This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its June 2001 decision in Engineering Contractors Association of South Florida, Inc. v. Broward County, the Florida Fourth District Court of Appeal struck down a prequalification process that resulted in only one eligible contractor for the award of multiple construction contracts. The case dealt with a new prequalification process implemented by Broward County for the award of several road construction projects. The Court of Appeal described the new prequalification process as follows:
Under the new procedure only those contractors who make the “short-list” may submit sealed bids. To obtain its shortlist, the County first publishes a “Request for Letters of Interest” (RLI) in the project. The County then attaches to the RLI a list of factors that will be considered in the short-listing decision process. County “staffers” then prepare a spreadsheet on each contractor, assigning either an “acceptable” or “unacceptable” rating on each of the categories based upon the contractor’s responses to the RLI. These spreadsheets are sent to the selection committee, which is comprised of some Broward County commissioners and management level personnel. A meeting is then held and committee members vote for their top choices. After the votes are cast and tallied, a determination is made regarding how many votes a contractor must have received in order to make the short-list. Those contractors that make the short-list then engage in traditional competitive sealed bidding.
The prequalification was legally challenged by other contractors who claimed that the process undermined the open competition rules:
This new procedure was used in the selection process for the Hiatus Road Project, the Wiles Road Project, the Douglas Road Project, and the Broward Boulevard Project. The contractor appellants in this appeal responded to the County’s Request for Letters of Interest on one or more of the four projects. The only contractor to make the short-list on any one of the four projects was Community Asphalt. As a result, in November 1999, the appellant contractor Central Florida Equipment Rentals, Inc., Community Asphalt Corporation, The DeMoya Group, Inc., Freedom Pipeline Corp., and The Redland Company, Inc. and two professional organizations Engineering Contractors Association of South Florida, Inc., and Florida Transportation Builders Association, Inc. filed suit, alleging, among other things, that the new procedure was contrary to chapter 336, Florida Statutes, and seeking a declaratory judgment and injunctive relief.
The Court of Appeal found that the evaluation process was insufficiently transparent and relied on inconsistently applied subjective criteria that resulted in the improper rejection of several contractors who appeared qualified to bid on the required work:
A bench trial was held, and the evidence presented regarding the manner in which the new procedure had been implemented was largely consistent with the allegations of the plaintiffs’ complaint. The staff evaluations created based upon the contractors’ responses to the RLIs were consistent with the representations in the complaint some contractors who received all “+” or all “acceptables” did not receive a single vote so as to be placed on the short-list. For the most part, those who sat on the selection committee could not recall specifically why they voted for one contractor over another or even why they voted for a particular contractor on one project but not another. Some testified that they cast their votes based upon past personal experiences with the companies, some favored companies headquartered in Broward County, some considered how cooperative contractors have been with the County in the past, and some considered it a plus if a firm was owned and operated by a minority.
While the Court of Appeal recognized that the County was not compelled to award solely on a low bid basis and that the County could factor other non-price considerations into its contract award decisions, it nonetheless found that the evaluation process could not be arbitrary:
Under this system, the public authority may not arbitrarily or capriciously discriminate between bidders, or make the award on the basis of personal preference. Marriott Corp. v. Metro. Dade County, 383 So. 2d 662, 665 (Fla. 3d DCA 1980) (quoting Hotel China & Glassware Co. v. Bd. of Pub. Instruction, 130 So. 2d 78, 81 (Fla. 1st DCA 1961)) (emphasis omitted). While section 21.42 of the Procurement Code provides that the County may utilize any type of procurement method which will promote the “best interests of the County” and section 21.64 provides that the Director of Purchasing shall use the best method available for obtaining construction services, including any accepted method utilized by government or private industry, the Procurement Code cannot be interpreted to authorize methods which are inconsistent with general law. Section 255.20, Florida Statutes, authorizes the award of contracts by a variety of methods, some of which would include the type of short-listing procedure used here, while sections 336.41 and 336.44, which are specific to county road and bridge projects, require that the contract “be let to the lowest responsible bidder” and “to the lowest competent bidder,” respectively. It is a well-known principle of statutory construction that “a specific statute covering a particular subject area controls over a statute covering the same and other subjects in more general terms.” C.S. v. S.H., 671 So. 2d 260, 268 (Fla. 4th DCA), review denied, 680 So. 2d 424 (Fla.1996). Applying that rule to the instant case, the contracts here were required to be let to the lowest “competent” or “responsible” bidder.
Statutes requiring a governmental agency to let a contract to the lowest “responsible” bidder have not been construed to mean, literally, the lowest dollars and cents bidder. See Couch Constr. Co. v. Dep’t of Transp., 361 So. 2d 184, 187 (Fla. 1st DCA 1978). Rather, “authorizations of this kind are held to invest public authorities with discretionary power to pass upon the honesty and integrity of the bidder necessary to a faithful performance of the contract-upon his skill and business judgment, his experience and his facilities for carrying out the contract, his previous conduct under other contracts, and the quality of his previous work….’” Id. (quoting 64 Am.Jur.2d Public Works & Contracts, § 70, at 927-28)(emphasis omitted); see also City of Pensacola v. Kirby, 47 So. 2d 533, 535 (Fla.1950)(holding that statute requiring award of contract to “lowest responsible” bidder does not require agency to award contract to the “lowest dollars and cents” bidder). Clearly, Broward County is permitted to consider the factors listed in the RLI in determining whether a particular bidder is “responsible” or “competent” to bid on a construction project.
The Court of Appeal found that the County’s prequalification process was tainted with subjectivity and personal preference and was therefore contrary to the applicable legal standards for public procurement:
Nonetheless, under the short-listing procedure used, some contractors who are admittedly responsible and satisfy all of the criteria listed in the RLI are still not permitted to submit a bid. The evidence at trial established that all of the contractors were considered responsible bidders by those on the selection committees. Ultimately, the contract is let not to the lowest responsible or lowest competent bidder, but instead to the lowest bidder among those contractors preferred by the selection committee. Such a result is contrary to the dictates of chapter 336 and circumvents the purposes of competitive bidding statutes. See Wester v. Belote, 103 Fla. 976, 138 So. 721, 724 (1931)(stating that competitive bidding statutes must be afforded “a construction always which will fully effectuate and advance their true intent and purpose and which will avoid the likelihood of same being circumvented, evaded, or defeated”)(emphasis added). The new system injects into the proceedings the very subjectivity and personal preferences that the bidding statutes were designed to do away with. Accordingly, we reverse the order of the trial court and find that the procedures at issue in this case which the County used to implement the new procurement code were legally improper.
As this case illustrates, while public institutions may establish prequalification processes to short-list potential suppliers and may factor non-price considerations into evaluation decisions, those same evaluation decisions should not be based on arbitrary or subjective factors; rather, the evaluation decisions should be conducted in accordance with generally applicable transparency standards.
