92-004018BID Hubbard Construction Company vs. Department Of Transportation Status: Closed Recommended Order on Wednesday, October 21, 1992.

Summary: Petitioner's bid responsive; Dept acted arbitraily in refusing to consider Disabled Business Enterprise (DBE) circumstances and facts related to DBE's application for renewal.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HUBBARD CONSTRUCTION COMPANY, )

)

Petitioner, )

)

vs. ) CASE NO. 92-4018BID

)

DEPARTMENT OF TRANSPORTATION, )

)

Respondent. )

___________________________________)

RECOMMENDED ORDER

Pursuant to notice, a final hearing in the above-styled matter was held on

July 22, 1992, in Tallahassee, Florida, before Joyous D. Parrish, a designated

Hearing Officer of the Division of Administrative Hearings. The parties were

represented at the hearing as follows:

APPEARANCES

For Petitioner: F. Alan Cummings

Mary M. Piccard

Cummings, Lawrence & Vezina, P.A.

1004 DeSoto Park Drive

Post Office Box 589

Tallahassee, Florida 32302-0589

For Respondent: Susan P. Stephens

Assistant General Counsel

State of Florida, Department

of Transportation

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399-0458

STATEMENT OF THE ISSUES

The central issue in this case is whether the Department's action in

posting its intent to award contract no. 18103, section/job no. 11130-3518, was

fraudulent, arbitrary, illegal or dishonest.

PRELIMINARY STATEMENT

This case began on June 18, 1992, when the Department of Transportation

(Department) posted the notice of its intent to award contract no. 18103,

section/job no. 11130-3518, to APAC-Florida, Inc. (APAC). When Hubbard

Construction Company (Hubbard or Petitioner), the apparent low bidder for the

project, learned of the award, it timely filed a notice of protest and the

petition which is at issue in this case.

Hubbard's challenge maintained that its bid was rejected because the

Department arbitrarily determined Hubbard had not met the disadvantaged business

enterprise (DBE) participation goal for the contract and did not otherwise meet

the good faith efforts requirement. Hubbard alleged that its bid did comply

with the ten percent DBE goal, and that its subcontractor, CDS Trucking, has

been a certified DBE since 1986. The case was forwarded to the Division of

Administrative Hearings for formal proceedings on July 8, 1992.

At the hearing, Hubbard presented the testimony of the following witnesses:

Wayne Evans, vice-president of Hubbard; Carlos Cantero, president of CDS

Trucking; Carmen Cantero, office manager with CDS Trucking; Cathy Garner Parker,

an operations management consultant II employed in the Department's

disadvantaged business certification section; Russell Waldon, acting manager for

the Department's minority programs office; and Kenneth N. Morefield, state

highway engineer employed by the Department and chairman of the awards

committee. Hubbard's exhibits numbered 1 through 14 were admitted into

evidence.

The Department presented the testimony of Paul S. Newell, the Department's

manager in the contracts office. The Department's exhibits numbered 1 through 8

were admitted into evidence.

The transcript of the hearing was filed with the Division of Administrative

Hearings on August 10, 1992. The parties filed proposed recommended orders

which have been considered in the preparation of this order. Specific rulings

on the proposed findings of fact are included in the attached appendix.

FINDINGS OF FACT

Based upon the prehearing stipulation, the testimony of the witnesses, and

the documentary evidence received at the hearing, the following findings of fact

are made:

1. Sometime prior to May 27, 1992, the Department solicited bids for

contract no. 18103, section/job no. 11130-3518 (the project).

2. The DBE goal for the project was stated at ten percent.

3. The bids for the project were opened on May 27, 1992, and six timely

bids were received including one from Hubbard and one from APAC.

4. Hubbard's bid was the apparent low bid at $1,573,558.00 when compared

to APAC's bid of $1,706,337.22. All other bids were presumably higher and are

not at issue in these proceedings. All such bids were, however, deemed

responsive by the Department.

