09-000858BID Floridian Construction And Development Company, Inc. vs. Department Of Environmental Protection Status: Closed Recommended Order on Friday, May 1, 2009.

Summary: Petitioner failed to show that award to the bidder who proposed a lower rated bid bond than that submitted by protestant was unresponsive. The specification in the ITB had no bond requirement for the bid bond.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FLORIDA CONSTRUCTION AND )

DEVELOPMENT COMPANY, INC., )

)

Petitioner, )

)

vs. ) Case No. 09-0858BID

)

DEPARTMENT OF ENVIRONMENTAL )

PROTECTION, )

) )

Respondent. )

RECOMMENDED ORDER

Pursuant to notice this cause came on for formal proceeding

and hearing before P. Michael Ruff, a duly-designated

Administrative Law Judge of the Division of Administrative

Hearings. The hearing was conducted on March 16, 2009, in

Tallahassee, Florida. The appearances were as follows:

APPEARANCES

For Petitioner: David M. Adelstein, Esquire

Kirwin Norris, P.A.

110 E. Broward Boulevard, Suite 1570

Ft. Lauderdale, Florida 33301

For Respondent: Reagan K. Russell, Esquire

Department of Environmental Protection

3900 Commonwealth Boulevard

Mail Station 35

Tallahassee, Florida 32399

STATEMENT OF THE ISSUES

The issues to be resolved in this proceeding concern

whether the proposed award of a contract to Ben Withers, Inc.,

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

policies or contrary to the bid solicitation specification

concerning bid bond requirements, within the meaning of

Subsection 120.57(3)(f), Florida Statutes (2008). It must also

be determined whether those bidders who submitted a less than

"A" bid bond rating are compliant with the specification, or

should be disqualified for non-responsiveness.

PRELIMINARY STATEMENT

This cause arose on the filing of a challenge to a Notice

of Intent to award a contract for construction services by the

Department of Environmental Protection (DEP, Department) to Ben

Withers, Inc. (Withers) for DEP Project No. 60611 (DEP Bid No.

49-08/09) for construction of a new entrance roadway, removal of

an existing timber bridge and construction of a new free-span

bridge, including all drainage and utility improvements, at Bald

Point State Park (Bald Point) in Franklin County, Florida.

The Petitioner filed its protest in accordance with

Sections 120.569 and 120.57 (3), Florida Statutes (2008), and

the matter was transmitted to the Division of Administrative

Hearings. The case was assigned to the undersigned and, in due

course, came on for hearing on the above date.

The Petitioner, Floridian Construction and Development

Company, Inc. (Petitioner, Floridian) contends that the

Department violated its bid specifications and its “policy”

concerning the materiality of the rating of bonds, as specified

in the bid specification. It argues that the Department’s

violation in these respects was arbitrary, capricious, and

contrary to competition, and that Floridian was the only

responsive bidder and should have been awarded the contract

because it was the only bidder to provide a bond rating in

compliance with the specifications and the Department’s policy.

The Department contends that its proposed award to Withers

conforms with its governing statutes and Florida Administrative

Code Chapter 60D-5, as well as the specifications; and that the

bid bond and payment and performance bonds may be issued by

different surety companies. It contends that the Petitioner

cannot show that the proposed agency action is clearly

erroneous, contrary to competition, arbitrary or capricious.

Upon the convening of the hearing, Joint Exhibits A through

I were admitted into evidence. The Petitioner also had admitted

its Exhibits A through G. The Respondent had its Exhibits one

through four admitted into evidence. The Petitioner presented

the testimony of four witnesses. The Respondent, relying on its

exhibits and cross-examination, called no witnesses.

Upon concluding the proceeding, the parties did not order a

transcript of the record. They submitted Proposed Recommended

Orders, which were timely submitted on March 26, 2009. The

undersigned has considered those Proposed Recommended Orders in

the rendition of this Recommended Order.

FINDINGS OF FACT

1. The Petitioner is a closely held Florida corporation.

It holds a State of Florida license as a General Contractor.

Its licensure authorizes it to perform work of the nature and

scope involved in this project. Mr. Milton Fulmer is the

principal owner and president of the Petitioner. He testified

in this proceeding on behalf of the Petitioner.

2. The Respondent is an Agency of the State of Florida

charged with managing and administering state-owned lands in the

state park system, including the planning and arranging for the

construction of facilities, installations and improvements on

those lands. The Respondent engages in procurement through

competitive bidding on a regular basis, in order to build and

maintain its improvements on those lands.

