10-009684BID Southern Atlantic Company, Llc vs. Orange County School Board Status: Closed Recommended Order on Wednesday, November 10, 2010.

Summary: Contractor for the School Board was not an agency and was not an agent for the School Board when awarding subcontracts.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SOUTHERN ATLANTIC COMPANY, LLC , )

)

Petitioner , )

)

vs. ) Case No. 10 - 9684BID

)

ORANGE COUNTY SCHOOL BOARD , )

)

Respondent . )

)

RECOMMENDED ORDER

Pursuant to notice, an evidentiary hearing was held in this

case on November 1, 2010, by video teleconference in Tallahassee

and Orlando, Florida, before Susan B. Harrell, a designated

Administrative Law Judge of the Division of Administrative

Hearings.

APPEARANCES

For Petitioner: Daniel Matthew Greene, Esquire

Daniel M. Greene, P.A.

Post Office Box 3092

Orlando, Florida 32802

For Respondent: Brian Kirwin, Esquire

Claire A. Ashington - Pickett, Esquire

Kirwin Norris, P.A.

200 South Orange Avenue, Suite 1950

Orlando, Florida 32801

STATEMENT OF THE ISSUE

The issue is whether the intended award of the electrical

subcontract for Phase 2 of the Comprehensive Needs Project at

Oak Ridge High School (the Pr oject) is a decision or intended

decision of an "agency" as that term is defined in

Subsection 120.52(1), Florida Statutes (2010). 1

PRELIMINARY STATEMENT

Petitioner, Southern Atlantic Company, LLC (Southern

Atlantic), filed a Petition against Respondent , O range County

School Board (School Board), protesting the intended award of an

electrical subcontract for Phase 2 of the Project. On

October 18, 2010, the School Board forwarded the Petition to the

Division of Administrative Hearings with the caveat that t he

School Board did not believe that "the petitioner has properly

asserted [the] petition against the Agency."

Along with the referral of the Petition, the School Board

filed a Motion to Dismiss Petition. The basis for the Motion to

Dismiss is that Southe rn Atlantic lacks standing to bring the

protest because the intended award of the electrical subcontract

was not action by the School Board, but was an action by

Wharton - Smith, Inc., the c onstruction c ontractor for the

Project. On October 20, 2010, Southe rn Atlantic filed a

Response to Motion to Dismiss, stating that the School Board was

"responsible for the actions of Wharton - Smith, Inc. , " and the

School Board had "retained complete control over the subcontract

bidding process and award."

On October 29, 2010, the School Board filed a Supplemental

Memorandum of Law. On October 31, 2010, Southern Atlantic filed

a Supplemental Argument in Response to Motion to Dismiss.

An evidentiary hearing was held on the Motion to Dismiss to

determine whether the intende d award of the electrical

subcontract was an agency action. At the evidentiary hearing,

Joint Exhibit 1 was admitted in evidence. Southern Atlantic

called Edward Hutchins as its witness. Petitioner's Exhibits 1

and 2 were admitted in evidence. The Scho ol Board called David

Lewis as its witness. The School Board did not submit any

exhibits for admission in evidence.

The Transcript was filed on November 8, 2010. The parties

agreed to submit and did file their proposed recommended orders

by November 8, 2 010. The parties' post - hearing submittals have

been considered in the preparation of this Recommended Order.

FINDINGS OF FACT

1. The School Board entered into a Standard Construction

Management Contract with Wharton - Smith, Inc. (Wharton - Smith) ,

for the P roject. Wharton - Smith is a private corporation. The

construction management contract provides that Wharton - Smith is

to perform all work in connection with the management and

construction of the Project. The work to be performed by

Wharton - Smith is compo sed of two phases: the pre - construction

phase services and the construction phase services. For the

construction phase, Wharton - Smith is required to "furnish and

pay for all management, supervision, financing, labor,

materials, tools, fuel, supplies, uti lities, equipment and

services of every kind and type necessary to diligently, timely,

and fully perform and complete in a good and workmanlike manner

the construction of the [Project] (or designated portions

thereof) in accordance with the terms and condi tions of the

Contract Documents. "

2. The construction management contract called for

Wharton - Smith to provide the School Board with a guaranteed

maximum price (GMP) proposal for the total sum of the

construction management fee and the cost of the work, which

included the subcontractor costs. Prior to determining the GMP,

Wharton - Smith is required to competitively bid the subcontracts.

The use of competitive bids is to foster competition and to

select the most economical , qualifi ed bidder to perform the

work.

