94-006082BID W. P. Austin Construction Corp. vs. Department Of Management Services Status: Closed Recommended Order on Friday, December 16, 1994.

Summary: It was arbitrary and capricious to reject all bids on basis that some bidders used deductive alternates and others used additive.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

W. P. AUSTIN CONSTRUCTION CORP., )

)

Petitioner, )

)

vs. ) CASE NO. 94-6082BID

)

DEPARTMENT OF MANAGEMENT SERVICES, )

)

Respondent. )

_____________________________________)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case by video

conference on November 17, 1994, before Michael M. Parrish, a Hearing Officer of

the Division of Administrative Hearings. Witnesses and parties participated in

both Tallahassee and Miami, Florida.

APPEARANCES

For Petitioner: Timothy J. Armstrong, Esquire

Armstrong & Mejer

Suite 1111, Douglas Centre

2600 Douglas Road

Coral Gables, Florida 33134

For Respondent: Stephen S. Mathues, Esquire

Department of Management Services

Knight Building, Suite 312

Koger Executive Center

2737 Centerview Drive

Tallahassee, Florida 32399-0950

STATEMENT OF THE ISSUE

The basic issue in this case is whether the Respondent should award a

contract to the Petitioner for its Project No. HSMV 92044000, Repairs, Art

Sutton Drivers' License Office, Miami, Florida, or should reject all bids and

rebid the contract.

PRELIMINARY STATEMENT

This case arises from a timely formal written protest to the Respondent's

intended decision to reject all bids received for the construction of its

Project No. HSMV 92044000, Repairs, Art Sutton Drivers' License Office, Miami,

Florida. Distilled to its essence, the case involves a dispute as to whether it

would be arbitrary or capricious for the Respondent to implement its intended

decision.

At the hearing on November 17, 1994, the parties offered Joint Exhibits 1

through 9 which were admitted in evidence. The Petitioner presented the

testimony of two witnesses, one of which was also recalled by the Respondent.

At the conclusion of the hearing the parties were allowed until November 29,

1994, to file their proposed recommended orders. Neither party ordered a

transcript of the proceedings at hearing. Thereafter, both parties filed timely

proposed recommended orders containing proposed findings of fact and conclusions

of law. All proposed findings of fact submitted by all parties are specifically

addressed in the appendix to this Recommended Order.

FINDINGS OF FACT

1. On August 31, 1994, the Respondent received and opened bids for its

Project No. HSMV 92044000, Repairs, Art Sutton Drivers' License Office, Miami,

Florida (the Project).

2. The bid specification documents (the Specifications) for the Project

included requirements for a Base Bid and for specific alternate proposals with

respect to three defined items of alternate work. Section 01100 of the

Specifications stated that "[a]ll Alternates described in this Section are

required to be reflected on the Bid Form as submitted by the bidder." Part 2 of

that section provided:

2.1 ALTERNATE NO. 1

A. Provide a deductive price to the base bid

for the removal of existing window units and

the installation of new units as indicated in

plans and specification Section 08520.

2.2 ALTERNATE NO. 2

A. Provide a deductive price to the base bid

for the provision of communications conductors

see specification Section 16400.

2.3 ALTERNATE No. 3

A. Provide a deductive price to the base bid for

the installation of all landscape materials as

indicated on plans and as per specification Section

02960.

3. Also included in the Specifications as Exhibit 4 was a Proposal Form.

The Specifications required each bidder to submit this form in triplicate on the

bidder's letterhead. With respect to alternates, the Proposal Form required:

With the foregoing as a Base Bid, the following

costs of alternate proposals are submitted in

accordance with the drawings and specifications.

Alternate No. 1 Add or Deduct $__________

Alternate No. 2 Add or Deduct $__________

Alternate No. 3 Add or Deduct $__________

4. The Respondent's architect received four bids on August 31, 1994. As

recorded on the Bid Tabulation and Notice of Award Recommendation, three bidders

provided specific prices for the three alternates, as well as a Base Bid. The

Bid Tabulation shows that two bidders provided specific prices for the three

alternates and included the alternate prices in their Base Bids. The Petitioner

provided specific prices for the three alternates, but excluded the alternate

prices from its Base Bid. The fourth bidder provided a specific price for only

one alternate and excluded that alternate price from its Base Bid. (The fourth

bidder was disqualified as non-responsive for failing to submit prices on all

three alternates.)