3. The Respondent issued an Invitation to Bid (ITB) for

certain road and additional work to be performed at the Bald

Point State Park, in Franklin County. The ITB is designated as

“Bid No. 49-08/09” on the Department of Management Services’

Vendor Bid System (VBS). It is undisputed that the ITB was

properly advertised and noticed.

4. The ITB project involves the construction of a new

entrance roadway, the removal of an existing timber bridge and

the installation of a new “free-span" bridge. The project also

includes related drainage and utility work. Three addenda to

the ITB were issued, which significantly increased the scope of

the work, and the estimated budget for the project, from

$1,000,000 to $3,000,000. The bids were timely opened on

January 12, 2009.

5. Withers was the low bidder. The Petitioner was the

sixth low bidder. The bid tabulation, announcing the

Respondent’s intent to award to Withers was posted on

January 23, 2009.

6. The Petitioner filed a timely protest, pursuant to

Section 120.57(3), Florida Statutes (2008). The protest notice

was filed on January 28, 2009, and the Petition was timely filed

on February 6, 2009.

7. Eight vendors submitted timely bid responses. None of

the bids were disqualified by the Respondent. The

specifications in the ITB required bidders to submit a good

faith deposit or bid guaranty, amounting to five percent of the

bid. This could be provided in the form of a bid bond. All the

bidders submitted bid bonds with their bids.

8. The instructions to bidders in the specifications of

the ITB require that, for bids exceeding $2,000,000, “the surety

that will provide the Performance Bond and Labor and Materials

Payment Bond shall have at least an 'A' rating in A.M. Best

Company’s online rating guide.” The ITB also provides that the

rating of a reinsurance company is not applicable and does not

meet this requirement.

9. The Petitioner’s expert witness, Paul Ciambriello,

acknowledged in his testimony that a Bid Bond, a Labor and

Materials Payment Bond (payment bond) and a Performance Bond

(payment bond) guarantee different aspects of a procurement or

project. A bid bond guarantees that a vendor or contractor will

execute the contract and undertake it for the bid price. A

payment bond guarantees payment for all equipment, labor,

materials and services, in the event the contractor fails to pay

for them, as contractually required. The performance bond

guarantees full performance of the contract by the surety

company, if the contractor defaults on performance of the

contract. The surety company would, in that event, be

completing the job, or obtaining bids from other contractors for

completion, while remaining liable for the difference between

the contract price and the actual price of project completion.

10. The Petitioner has taken the position that the

specification requiring an "A" rating for the payment and

performance bonds should be applied by the Respondent to the bid

bond requirement, as well, because there is no significant or

practical difference between the issuance and underwriting

efforts involved in the obtaining of the two types of bond for a

given project. The Petitioner’s point is that, if an "A" rated

surety is required for the payment bond and the performance

bond, then, as a practical matter, that is the same thing as

requiring a bid bond of that same rating, because in the vast

majority of cases, the surety which underwrites the bid bond and

the one issuing the payment and performance bonds is the same

surety, and that inclusive would allow for only one underwriting

effort. Because of this purported custom or course of dealing

in the industry, as also purportedly reflected in past

Department practice regarding bond requirements, the Petitioner

maintains that its bid was the only responsive bid, and all the

other bidders should have been disqualified.

11. The Petitioner provided its insurance and bond broker,

Paul Ciambriello, of the Guignard Company with information about

the project and its surety requirements. The broker then

obtained a bid bond with International Fidelity Insurance

Company and Everest Reinsurance Company, as co-sureties.

International Fidelity Insurance Company has an “A-“ rating,

according to the Best’s rating guide. Everest Reinsurance

Company has a rating of “A”, according to that rating guide.

12. The other seven bidders submitted bids accompanied by

bid bonds issued by surety companies with “A” ratings. The bid

specification provided no rating requirement for the bid bond.

13. The Petitioner has argued that it is the custom or

practice in the surety industry for the surety company which

underwrites a bid bond to also underwrite the payment and

performance bonds. In addition to the reasons referenced above,

this is generally done because the surety will offer a very low

premium price for a bid bond and "make its money" on the premium

price for the payment and performance bonds, which it would also

issue in the normal course of dealing. There is also a very

short time period between issuance of the bid bond and the

requirement to underwrite the payment and performance bonds,

which is another reason why it is the customary practice in the

surety industry for the same company to write both types of

bond. The Petitioner contends that the bid bond and the payment

and performance bonds really have no practical distinction

because it is so common that a surety company issuing a bid bond

will be the same as the surety company (with its bond rating)

which issues the payment and performance bonds.