3. Paragraph 36.2 of the construction management contract

provides:

A subcontractor is any person or entity who

is performing, furnishing, supplying or

providing any portion of the Work pursuant

to a contract with Construction Contractor.

Construc tion Contractor shall be solely

responsible for and have co ntrol over the

subcontractors.

4. Paragraph 36.3 of the construction management contract

provides:

When Construction Contractor submits its

guaranteed maximum price proposal to Owner,

Construction Contractor also shall submit to

Owner a list of the names, addresses,

licensing information and phone numbers of

the subcontractors Construction Contractor

in tends to use for each portion of the Work,

as well as identifying in writing those

portions of the Work it intends to perform

with its own employees. The list

identifying each subcontractor cannot be

modified, changed, or amended without prior

written app roval from Owner. . . .

Construction Contractor shall continuously

update that subcontractor list, so that it

remains current and accurate throughout the

entire performance of the Work.

Construction Contractor shall not enter into

a subcontract with any subcontractor, if

Owner reasonably objects to that

subcontractor. Construction Contractor

shall not be required to contract with

anyone that it reasonably objects to. . . .

All subcontracts between Construction

Contractor and it subcontractors shall be i n

writing and are subject to Owner's approval.

5. The following provisions of the construction management

contract are relevant to the solicitation and award of

subcontracts:

37.1 The purpose of this Paragraph is to

insure that Construction Contractor

[ Wharton - Smith] makes a genuine effort to

stimulate subcontractor interest in the

Project and maximize participation of

potential qualified subcontractors in the

bidding process. At all times Owner [School

Board] shall have access to and the right to

requi re copies of all correspondence,

records, files and other bid documents

(including all bid responses) with respect

to the bidding process. Further ,

C onstruction Contractor shall notify Owner

of the date, time and place of all bid

openings and Owner shall have the right to

attend any and all such bid openings. All

bid openings shall be conducted in Orange

County, Florida. Finally, Construction

Contractor shall develop in writing

subcontract bidding procedures for Owner's

review and approval. Once those p rocedures

have been approved by Owner, Construction

Contractor shall not deviate from such

procedures without obtaining Owner's prior

written consent.

* * *

37.1.2 Within thirty (30) days after

execution of this Contract, Construction

Contractor shall submit a written

"Construction Market Analysis and

Prospective Bidders Report" setting out

recommendations and providing information as

to prospective bidders. As various bid

packages are prepared for bidding,

Construction Contractor shall submit t o

Owner and Design Professional [architect

and/or engineer] a list of potential bidders

for their review and approval. Construction

Contractor shall be responsible for

promoting and encouraging bid competition.

* * *

37.2 Construction Contracto r shall prepare

invitations for bids and all other

appropriate bid documents for all

procurement of long lead items, materials

and services, for subcontractor contracts

and for site utilities. All such

invitations for bids and bid packages shall

be submit ted to Design Professional and

Owner for their review and approval prior to

distribution to bidders.

37.2.1 Except as hereafter provided in

Paragraph 37.5, all subcontractors are to be

awarded to the lowest responsive and

responsible bidder.

* * *

37.2.3 Subcontracts exceeding $25,000.00

must be publically advertised for at least

two (2) consecutive weeks prior to the

established bid opening time and date. All

such bids must be in writing and shall be

received and opened in the manner and at t he

location, date and time established in the

bid documents. All such bids received by

Construction Contractor shall be entered on

a bid tabulation sheet and a copy of both

the bids and the tabulation sheet shall be

sent to Owner and Design Professional f or

their review and comment prior to

Construction Contractor awarding the

subcontract.

* * *

37.4 For each subcontract that exceed s

$25,000, Construction Contractor shall,

unless waived in writing by Owner, conduct a

pre - bid conference with pros pective bidders

and pre - award conference with the successful

bidder. Design Professional and Owner shall

be invited to all such meetings. In the

event questions are raised which require an

interpretation of the bidding documents or

otherwise indicate a n eed for clarification

or correction of the invitation,

Construction Constructor shall transmit

these to the Design Professional in writing

and upon receiving clarification or

correction in writing from Owner or Design

Professional shall issue an addendum t o the

bidding documents to all the prospective

bidders.

37.5 Notwithstanding the provision above

requiring award of subcontracts to the

lowest responsive and responsible bidder,

Construction Contractor may award a

subcontract to someone other than the lowest

responsive and responsible bidder provided

Construction Contractor has first received

Owner's express written consent to such

award. Owner's consent to any such award

will be at Owner's sole discretion.