5. In pertinent part, the Petitioner's proposal read:

With the foregoing as a Base Bid, the following

costs of alternate proposals are submitted in

accordance with the drawings and specifications:

Alternate No. 1 Add or Deduct . . . $4,400.00

Alternate No. 2 Add or Deduct . . . $1,158.00

Alternate No. 3 Add or Deduct . . . $2,084.00

These Alternates were in addition to the Petitioner's Base bid of $204,322.00.

The proposal form submitted by the Petitioner comports with Exhibit 4 to the

Specifications, which was the mandatory Proposal Form.

6. On August 31, 1994, William Phillip Austin, Peitioner's President,

wrote the architect:

Per our telephone conversation this date regard-

ing the confusion relating to the Add/Deduct for

Alternates 1, 2 and 3 for the above project,

please be advised that our base bid did not

include the work described in the Alternates.

As stated if you want work described in Alternates

1, 2 and 3, you must add the cost to our base bid.

The base bid including Alternates 1, 2 and 3 would,

therefore, be $211,964.00.

If we can provide additional information, please do

not hesitate to contact us.

7. The Respondent's architect completed and submitted the bid Tabulation

and Notice of Award Recommendation to the Respondent in early September. The

document clearly discloses the amounts of each bidder's Base Bid and Alternate

proposals. Using plus () and minus (-) signs, the Bid Tabulation further shows

each bidder's method of calculation. The record is devoid of evidence that the

Respondent had any problem in evaluating the bids and identifying the lowest

bidder. The Petitioner was the lowest bidder on any combination of base bid

plus or minus any or all alternates.

8. Subsequently the Petitioner received a NOTICE OF AWARD RECOMMENDATION

dated October 4, 1994. The Notice informed the Petitioner that the Respondent

"has recommended that the contract be awarded to your firm in the total amount

of $211,964.00, accepting the Base Bid and Alternates #1, #2 & #3. The

Administrator of Contracts Design and Permitting, Division of Building

Construction, Department of Management Services, State of Florida will consider

this recommendation." Larry R. Coleman, Construction Projects Administrator,

signed the letter. The Petitioner acknowledged receipt.

9. A representative of the second lowest bidder, Kalex Construction, then

contacted the Respondent, complaining of the Award Recommendation. The grounds

for the Kalex complaint are not in the record. However, on October 14, 1994, H.

R. Hough, the Respondent's Contracts Administrator, sent the Petitioner a letter

"to notify you of the State's decision to reject all bids on the above

referenced project due to ambiguities in the specifications." Mr. Hough's

reasons for the rejection are "other than those stated by the protestor," Kalex.

10. The Respondent's Rule 60D-5.007, Florida Administrative Code, states:

Determination of Successful Bidder.

(1) All projects except where competitive

bidding is waived under the provisions of Rule

60D-5.008 will be publicly bid in accordance with

the provisions in the project specifications

bidding documents. Award of contract will be

made to the responsive bidder, determined to be

qualified in accordance with the provisions herein

and meeting the requirements of the bidding

documents, that submits the lowest valid bid

for the work. The lowest bid will be determined

as follows:

(2) The lowest bid will be the bid from the

responsive bidder that has submitted the lowest

price for the base bid or the base bid plus the

additive alternates or less the deductive alternates

chosen by the Agency to be included in or excluded

from the proposed contract, taken in numerical order

listed in the bid documents. The order of the

alternates may be selected by the Agency in any

sequence so long as such acceptance out of order

does not alter the designation of the low bidder.