5. The Department established two dates for the posting of the award for

this project. One date, June 18, 1992, was twenty-two days after the letting.

That calculation requires that the actual letting date (May 27, 1992) be counted

as the first day. The second date, using the same approach, was specified at

forty days after the letting, July 6, 1992.

6. The Department elected to post for this project on day 22, and its

intent to award the contract to APAC was therefore disclosed on June 18, 1992.

7. Hubbard timely filed an initial protest to the intent to award, and

subsequently timely filed its formal protest on June 29, 1992.

8. The Department rejected Hubbard's bid solely because one of its

subcontractors, CDS Trucking, was not on a list of certified DBE firms on the

day the bids for the contract were opened.

9. Hubbard is a highway construction contractor which bids for, and

performs, highway construction projects with the Department and other public

entities.

10. Hubbard is aware of public contracts that require a specified percent

to be performed by DBE subcontractors. In fact, most of Hubbard's work is

performed pursuant to such contracts and, as Petitioner has been in business for

a number of years, it has vast experience meeting DBE goals. More important,

Petitioner has never failed to meet a DBE goal. The Department is fully

cognizant of Hubbard's past performance and reputation regarding compliance with

DBE goals.

11. When it receives an invitation to bid on a public construction

project, Hubbard contacts DBE subcontractors for quotes for the job. While

these contacts may be informal, such as by telephone conversation or facsimile

transmission, the subcontractor is made aware that it is being contacted for the

quote in reference to the DBE goal for the proposed project.

12. In this case, Hubbard contacted CDS Trucking for a DBE subcontractor

quote. Petitioner has used CDS Trucking numerous times in the past to perform

services and on each such occasion CDS Trucking has been identified and accepted

as a DBE.

13. CDS Trucking gave Hubbard a quote of $30,000.00 to perform asphalt

hauling services on the subject project. Taken in total with the other four

DBEs who gave quotes to Hubbard, the total proposed DBE participation on

Petitioner's bid was 10.65 percent. This amount exceeded the Department's

stated goal for the project. Without including CDS Trucking, Hubbard's bid did

not meet the 10 percent DBE goal.

14. Under the Department's policy, in order to be eligible for inclusion

as a DBE, a subcontractor must be listed in a DBE directory published each month

by the Department. To be included in the directory a subcontractor must be a

certified DBE as determined by the Department's minority programs office, must

be in the process of seeking DBE certification renewal by having applied for

such renewal not later than 90 days prior to certification expiration, or be

certified on the date the directory list is closed for the month. Additionally,

the Department will allow a contractor to use a DBE firm that is certified

subsequent to the printing of the DBE directory, if such company is certified

prior to the submission of bids.

15. Under the foregoing policy, it is not unusual for the DBE directory to

include numerous subcontractors who are, in fact, noncertified DBEs at the time

of the bid letting or award. Consequently, a contractor using a noncertified

DBE may qualify for, and receive, a contract award simply because it used a

subcontractor listed in the DBE directory.

16. Conversely, the use of a subcontractor who is not included in the DBE

directory but is, in fact, a certifiable DBE may result in the contractor's bid

being deemed nonresponsive for not meeting the DBE goal.

17. Pertinent to this case, CDS Trucking has been identified and certified

as a DBE since 1985. During that time there have been two lapses in DBE's

certification status. Both lapses were voluntary in the sense that CDS

Trucking, through its own conduct, intentionally failed to renew its

certification. In the first instance, the company was undergoing internal

organizational changes that delayed the application process. In the second

case, Mrs. Cantero, the office manager and person responsible for the

recertification application, was out of the office ill for an extended period of

time. During these occasions, CDS Trucking knew its certification as a DBE

would be suspended until completion of the renewal applications.

18. CDS Trucking has never been denied DBE certification. The factual

circumstances giving rise to CDS Trucking's initial eligibility and

certification as a DBE and its current status have not changed.

