87-003848BID State Paving Corporation vs. Department Of Transportation Status: Closed Recommended Order on Thursday, October 1, 1987.

Summary: Petitioner failed to prove bid by low bidder was unbalanced to the detriment of state.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

STATE PAVING CORPORATION , )

)

Petitioner , )

)

vs. ) CASE NO. 87-3848BID

)

DEPARTMENT OF TRANSPORTATION, )

)

Respondent, )

and )

)

GILBERT CORPORATION OF )

DELAWARE, )

)

Intervenor. )

___________________________________)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly

designated Hearing Officer, K. N. Ayers, held a public hearing in the above-

styled case on September 11, 1987, at Tallahassee, Florida.

APPEARANCES

For Petitioner: John O. Williams, Esquire

John Beck, Esquire

1343 East Tennessee Street

Tallahassee, Florida 32308

For Respondent: Brant Hargrove, Esquire

John Anderson, Esquire

Department of Transportation

Haydon Burns Building

Tallahassee, Florida 32399-0458

For Intervenor: Douglas Wilson, Esquire

213 South Jefferson Street, Suite 700

Roanoke, Virginia 24011

By Amended Petition for Formal Hearing received September 8, 1987, State

Paving Corporation, Petitioner, challenges the proposed action of the Florida

Department of Transportation (DOT), Respondent, to award contract on State

Project No. 97870-334, etc. to Gilbert Corporation of Delaware (Gilbert),

Intervenor, the apparent low bidder. As grounds therefor, it is alleged that

the Gilbert bid is unbalanced. Petitioner's initial challenge to the proposed

award, filed August 21, 1987, was challenged by a Department of Transportation

Motion to Dismiss which was forwarded to the Division of Administrative Hearings

with the Petition. The principal ground for the Motion to Dismiss is that the

Petition challenged the bid specifications and such a challenge must be made

prior to the bid opening.

A prehearing conference was held September 4, 1987, on the Motion to

Dismiss and Gilbert's Petition to Intervene at which both intervention and

dismissal was granted with leave to file an Amended Petition alleging the facts

upon which to base the allegation that the bid of Gilbert is unbalanced. This

hearing is on the Amended Petition. Ruling on Respondent's motion to strike

portions of the Amended Petition was reserved when made and again when renewed

at the close of Petitioner's case. This motion was to strike paragraphs 8p and

9 of the Amended Petition. Paragraph 8 of the Amended Petition listed those bid

items that Petitioner contends rendered Gilbert's bid unbalanced. Subparagraph

8(p) was, "All items in the document entitled 'This is Not an Addendum'. . . . "

Paragraph 9 alleged that Gilbert's bid was so unbalanced that Petitioner's bid

is actually the low bid and the contract should be awarded to Petitioner. For

reasons noted below, the motion to strike Section 8p is now granted and the

motion to strike Paragraph 9 is denied.

At the hearing, Petitioner called two witnesses, Respondent called two

witnesses, Intervenor called one witness and two exhibits were admitted into

evidence.

Proposed findings have been submitted by the Petitioner and Intervenor, and

the Department of Transportation adopted the proposed findings submitted by the

Intervenoreatment accorded those proposed findings is contained in the

Appendix attached hereto and made a part hereof.

BACKGROUND

To understand the posture of this case at the time the hearing began, it is

necessary to review the history thereof. The initial bid protest was filed by

State Paving on August 21, 1987, after Department of Transportation announced

its intent to award the bid to Gilbert. That petition basically challenged the

bid specifications and plans. Department of Transportation's motion to dismiss

that Petition was granted on the basis of Rule 14-25.024, Florida Administrative

Code, and Capeletti Brothers, Inc. vs. Department of Transportation, 499 So.2d

855 (Fla. 1st DCA 1986). Rule 14-25.024 (1), Florida Administrative Code,

requires challenges to bid solicitations be made prior to the date on which bids

are to be received. Capeletti, supra, at p. 857 holds that a failure to file a

timely protest constitutes a waiver of Chapter 120 proceedings. Accordingly,

objections to evidence challenging the bid specifications was sustained at the

hearing. To expedite the proceedings, a continuing objection to any such

question was granted. Accordingly, when preparing this Recommended Order, all

testimony challenging the bid specifications has been disregarded as evidence in

these proceedings.