14. Although the Petitioner's expert witness,

Mr. Ciambriello, testified that a bid bond, in essence,

guarantees the payment and performance bond, that guarantee is

not actually true as a matter of law. Rather, the bid bond does

not guarantee that the surety company issuing the bid bond will

issue the payment and performance bonds, but rather that the

principal, i.e. the contractor, shall provide the payment and

performance bonds from a good and sufficient surety, according

to the obligee's, the Respondent Agency's, requirements (bid

specifications).

15. Mr. Ciambriello acknowledged in his testimony,

however, that, while it is rare, in his experience representing

surety companies, for a contractor to change the surety company

it uses between the issuance of the bid bond and the issuance of

the payment and performance bonds, a contractor certainly can do

so. It can also simply initially select a different surety

company, from the bid bond surety, to issue the payment and

performance bonds.

16. There are several reasons a contractor might elect to

change surety companies between the issuance of the bid bond and

the issuance of the payment and performance bonds. The surety

company might become insolvent, lose its ratings, or another

surety company might offer a better rate on its premium, which

might induce a contractor to change surety companies between the

issuance of the two types of bonds.

17. In order for a vendor or contractor to establish a

surety, a pre-qualification process is necessary. In pre-

qualification, contractors must supply information including

project history, credit references, reviewed financial

statements, personal financial information and details regarding

assets. The surety companies assess risk based upon the

characteristics of the project, including its size, nature,

location, and complexity. A surety may elect not to underwrite

the payment and performance bonds for a project for which it has

issued the bid bond, which would also require a contractor to

seek a different surety for issuance of the later payment and

performance bonds. Moreover, contractors must qualify for

surety bonds and not all contractors succeed in qualifying;

further, not all contractors can succeed in qualifying and

procuring surety bonds from an "A" rated company.

18. The Petitioner, as found above, submitted its bid

response with co-sureties proposed to underwrite the bonds. The

Respondent accepts the premise that use of the rating of a co-

surety is compliant with the ITB solicitation specification.

The use of two surety companies listed as co-sureties on a bond

is very unusual, in the Respondent's experience.

19. The Respondent had a good faith belief, at the time it

posted the notice of intent to award the bid, that it could not

disqualify any bidder for submitting a bid bond from a surety

rated less than A, based upon its ITB specification. Indeed it

should not, because the bid bond specification contained no

rating requirement for the bid bond. Moreover, the Respondent

had a good faith belief that the contractors could change surety

companies between the issuance of the bid bond and the payment

and performance bonds.

20. The Respondent's belief or interpretation as to this

last point is correct. In another procurement involving the

Respondent, on a project located at Jonathan Dickenson State

Park, a bidder, H and J Contracting, Inc. (H and J), changed

surety companies between the issuance of the bid bond and the

issuance of the payment and performance bonds. That bidder was

determined to have successfully provided compliant bonds, which

met the specifications in that solicitation.

21. The Respondent had advertised the ITB for the

campground renovation project at Jonathan Dickenson State Park,

using the same solicitation specification for surety bonds as

was used for the Bald Point project at issue in this case. The

low bidder in that case, H and J Contracting, Inc., submitted a

bid for $2,033,636.32. It was therefore required to comply with

the specification for bonds regarding bids which exceeded two

million dollars. H and J, therefore submitted a bid bond from

Liberty Mutual Insurance Company, a company which carried an "A"

rating according to Best's On-line Ratings Guide. H and J

subsequently submitted payment and performance bonds from U.S.

Specialty Insurance Company, a company rated "A" according to

that same ratings guide. H and J was deemed to have complied

with the specifications concerning bonding, because, by changing

surety companies for the payment and performance bonds, it

provided such bonds with the required "A" rating, even though

the bid bond submitted in that case only carried an "A" rating.

The solicitation specification in that case did not require any

particular rating for the bid bond.

22. In the instant situation, the Respondent did not

violate its specification by accepting bid bonds of all bidders

because the solicitation specification stated that the rating

should apply to the surety company issuing the payment and

performance bonds, not the bid bond.

23. The Petitioner contends that its interpretation of the

solicitation specification, that the rating requirement should

be applied to the bid bond also, is the only practical

interpretation because of the pre-qualification process and the

lack of adequate time between submittal of the bid bond and the

requirement for submittal of the payment and performance bonds.

