers."

4. The Department thus did not make failure of a

contractor or subcontractor to visit the site of the project an

event that would result in disqualification. The Department's

intent rather was to place contractors on notice that failure to

visit the site would be at the sole risk of the general

contractor/bidder if failure to visit the site resulted in an

unforeseen problem, cost, or risk. The Department stated at

Addendum 1, D-9 the following:

D-9 site examination by contractor: The

general contractor and all subcontractors as

listed on Exhibit Five, shall visit the

project site and examine the existing

conditions affected by this work prior to

submitting a bid. Any bid submitted without

prior examination of on-site existing

conditions will be at the sole risk of the

general contractor. The contractor shall

submit on its letterhead the following at

time of bid, certifying that he and his subs

thoroughly examined the project site: 'I

(name of general contractor), do hereby

certify that all associated general and

subcontractor entities have visited the

project site and thoroughly examined the on-

site existing conditions prior to the

submittal of the bid.'

5. Lt. Col. Keating is the contract officer and manager.

His duties include reviewing the bids and making final

determination on bid proposals submitted to the Department for

projects such as this renovation project. He reviewed the

entire package of bid submissions after the bid opening in

Tallahassee. These are his duties concerning every bid opening

of the Department.

6. Lt. Col. Keating reviewed the failure of CSI to submit

the Addendum D-9 letter and determined that the absence of the

letter did not give CSI an unfair competitive advantage. He

determined that this was a minor irregularity which was

waivable.

7. Mr. Hersey was the construction consultant for the

Department for this project. Mr. Hersey reviewed the CSI file

after the bids were submitted, noting that CSI's bid did not

include all the verbiage required by Addendum One, D-9. He

determined, however, that the proposed included the "Exhibit 4"

document which stated that CSI had "visited the site of the

proposed project and familiarized himself with the local

conditions, nature, and extent of the work." Mr. Hersey brought

this omission to Lt. Col. Keating's attention.

8. Lt. Col. Keating considered the failure of CSI to

submit the Addendum 1, D-9 letter language and determined that

the omission did not give CSI an unfair competitive advantage

over other bidders and therefore that it was a minor

irregularity. He determined that the fact that there was

language in the bid submittal of CSI to the effect that the

contractor had visited the site and familiarized himself with

conditions, nature, and scope of the work made the bid actually

responsive. The failure to include the language required in

Addendum 1, D-9 did not render the bid unqualified or non-

responsive, but, instead, the failure to include that language

would have the consequence of making CSI responsible for any

loss caused by the failure to visit the project site or have the

subcontractors visit the project site before bidding. If that

omission caused any additional cost or unforeseen circumstances

which had a cost attributable to them, CSI would have to bear

the risk of paying for any such expense itself under the terms

of the specifications.

9. It was thus determined that the failure to visit the

site had the consequence of making the contractor assume

resulting risks but was considered by the Department to be a

quality assurance measure in the specifications, instead of a

determining or qualifying factor for award of the project.

Lt. Col. Keating determined that the failure to submit the

required language in the letter did not give CSI an unfair

competitive advantage. CSI's bid was $1,866,212.00. The bid of

the Petitioner, Warren Building Company, Inc., was

$1,944,000.00. Thus, CSI's bid was $77,788.00 lower than the

bid submitted by the Petitioner Warren.

10. In preparing his bid submittal, the Petitioner had not

been charged by his subcontractors for their visiting the

Tallahassee project site. His entire cost of submitting the

response to the invitation to bid on behalf of Warren, was

$10,000.00 or less. Thus, the failure by CSI to have

subcontractors visit the site and evaluate the work was clearly

not shown to have saved CSI costs, in an amount anywhere

approaching the total difference in the amounts of the two bids.

Only if the avoidance of such costs represented by the visits of

the contractor and subcontractors to the job site was greater

than or at least approximately equal to the $77,788.00

difference between the two bids, would the failure of CSI to

entirely comply with this specification result in a change in

the relative competitive positions of the two bidders. Put

another way, there was no evidence to show that had CSI

completely complied with the disputed specification, that it

would not still have much the lowest-priced responsible and

responsive bid.

11. It was thus determined by Lt. Col. Keating that the

$1,866,212.00 bid submitted by CSI was the lowest responsible

and responsive bid. He therefore determined that the award of

the contract should be give to CSI and an Agency decision to

that effect was posted on April 11, 2008. The subject protest

and proceeding ensued.

CONCLUSIONS OF LAW

12. The Division of Administrative Hearings has

jurisdiction of the subject matter hereof and the parties to

this proceeding. §§ 120.569 and 120.57(1)(3), Fla. Stat.

(2007).

13. Section 120.57(3)(f), Florida Statutes (2007),

provides pertinently as follows:

. . . Unless otherwise provided by statute,

the burden of proof shall rest with the

party protesting the proposed agency action.