FINDINGS OF FACT

1. On or about June 3, 1987, DOT advertised that it would receive bids on

State Project No. 97870-334, etc. in Dade, Broward and Palm Beach Counties to

improve portions of the Florida Turnpike.

2. On June 24, 1987, bids were received by DOT from Gilbert, State Paving

and Archer Western Contractors. The apparent low bidder at bid opening on June

24, 1987, was Gilbert and State Paving was apparent second low bidder.

3. DOT was informally advised by John Beck, an attorney representing State

Paving, that Gilbert's bid was believed to be unbalanced and the appropriate

officials referred the issue to the DOT Bureau of Estimates to look into the low

bid to see if it was unbalanced to the detriment of the State.

4. Review of the Gilbert bid began with an internal analysis of the bid

prices in comparison to the DOT Estimate of the Work. All bid prices above or

below a certain percent of the engineer's estimate of costs were prepared in a

computer printout and those items were checked by the consultants on the

project. Basically, the major items in the project, which comprises some 400

bid items, were broken down to 10 groupings and the bids for each item in these

groups was prepared for the three bidders and tabulated in Exhibit 2.

5. The DOT Technical Committee reviewed the bids and concluded there was

no unbalancing in Gilbert's bid which was detrimental to the State. This

recommendation was approved by the Awards Committee which had also been

furnished the information in Exhibit 2 by the consulting engineer for the

project. Based upon this information, the Awards Committee concluded that the

awards should go to Gilbert as no unbalancing detrimental to the State was

found.

6. Specification made a part of all DOT bid proposals provide that DOT may

reject an unbalanced bid. As a matter of policy, DOT only rejects unbalanced

bids deemed contrary to the interests of the State.

7. Bids may be unbalanced in numerous ways. One significant method is

known as front loading where the bidder submits a high bid for the work to be

done at the beginning of the project such as clearing and grubbing and low bids

for the work done later in the project. If successful in getting the award,

this bidder would have excess profits on the clearing and grubbing which could

draw interest while the less profitable later work was being done. Another

variant is to study the plans and specifications to see if the quantities listed

in the bid proposal are accurately reflected in the plans and specifications.

If not, those items for which the bid proposal shows more than the plans and

specifications reasonably required can be bid low, and for those items by which

the bid proposal shows less than actually will be required can be bid high.

Since the contractor is paid by the units used, those excess units at a higher

price would result in more profit for the contractor yet allow him to submit an

overall lower bid. For example, if the bid proposal contains two similar items

for which the request for proposal estimates 100 each will be required, and the

bidder concludes that only 50 will be required at Site A and 150 at Site B, he

submits a low bid for Site A and a high bid for Site B. If the fair price for

these units is $10 each, and the bidder bids $5 per unit for Site A or $500, and

$15 for Site B or $1500, the total bid price is $2000, but if the bidder only

installs 50 at Site A he would be paid $250 and install $150 at Site B for which

he would be paid $2250. His total compensation would be $2500.

8. In competitively bid contracts, such as the instant project,

contractors modify their prices by taking a calculated risk that certain items

bid on will not need to be accomplished and submit a nominal bid of $1 or 1 cent

for such an item. By definition, such a bid is unbalanced, but if the item so

bid has to be provided, the contractor has to provide this service at the bid

price.

9. The only evidence submitted by Petitioner tending to show Gilbert's bid

was unbalanced to the detriment of the State was testimony, objected to and

sustained, that the plans and specifications showed more of certain units would

be needed than the estimated quantities on the bid proposal, which constituted

the basis for the bids submitted. Such evidence constitutes a challenge to the

bid specifications and is untimely. Gilbert's witness who prepared the bid

submitted by Gilbert adequately explained the basis for bids submitted by

Gilbert on the challenged items.