Moreover, the Petitioner contends that any other interpretation

would be contrary to competition because other bidders may have

bid on the project had they known that the Respondent was not

applying the rating requirement to the bid bond, as the

Respondent had done in past procurements. This argument is

somewhat specious, however, because, in fact, the Petitioner's

interpretation would negate the fact that the bid bond

specification does not require a rating.

24. The Petitioner is the only one of the six top bidders

who submitted an "A" bond rating response concerning, according

to its argument, the bid bond requirement. Thus, if its

interpretation were followed as to the bid bond rating

requirement, then such would be anti-competitive, in relation to

the other bidders, because none of them supplied an ”A" rating

surety in response to the bid bond specification. In the face

of the fact that the bid bond specification required no rating,

to interpret the rating requirement of the payment and

performance bonds as being applicable to the bid bond stage of

the procurement, would effectively eliminate the other bidders,

which were lower in price than the Petitioner, from the

competition.

25. The Petitioner also argues that other unknown vendors

might have bid on the project had they known that the Respondent

was not applying a rating requirement to the bid bond, as the

Respondent had done in the past. In fact, however, all bidders

or vendors with access to the ITB solicitation knew, or should

have known, of the specification of this particular ITB, which

differed in its terms from some past solicitations of the

Respondent by not requiring a rating for the bid bond.

26. Moreover, there is no evidence that, in the pre-

submittal stage of the process, potential bidders could not have

asked for clarification of the specification from the Agency had

they chosen to do so. There is no showing by persuasive

evidence that there is an anti-competitive effect on potential

bidders caused by the Respondent's specification concerning the

bid bond. In fact, logic would dictate that by removing any

rating requirement for the bid bond, the potential universe of

bidders might be enlarged and therefore this might have a

positive competitive effect.

27. Additionally, the Petitioner's argument that the

specification should be interpreted to apply a rating

requirement to the bid bond, when the actual specification, in

its language, does not contain such a requirement, is rejected

also for the additional reason that such an interpretation is

contrary to the plain meaning of the bid specification language.

This amounts to, at least, an implicit collateral challenge to

the specification, which is untimely and impermissible. 1/

28. There are 19 vendors listed on the "plan holders list"

for the Bald Point project. That relatively large number of

potential bidders is because the project began as a paving

contract, and was later amended to include vertical

construction. This changed the licensure requirement as to

potential vendors from a situation of no license being required,

to a situation where a general contractor or building contractor

license would be required. Some of the bidders appearing on the

plan holders list are just paving contractors, and therefore,

under the amended project, they would no longer qualify to bid

on the entire job, although they might be sub-contractors. Not

all bidders who bid on the Bald Point Project are listed on the

plan holders list.

29. The Petitioner's argument that the Respondent may have

had more of the 19 potential bidders actually submit bids, if

the other vendors had known that the Respondent would accept bid

bonds from a surety rated less than "A" is not persuasive. It

is impossible to determine how many contactors actually reviewed

the Bald Point Project plans and for what reasons they decided

not to submit a bid. Seven of the eight bidders submitted bid

bonds from surety's rated "A" rather than "A." It certainly

seems obvious that those bidders did not interpret the bid bond

specification as requiring a bid bond from an "A" rated surety

company or better. Moreover, all potential vendors, whether

they bid or not, who reviewed the specifications should have

known when they read the specification that there was no rating

requirement attendant to the bid bond (as evidenced by the fact

that seven of the eight bidders competing in this situation

obviously seemed to be so aware and did not submit an "A"

surety for the bid bond). Thus, in this context, the

Respondent's interpretation of this specification is not anti-

competitive.

30. The Petitioner also contends that the Respondent acted

contrary to its policy by accepting bid bonds from all eight

bidders and not disqualifying all but the Petitioner's bid,

since it alone submitted one carrying an "A" rating. The

Petitioner refers to past practices of the Respondent as being

its "policy."

31. In this particular, the Petitioner and Respondent were

involved in a prior bid procurement and protest involving the

Apalachicola National Estuarine Research Reserve Headquarters

project (ANERR). The Petitioner in that situation was the

lowest bidder, but had its bid disqualified. The Petitioner

uses the prior project specification as evidence of what the

Respondent's policy is with regard to situations such as that in

the instant case.

32. The solicitation specification regarding bonds for the

ANERR project, however, was different from the solicitation

specification for the Bald Point Project. The solicitation

specification for the ANERR project required that all bonds have

at least a minimum rating of "A" in the latest issue of the Best

Rating Guide.

