County Rejects Contractor’s Sharp Protest as It Approves $9 Million Matanzas Interchange Bid

Seventeen years after it was first proposed as a traffic safety valve during emergencies, the Matanzas Woods Parkway interchange with I-95 was cleared for construction Monday. The Flagler County Commission unanimously approved a $9 million bid from Winter Park-based Hubbard Construction.

But the process had to overcome an obstacle the commission has never faced before: a bid protest. That obstacle may not have been removed entirely.

In an unusual move, one of the three companies that submitted a bid, Watson Civil Construction of Jacksonville, sharply protested the bid award, claiming that Hubbard’s bid was incomplete and that the county’s process in accepting the bid went grossly against the county’s own policy. The process the county allowed, Watson claimed, set a precedent that will allow future bidders to game the system to their advantage.

The county administration called Hubbard’s missing information “minor irregularities” that gave the company no competitive advantage over the two others. And while Watson considered the omissions much worse, the county considered the matter almost irrelevant, since Watson’s bid placed it outside the county’s budget to begin with, disqualifying it regardless of other bidders in play. (Neither company has worked for Flagler County before.)

The protest played out before county commissioners Monday morning as an attorney for Watson and the county attorney made their case, opening a rare window into the usually arcane and purely administrative bidding process of government agencies.

The commission stuck with its administrator’s decision. But it may not be over. Watson has the right to appeal the decision to circuit court. “We are reviewing that decision now as we believe the ruling was erroneous, but we have not yet made a final determination,” Watson’s attorney, Jeffrey Regan, said in an email this afternoon.

Interchange construction will be mostly paid for through a state Department of Transportation grant of close to $10 million, with Palm Coast picking up a $320,000 portion of the bill. The total bid included two “alternate” bids: one for landscaping and irrigation, and one for the installation of a water main to be used for reclaimed water. That’s the portion of the construction Palm Coast will pay for. Hubbard’s bid for all three came in at $9 million. Watson’s came in at $9.8 million. A third company, Masci General Contractor of Port Orange, submitted a bid for $11.1 million.

Regan told the commission Hubbard’s bid was not qualified as a matter of law. The deficiencies in the bid were not “minor.” And even if the bid could have been corrected, “we don’t believe the procedure that was followed met the requirements of the county’s purchasing policy.”

Specifically, Regan said Hubbard did not identify subcontractors for specific “work elements” such as precast box culverts.

“It is undisputed,” Regan said, “that Hubbard failed in its bid to produce this mandatory information.” So because of the invitation to bid had said explicitly that those elements were required in the bid, Hubbard should have been disqualified “right out of the box,” and its bid not considered. “The county should have immediately proceeded to the next lowest bidder which was Watson.”

The county, for its part, waived what it called “a minor item” and allowed Hubbard to correct its bid, after the bids were opened. Watson considered that improper. The county clearly spelled out mandatory items in its bid offer. Once that spelled out that clearly, “that means it’s not a minor item by definition, that means it cannot be waived,” Regan said. “We believe that that’s true as a matter of law. We believe that the courts would find that true as a matter of law. There’s no factual dispute over that. That’s how you drafted your ITB so you need to live with it.” (ITB is the acronym for invitation to bid.)

Regan noted that Craig Coffey, the county administrator, did not, in fact, waive the contested requirement. Rather, four days after the bids were opened (two business days, four days including the weekend), the county waived the time period in which to meet the requirement. “If the county can waive the time period to include after-bid opening of any mandatory requirement necessary for a qualified bid,” Regan said, “then the county can waive anything at all in wants in the bid process, and turn public bid processing into a mockery. And we believe that that directly contradicts the mission statement of the Flagler County purchasing policy, which specifically states that this policy is to promote fairness among competing bidders for work from the county here. That flies in the face of it.”

Regan also disputed Coffey’s determination that even if there had been no such waiver, Hubbard would still not have had a competitive advantage, as the difference in bids was still to its advantage. Regan found that reasoning untenable, because Hubbard “got the benefit of then seeing what all of the other bidders had put down and how much money it left on the table before the second-lowest bidder.”

“If you don’t grant the bid protest, that’s the sort of thing that you’re going to allow, that’s the precedent that you’re going to set,” Reagan said: the county is giving bidders a second chance after the fact. Especially when Watson (and the county) could not have known whether Hubbard left out the information intentionally, to force other companies to show their cards and then act on the information, Regan said. Hubbard provided no evidence about the reason the information was left out.

Regan also noted that for the correct process to be followed, County Attorney Al Hadeed had to provide a written determination ratifying the administration’s decision. Hadeed provided that determination, but only today, Regan said, raising another question of propriety. Regan read that determination during the commission meeting, while waiting to speak on the bid item.

Hadeed focused his determination on Watson’s standing: since Watson’s bid Waston high, the company had no standing to dispute the results. But Regan said the bid request never formally stated that the bid had to be below a certain amount, while Watson’s bid was, in fact, below a formal engineering estimate of the project’s cost.

To Hadeed, the most important issue was the bottom-line dollar figures and the state’s estimate. The Hubbard bid, he said, was $600,000 less than Watson’s, while Watson’s bid is “outside” the county’s own budgeted amount for the project. If, for example, all bids were above the budgeted amount, all bids would have been rejected and the county would have had to re-bid the project.

“A bidder, I believe, should have known that they were at risk, submitting a bid that exceeds what was described as the engineer’s estimate,” Hadeed said. Beyond that, the county attorney said, the waiving issue has been mischaracterized. The county, he said sought to ensure that Hubbard had secured the disputed cost elements “prior to the bid submittal.” It wouldn’t have mattered what the cost was to Hubbard to provide these elements (namely, the culverts). “They’re only paid one price to do the job,” Hadeed said. So county staff contacted the subcontractor providing the culverts and confirmed that Hubbard had contacted the company before the bid was submitted. In sum, Hadeed said, the initially lacking information was a matter of “oversight.”

Hadeed then moved on to Watson’s standing to file a bid challenge in the first place. “Our policy and state law clearly provides that if you submit a bid that’s outside of that determined estimate, if you would not be eligible to get the bid, you have no standing to submit a bid challenge,” he said. “So to me, that decides it all. Discussion about the vendor qualification doesn’t matter, because there isn’t the standing to challenge it. However, we want to make sure we lay out all the facts because we’re not trying to undermine fair competition. And so that explanation of the process with Mr. Coffey determining that he had the authority, and our policy is very explicit, we have the authority to waive formalities, not just minor irregularities, our policy is stronger on that basis, and we’re always looking for the bid that’s going to best serve the county, but without compromising fair competition.”

State law allows the commission to sit in judgment of such bid protests, diminishing somewhat the independence of that process. There was little stomach among commissioners for debate over the issue: it would have meant second-guessing their own administration and attorney. Time and history are also bearing down on the commissioners, one of whom—George Hanns—was on the commission in 1998 when, after the wildfires that ravaged the county, the commission first asked the state for the interchange, but was rebuffed. Now that it has the money for it, the county doesn’t want to rebid the project because key parts of the construction project are scheduled for this summer, when Matanzas High School, which will be directly impacted, is not in session.

“At this particular point I just feel like we need to move on with this,” Hanns said. “I have total confidence in our staff and our legal department.”