10. The document entitled "This is Not an Addendum," clearly states on its

face that "an addendum may follow containing the following information." No

bids are solicited thereby and for no item contained thereon is the State

obligated to contract. This document was provided all bidders before bids were

open and no unfair advantage to anyone or detriment to the State was shown. In

a project containing some 400 bid items, many modifications of the contract

during construction is required to cover unforeseen circumstances that arise.

While it would be better to get competitive bids on every bit of work done on

this project, in this imperfect world unforeseen items will appear. The

document complained of attempts to alert the bidders to some anticipated work

not foreseen when the bid proposal was prepared, but it is not a part of the bid

solicitation.

CONCLUSIONS OF LAW

11. The Division of Administrative Hearings has jurisdiction over the

parties to, and the subject matter of, these proceedings.

12. DOT bid specifications provide that it may reject unbalanced bids. As

a matter of policy, such bids are rejected only when deemed contrary to the

State's interest. Since all bids are to some extent "unbalanced", this is a

reasonable policy justified by the evidence presented at the hearing.

13. State Paving has the burden to prove, by a preponderance of the

evidence, that Gilbert's bid in this project was unbalanced to the detriment of

the State. This burden State Paving has failed to meet. The only evidence

tending to show an advantage to Gilbert and detriment to the State was the

untimely and therefore inadmissible challenge to the quantities shown in the bid

solicitations. Even had this evidence been admissible, Gilbert explained the

basis for its bid on each challenged item.

14. With respect to State Paving's contention that because of the

unbalancing of Gilbert's bid, State Paving was the low bidder and should receive

the award, the only evidence to sustain this position was the opinion of State

Paving's expert witness that the quantities shown on the bid solicitation were

inconsistent with the plans and specifications. This constitutes an untimely

challenge to the bid solicitation and is inadmissible.

15. From the foregoing, it is concluded that State Paving Corporation has

failed to prove, by a preponderance of the evidence, that the bid submitted by

Gilbert Corporation of Delaware, Inc., on Project No. 97870-334, etc. was

unbalanced to the detriment of the State of Florida. It is

RECOMMENDED that the Petition of State Paving Corporation challenging the

award of the bid on State Project No. 97870-334, etc. to Gilbert Corporation of

Delaware, Inc., be dismissed.

ENTERED this 1st day of October, 1987, in Tallahassee, Florida.

_________________________________

K. N. AYERS

Hearing Officer

Division of Administrative Hearings

The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 1st day of October, 1987.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 87-3848

Treatment Accorded Petitioner's Proposed Findings

1-5. Contained in HO preamble and HO #2.

6-7. Contained in HO #3.

8. Accepted only insofar as consistent with

HO #4 and 5. Otherwise rejected.

9. Rejected.

10. Accepted. However, when the bid was reviewed

for unbalancing, Petitioner's Amended Complaint

was not in existence.

11. Included in HO #8.

12. Accepted insofar as included in HO #10 ;

otherwise rejected.

13. Rejected as unsupported by credible evidence.

Treatment Accorded Proposed Findings submitted by Intervenor and Adopted by the

Respondent.

1. Included in HO #1.

2. Included in HO #2.

3. Included in HO #3.

4. Included in HO #4.

5-6. Included in HO #5.

7-13. Included in HO Preamble.

14-15. Included in HO #9.

16. Included in HO #8.

17. Accepted. See HO #4.

COPIES FURNISHED:

John O. Williams, Esquire

John Beck, Esquire

1343 East Tennessee Street

Tallahassee, Florida 32308

Brant Hargrove, Esquire

John Anderson, Esquire

Department of Transportation

Haydon Burns Building

Tallahassee, Florida 32399-0458

Douglas Wilson, Esquire

213 South Jefferson Street

Suite 700

Roanoke, VA 24011

Kaye N. Henderson, P. E.

