17-000589BID National Water Main Cleaning Co vs. Department Of Transportation Status: Closed Recommended Order on Wednesday, April 19, 2017.

Summary: Petitioner failed to prove that the Department of Transportation's intended award to Intervenor was contrary to the bid specifications, which required either an electronic or original paper bid bond.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

NATIONAL WATER MAIN CLEANING CO,

Petitioner,

vs. Case No. 17 - 0589BID

DEPARTMENT OF TRANSPORTATION,

Respondent,

and

VACVISION ENVIRONMENTAL, LLC,

Intervenor.

_______________________________/

RECOMMENDED ORDER

Pursuant to notice, a final hearing was held in this case on

March 3, 2017, in Tallahassee, Florida, before Suzanne Van Wyk, a

duly - designated Administrative Law Judge of the Division of

Administrative Hearings.

APPEA RANCES

For Petitioner: Geoffrey D. Smith, Esquire

Smith & Associates

Suite 202

1499 South Harbor City Boulevard

Melbourne, Florida 32901

For Respondent: Doug las D ell Dolan, Esquire

Department of Transportation

605 Suwannee St reet , M ail Station 58

Tallahassee, Florida 32399 - 045 8

For Intervenor: Megan M. Warren, Esquire

McRae & Metcalf, P.A.

2612 Centennial Place

Tallahassee, Florida 32308

STATEMENT OF THE ISSUE

Whether RespondentÓs intended action to award Contract

No. E3Q37 to VacVision Environmental, LLC, for ÐMilton Operations

Routine Maintenance,Ñ is contrary to RespondentÓs solicitation

specifications.

PRELIMINARY STATEMENT

On October 11, 2016, Respondent, the Department of

Transportation (the Dep artment), issued an Invitation to Bid

(ITB) on Contract No. E3Q37 (the Contract) , a project to

rehabilitate existing underground sewer pipes located in Santa

Rosa County, Florida. Both Petitioner and Intervenor timely

submitted bids for the projects, whic h were opened by the

Department on November 10, 2016. The Department posted its

Notice of Intent to award the C on tract to Intervenor on

December 7, 2016.

Petitioner timely filed a notice of intent to protest the

award on December 12, 2016, and filed its F ormal Petition

challenging the DepartmentÓs award of the C ontract on

December 22, 2016. The Department referred the matter to the

Division of Administrative Hearings on January 24, 2017, for

assignment of an administrative law judge.

The final hearing was scheduled for, and commenced on,

March 3, 2017. The partiesÓ Join t Exhibits 1 through 4, 4a,

and 5 through 7 were admitted in evidence.

Petitioner presented the testimony of its President,

Salvatori F. Perri, and PetitionerÓs Exhibits 1 through 4 were

ad mitted in evidence. The Department presented the testimony of

Richard Norris, District ansportation Support Manager; Amanda

Mauldin, Contract Analyst III; Jared Kirkland, Estimates

Specialist; and Marilyn Durrance, Contract Specialist. The

Department Ós Exhibits 1 through 10 were admitted in evidence, as

well as Exhibit 11, pages 1 through 114.

Intervenor offered the testimony of its representative,

Wesley A. Kingery, and introduced IntervenorÓs Exhibits 1

through 4, which were admitted in evidence.

Th e one - volume Transcript of the proceedings was filed on

March 17, 2017. The parties timely filed Proposed Recommended

Orders, which have been considered in the preparation of this

Recommended Order.

FINDING S OF FACT

1. The Department is an agency of the State of Florida

tasked with procuring the construction of all roads designated as

part of the State Highway System or the State Park Road System,

or of any roads placed under the DepartmentÓs supervision by law.

See § 334.044, Fla. Stat. (2016). 1/

2. Fu rther, the Department has the duty to ensure that

maintenance of sewers within the right - of - way of the roadways

within its jurisdiction does not degrade the integrity of its

facilities. See § 337.401, Fla. Stat.

3. Petitioner, National Water Main Cleanin g Co., is a full -

service maintenance and rehabilitation pipe contracting business

based in New Jersey. The company has been in business since 1949

and primarily contracts with government entities to perform storm

and sanitary sewer inspection, cleaning, a nd repair.