11. Under the above-quoted rule, the Respondent compares bids beginning

with the lowest "base bid." The Respondent is of the view that for this

comparison to be fair and equal, all bidders must include the same scope of work

in the "base bid." The Respondent does not interpret the above-quoted rule to

allow deductive alternates from some bidders and additive alternates from

others. (For reasons discussed in the Conclusions of Law which follow, the

Respondent's interpretation and application of the above-quoted rule is

erroneous.)

12. The Specifications contain some ambiguous and inconsistent language

regarding whether alternates should be treated as additive or deductive. The

ambiguous and inconsistent language did not provide any bidder with an advantage

or a disadvantage, nor did it otherwise affect the fairness of the bidding

process.

CONCLUSIONS OF LAW

13. The Division of Administrative Hearings has jurisdiction over the

subject matter of and the parties to this proceeding. Sections 120.53 and

120.57(1), Florida Statutes.

14. The basic legal principles applicable to a case of this nature are

summarized in Systems/Software/Solutions v. Department of Transportation, DOAH

Case No. 92-0339BID, Recommended Order issued March 12, 1992, where Hearing

Officer Kilbride wrote:

25. The law of Florida has established that a

strong deference be accorded an agency's decision

in competitive bidding situations:

[A] public body has wide discretion in

soliciting and accepting bids for public

improvements and its decision, when

based on an honest exercise of this

discretion, will not be overturned by a

court even if it may appear erroneous

and even if reasonable persons may

disagree.

Liberty County v. Baxter's Asphalt and Concrete,

Inc., 421 So.2d 505, 507 (Fla. 1982).

26. In deciding Department of Transportation v.

Groves-Watkins Constructors, 530 So.2d 912 (Fla.

1988), the Supreme Court of Florida ruled that

the Liberty County decision established the stand-

ard by which an agency's decision on competitive

bids for a public contract should be measured when

it further held that the agency's discretion, as

stated above, cannot be overturned absent a finding

of "illegality, fraud, oppression or misconduct."

Groves-Watkins, 530 So.2d at 913.

27. The Grove-Watkins standard was recently re-

iterated in Scientific Games, Inc. v. Dittler

Brothers, Inc., 586 So.2d 1131 (Fla. 1st DCA 1991).

In Scientific Games, Inc., the Court was determining

the scope of discovery to be permitted in an

administrative proceeding concerning the evaluation

of an RFP. The Court concluded that the scope of

discovery must be viewed in light of the proper

standard of review to be employed by the Hearing

Officer in these types of proceedings and stated:

The Hearing Officer need not, in effect, second

guess the members of the evaluation committee

to determine whether he and/or other reasonable

and well-informed persons might have reached a

contrary result . . . "[T]he Hearing Officer's

sole responsibility is to ascertain whether the

agency acted fraudulently, arbitrarily, illegally,

or dishonestly." Groves-Watkins, 530 So.2d at 914.

Scientific Games, Inc., 586 So.2d at 1131. See,

also, C.J. Courtenay v. Department of Health and

Rehabilitative Services, 581 So.2d 621 (Fla. 5th

DCA 1991). (It is not the Hearing Officer's

function to reweigh award factors and award to

protestor).

Other summaries citing additional authorities can be found in the recommended

orders issued in the following cases: Bozell, Inc., et al. v. Department of

Lottery, et al., DOAH Case No. 91-3165BID, Recommended Order issued July 25,

1991; Consultec, Inc. v. Department of Administration, Division of State

Employees' Insurance, et al., DOAH Case No. 91-5950BID, Recommended Order issued

November 13, 1991; Professional Testing Service, Inc. v. Department of

Professional Regulation, DOAH Case No. 91-7429BID, Recommended Order issued

January 3, 1992.

15. This case does not raise any issues with regard to whether the

Respondent acted fraudulently, illegally, or dishonestly. The disposition of

this case turns on whether the proposed rejection of all bids was arbitrary and

capricious. For the reasons explained below, it was.