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 proposed action is

contrary to the agency's governing statutes,

the agency's rules or policies, or the

solicitation specification. The standard of

proof for such proceeding shall be whether

the proposed agency action was clearly

erroneous, contrary to competition,

arbitrary or capricious . . .

Thus, a Petitioner protestant must sustain its burden of proof

by preponderant evidence. Department of Transportation v.

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

Contracting and Engineering Corp. v. Department of

Transportation , 709 So. 2d 607, 609 (Fla. 1998). The Petitioner

must thus demonstrate that the Agency's proposed action is

contrary to governing statutes, the Agency's rules or policies,

or the bid or proposal specifications. Put another way, it must

be determined whether the Agency was in error in applying a

governing principle, as for instance, its interpretation or

application of bid specifications.

14. Whether an act is contrary to competition is

determined by considering whether it offends the purpose of the

competitive bidding statutes. "The purpose of the competitive

bidding process is to secure fair competition on equal terms to

all bidders by affording an opportunity for an exact comparison

of bids." Harry Pepper and Associates, Inc., v. City of Cape

Coral , 352 So. 2d 1190 (Fla. 2nd DCA 1977). See also Wester v.

Belote , 138 So. 2d 721 (Fla. 1931).

15. Section 287.057(2), Florida Statutes (2007), requires

an agency to award a contract to the "responsible offeror whose

proposal is determined in writing to be the most advantageous to

the state, taking into the consideration the price and other

criteria set forth in the request for proposals."

16. In the case at hand the Department listed a number of

items in the specifications that would result in a bid being

rejected. The failure to comply with Addendum D-9, was not one

of them, however. In fact, the plain language of Addendum 1,

D-9 states that the penalty for failure to comply with

submitting the site examination would be that the general

contractor assumed any additional risk caused by its failure to

examine the site or to submit the relevant document assuring of

the site examination. There was no penalty of rejection of the

proposer's bid for such a failure.

17. The Department also placed all bidders on notice in

the invitation to bid documents that it reserved the right to

accept minor informalities or irregularities in bids, in the

best interest of the state, which it considered to be non-

substantial or matters of form, and the correction or waiver of

which would not be prejudicial to other bid proposals. The

Department's determination that the CSI submission was

responsive and responsible and that the omission in question was

a minor irregularity and waivable was shown by the preponderant

weight of the evidence to be properly within its discretion.

The evidence did not demonstrate that the Department thus acted

arbitrarily, capriciously, or contrary to competition. This is

because the Agency was shown to have considered all relevant

factors and made good faith consideration of the factors and

employed a reasonable basis for making its final decision rather

than caprice or whim. See Adam Smith Enterprises, Inc., v.

State, Department of Environmental Regulation , 553 So. 2d 1260,

1273 (Fla. 1st DCA 1989).

18. The purpose of competitive bidding is to secure the

lowest responsible offer. Minor irregularities in bids, vis a

vis, specifications can be waived, effectuating that purpose.

See Air Support Services International, Inc., v. Metropolitan

Dade County , 614 So. 2d 583, 584 (Fla. 3rd DCA 1983); Tropabest

Foods, Inc. v. State of Florida, Department of General Services ,

493 So. 2d 50, 52 (Fla. 1st DCA 1986). Although a bid

containing a material variance from the specifications is not

acceptable, not every deviation from an invitation to bid

specification is material. Glatstein v. City of Miami , 399

So. 2d 1005 (Fla. 3rd DCA 1981), rev . denied 407 So. 2d 1102

(Fla. 1981).

19. The opinion in Robinson Electrical, Inc. v. Dade

County , 417 So. 2d 1032 (Fla. 3rd DCA 1982), is instructive

where the court stated:

In determining whether a specific non-

compliance constitutes a substantial and

hence a non-waivable irregularity, the

courts have applied two criteria-first,

whether the effect of a waiver would be to

deprive the municipality of its assurance

that the contract will be entered into,

performed and guaranteed according to its

specified requirements, and second, whether

it is of such a nature that its waiver would

adversely affect competitive bidding by

placing a bidder in a position of advantage

over other bidders or by otherwise

undermining the necessary common standard of

competition.

In application of the general principles

above discussed, sometimes it is said that a

bid may be rejected or disregarded if there

is a material variance between the bid and

the advertisement. A minor variance,

however, will not invalidate the bid. In

this context a variance is material if it

gives the bidder a substantial advantage

over the other bidders, and thereby

restricts or stifles competition.