33. The Petitioner submitted a bid bond from a surety

company rated "A-" with its bid for the ANERR Project. The bid

was therefore deemed non-responsive by the Respondent Agency and

the bid was disqualified for failing to meet the solicitation

specification.

34. The Petitioner's president testified that he read the

specification for the Bald Point Project and he conceded that it

was different from the specification for the ANERR Project. The

Petitioner's argument that, apparently, the Respondent's policy

or practice in the ANERR Project situation should be applied to

interpretation of the bonding requirement for the Bald Point

Project is not persuasive. Clearly the specification concerning

the bid bond and bond rating was different between the two

projects. The attempted application of the purported past

policy or practice of the Department to interpret the Bald Point

specification concerning the bid bond, to require an "A" rating

for the bid bond, when the specification term clearly does not

provide it (merely because that was the policy or practice in

the ANERR project case, involving a different specification)

amounts to an untimely collateral attempt to alter the

specification of the Bald Point Project. Such would amount to a

material deviation from the specifications because it would

disqualify seven of the eight bidders (and would likely have

resulted in fewer bids had potential bidders been on notice of

that policy or interpretation).

35. In like manner, the Petitioner relies on the case of

Gum Creek Farms, Inc., v. Department of Environmental

Protection , Case No. OGC 07-2623 (FO: June 20, 2008) as evidence

of the Respondent's policy with regard to bond rating

requirements. In that case, as in the ANERR situation, the

solicitation specification was different from the Bald Point

specification at issue. Because the two situations referenced

above are different from the Bald Point Project as to the

specification requirements, they cannot be said to be evidence

of a policy or regular practice by the Agency which would be

applicable to this case, since the specific requirements of the

bid specifications in this solicitation are what drive the

necessary bid responses.

36. Over a period of approximately 10 years the Department

has engaged in bid procurement with regard to approximately 600

projects. The Respondent has, during that time, consistently

required compliance with its surety ratings specifications in

its bid solicitations. This is because an adequate surety

bonding for payment and performance is an important means for

the Respondent to manage its risk as the owner of a project.

Thus, whatever the specifications concerning bond ratings are

for a particular project, the Respondent has consistently

required compliance with them. In the instant situation, the

Respondent re-wrote its rating specification for the Bald Point

Project so that it was different from the other two projects

referenced and discussed above. It has re-written its

specifications on other occasions as well, which is within its

prerogatives.

Timeliness of Payment and Performance Bond Notification

37. The general conditions of the contract require that

the contractor submit evidence of its ability to provide

acceptable payment and performance bonds within two working days

of being notified of a successful bid. The contractor has 10

days to actually furnish the bonds.

38. The testimony of Michael Renard, of the Department,

shows, however, that as a practical matter, it is not a material

deviation if a contractor does not supply evidence of ability to

provide compliant bonds precisely within that time period. The

actual payment and performance bonds are usually submitted to

the Respondent at the time the contract is actually signed or

shortly thereafter. Sometimes it may be a longer period of time

before the contractor submits payment and performance bonds.

This might occur because authorization to sign a contract is

suspended due to budgetary concerns or due to lack of funding

availability. The Respondent does not require and contractors

do not generally wish to expend their capital for payment of a

surety premium until a contract is actually signed and in

effect, and the Agency's funding is approved and released, as

persuasively shown by the testimony of Michael Renard and Ben

Withers.

39. The winning bidder herein, Withers, did not provide

evidence of ability to provide compliant payment and performance

bonds within two days of being notified of being the lowest

bidder. This was because the protest was filed during the

intervening time and Withers and the Respondent were of the good

faith belief that all responsive efforts to the solicitation

were tolled upon notice being provided that a protest had been

filed. In fact, because a protest was filed, triggering a

formal proceeding to determine which entity might ultimately be

the contractor, it could not be determined that there was, as

yet, a winning bidder or contract, as a necessary pre-requisite

to issuance of payment and performance bonds.

40. In fact, the Respondent has received evidence of

Withers' ability to provide compliant payment and performance

bonds. This evidence was provided after Withers was informed

that a co-surety rating would be acceptable to the Respondent

and in compliance with the bid specification. This treatment,

of allowing a co-surety rating as being acceptable was also

accorded the Petitioner, who submitted a co-surety proposal.