16. The mandatory Proposal Form included in the Specifications expressly

provided for bidders to state their prices for each of the three alternates in

terms of amounts to be added to the base bid or amounts to be deducted from the

base bid. The Respondent's Rule 60D-5.007, Florida Administrative Code, also

expressly provides for the evaluation of bids in which the prices for alternates

are stated in terms of amounts to be added to the base bid or amounts to be

deducted from the base bid. Such being the case, the fact that the Petitioner

(and one other bidder) used additive prices for the alternates was, at worst, a

"non-material bid deviation" to the extent that such pricing deviated from the

language of Section 01100 of the Specifications providing for a "deductive

price" for each alternate. Rule 60D-5.0072, Florida Administrative Code

provides: "The Agency shall reserve the right to waive any non-material

deviation in bids received." On the facts in this case, the Respondent should

exercise its reserved right, should waive the non-material deviation in the

Petitioner's bid, and should award the contract for the subject Project to the

Petitioner. To do otherwise would be to glorify form over substance, which is,

of course, arbitrary and capricious.

17. The Respondent argues that under its Rule 60D-5.007, bids with

additive alternates cannot be compared and evaluated with bids with deductive

alternates because the "base bids" would encompass different scopes of work and

it would be like comparing apples to oranges. The Respondent's argument fails

because it is based upon an incorrect interpretation and application of the

subject rule. Where, as here, the Specifications require the bidders to include

prices for one or more alternates, the rule does not require a comparison of

just the "base bids" to determine the lowest bid. Instead, the rule provides:

The lowest bid will be the bid from the responsive

bidder that has submitted the lowest price for . . .

the base bid plus the additive alternates or less

the deductive alternates chosen by the Agency to

be included in or excluded from the proposed

contract. . . .

Once the Agency has determined which alternates it wishes to include in or

exclude from the proposed contract, it is a simple process to compare bids in

the manner required by the rule and it is irrelevant that some of the bidders

may have treated the alternates as additive and others may have treated them as

deductive. By means of simple addition and subtraction the bids can be

accurately and fairly compared. The process is equally fair and equally

accurate regardless of whether the bidder treated the alternates as additive or

deductive. Such being the case, it would be arbitrary and capricious to reject

all bids solely because some had additive alternates and others had deductive

alternates.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that the Department of Management Services issue a Final Order in

this case awarding a contract for the subject project to the Petitioner.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 16th day of

December 1994.

___________________________________

MICHAEL M. PARRISH

Hearing Officer

Division of Administrative Hearings

The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

[phone]

Filed with the Clerk of the

Division of Administrative Hearings

this 16th day of December 1994.

APPENDIX

The following are my specific rulings on all proposed findings of fact

submitted by all parties.

Proposed findings submitted by Petitioner

Paragraph 1: This is primarily a statement of position and is addressed in

the Preliminary Statement.

Paragraphs 2 through 10: Accepted in substance with a few unnecessary

details omitted.

Proposed findings submitted by Respondent

Paragraphs 1 through 6: Accepted in substance.

Paragraph 7: First sentence accepted in substance. Second sentence

rejected as constituting a conclusion which is not warranted by the evidence.

Third sentence is accepted as an accurate statement of how Respondent has been

interpreting the subject rule, but is not accepted as constituting a correct

interpretation of the rule.

Paragraph 8: Rejected as misleading and confusing because the "scope of

work" to be performed under the contract can only be determined after the

Respondent decides which alternates to include and which to exclude.

Paragraph 9: The first two sentences are accepted in substance. The last

sentence is rejected as constituting a conclusion which is not warranted by the

evidence.

COPIES FURNISHED:

Timothy J. Armstrong, Esquire

Armstrong & Mejer

Suite 1111 Douglas Centre

2600 Douglas Road

Coral Gables, Florida 33134

Stephen S. Mathues, Esquire

Department of General Services

Knight Building, Suite 312

Koger Executive Center

2737 Centerview Drive

Tallahassee, Florida 32399-0950

Paul A. Rowell, General Counsel

Department of General Services

Knight Building, Suite 312

Koger Executive Center

2737 Centerview Drive

Tallahassee, Florida 32399-0950

William H. Lindner, Secretary

Department of General Services

Knight Building, Suite 307

Koger Executive Center

2737 Centerview Drive

Tallahassee, Florida 32399-0950

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 ten 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.