Whenever Construction Contractor wishes to

a ward a subcontract to someone who is not

the lowest responsive and responsible

bidder, Construction Contractor must notify

Owner in writing, setting out in detail the

reasons and justification for the suggested

award.

6. The subcontract for electrical wo rk for Phase 2 of the

Project was for more than $25,000.

7. Wharton - Smith did the following in the procurement of

the electrical subcontract for the Project: prepared the bid

packages, advertised, issued the invitation for bids, held the

pre - bid conferen ce, collected the bids, opened and reviewed the

bids, analyzed the bids for compliance with the scope of work,

determined which bidder was the lowest responsive and

responsible bidder, and selected the subcontractor.

8. The bid form included in the invita tion to bid

provided:

The Bidder understands and agrees that the

Construction Manager and/or Owner reserves

the right to reject this Bid or any and all

bids for the Project, and to waive minor

irregularities or informalities in any bid

and to award Alterna tes in any order that in

the Construction Manager's judgment will be

in the Owner's best interests.

This wording was prepared by Wharton - Smith without regard to the

provision s of the construction management contract.

9. Southern Atlantic had done the ele ctrical work for

Phase 1 of the Project. Southern Atlantic submitted a bid for

the electrical subcontract for Phase 2 of the Project.

10. Edwin Hutchins, the president of Southern Atlantic,

was advised by David Lewis, who was employed by Wharton - Smith ,

t hat Southern Atlantic was not the lowest responsive and

responsible bidder.

11. The construction management contract provides that the

School Board may review and comment on the bids that are

submitted. Based on Petitioner's Exhibit 2, which is a bidder

summary, the School Board did make some comments on the bids

that were submitted for all subcontracts. No comments were made

by the School Board concerning Southern Atlantic's bid.

12. The School Board did not issue the invitation to bid,

did not conduct the pre - bid conference, did not open the bids,

and did not determine which was the lowest responsive and

responsible bidder. The School Board will not be entering into

a subcontract with the lowest responsive and responsible bidder

for the electrical wor k on the P roject and will not control or

be responsible for the work of the subcontractor .

CONCLUSIONS OF LAW

13. The Division of Administrative Hearings has

jurisdiction over the parties to and the subject matter of this

proceeding. §§ 120.569 and 120.57, Fla. Stat.

14. Subsection 120.57(3)(b), Florida Statutes, provides

that any person who is adversely affected by an agency decision

or intended decision regarding a contract solicitation or award

process may file a bid protest. The term "agency" i s defined in

Subsection 120.52(1), Florida Statutes, and provides:

(1) ÐAgencyÑ means the following officers

or governmental entities if acting pursuant

to powers other than those derived from the

constitution:

(a) The Governor; each state officer and

s tate department, and each departmental unit

described in s. 20.04; the Board of

Governors of the State University System;

the Commission on Ethics; the Fish and

Wildlife Conservation Commission; a regional

water supply authority; a regional planning

agency ; a multicounty special district, but

only when a majority of its governing board

is comprised of nonelected persons;

educational units; and each entity described

in chapters 163, 373, 380, and 582 and

s. 186.504 .

(b) Each officer and governmental entity in

the state having statewide jurisdiction or

jurisdiction in more than one county.

(c) Each officer and governmen tal entity in

the state having jurisdiction in one county

or less than one county, to the extent they

are expressly made subject to this act by

general or special law or existing judicial

decisions.

This definition does not include any

municipality or legal entity created solely

by a municipality; any legal entity or

agency created in whole or in part pursuant

to part II of chapter 361; any metropolitan

planning organization created pursuant to

s. 339.175 ; any separate legal or

administrative entity created pursuant to

s. 339.175 of which a metropolitan planning

organization is a member; an expressway

authority pursuant to chapter 348 or any

transportation authority under chapter 343

or chapter 349; or any legal or

administrative en tity created by an

interlocal agreement pursuant to

s. 163.01(7), unless any party to such

agreement is otherwise an agency as defined

in this subsection.

15. "The above definition does not in terms encompass a

private entity which contractually agrees t o provide services

for a state agency." Vey v. Bradford Union Guidance Clinic,

Inc. , 399 So. 2d 1137, 1139 (Fla. 1st DCA 1981). Wharton - Smith

is a private corporation which contracted with the School Board

to construct the Project. It is not an agency a s that term is

defined in Subsection 120.52(1), Florida Statutes. See First

Quality Home Care, Inc. v. Alliance for Aging, Inc. , 14 So. 3d

(Fla. 3rd DCA 2009).