4. On October 11, 2016, the Department published a bid

solicitation notice for the Contract , seeking contractors to

desilt, remove blockages from, and install liners in existing

underground sewer pipe on a specified state road in Santa Rosa

Cou nty. The ITB included specifications, plans, and a proposal

form with specific work items.

5. The ITB contained the following relevant language

requiring a bid bond for proposals over $150,000:

For bids over $150,000.00, the standard

proposal guaranty of 5% of the bid will be

required. A Proposal Guaranty of not less

than five percent (5%) of the total actual

bid in the form of either a certified check,

cashierÓs check, trust company treasurerÓs

check, bank draft of any National or state

bank, or a Suret y Bid Bond made payable to

the Florida Department of Transportation must

accompany each bid in excess of $150,000.00.

* * *

Bid Bonds shall substantially conform to DOT

Form 375 - 020 - 09 furnished with the Proposal.

Surety2000 or SurePath electronic Bi d Bond

submittal may be used in conjunction with Bid

Express internet bid submittal. For more

information please visit

https://www.surety2000.com [f]or Surety2000

or ht tps://www.insurevision.com for SurePath.

Paper Bid Bonds will also be accepted for

bids submitted through Bid Express provided

they are received prior to the deadline for

receiving bids, by the locations(s)

identified in the Bid Solicitation Notice for

r eceiving bids for the advertised project(s).

If an electronic bid bond is not being

submitted, the bidder must submit an original

bid bond. (A fax or copy sent as an

attachment will not be accepted.)

(emphasis added).

6. The deadline for submission of bids was Thursday,

November 10, 2016 , at 2:00 p.m.

7. On November 10, 2016, the Department received and opened

bids from both Petitioner and Intervenor, as well as two other

vendors.

8. PetitionerÓs bid for the project was the lowest at

$504,380.70. IntervenorÓs bid was the next lowest at $899,842.

9. Petitioner submitted its bid for the project through Bid

Express, the DepartmentÓs electronic bid submission website.

10. Along with its bid, Petitioner submitted several

attachments in a .zip file, including a .pdf copy of a bid bond

from TravelerÓs Casualty and Surety Company in the amount of

5 percent of the total amount of the bid.

11. Petitioner did not submit an electronic bid bond

through either Surety2000 or SurePath, nor did it submit the

o riginal paper bid bond prior to the deadline for submission of

bids.

12. The original paper bid bond remained in the possession

of PetitionerÓs President, Salvatore Perri, on the date of the

final hearing.

13. PetitionerÓs bid was reviewed by employees of the

DepartmentÓs District 3 Contracts Administration Office and

deemed Ðnon - responsiveÑ because the bid bond submission did not

comply with the bid specifications.

14. On December 7, 2016, the Department posted its notice

of intent to award the Contr act to Intervenor.

15. The .pdf copy of the bid bond Petitioner attached to

its bid for the project was on Department form 375 - 020 - 09, Bid or

Proposal Bond.

16. Form 375 - 020 - 09 contains the following note: ÐPower of

Attorney showing authority of Flori da Licensed Insurance Agent to

sign on behalf of, and bind, surety must be furnished with this

form. Affix Corporate Seal of Surety.Ñ

17. The Power of Attorney accompanying PetitionerÓs bid

bond contains the following language: ÐWarning: THIS POWER OF

ATTORNEY IS INVALID WITHOUT THE RED BORDER.Ñ

18. The attached Power of Attorney is a copy in black - and -

white, rather than an original with the red border.

Waiver

19. Pursuant to the ITB, and by operation of section

120.57, Florida Statutes, the deadli ne to file a protest to the

bid specifications was October 14, 2016, 72 hours after posting

of the ITB.

20. Petitioner did not file a protest to the specifications

of the ITB.

CONCLUSIONS OF LAW

21. The Division of Administrative Hearings has

jurisdicti on over the parties to and the subject matter of this

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

22. Section 120.57(3)(f) provides that:

[T] he burden of proof shall rest with the

party protesting the proposed agency action.

In a competitive - pr ocurement 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 agencyÓs proposed action is

contrary to the agencyÓs governing statutes,

the agencyÓs rul es or policies, or the

solicitation specifications. The standard of

proof for such proceedings shall be whether

the proposed agency action was clearly

erroneous, contrary to competition,

arbitrary, or capricious.

