13-002152BID Tamco Electric, Inc. vs. Pinellas County School Board Status: Closed Recommended Order on Wednesday, October 16, 2013.

Summary: Petitioner failed to prove that the decision by the Pinellas County School Board to reject all bids was illegal, arbitrary, dishonest, or fraudulant.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

TAMCO ELECTRIC, INC. ,

Petitioner ,

vs. Case No. 13 - 2152BID

PINELLAS COUNTY SCHOOL BOARD ,

Respondent .

/

RECOMMENDED ORDER

Pursuant to notice, a final hearin g in this cause was held

by video teleconference between sites in St. Petersburg and

Tallahassee, Florida, on September 4, 2013, before the Division

of Administrative Hearings by its designated Administrative Law

Judge Linzie F. Bogan.

APPEARANCES

For Peti tioner: William B. Meacham, Esquire

308 East Plymouth Street

Tampa, Florida 33603

For Respondent: Heather J. Wallace, Esquire

Pinellas County School Board

301 4th S treet Southwest

Largo, Florida 33770

STATEMENT OF THE ISSUE

Whether Respondent ' s action to reject all bids submitted in

response to ITB 13 - 803 - 205, relating to the removal and

replacement of the public address system at Countryside High

School, is illegal, arbitrary, dishonest, or fraudulent, as

alleged in the Amended Petition.

PRELIMINARY STATEMENT

Tamco Electric, Inc. (Petitioner) , is challenging the

decision by the Pinellas County School Board (Respondent) , to

reject all bids su bmitted in response to an Invitation to Bid

13 - 03 - 205 (ITB) advertised on March 4, 2013. Petitioner was the

lowest bidder for the project. However, Respondent rejected

Petitioner ' s bid when it determined that Petitioner ' s bid was

non - responsive. Petitio ner filed a protest challenging

Respondent ' s decision to reject its bid and Respondent, based

upon grounds enumerated in Petitioner ' s protest, decided to

reject all bids submitted in response to the ITB. Petitioner

challenges herein Respondent ' s decision to reject all bids.

On June 13, 2013, Petitioner ' s bid protest was referred to

the Division of Administrative Hearings for assignment of an

Administrative Law Judge. By agreement of the parties, the final

hearing took place on September 4, 2013. Also by agreement of

the parties, the instant case was consolidated for final hearing

purposes with Division of Administrative Hearings C ase

No. 13 - 2153BID. As requested by the parties, Recommended Orders

will be issued in each case.

At the hearing, Petitioner offered testimony from Keith

Thomsen, Linda Balcombe, Michael Hewett, and Alfred Trujillo.

Mrujillo is the vice president of Tamco Electric, Inc. The

remaining witnesses are employed by Respondent. Counsel for

Respondent examined each witness but d id not call any witnesses

during its case - in - chief. The parties J oint Exhibits 1 through 7

were admitted into evidence. Petitioner ' s Exhibits 5 through 8,

and 10 , were also admitted into evidence.

A Transcript of the proceeding was filed with the Divisi on

of Administrative Hearings on September 18, 2013. Respondent

timely filed a proposed recommended order, which has been

considered in the preparation of this Recommended Order.

Petitioner did not file a proposed recommended order.

FINDING S OF FACT

1. On March 4, 2013, the ITB was issued by Respondent for

work related to the removal and replacement of the public address

system at Countryside High School in Clearwater, Florida.

According to the Special Conditions portions of the ITB, the

" scope " of the project is to " [p]rovide labor and materials to

remove and replace the auditorium sound system as per plans and

specifications by Keane Acoustics, Inc. " The ITB was assigned

bid number 13 - 803 - 205 by Respondent. Bids for the contract were

to be submitted to Respondent by 3:00 p.m., April 11, 2013.

2. Bids for the project were timely received from two

companies. The first company, Becker Communications, Inc., d/b/a

BCI Integrated Solutions (BCI), submitted a bid in the amount of

$118,143.27. Petition er submitted a bid in the amount of

$108,000.00.

3. There is a section of the ITB titled " special

conditions. " The special conditions provide in part that " [t]his

is an ALL or NONE bid [and] [t]he entire contract shall be

awarded to the lowest responsiv e and responsible bidder meeting

the specifications. " On April 22, 2013, Respondent posted a

notice advising of its intent to award the contract to BCI.