19. The DBE certification held by CDS Trucking for the 1991/92 year

expired on March 13, 1992.

20. On February 7, 1992, CDS Trucking filed an application for DBE

recertification. Had the Department acted on that application within 90 days of

its filing, CDS Trucking would have been recertified as a DBE on or before May

7, 1992.

21. At the time the application for recertification was filed, CDS

Trucking had submitted all information required by law or rule as set forth on

the application form. No additional information from the applicant was required

by law or rule in order for the Department to act on the application.

22. Instead of processing the application within 90 days, the Department

requested copies of two contracts recently executed by the applicant. The form

letter issued by the Department provided: "Your application is presently under

review. In order to complete this review, please submit the following

additional information." (emphasis added) Such letter incorrectly suggested to

CDS Trucking that if it did not furnish the information, its application would

not be completed.

23. On March 24, 1992, CDS Trucking responded to the request and submitted

the additional information which it thought was required to complete its

application.

24. Because it had requested additional information, the Department

extended the time within which to act on CDS Trucking's application for

recertification. Since the Department's request for such information was made

on the last possible date to make such request, the time to act on the

application, under the Department's interpretation, was extended the maximum

length of time. More important to this case, however, is the fact that the

Department had no basis, in law or fact, to seek additional information from CDS

Trucking.

25. Moreover, had CDS Trucking filed its application for recertification

prior to 90 days before the expiration of its certificate, the Department would

have left CDS Trucking on the DBE roster regardless of the length of time

necessary to process its renewal, including any delays created by the

Department's requests for additional information.

26. The Department does not have a rule that requires DBE applicants for

recertification to file for renewal not later than 90 days prior to expiration

of their certifications.

27. The DBE directory used for this bid letting included the names of many

DBE subcontractors whose certifications had expired before April 8, 1992, the

date of printing for the directory. An even larger number of DBE subcontractors

whose certifications expired before May 27, 1992, were included in the DBE

directory used for this bid letting. One of the DBE subcontractors used by an

unsuccessful bidder on this project (whose bid the Department did not deem

nonresponsive) had a certification that had expired on June 12, 1988.

28. At the time it gave Hubbard the quote for this project, CDS Trucking

believed it was operating as a DBE. Since CDS Trucking had supplied all

requested information to the Department and had a history of certification, no

reasonable basis existed to presume CDS Trucking was not a bona fide DBE.

29. CDS Trucking, by giving a quote to Petitioner, represented itself as a

DBE to Hubbard.

30. Hubbard relied on the quote from CDS Trucking and presumed it to be a

DBE. As such, Hubbard further presumed it had met the DBE requirement for this

project and, consequently, did not believe it needed to make an additional good

faith showing.

31. Indeed, had the Department followed its applicable rules, CDS Trucking

would have been certified on the date of the letting, May 27, 1992.

32. Had Hubbard known CDS Trucking was not certified on May 27, 1992,

other arrangements could have been made.

33. The Department arbitrarily rejected Hubbard's bid and refused to look

at the facts and extenuating circumstances regarding CDS Trucking and the

Department's own failure to timely process the DBE's renewal application.

34. The fact that CDS Trucking, because of the Department's own failure to

timely issue the recertification, was not certified on the date of letting is a

minor irregularity in that CDS Trucking was certified on the date of the award

and clearly was eligible for certification at all times. More important, the

inclusion of CDS Trucking as a DBE does not convey an improper advantage on

Hubbard not enjoyed by the other bidders.

35. The Department failed to consider any of the factual matters related

to CDS Trucking when it determined Hubbard's bid to be nonresponsive for its

alleged failure to meet the DBE project goal.

36. In fact, when the fact that CDS Trucking should have been certified by

the Department on May 27, 1992 is considered, Hubbard's bid for this project did

and does meet the DBE project goal.