23. The nature of the de novo review in a bid protest

proceeding has been established as follows:

[T]he phrase 'de novo hearing' is used to

describe a form of intra - agency review. The

judge may receive evidence, as with any

formal hearing under section 120.57(1), but

the object of the proceedin g is to evaluate

the action taken by the agency. See

Intercontinental Properties, Inc. v. State

Department of Health and Rehabilitative

Services , 606 So. 2d 380 (Fla. 3d DCA 1992).

State Contracting and EngÓg Corp. v. DepÓt of Transp. , 709

So. 2d, 607, 6 09 (Fla. 1st DCA 1998).

24. The standard of review of the agencyÓs proposed action

in a bid protest proceeding has been generally described as

follows:

[A] Òpublic body has wide discretion Ó in the

bidding process and Òits decision, when based

on an honest exerciseÓ of the discretion,

should not be overturned Òeven if it may

appear erroneous and even if reasonable

persons may disagree.Ó Department of

Transportation v. Groves - Watkins

Constructors , 530 So. 2d 912, 913 (Fla. 1988)

(quoting Liberty County v. B axter's Asphalt &

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

(emphasis in original). ÒThe hearing

officer's sole responsibility is to ascertain

whether the agency acted fraudulently,

arbitrarily, illegally, or dishonestly.Ó

Groves - Watkins , 530 So. 2d at 914.

Scientific Games, Inc. v. Dittler Bros. , 586 So. 2d 1128, 1131

(Fla. 1st DCA 1991).

25. Petitioner has the burden to establish that the

DepartmentÓs intended award of the Contract to Intervenor is

clearly erroneous, contrary to competition, arbitra ry, or

capricious. § 120.57(3)(f) , Fla. Stat. ; DepÓt of Transp. v.

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

26. Agency action will be found to be "clearly erroneous"

if it is without rational support and, consequently, the

administrative law judge has a "definite and firm conviction that

a mistake has been committed." U.S. v. U.S. Gypsum Co. , 333

U.S. 364, 395 (1948); see also Pershing Indus., Inc. v. DepÓt of

Banking & Fin. , 591 So. 2d 991, 993 (Fla. 1st DCA 1991). Agency

action may also be found to be "clearly erroneous" if the

agency's interpretation of the applicable law conflicts with its

plain meaning and intent. Colbert v. Dep't of Health , 890 So. 2d

1165, 1166 (Fla. 1st DCA 2004). In such a case, "judicial

deference need not be give n" to the agency's interpretation. Id.

27. Petitioner first argues that it complied with the ITB

specifications by timely submitting a bid bond electronically

prior to the October 11, 2016, submission deadline. As such,

Petitioner claims that it was the lowest responsible, responsive

bidder for the project, thus awarding the C ontract to Intervenor

is clearly erroneous.

28. PetitionerÓs first argument is not persuasive.

Petitioner chose not to utilize either the Surety2000 or SurePath

electronic bid sys tems, which provide verification of bid bonds.

Petitioner attached a copy of a bid bond to its electronic bid.

Doing so did not convert the paper bid bond into an electronic

bid bond.

29. Having chosen not to use either of the electronic bid

bond servic es, the plain language of the ITB limited Petitione r

to only one other alternative -- submittal of a paper bid bond to

the location identified in the ITB for receipt of bids prior to

the deadline for receipt of bids. Further, the ITB specified

that if an el ectronic bid bond is not being submitted, Ðthe

bidder must submit an original bid bond.Ñ Petitioner did not

submit the original bid bond, but rather submitted a copy -- a

method expressly prohibited by the specifications. It matters

not that the copy came as an attachment to its electronic bid

submission, rather than a fax or copy by U.S. Mail or delivery

service. A copy is a copy and the original was required since an

electronic bid bond was not submitted.

30. Petitioner argues, alternately, that failu re to submit

the original paper bid bond was a minor irregularity in its bid

which should be waived by the Department.

31. Irregularities in a bid proposal can be waived if they

are minor or technical and if they do not give a bidder a

competitive advant age. See Liberty Cnty. v. BaxterÓs Asphalt &

Concrete , 421 So. 2d 505 (Fla. 1982); Overstreet Paving Co. v.