4. Although Petitioner submitted the lowest bid, Respondent

determined that Petitioner ' s bid was non - responsive because the

bid failed to include " proof of 5 years [of] experience with this

type of work " as required by the special conditions of the ITB.

Petitioner interpreted this provision as requiring five years of

experience as a certain type of gene ral contractor, which

Petitioner had, whereas Respondent intended for the ITB to convey

that five years of experience related to the removal and

installation of audio equipment was the desired type of

experience. Petitioner ' s failure to respond to the ITB in the

manner contemplated by Respondent was a technical, nonmaterial

irregularity. 1/

5. Numbered paragraph six of the General Terms & Conditions

of the ITB provides in part that Respondent " expressly reserves

the right to reject any bid proposal if it determines that the

. . . experience of the bidder, compared to work proposed,

justifies such rejection. "

6. On April 24, 2013, Petitioner provided to Respondent a

notice advising of its intent to protest the award of the

contract to BCI. On May 3, 201 3, Petitioner filed its formal

protest challenging Respondent ' s intended action of awarding the

contract to BCI.

7. Petitioner ' s formal protest enumerated several grounds.

Of particular concern to Respondent were Petitioner ' s assertions

that the ITB was " inconsistent with Florida law since bidders

[were] not required to submit a List of Subcontractors by the

time of opening bid " 2/ and that provisions of the ITB were

ambiguous with respect to the type of experience required to

qualify for bidding. 3/ Prio r to receiving Petitioner ' s protest,

Respondent was unaware of the fact that its bid specifications

governing the disclosure of subcontractors did not comply with

Florida law. Upon consideration of Petitioner ' s grounds for

protest, Respondent determined t hat the ITB, as alleged by

Petitioner, failed to comply with section 255.0515, Florida

Statutes (2012), 4/ and that there was ambiguity in the language

regarding the experience requirements for bidders. 5/

8. Respondent refers to the problems with the ITB as

" procedural errors. " These procedural errors will be referred to

herein as " irregularities " as this term is more in keeping with

the nomenclature of this area of jurisprudence. Given the ITB ' s

irregularities, Respondent decided to reject all bids.

9. In explaining Respondent ' s rationale for rejecting all

bids, Michael Hewett, Respondent ' s Director of Maintenance, 6/

testified that " the [irregularities] were such that [they]

potentially could give an unfair advantage to one bidder over

another. " As fo r the issue related to the requirements of

section 255.0515, Mr. Hewett explained that neither of the two

bidders submitted a listing of subcontractors. It would have

been competitively disadvantageous to BCI if Petitioner were able

to successfully argue that BCI should be disqualified for failing

to provide a listing of subcontractors when Petitioner also

failed to provide such listing.

10. During the same approximate time that the ITB in the

present case was issued, Respondent issued an ITB for nearly

identical work to be performed at one of its other facilities

(Palm Harbor). In all material respects, the Palm Harbor ITB was

identical to the one at issue herein. Unlike the present case,

BCI was the sole bidder for the Palm Harbor project and this

dis tinguishing fact reasonably explains why Respondent did not

reject BCI ' s bid for the Palm Harbor Project even though the ITB

therein was plagued with the same irregularities found in the

present case. 7/

CONCLUSIONS OF LAW

11. The Division of Administrat ive Hearings has jurisdiction

over the subject matter and the parties in this case under

sections 120.569 and 120.57(1), Florida Statutes.

12. Petitioner demonstrated standing and entitlement to

hearing on Respondent ' s decision to reject all bids.

13. Petitioner bears the burden of proof, which rests with

the party protesting the proposed agency action. § 120.57(3)(f);

State Contracting and Eng. Corp. v. Dep ' t of Transp. , 709 So. 2d

607, 609 (Fla. 1st DCA 1998).

14. In a proceeding brought to prote st the intended

rejection of all competitive proposals, the applicable standard of

review is that developed in Dep ' t of Transp. v. Groves - Watkins

Constructors , 530 So. 2d 912, 914 (Fla. 1988), a case in which the

Florida Supreme Court held that the adminis trative law judge ' s

" responsibility is to ascertain whether the agency acted

fraudulently, arbitrarily, illegally or dishonestly. " The statute

was subsequently amended to reflect that this is the applicable

standard when an agency rejects all bids. § 120 .57(3)(f).