There is no persuasive evidence that the fact that Withers may

have supplied evidence of a compliant payment and performance

bond beyond the above-referenced time limits had anything to do

with selection of Withers over the Petitioner or other bidders

and thus provided a competitive advantage for Withers. The

Petitioner filed its written evidence of ability to provide the

payment and performance bonds on February 20, 2009, almost a

month after the posting of the Intent to Award.

41. It did not even become incumbent upon Withers to

submit such evidence regarding payment and performance bond

compliance until after it was notified that it was a successful

bidder. As pertinent to the issues in this proceeding, Withers

was selected, in essence, because its bid submittal was

compliant with the bid bonding requirement, other

specifications, and was the lowest bid. The fact that Withers

went beyond the time limits for furnishing evidence of compliant

payment and performance bonds, occurred after the initial choice

by the Agency as to the awarded bidder, here under review.

Thus, Withers' excession of the time limit regarding the payment

and performance bond evidence submittal, etc., is not a material

deviation from specifications, as to the manner in which the

award decision was made. It is of no consequence because, with

the initiation of a formal proceeding, there was not even a

final award and contract as yet.

42. Finally, although argument was made concerning whether

the Respondent had waived the requirement of payment and

performance bonds from an "A" down to an "A" rating, the

persuasive evidence shows that the Respondent never did waive

the rating requirement in order to post the award to Withers.

The Respondent has established that there was no need for it to

waive the "A" rating requirement, and it had no intent to do

so.

CONCLUSIONS OF LAW

43. The Division of Administrative Hearings has

jurisdiction of the subject matter of and the parties to this

proceeding. §§ 120.569 and 120.57(3), Fla. Stat. (2008).

44. The de novo proceeding envisioned by Section

120.57(3), Florida Statutes, is not the same as that emanating

from Section 120.57(1), Florida Statutes. A Section 120.57(1)

proceeding essentially is forward-looking and employs

consideration of properly admitted evidence to fashion findings

of fact and conclusions of law designed to formulate final

agency action, with the Administrative Law Judge sitting in

place of the agency head to determine, by recommended order,

what the agency's decision shall be. Hamilton County Board of

County Commissioners v. Florida Department of Environmental

Regulation , 587 So. 2d 1378, 1387 (Fla. 1st DCA 1991). A

Section 120.57(3) proceeding requires the trier of fact to "look

back," in the sense of reviewing the evidence available to the

Respondent Agency when the initial Agency action was taken.

State Contracting and Engineering Corp. v. Department of

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

Syslogic Technology Services, Inc. v. South Florida Water

Management District , Case No. 01-4385BID (DOAH January 18,

2002). See also Floridian Construction and Development Company,

Inc. v. Florida Department of Environmental Protection , 07-

5636BID (DOAH March 21, 2008).

45. The Administrative Law Judge may consider evidence

that the Agency did not consider, which may or may not have been

available to the Agency at the time of the initial Agency

action. This is considered, not for the purpose of formulating

future Agency action, but for the limited purpose of considering

whether the Respondent Agency's failure to consider the other

evidence was clearly erroneous, contrary to competition,

arbitrary or capricious. Id.

46. The Petitioner has the burden of proving a legitimate

reason for invalidating the proposed Agency action concerning

the bid award. State Contracting and Engineering Corporation v.

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

1998). The Petitioner must show that the proposed agency action

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

policies or the solicitation specifications themselves. Id.

See also § 120.57(3)(f), Fla. Stat. (2008). The statute defines

the applicable standard of proof in a bid protest proceeding

involving the rejection of a competitive bid as "whether the

proposed agency action was clearly erroneous, contrary to

competition, arbitrary, or capricious. Id.

47. An arbitrary decision has been held to be one not

supported by fact or logic and a capricious action is one taken

without thought or reason or which is irrational. Agrico

Chemical Company v. Department of Environmental Regulation , 365

So. 2d 759, 763 (Fla. 1st DCA 1978). See also Dravo Basic

Materials Company, Inc. v. Department of Transportation , 602 So.

2d 632, 634 n.3 (Fla. 2nd DCA 1992). ("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").

48. A decision is clearly erroneous when unsupported by

substantial evidence or contrary to the clear weight of the

evidence or is induced by an erroneous view of the law. Black's

Law Dictionary , 251 (6th Edition 1990); see also U.S. v. U.S.

Gypsum Company , 333 U.S. 364, 395 (1948) ("a finding is 'clearly

erroneous' when although there is evidence to support it, the

reviewing court on the entire evidence is left with a definite

and firm conviction that a mistake has been committed"). See

also Anderson v. City of Bessemer City, North Carolina , 470 U.S.