DepÓt of Transp. , 608 So. 2d 851, 853 (Fla. 2d DCA 1992); and

Intercontinental Properties, Inc. v. DepÓt of Health , 606 So. 2d

380 (Fla. 3d DCA 199 2).

32. In determining whether a bidderÓs failure to conform to

the specifications of the bid package constitutes a material,

rather than minor irregularity, two criteria are applicable:

[F]irst, whether the effect of the waiver

would be to deprive the [g overnmental entity]

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

i t s 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.

Robinson Elec. Co. v. Dade Cnty. , 417 So. 2d 1032, 1034 (Fla. 3d

DCA 1982)(citing Glastein v. City of Miami , 399 So. 2d 1005 ( Fla.

2d DCA 1981)).

33. The purpose of requiring a bid bond is to ensure that

the successful bidder will enter into the contract for the

project. 2/ See City of Wildwood v. Gibbs & Register, Inc. , 694

So. 2d 763, 766 (Fla. 5th DCA 1997); § 334.187, Fla. Stat.

Without a bond, the Department has no assurance that a contract

will be formed. If no contract is formed, the project would have

to be rebid, which would cost the Department both in delay and

administrative expense.

34. The court in Wildwood fu rther explained:

[A bid bond] provides that a certain amount

of money will be paid in the event that a

successful bidder on a public project fails

to enter into a formal contract; it is a type

of liquidated damages and it represents an

added incentive to discourage the withdrawal

of bids.

Id . (quoting John Alan Appleman, Insurance Law and Practice

§ 5831 (1st ed. 1941)).

35. In the case at hand, Petitioner submitted a copy of a

bid bond, rather than the original. As noted in RespondentÓs

Proposed Rec ommended Order, the evidence code provides that a

duplicate of a negotiable instrument is not admissible to the

same extent as an original. See § 90.953(1), Fla. Stat. In

cases for payment, the original must be brought forward both to

demonstrate the rig ht to payment and to preclude the possibility

that the instrument has already been negotiated. See

Pennsylvania Blue Shield v. Wolfe , 575 So. 2d 1361, 1363 (Fla. 3d

DCA 1991). In short, a copy of PetitionerÓs bid bond is

unenforceable.

36. It was not a rbitrary for the Department to conclude

that PetitionerÓs submission of an unenforceable bid bond was not

a minor irregularity that could be waived. See Phoenix Mowing

and Landscaping, Inc. v. DepÓt of Transp. , Case No. 01 - 0371BID

(Fla. DOAH Apr. 25, 2001 ); Quinn Constr., Inc. v. DepÓt of

Transp. , Case No. 95 - 0564 (Fla. DOAH Apr. 26, 1995). Submitting

a copy alone deprived the De partment of assurance that the

C ontract would be entered into, performed, and guaranteed

according to the specifications.

37. Finally, submitting an unenforceable bid bond gives

Petitioner the competitive advantage of escaping the requirement

to perform the C ontract at the low bid, if advantageous to

Petitioner, without being liable under the bid bond. 3/ See Id .

38. Petitioner Ós submission of a copy of its bid bond,

rather than either the original or an electronic copy verified

through Surety2000 or Surepath, was a material irregularity which

could not be waived by the Department.

39. Petitioner did not establish that the Dep artmentÓs

intended award of the Contract to Intervenor was contrary to the

solicitation specifications.

Specifications Challenge

40. Finally, to the extent that Petitioner takes issue with

the ITB specification requiring either an electronic bid bond or

a n original paper bid bond, 4/ Petitioner has waived that argument

by failing to timely challenge the bid specifications.

41. Subsection 120.57(3)(b) provides in part:

With respect to a protest of the terms,

conditions, and specifications contained in a

so licitation, including any provisions

governing the methods for ranking bids,

proposals, or replies, awarding contracts,

reserving rights of further negotiation, or

modifying or amending any contract, the

notice of protest shall be filed in writing

within 7 2 hours after the posting of the

solicitation. The formal written protest

shall be filed within 10 days after the date

the notice of protest is filed. Failure to

file a notice of protest or failure to file

a formal written protest shall constitute a

waiv er of proceedings under this chapter.

42. The policy expressed by subsection 120.57(3)(b) is

that vendors must complain early if they are unhappy with the

procurement method the agency chooses, or their right to

complain will be waived. See Tex. Aquatic Harvesting, Inc. v.