Secretary

Department of Transportation

Haydon Burns Building

605 Suwannee Street

Tallahassee, Florida 32399-0450

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE OF FLORIDA

DEPARTMENT OF TRANSPORTATION

STATE PAVING CORPORATION,

Petitioner,

vs. CASE NO. 87-3848BID

DEPARTMENT OF TRANSPORTATION,

Respondent,

and

GILBERT CORPORATION OF DELAWARE,

Intervenor.

_________________________________/

FINAL ORDER

The Record in these proceedings and the Recommended Order have been

reviewed. The Exceptions to Recommended Order filed by Petitioner, State Paving

Corporation, are addressed herein.

1. Exception No 1 is reargument of Respondent's motion to dismiss portions

of the Petition for Formal Hearing which has already been ruled on by the

Hearing Officer.

Fla. Admin.Code Rule 14-25.024 clearly sets forth the requirement that a

bid solicitation protest be filed before bid are received:

Any person adversely affected by a bid

solicitation shall file a notice of

protest, in writing, prior to the date

on which bids are to be received, and

shall file a formal written protest

within ten days after filing the notice

of protest.

Fla. Admin. Code Rule 14-25.024(1).

As noted by the First District Court of Appeal in Capeletti Brothers, Inc.

v. Department of Transporation, 499 So.2d 855 (Fla. 1st DCA 1986), the purpose

of the bid solicitation protest "is to allow an agency, in order to save

expense to the bidders and to assure fair competition among them, to correct or

clarify plans and specifications prior to accepting bids." Id. at 857.

Petitioner's failure to timely file a bid solicitation protest constitutes

a waiver of Chapter 120 proceedings. Id. at 857. So any waiver which has

occurred has been on the part of the Petitioner. The Hearing Officer's ruling

is considered correct as a matter of fact and of law.

2. Exception No. 2 is nothing more than a challenge to the ultimate

conclusion of the Recommended Order that Petitioner failed to meet its burden of

persuasion and the protest should be dismissed. The Recommended Order is found

to be supported by competent, substantial evidence and to be supported by law.

Any challenge to the dismissal of the Protest will have to be made by appeal

from this Final Order to the district court of appeal.

3. Exceptions 3, 4, and 5 address the rejection by the Hearing Officer of

certain portions of Petitioner's Proposed Recommended Order. It is the Hearing

Officer's function to consider all the evidence presented, resolve conflicts,

judge credibility of witnesses, draw permissible inferences from the evidence,

and reach ultimate findings of fact based on competent, substantial evidence.

The Department cannot reweigh the evidence presented, judge credibility of

witnesses, or otherwise interpret the evidence to fit its desired ultimate

conclusion. Heifetz v. Department of Business Regulations, 475 So.2d 1277, 1281

(Fla. 1st DCA 1985). Since the Recommended Order is supported by competent,

substantial evidence, the Department cannot change the Hearing Officer's

findings of fact.

Contrary to the assertions of Petitioner, the Hearing Officer did address

the issue of unbalancing of bids. At page 5 of the Recommended Order, the

Hearing Officer fond that the DOT Technical Committee reviewed the bids and

concluded there was no unbalancing. Petitioner failed to prove by a

preponderance of the evidence that Gilbert's bid was unbalanced to the detriment

of the State. Even though the Hearing Officer ruled that Petitioner's evidence

was inadmissible, at page 8 of the Recommended Order he concluded: "Even had

this evidence been admissible, Gilbert explained the basis for its bid on each

challenged item." This finding of fact is supported by competent, substantial

evidence. See Transcript of Hearing, pages 150-187.

Being supported by competent, substantial evidence and being correct as a

matter of law, the Recommended Order is incorporated by reference and made a

Part of this Final Order. It is

ORDERED that the protest of State Paving Corporation is DISMISSED and State

Project 97870-3334 is AWARDED to Gilbert Corporation of Delaware, Inc.

______________________________

KAYE N. HENDERSON, P.E.

Secretary

Department of Transportation

Haydon Burns Building

605 Suwannee Street

Tallahassee, Florida 32399