CONCLUSIONS OF LAW

37. The Division of Administrative Hearings has jurisdiction over the

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

38. In this case Petitioner bears the burden of proof to establish that it

is entitled to the bid award because the agency's decision in the proposed

award is fraudulent, arbitrary, illegal or dishonest.

39. An arbitrary award is one not based upon or supported by facts or

logic. In this case, the Department's disallowance of CDS Trucking is not

supported by the facts or logic. Without a doubt, CDS Trucking is a DBE. The

only reason Hubbard's bid was deemed nonresponsive was because it did not meet

the DBE goal for the project without including CDS Trucking. The only reason

CDS Trucking was not a certified DBE on the date of the letting was because the

Department had not acted on the application timely. Had the Department timely

and properly processed CDS Trucking's application for DBE certification renewal,

the company would have been certified on the date of the letting. Had the

Department considered the factual matters related to the recertification,

instead of merely checking the DBE directory (which was replete with DBEs with

expired certifications), Hubbard would have been deemed responsive.

40. Unfortunately, the minority business office did not follow its rules

in processing the renewal for CDS Trucking. The office had no basis to support

the request for additional information. The attempt to extend the deadline for

acting on the application may have been a response to the time restraints and

pressures of the office's work load but did not relate to a shortcoming of the

application. There was not an identifiable problem in the application or file

for CDS Trucking that would have precluded DBE certification renewal. It is

incontrovertible that CDS Trucking has always been eligible for DBE

certification.

41. Hubbard and the public (by having to pay an additional $132,779.22 for

this project) should not be prejudiced because one division of the Department

failed to timely act. In making its decision to deem Hubbard nonresponsive, the

Department failed to consider any factors related to CDS Trucking certification.

Because it determined CDS Trucking was not certified on the day of letting,

regardless of Department error, the Department deemed Hubbard's bid

nonresponsive. Such result is not based in reason, logic or law.

42. Moreover, such result does nothing to assure that the integrity of the

bidding process is upheld. To allow a bidder to use a noncertified DBE just

because it is listed in the DBE directory is more illogical than to allow the

inclusion of a bona fide DBE who, because of Department error, is not certified

on the date of letting. Both the bidding process and the objectives of the DBE

program could be readily circumvented by an unscrupulous bidder. In this case,

a qualified, eligible DBE will be denied the opportunity this project affords if

the Department's arbitrary position is allowed.

RECOMMENDATION

Based on the foregoing, it is

RECOMMENDED:

That the Department of Transportation enter a final order finding Hubbard

Construction Company's bid responsive, and awarding contract no. 11130-3518 to

Hubbard Construction Company.

DONE and ENTERED this 21st day of October, 1992, in Tallahassee, Leon

County, Florida.

___________________________________

JOYOUS D. PARRISH Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32301

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 21st day of October, 1992.

APPENDIX TO CASE NO. 92-4018

RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE PETITIONER:

1. Paragraphs 1 through 33, 36, 38, 41, 43, 47, 48, 51, and 55 are

accepted.

2. Except as specifically addressed in the foregoing findings of fact, all

remaining paragraphs are rejected as hearsay, argument, presuming facts not in

evidence, contrary to the weight of the evidence or misstatement of the record,

irrelevant, or repetitive.

RULINGS ON THE PROPOSED FINDINGS OF FACT SUBMITTED BY THE RESPONDENT:

1. Paragraphs 1 through 5, 8, 11, 14, 15, 16, 17, 18, 19, 20, 22, 24, 29,

31, 32, 36, 38, 45, 46, 47, 48, 50, 51, 52, 53, 54, 55, 57, and 59 are accepted.

2. Except as specifically addressed in the foregoing findings of fact, all

remaining paragraphs are rejected as incorrect or incomplete references of fact,

recitation of testimony not accepted as ultimate fact, argument, irrelevant,

contrary to the weight of the total evidence, or inapplicable as a matter of law

and therefore immaterial.