16. In order to have standing to protest a decision

or intended decision to award a contract a ward pursuant to

S ubs ection 120.57 (3) , Florida Statutes, the decision or intended

decision must an agency decision or intended decision.

The School Board is defined as an agency pursuant to

Subsection 120.52(1), Florida Statutes. Southern Atlantic

contend s that the intended contract award for the electrical

subcontract for Phase 2 of the Project was made by the School

Board through its agent, Wharton - Smith.

17. Section 1013.45, Florida Statutes, allows school

boards to contract for the construction or ren ovations of

facilities by a variety of methods and provides:

(1) Boards may employ procedures to

contract for construction of new facilities,

or for additions, remodeling, renovation,

maintenance, or repairs to existing

facilities, that will include, but not be

limited to:

(a) Competitive bids.

(b) Design - build pursuant to s. 287.055.

(c) Selecting a construction management

entity, pursuant to s. 255.103 or the

process provided by s. 287.055, that would

be responsible for all scheduling and

coordination in both design and construction

phases and is generally responsible for the

successful, timely, and economical

completion of the construction project. The

construction management entity must consist

of or contract with licensed or registered

professionals for the specific fields or

areas of construction to be performed, as

required by law. At the option of the

board, the construction management entity,

after having been selected, may be required

to offer a guaranteed maximum price or a

guaranteed completion date; in which case,

the construction management entity must

secure an appropriate s urety bond pursuant

to s. 255.05 and must hold construction

subcontracts. The criteria for selecting a

construction management entity shall not

unfairly penalize an entity that has

relevant experience in the delivery of

construction projects of similar si ze and

complexity by methods of delivery other than

construction management.

(d) Selecting a program management entity,

pursuant to s. 255.103 or the process

provided by s. 287.055, that would act as

the agent of the board and would be

responsible for sc hedule control, cost

control, and coordination in providing or

procuring planning, design, and construction

services. The program management entity

must consist of or contract with licensed or

registered professionals for the specific

areas of design or c onstruction to be

performed as required by law. The program

management entity may retain necessary

design professionals selected under the

process provided in s. 287.055. At the

option of the board, the program management

entity, after having been select ed, may be

required to offer a guaranteed maximum price

or a guaranteed completion date, in which

case the program management entity must

secure an appropriate surety bond pursuant

to s. 255.05 and must hold design and

construction subcontracts. The crite ria for

selecting a program management entity shall

not unfairly penalize an entity that has

relevant experience in the delivery of

construction programs of similar size and

complexity by methods of delivery other than

program management.

(e) Day - labor c ontracts not exceeding

$280,000 for construction, renovation,

remodeling, or maintenance of existing

facilities. Beginning January 2009, this

amount shall be adjusted annually based upon

changes in the Consumer Price Index.

18. If the School Board had w anted a contractor to act as

the agent of the School Board, the Legislature provided a method

of procurement that would allow that, a contract with a program

management entity. The School Board determined that it would

use a construction management contra ct for the Project, not a

program management contract, and awarded the construction

management contract to Wharton - Smith. The intent of the

Legislature was that a construction management contractor would

not act as the agent for a school board.

19. The F irst District Court of Appeal discusses factors

to be considered in determining whether a contractor is an

independent contractor or an agent in Del Pilar v. DHL Global

Customer Solutions (USA), Inc. , 993 So. 2d 142, 146 (Fla. 1st

DCA 2008).

A particularly significant factor in the

determination of status is "the degree of

control exercised by the employer or owner

over the agent. More particularly, it is

the right of control, and not actual

control, which determines the relationship

between the parties." Nazworth v. Swire

Fla. Inc. , 486 So. 2d 637, 638 (Fla. 1st DCA

1986) (internal citations omitted); see

generally Restatement (Second) of Agency

§ 220(2)(a) (1958); Harper ex rel. Daley v.

Toler , 884 So. 2d 1124, 1131 (Fla. 2d DCA

2004) (observing that ext ent of principal's

control is "most important factor"). "If

the employer's right to control the

activities of an employee extends to the

manner in which a task is to be performed,

then the employee is not an independent

contractor," but rather is an agent for

whose negligence the principal is

vicariously liable. Parker [v. Dominos

Pizza 629 So. 2d 1026, 1027 (Fla. 4th DCA

see also Cawthon v. Phillips

Petroleum Co. , 124 So. 2d 517, 519 (Fla. 2d

DCA 1960).

In most cases, the terms of a contract

between the parties is a pertinent index of

the principal's right of control and should

factor heavily into the inquiry, "unless

other provisions of the agreement, or the

parties' actual practice, demonstrate that

it is not a valid indicator of status [or]

. . . belie the creation of the status

agreed to by the parties." Keith v. News &

Sun Sentinel Co. , 667 So. 2d 167, 171 (Fla.