564 (1985).

49. The purpose of competitive bidding has been described

as follows:

[T]o protect the public against collusive

contracts; to secure fair competition upon

equal terms to all bidders; to remove not

only collusion but temptation for collusion

and opportunity for gain at public expense;

to close all avenues to favoritism and fraud

in its various forms; to secure the best

values for the [public] at the lowest

possible expense; and to afford an equal

advantage to all desiring to do business

with the [government], by affording an

opportunity for an exact comparison of bids.

Wester v. Belote , 138 So. 2d 721, 723-4 (Fla. 1931); Harry

Pepper and Associates, Inc. v. City of Cape Coral , 352 So. 2d

1190, 1192 (Fla. 2nd DCA 1977); Air Support Services

International, Inc. v. Metropolitan Dade County, Inc. , 614 So.

2d 583, 584 (Fla. 3rd DCA 1993).

50. The Respondent did not act contrarily to its

solicitation specifications when it accepted bid bonds from the

various bidders, underwritten by surety companies carrying less

than an "A" rating. This is because the specifications did not

require any rating at all for the surety company providing the

bid bond. The "A" surety company rating requirement, by the

terms of the specifications, only applied to the performance and

payment bonds, which are supplied after the bid award is made.

In fact, had the Respondent required the "A" rating to be

applicable to the bid bond when it considered the bid

submittals, it would be affirmatively acting contrarily to its

solicitation specification. If it disqualified certain of the

bidders for submitting a bid bond from a surety carrying less

than an "A" rating (as the Petitioner urges that it do) it

would be violating the above-referenced legal mandates by acting

contrary to competition, arbitrarily, or capriciously, and,

obviously, contrary to its solicitation specifications. See

State Contracting , 709 So. 2d at 609.

51. The Petitioner contends that the Respondent should

have followed what it argues was the Respondent's past policy or

practice relating to the rating of bonds and to related

responses to solicitations regarding bond requirements. The

Petitioner means, in essence, that the rating requirement for

the performance and payment bonds should have been applied to

the submission of bid bond responses to the solicitation as

well, which it contends would be in accord with the policy and

practice of the Respondent. This position loses sight of two

pivotal considerations, however. First, it would be arbitrary,

capricious, and clearly erroneous if the Respondent employed a

policy, which, at least implicitly, grew out of the

specifications of prior procurement projects. Those past

procurements obviously had different specifications because the

specifications have been rewritten since those employed in the

past projects, upon which the Petitioner relies for its

explication of the proper "policy." Secondly, and related to

this point, the employment of the Respondent's past policy or

practice in the manner advanced by the Petitioner, would simply

be irrelevant because the specifications have been rewritten and

are different from those which relate to the same bond rating

issue from past procurement projects and solicitations.

Moreover, as a matter of law, the Respondent can have no

generally applicable policy that is not articulated in statute,

rule, or the specifications themselves and can base no agency

action that determines the substantial interests of a party on

what amounts to an unadopted rule. § 120.57(1)(e), Fla. Stat.

(2008).

52. Obviously, if the Agency could reach back to

solicitation efforts for past procurement projects, to borrow

policy or practice and seek to implement such in the situation

at hand, there could be no mutuality of terms, proper notice and

due process for bidders, in terms of having advance notice of

the specifications which would actually be followed by the

Agency, and because bidders might not be treated equally in a

competitive context. Thus, in light of these legal

considerations and because the persuasive evidence, especially

the specification concerning bid bond requirements, does not

support it, this "policy or practice" argument must be rejected.

The opinion of the bidder, the Petitioner, regarding what is

sufficient cannot replace the express ITB requirements,

particularly in the absence of a timely challenge to the

specification. See Capaletti Bros. Inc. v. Department of

Transportation , 499 So. 2d 855, 857 (Fla. 1st DCA 1986) rev .

denied , 509 So. 2d 1117 (Fla. 1987).

53. The Petitioner has also implied that Withers is not in

compliance with the specification regarding submission of

evidence that it can provide acceptable performance and payment

bonds. This argument is inappropriate because the purpose of

this proceeding is limited to determining whether the

Respondent's action in not disqualifying bidders at the bid

posting was contrary to law or the solicitation specifications.

Syslogic , Case No. 01-4385BID at 18-19, para. 43-44. The

Respondent's receipt of the evidence that the low bidder can

provide compliant payment and performance bonds, the requirement

as to when it is to be provided, and the provision of the

payment and performance bonds themselves, is to occur (according

to the specifications) after the disputed Agency action occurred

(posting of the winning bidder). See Fla. Admin Code R. 60D-

5.004(2)(b)1.c. and d.