COPIES FURNISHED:

Susan P. Stephens

Asst. General Counsel

Dept. of Transportation

605 Suwannee Street

Tallahassee, Florida 32399-0450

F. Alan Cummings, Esquire

Mary Piccard, Esquire

P.O. Box 589

Tallahassee, Florida 32302-0589

Ben G. Watts, Secretary

Attn: Eleanor F. Turner

Department of Transportation

605 Suwannee Street, MS 58

Tallahassee, Florida 32399 0458

Thornton J. Williams, Esquire

General Counsel

Department of Transportation

605 Suwannee Street, MS 58

Tallahassee, Florida 32399 0458

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended

Order. All agencies allow each party at least 10 days in which to submit

written exceptions. Some agencies allow a larger period within which to submit

written exceptions. You should contact the agency that will issue the final

order in this case concerning agency rules on the deadline for filing exceptions

to this Recommended Order. Any exceptions to this Recommended Order should be

filed with the agency that will issue the final order in this case.

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

DISTRICT COURT OPINION

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

IN THE DISTRICT COURT OF APPEAL

FIRST DISTRICT, STATE OF FLORIDA

HUBBARD CONSTRUCTION COMPANY, NOT FINAL UNTIL TIME EXPIRES TO

FILE MOTION FOR REHEARING AND

Appellant, DISPOSITION THEREOF IF FILED

vs. CASE NO. 93-1701

DOAH CASE NO. 92-4018BID

DEPARTMENT OF TRANSPORTATION,

Appellee.

______________________________/

Opinion filed September 29, 1994.

An appeal from Department of Transportation. Ben G. Watts, Judge.

F. Alan Cummings and Mary M. Piccard of Cummings, Lawrence & Vezina, P.A.,

Tallahassee, for Appellant.

Thornton J. Williams and Gregory G. Costas of Department of Transportation,

Tallahassee, for Appellee.

PER CURIAM.

The appellant challenges a final order in which the Department of

Transportation (the department) rejected certain findings of fact and

conclusions of law of the hearing officer and thereby denied the appellant's bid

protest. Because the hearing officer's recommended order was supported by

competent substantial evidence and did not involve a misapplication of law, we

reverse.

The appellant submitted the lowest bid for a contract to construct a

highway project. The department rejected the bid as nonresponsive and notified

the appellant of its intent to award the contract to the next lowest bidder.

The appellant filed a timely protest, and, following a hearing, the hearing

officer determined that the discrepancy in the appellant's bid was a minor

irregularity that did not convey an improper advantage to the appellant. The

hearing officer thus concluded that the department acted arbitrarily in

rejecting the appellant's bid and recommended that the department award the bid

to the appellant. The department rejected the hearing officer's findings that

the discrepancy was minor and that the irregularity did not result in a

competitive advantage to the appellant, and thus concluded that it had not acted

arbitrarily in rejecting the appellant's bid.

Contrary to the department's position, we conclude that the record contains

competent substantial evidence to support the hearing officer's findings and

that the department thus erred in rejecting those findings on that basis. See,

e.g., Department of Transportation v. Groves-Watkins Constructors, 530 So.2d

912, 913 (Fla. 1988); see also Overstreet Paving Co. v. Department of Trans.,

608 So.2d 851 (Fla. 2d DCA 1992); Asphalt Pavers v. Department of Trans., 602

So.2d 558 (Fla. 1st DCA 1992). And the findings amply demonstrate that the

department acted arbitrarily in rejecting the appellant's bid.

We accordingly reverse the final order. We remand this cause to the

department for an order awarding the contract to the appellant, if the contract

has not already been awarded to a competitor. If the contract has already been

awarded, the appellant may seek ancillary relief pursuant to section

120.68(13)(a)2, Florida Statutes (1993), in an appropriate circuit court. See

Overstreet Paving, 608 So.2d at 853.

ALLEN, KAHN and MICKLE, JJ., CONCUR.