1995). In that case, "the actual practice

and relationship of the parties should

control." Id .

20. Wharton - Smith was awarded the construction management

contract. Pursuant to the construction management contract,

Wharton - Smith is responsible for the construction of the

Project , including the work of the subcontractors. The

construction management contract calls for Wharton - Sm ith to

submit a GMP to the School Board. The GMP is similar to a cost -

plus contract in which the contractor is paid the actual costs

of the work plus a certain percentage of the costs as its fee.

In the case of the GMP, the School Board will pay Wharton - Smith

the actual costs of the subcontracts; thus, the School Board

requires Wharton - Smith to competitively bid the subcontracts in

order to foster competition and to award to the most

economically - qualified bidder , which should equate to savings to

the Sch ool Board .

21. Wharton - Smith is required by the construction

management contract to prepare a report within 30 days of

executing the construction management contract which includes a

list of potential bidders for the School Board and the design

professio nal's review and approval. Because the electrical

subcontract is for more than $25,000, the solicitation process

requires a two - week advertising period. There could be bidders

who bid based on the advertisement and who were not included in

the potential list of bidders previously submitted to the School

Board and the design professional. There is nothing in the

construction management contract which requires that the School

Board approve bidders who were not in the list of potential

bidders.

22. Wharton - Smith prepared the solicitation documents for

the electrical subcontract. The construction management

contract requires that the invitation to bid be submitted to the

School Board and the design professional for review and

approval. Wharton - Smith issues the invitation to bid, opens the

bids, and tabulates the bids. A copy of the bids and the bid

tabulation are sent to the School Board and design professional

for review and comment. Wharton - Smith determines whic h

subcontractor is the lowest responsive and responsible bidder.

The School Board does not determine which subcontractor is the

lowest responsive and responsible bidder.

23. The construction management contract require s that

subcontracts be awarded to th e lowest responsive and responsible

bidder. If Wharton - Smith wants to deviate from this contract

requirement, it must seek approval from the School Board.

24. The competitive bidding of the subcontracts occurs

prior to the determination of the GMP. When the GMP is

submitted to the School Board for approval, a list of the

subcontractors which Wharton - Smith intends to use is also

presented to the School Board. Wharton - Smith will not enter

into a contract with a subcontractor if the School Board has a

reas onable objection to the subcontractor. Similarly, if

Wharton - Smith reasonably objects to a subcontractor, it is not

required to contract with that subcontractor. Thus, neither the

School Board nor Wharton - Smith has exclusive control over which

subcontrac tors will be used on the Project.

25. Wharton - Smith enters into the subcontracts, not the

School Board. Wharton - Smith has control over the subcontractors

and is responsible for the work of the subcontractors , not the

School Board .

26. Viewing the const ruction management contract as a

whole, Wharton - Smith is not the agent of the School Board. The

intended award of the electrical subcontract is not an agency

decision. Therefore, Southern Atlantic has no standing to

protest the intended award pursuant to Subsection 120.57(3),

Florida Statutes.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that a final order be entered dismissing

Southern Atlantic's Petition.

DONE AND ENTERED this 10th day of November , 2 010 , in

Tallahassee, Leon County, Florida.

S

SUSAN B. HARRELL

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399 - 3060

(850) 488 - 9675

Fax Filing (850) 921 - 6847

www.doah.state.fl.us

Filed with the Clerk of the

Division of Administrative Hearings

this 10th day of November , 2010 .

ENDNOTE

1/ Unless otherwise indicated, all references to the Florida

Statutes are to the 2010 version.

COPIES FURNISHED :

Daniel Matthew Greene, Esquire

Daniel M. Greene, P.A.

Post Office Box 3092

Orlando, Florida 32802

Brian Kirwin, Esquire

Claire A. Ashington - Pickett, Esquire

Kirwin Norris, P.A.

200 South Orange Avenue, Suite 1950

Orlando, Florida 32801

Deborah K. Kearney, General Counsel

Department of Education

Turlington Building, Suite 1244

325 West Gaines Street

Tallahassee, Florida 32399 - 0400

Dr. Eric J. Smith, Commissioner of Education

Department of Education

Turlington Building, Suite 1514

325 West Gaines Street

Tal lahassee, Florida 32399 - 0400

Ronald (Ron) Blocker, Superintendent

Orange County School Board

445 West Amelia Street

Orlando, Florida 32801

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.