54. Even if the manner by which Withers provided evidence

of the payment and performance bond capability, and the

provision of the bonds themselves, is relevant to this

proceeding, it has not been demonstrated that compliance was

untimely. This is because the protest filed in this proceeding

tolled the procurement process short of the time limit

expiration for providing evidence of ability to provide the

payment and performance bonds, by the initiating of this de novo

proceeding. Since this de novo proceeding is designed to review

whether the Agency acted in accordance with relevant law in

determining the awardee, all later aspects of the procurement

process were tolled after the filing of the protest. See §

120.57(3)(c), Fla. Stat. (2008).

55. It is not necessary to address the issue, raised by

the Petitioner, regarding waiver of the bond rating requirement.

This is because, although it may have engaged in internal

discussion concerning possible waiver of the rating requirement

from an "A" to an "A" rating on the payment and performance

bonds, the Respondent never actually waived the requirement in

order to post the award to the low bidder. Moreover, in this

proceeding review is limited to the analysis of the Agency

action up through the act of posting the bid award.

56. It is not necessarily proper in a Section 120.57(3),

Florida Statutes, proceeding to consider whether the Respondent

could waive the requirement, or whether the Respondent would

have abused its discretion if it had waived that requirement.

In light of the above discussion regarding the nature of "de

novo review" in this proceeding, the undersigned does not look

forward in order to recommend final agency action, concerning a

waiver or any other issue, but rather to use evidence adduced in

a de novo hearing context to "look backward" and determine if

the Respondent Agency, in making its initial decision, complied

with the above-discussed requirements of law. Syslogic Case No.

01-4385BID.

57. In summary, the Petitioner has the burden to show, by

preponderant evidence, that the Agency action taken was contrary

to its governing statutes, rules, or policies or to the

solicitation specifications. State Contracting , 709 So. 2d at

609; see also § 120.57(3)(f), Fla. Stat. (2008). In order to

prevail, the Petitioner must also show by preponderant evidence

that any violation of statute, rule, policy or specification was

also clearly erroneous, contrary to competition, arbitrary, or

capricious. Id. See also Floridian Construction , DOAH Case No.

07-5636BID at page 16.

58. The Petitioner has not met its burden to show that by

accepting all the bid bonds from the bidders, and then posting

the award in favor of Withers, that the Respondent violated its

governing statute, Chapter 255, Florida Statutes, its rules,

Fla. Admin. Code Chapter 6D-5, policies or the solicitation

specifications. Even if such had been violated by the

Respondent, the Petitioner did not meet its burden to show that

the action of accepting all bid bonds and not disqualifying all

bidders, other than the Petitioner, as the Petitioner seeks

herein, was clearly erroneous, contrary to competition,

arbitrary or capricious. Agencies have wide discretion in

soliciting and accepting bids. When an agency makes its

decision based on an honest exercise of its discretion, the

decision should not be overturned, even if it may appear

erroneous and even if reasonable persons may disagree.

Overstreet Paving Co. v. Department of Transportation , 608 So.

2d 851, 852-853 (Fla. 2nd DCA 1992) (citing Department of

Transportation v. Groves-Watkins Constructors , 510 So. 2d 912,

913 (Fla. 1988)).

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 issued by the Florida

Department of Environmental Protection dismissing the protest.

DONE AND ENTERED this 1st day of May, 2009, 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 1st day of May, 2009.

ENDNOTE

1/ § 120.57(3)(b), Fla. Stat. (2008).

COPIES FURNISHED :

David M. Adelstein, Esquire

Kirwin Norris, P.A.

110 E. Broward Boulevard, Suite 1570

Ft. Lauderdale, Florida 33301

Reagan K. Russell, Esquire

Department of Environmental Protection

3900 Commonwealth Boulevard

Mail Station 35

Tallahassee, Florida 32399

Lea Crandall, Agency Clerk

Department of Environmental Protection

3900 Commonwealth Boulevard

Tallahassee, Florida 32399-3000

Tom Beason, General Counsel

Department of Environmental Protection

3900 Commonwealth Boulevard

Tallahassee, Florida 32399-3000

Michael W. Sole, Secretary

Department of Environmental Protection

3900 Commonwealth Boulevard

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 Recommended Order should be filed with the agency that

will issue the Final Order in this case.