DepÓt Envtl. Prot. , Case No. 06 - 4217BID (Fla. DOAH Feb. 27,

2007), mod. in part , Case No. 06 - 2223 (Fla. DEP March 29,

2007)(concluding that bidder who did not challenge the RFP

within 72 hours of issuance waived the right to challenge

agencyÓs use of the IT B without written findings that an RFP was

not practicable).

43 . As explained by Administrative Law Judge Cave in

Correctional Services Corporation v. Department of Juvenile

Justice , Case Nos. 02 - 2966BID and 02 - 2967BID (Fla. DOAH

Oct . 29, 2002):

The policy underlying this requirement and

the waiver provision is obvious: If a would -

be offeror takes issue with the State's

proposed method of procurement, it should

challenge that method at the inception, so

that any legal or other elemen t of the

state's request can be remedied in a timely

fashion, rather than at the end of the

process.

44 . In the case at hand, the Department issued the ITB on

October 11, 2016, and Petitioner never filed a challenge to the

ITB specifications. As such, P etitioner has waived the right to

challenge the agencyÓs method of procurement.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of

Law, it is RECOMMENDED that :

Respondent, Department of Transportation, enter a final

order adopting th e Findings of Fact and Conclusions of Law set

forth herein, and award Contract E3Q37 for Milton Operations

Routine Maintenance, to Intervenor, VacVision Environmental, LLC.

DONE AND ENTERED this 1 9 th day of April , 2017 , in

Tallahassee, Leon County, Florid a.

S

SUZANNE VAN WYK

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 1 9 th day of April , 2017 .

ENDNOTE S

1/ Unless otherwise specific herein, all references to the

Florida Statutes are to the 2016 version.

2/ Section 3 - 4 of the DepartmentÓs Standard Specifications for

Road and Bridge Construction provides that the ÐDepartment will

immediately release the Proposal Guaranty of the two lowest

responsible Bidders after the successful Bidder delivers the

executed Contract . . . to the Department . . . .Ñ

3/ It is not beyond comprehension that Petitioner might have

walked away from its bid, after opening, when it discovered that

its bid was almost $400,000 less than the next lowest bid, and

perhaps, considered that it had underestimated the work involved.

4/ In the Prehearing Stipulation, the parties stipulated to the

following issue of law to be determined by the undersigned:

ÐWhether NationalÓs protest of the provisions of the ITB relating

to submission of the bid bond is untimely because it failed t o

comply with the requirements of section 120.57(3)(b).Ñ

COPIES FURNISHED:

Douglas Dell Dolan, Esquire

Department of Transportation

605 Suwannee Street , Mail Station 58

Tallahassee, Florida 32399 - 045 8

(eServed)

Christopher T. McRae, Esquire

McRae & Me tcalf, P.A.

2612 Centennial Place

Tallahassee, Florida 32308

(eServed)

Megan M. Warren, Esquire

McRae & Metcalf, P.A.

2612 Centennial Place

Tallahassee, Florida 32308

(eServed)

David J. Metcalf, Esquire

McRae & Metcalf, P.A.

2612 Centennial Place

Talla hassee, Florida 32308

Susan Crystal Smith, Esquire

Smith & Associates

Suite 202

1499 South Harbor City Boulevard

Melbourne, Florida 32901

(eServed)

Geoffrey D. Smith, Esquire

Smith & Associates

Suite 202

1499 South Harbor City Boulevard

Melbourne, Flori da 32901

(eServed)

Timothy Bruce Elliott, Esquire

Smith & Associates

Suite 201

2834 Remington Green Circle

Tallahassee, Florida 32308

(eServed)

Andrea Shulthiess, Clerk of Agency Proceedings

Department of Transportation

Haydon Burns Building

605 Suwan nee Street, M ail Station 58

Tallahassee, Florida 32399 - 0450

(eServed)

Rachel Cone, Interim Secretary

Department of Transportation

Haydon Burns Building

605 Suwannee Street, M ail Station 57

Tallahassee, Florida 32399 - 0450

(eServed)

Tom Thomas, General C ounsel

Department of Transportation

Haydon Burns Building

605 Suwannee Street, M ail Station 58

Tallahassee, Florida 32399 - 0450

(eServed)

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

1 0 days fro m 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.