15. This is a stringent burden. As the First District has

stated, " an agency ' s rejection of all bids must stand, absent a

showing that the ' purpose or effect of the rejection is to defeat

the object and integrity of competitive bidding. '" Gu lf Real

Props., Inc. v. Dep ' t of Health and Rehab. Servs. , 687 So. 2d

1336, 1338 (Fla. 1st DCA 1997).

16. Petitioner alleges that Respondent ' s decision to reject

all bids was arbitrary because Respondent " changed its story and

otherwise refused to provid e any specifics or details regarding

its rejection of all bids. . . . " 8/ Where an agency, in deciding

to reject all bids, has engaged in an honest, lawful, and rational

exercise of its " wide discretion in soliciting and accepting bids

for public improveme nts " its decision will not be overturned, even

if it may appear erroneous and even if reasonable persons may

disagree. Dep ' t of Transp. v. Groves - Watkins Constructors , 530

So. 2d 912, 913 (Fla. 1988)(quoting from Liberty Co. v. Baxter ' s

Asphalt and Concre te, Inc. , 421 So. 2d 505, 507 (Fla. 1982)).

17. An agency ' s discretion to reject all bids is not

unbridled, however. Notwithstanding the fact that Petitioner

alleges fraud, illegality, and dishonesty, the essence of

Petitioner ' s case is that Respondent ' s decision to reject all bids

was arbitrary because Respondent allowed a similar project to

proceed with the same contractual irregularities. An arbitrary

decision is one that is not supported by facts or logic, or is

despotic. Agrico Chem. Co. v. Dep ' t of Envtl. Reg. , 365 So. 2d

759, 763 (Fla. 1st DCA 1978).

18. In applying the " arbitrary " standard of review, it must

be determined whether the agency has: (1) considered all the

relevant factors; (2) given actual, good faith consideration to

those facto rs; and (3) used reason rather than whim to progress

from consideration of each of these factors to its final decision.

Adam Smith Enterprises, Inc. v. State Dep ' t of Envtl. Reg. , 553

So. 2d 1260, 1273 (Fla. 1st DCA 1989).

19. The evidence establishes t hat Respondent ' s decision to

reject all bids was based on concerns about ambiguities in the

ITB ' s verbiage regarding the experience requirements for general

contractors and the portion of the ITB governing the disclosure of

subcontractors. Petitioner prov ed that the error in its bid

regarding the extent of its professional experience was a

technical, nonmaterial irregularity. Had the issue of

Petitioner ' s level of experience been Petitioner ' s only ground of

protest, then Petitioner would have undoubtedly prevailed in its

initial protest of Respondent ' s decision to reject its bid as

non - responsive. Cf. Overstreet Paving Co. v. Dep ' t of Transp. ,

608 So. 2d 851 (Fla. 2d DCA 1992)(no public benefit derives from

rejecting low bidder for technical deficiency in the absence of

unfair competitive advantage). However, when Petitioner raised

the meritorious issue concerning the ITB ' s non - compliance with

section 255.0515, this cast the ITB in a different light.

20. It has long been established that the policy reas ons

" implicit in [s]ection 255.0515, [serve to] prevent competitive

advantage, insure the quality of the subcontractors, insure

public confidence in the bidding process, and encourage future

competition. " E.M. Watkins & Co. v. Bd. of Regents , 414 So. 2d

5 83, 587 (Fla. 1st DCA 1982). These policy objectives were

furthered in the present case when Respondent decided to reject

all bids. There is nothing fraudulent, arbitrary, illegal or

dishonest about Respondent ensuring that its competitive bidding

proces s comports with essential requirements of the law.

21. Petitioner has not met its burden of proving that the

rejection of all bids by Respondent is illegal, arbitrary,

dishonest, or fraudulent.

RECOMMENDATION

Upon consideration of the above findings of f act and

conclusions of law, it is

RECOMMENDED:

That the Pinellas County School Board enter a final order

finding that the rejection of all bids submitted in response to

ITB 13 - 803 - 205 was not illegal, arbitrary, dishonest, or

fraudulent, and dismissing Tam co Electric, Inc. ' s instant

protest.

DONE AND ENTERED this 16 th day of October , 2013 , in

Tallahassee, Leon County, Florida.

S

LINZIE F. BOGAN

Administrative Law Judge

Division of Administrative Hearings

The DeSoto Build ing

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 16 th day of October , 2013 .