20. Assuming arguendo that CSI was less than fully

responsive to the specification concerning site examination and

evaluation by the contractor and subcontractors, the

preponderant direct and circumstantial evidence, culminating in

the above-found facts does not show any deviation to be

material. The courts do not favor the disqualification of a low

bidder for non-responsiveness where a bid irregularity does not

impart an unfair competitive advantage to the low bidder. In

the case of Intercontinental Properties v. DHRS , 606 So. 2d 380

(Fla. 3rd DCA 1992), the court, in reversing a hearing officer's

finding of unresponsiveness on the part of a bidder, discussed

at length the well-known case of Liberty County v. Baxter's

Asphalt and Concrete, Inc. , 421 So. 2d 505 (Fla. 1982),

concerning principles applicable to competitive bidding. The

Intercontinental court enunciated the principle from the

Baxter's opinion that:

A minor irregularity is a variation from the

bid invitation or proposal terms and

conditions which does not affect the price

of the bid, or give the bidder an advantage

or benefit not enjoyed by other bidders, or

does not adversely impact the interest of

the Department . . .

There is a very strong public interest in

favor of saving tax dollars in awarding

public contracts. There is no public

interest, much less a substantial public

interest, in disqualifying low bidders for

technical deficiencies in form, where the

low bidder did not derive any unfair

competitive advantage by reason of the

technical omission. . . .

In either event, there is a strong public

policy in favor of awarding contracts to the

low bidder, and an equal strong public

policy against disqualifying the low bidder

for technical deficiencies which do not

confer an economic advantage on one bidder

over another. Id. at 387. (Emphasis

supplied).

See also ESP Security and Satellite Engineering, Inc. v.

University of Florida, Physical Plant Division,

Architecture/Engineering Department (Case No. 94-2035BID, DOAH

Recommended Order entered April 12, 1995).

21. In the case at hand, CSI was shown to be the low

bidder by a substantial amount, as reflected in the figures

referenced in the above Findings of Fact. The evidence adduced

by the Petitioner also shows that the Petitioner spent

approximately $10,000.00 for all bid proposal-related work or

preparations before submission of its bid proposal. Even though

CSI may not have made the site examination or may not have had

its subcontractors make the relevant site examination provided

for in the above-referenced specification, if it had done so,

and spent a resultant similar amount on bid preparation, it

would still have a substantially lower bid price than would the

Petitioner.

22. Moreover, the specifications are clear in providing

that this was not a specification which carried with it a

penalty of disqualification for any bidder who failed to comply.

In fact, the bid specifications, as found above, provided that

any contractor who did not comply with this specification

concerning site evaluation and inspection would bear the risk of

failure to comply with that specification. Thus, failure to

comply would not affect the price ultimately paid or the other

circumstances and conditions of performance to be provided by

the contractor, if the contractor had omitted compliance or

complete compliance with that specification.

23. There was simply no preponderant evidence to show that

failure to completely comply with the relevant specification at

issue resulted in CSI being awarded the bid. In fact, as shown

by the significant disparity in the price proposed by CSI versus

that proposed by Warren, the Petitioner, CSI would have been the

low bidder by a substantial amount in either circumstance.

24. In summary, therefore, it has been demonstrated by the

preponderant, persuasive evidence of record, culminating in the

above findings of fact, that the determination by the Department

that CSI's bid proposal was responsive, responsible and the

lowest bid was a reasonable decision. So too, was the

determination that the minor irregularity at issue was an

omission which did not confer an unfair competitive advantage on

CSI. These determinations are supported by the preponderant,

credible, persuasive evidence of record and do not offend the

above-discussed and concluded purpose of the competitive bidding

statute involved. These decisions are not contrary to

competition and, because the Agency has been shown to have given

good faith, reasonable consideration to all relevant factors,

the decisions would not be arbitrary or capricious, and are

shown to comport with Agency statutes, rules, and policies. The

decision was shown to comport with the specifications of the bid

solicitation.

RECOMMENDATION

Having considered the foregoing Findings of Fact,

Conclusions of Law, the evidence of record, the candor and

demeanor of the witnesses and the pleadings and arguments of the

parties, it is, therefore,

RECOMMENDED that a final order be entered by the Department

of Military Affairs, awarding the contract for renovation work

at the National Guard Armory in Tallahassee, Florida (No.

207005) to Concrete Services, Incorporated.

DONE AND ENTERED this 20th day of August, 2008, in

Tallahassee, Leon County, Florida.

S

P. MICHAEL RUFF

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

[phone] SUNCOM 278-9675

Fax Filing [phone]

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 20th day of August, 2008.

COPIES FURNISHED :

Thayer M. Marts, Esquire

1105 Hays Street

Post Office Box 1814

Tallahassee, Florida 32302

Kim F. Heller, II, Esquire

Elizabeth C. Masters, Esquire

Florida National Guard

Post Office Box 1008

St. Augustine, Florida 32085-1008

Elizabeth C. Masters, Lt. Colonel

Florida Army National Guard

82 Marine Street

St. Augustine, Florida 32084

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

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

to this Recommended Order should be filed with the agency that

will issue the Final Order in this case.