ENDNOTE S

1/ An irregularity is no nmaterial when a bidder does not, as a

result of the irregularity, receive an economic benefit or

advantage over other bidders. Harry Pepper & Assoc . ' s, Inc. v.

City of Cape Coral , 352 So. 2d 1190 (Fla. 2d DCA 1978). See also

Liberty Cnty. v. Baxter ' s As phalt & Concrete , 421 So. 2d 505

(Fla. 1982).

2/ Section 255.0515, Florida Statutes, provides that " [w] ith

respect to state contracts let pursuant to competitive bidding,

whether under chapter 1013, relating to educational facilities,

or this chapter, re lating to public buildings, the contractor

shall not remove or replace subcontractors listed in the bid

subsequent to the lists being made public at the bid opening,

except upon good cause shown. " The " special conditions " of the

ITB provide that the list of all subcontractors that will provide

services for the project may be submitted after the award of the

contract. Neither Petitioner nor BCI submitted a list of

subcontractors with their respective bid proposals.

3/ As previously noted, the " special co nditions " of the ITB

provide, in part, that in order for bids to be considered

responsive, documentation should be provided by the bidder

establishing " proof of 5 years [of] experience with this type of

work. " The portion of the " special conditions " where this

language appears enumerate s three items dealing generally with

the type of contractors ' license that a bidder should possess.

By comparison, the " general conditions " of the ITB provide that

" [i]t is mandatory that contractors bidding as prime contra ctors

on projects . . . be currently qualified on the date of opening

of bids [as] an ET, ES, EF or EG contractor by providing a copy

of their contractor ' s license, a business license for this type

of work, and a [sic] proof of at least five (5) years [of]

experience in installing Auditorium sound reinforcement systems. "

When these respective provisions of the ITB are read together,

the most reasonable interpretation of the language would lead one

to conclude that a bidder should have at least five years o f

experience in installing auditorium sound reinforcement systems

as a licensed contractor. However, the respective provisions are

not a model of clarity and it was not unreasonable for Petitioner

to have misinterpreted the same nor was it irrational for

Respondent to acknowledge the inherent ambiguity as one of the

grounds for rejecting all bids.

4/ All references to Florida Statutes are to the 2012 edition

unless otherwise indicated.

5/ The fact that Petitioner did not timely file a notice of

protest to the terms, conditions, or specifications contained in

the solicitation meant that bidders waived protest on this ground.

Consultech of Jacksonville v. Dep ' t of Health , 876 So. 2d 731,

734 (Fla. 1st DCA 2004). The fact that Petitioner waived its

righ t to protest the specifications does not itself preclude

Respondent from considering ambiguities in the specifications as a

factor when deciding to reject all bids on the ground that the ITB

was flawed. See Caber Systems, Inc. v. Dep ' t of Gen. Servs. , 530

So. 2d 325 (Fla. 1st DCA 1988) .

6/ Mr. Hewett serves as a member of the supervisory staff

responsible for technical specifications, licensing requirements,

and award recommendations related to the project.

7/ Petitioner contends that because the irre gularities did not

justify rejection of the bid for the Palm Harbor project, that

those same irregularities should therefore not justify the

rejection of all bids in the present case. Petitioner presumes

that Respondent ' s decision to not rebid the Palm Ha rbor project

was correct. The undersigned states no opinion with respect to

the correctness of Respondent ' s decision not to rebid the Palm

Harbor project as this is not at issue in the present case.

Nevertheless, the fact that the Palm Harbor project was allowed

to proceed and the project in the instant case was not, does not,

ipso facto, establish that Respondent ' s decision to reject all

bids was arbitrary, illegal, dishonest, or fraudulent.

8/ Petitioner offered no credible evidence establishing that

Respondent " changed its story. "

COPIES FURNISHED:

Heather J. Wallace, Esquire

Pinellas County School Board

301 4th Street Southwest

Largo, Florida 33770

William B. Meacham, Esquire

308 East Plymouth Street

Tampa, Florida 33603

Dr. Michael A. Grego, Superintendent

Pinellas County School District

301 4th Street, Southwest

Largo, Florida 33770 - 2942

Pam Stewart

Commissioner of Education

Department of Education

Turlington Building, Suite 1514

325 West Gaines Street

Tallahassee, Florida 32399 - 0400

Mat thew Carson, General Counsel

Department of Education

Turlington Building, Suite 1244

325 West Gaines Street

Tallahassee, Florida 32399 - 0400

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

1 0 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.