PUBLIC CONTRACTS Project Acquisition and Project Delivery Systems

1. PUBLIC CONTRACTS Project Acquisition and Project Delivery Systems An Overview of Current Issues and Trends in Public Construction James E. Krause, Attorney Regan Zebouni & Walker, PA Jacksonville, Florida Direct Dial 904.861.0192 Email jkrause@rzwlaw.com

3. Overview – To Bid or Not to Bid • OVERVIEW • Review and discuss public contract issues • Review construction acquisition systems • Review project delivery systems • Review specific Public Contract issues • Florida Public Contract law • JEA contract review

4. Part IPUBLIC CONTRACT ISSUES • Owner Expectations: • Better - Faster - Cheaper • Desire to work with fewer, but more reliable vendors • No disputes -- no lawyers -- no lawsuits • Less risk/responsibility for Owner • Engineer - Contractor has all risk

5. Overview • Historical Perspective. • Rise of Owner – Architect – Contractor System. • Increasing complexity in building systems requires complex management practices. • Increased density involves governmental concern with health safety and welfare. • Increased overall complexity engages legal system.

6. Overview - Private Owners • Private Owners typically have fewer procurement restraints than Public Owners. • The Golden Rule applies. • The Owner is the ultimate authority. • Owners recognize the value of competition – more or less. • There is more possibility of bargaining for favorable contract terms in private work.

7. Overview - Public Contracts • Public contracts derive from statutes, regulations, ordinances, etc. • It is common for Public sector contracts to require competitive procurement. • Contracting officers for Public Agencies have limited authority, and cannot commit the Agency or Government beyond their authority. • Public contracts are standardized – there is little room for bargaining.

8. Overview – Public Owners • Public Owners were not typically allowed to use negotiated or sole source contract acquisition. • Public Owners were looking for a method to increase flexibility in their acquisition. • “Best Value” procurement is the new tool for Public Agencies.

9. Overview - Owners • Public (Government) contracts differ from nonpublic contracts in that private sector contracts have few constraints, while public sector contracts involve extensive regulations imposed by the government.

10. Public Owners • Authority • Contracting officials have limited authority • Contractor must be aware of that authority or risk not getting paid for services and materials provided outside that authority • Contractor is responsible for determining contracting officers authority. • Sovereign Immunity

11. Florida Public Contracts • Sources of Information • Florida Statutes • Administrative Procedures Act • Department of Administrative Hearings • Agency/Department Policies and Procedures Manuals

12. PUBLIC CONTRACTSCompetition - Florida • It is common to have statutory requirements that Public sector contracts require competitive bidding. • According to the Florida Supreme Court, since the government is a major employer and is political in nature, there is an assumption that there may be impropriety and that the government cannot be trusted to meet and negotiate suitable terms without at least the appearance of impropriety or special favor. • Competitive bidding serves the dual purpose of safeguarding against favoritism toward a particular contractor and giving all a fair opportunity to participate.

13. PUBLIC CONTRACTSCompetition - Florida • Florida statutory law requires competitive bidding, and the Florida District Court of Appeals has held that the government cannot split the contract into separate pieces to avoid the statutory monetary minimum (with exceptions for specialty work or work that requires special skills not found in the general market). • Further, Florida courts have held that a public body may not draw specifications in its bid request that would permit only one bidder to qualify for the project.

14. PUBLIC CONTRACTSCompetition - Florida • 255.05(1) – “award contracts based on the submission of sealed bids, proposals submitted in response to a request for proposals, proposals in a response to a request for qualifications, or proposals submitted for competitive negotiation. • 255.20(19) – Local bid law requires competition on all projects exceeding $200,000 • NOTE: Competitive Bidding not required

15. PUBLIC CONTRACTSCompetition - Florida • (1) COMPETITION - Generally, no common law requirement for competitive procurement in absence of constitution, statute, charter, ordinance, or rule requiring competitive procurement. • (2) Statutes, charters, and ordinances, however, generally require competitive procurement for construction contracts. Florida Statutes 255.05(1) “County, municipality, district. . .or other political subdivisions of the state seeking to construct or improve a public building, structure or other public construction works must be competitively awarded to an appropriately licensed contractor for each project that is estimated in accordance with generally accepted accounting principles to have total construction project costs of more than $200,000. . . .[T]he term ‘competitively award’ means to award contracts based on the submission of sealed bids, proposals submitted in response to a request for proposals, proposals in response to a request for qualifications, or proposals submitted for competitive negotiation.

16. PUBLIC CONTRACTSCompetition - Florida • COMPETITION can be: • Sealed Competitive Bid (IFB, ITB) • Response to RFP • Response to RFQ • Response to Request for Competitive Negotiation • FS 255.20

17. PUBLIC CONTRACTSFLORIDA • Public bodies procurement procedures fall under various statutes, ordinances, rules, policies, procedures, codes, etc. • A public procurement may fall under more than one agency’s jurisdiction. • Carefully confirm what the rules are for your specific procurement.

18. PUBLIC CONTRACTSFLORIDA • Do not participate in preparing the invitation to bid or the request for proposals • If you are a would-be bidder or proposer, be careful about participating in developing specifications, invitation to bid, or request for proposals • Florida Statutes 287.057(10) “[a] person who. . .participates in the drafting of a solicitation or who develops a program for future implementation is not eligible to contract with the agency for any other contracts dealing with that specific subject matter, and any firm in which such person has any interest is not eligible to receive such contract”

19. PUBLIC CONTRACTSFLORIDA • Review the invitation to bid or the request for proposal as soon as possible. Identify questions and concerns. • Be fully responsive • Be timely • Beware “lobbying” restrictions. • Be careful to avoid anti-competitive actions. • Attend pre-bid conference; appropriately ask clarifying questions

20. PUBLIC CONTRACTSFLORIDA • Preparing and submitting the bid or proposal. • 1. If the invitation to bid or request for proposal contains unacceptable terms, the invitation or request often requires a protest within so many days of the invitation or request being released • Florida Statutes 120.57(3)(a) “[w]ith respect to a protest of the terms, conditions, and specifications contained in a solicitation, including the provisions governing the methods for ranking bids, proposals, or replies, awarding contracts, reserving rights of further negotiation, or modifying or amending any contract, the notice of protest shall be filed in writing within 72 hours after the posting of the solicitation. . .Failure to file a notice of protest. . .shall constitute a waiver of proceedings under this chapter”

21. PUBLIC CONTRACTSFLORIDA • Preparing and submitting the bid or proposal. • 2. Responsive • Answer all questions; respond to all requests. • It is best to mirror the request from the agency. • 3. Timely response essential • Late responses will not be considered.

22. PUBLIC CONTRACTSFLORIDA • Preparing and submitting the bid or proposal. • 4. Beware “lobbying” restrictions. • Miami “cone of silence” until award. Proposors may not contact anyone involved in the source selection process; evaluators may not respond or communicate with proposors. • Orange County - A lobbying blackout period begins with the issuance of the solicitation and continues until the Board selects the successful proposer/bidder.

23. PUBLIC CONTRACTSFLORIDA • Preparing and submitting the bid or proposal. • 5. Avoid anti-competitive actions • Collusion between contractors destroys competition. • “all agreements, whether principal or subsidiary in character, which in their necessary operation upon the actions of contractors engaged in bidding for public work, tend to restrain the natural rivalry and competition of the parties, and thus produce a result disadvantageous to the public, are against public policy and void.”

24. PUBLIC CONTRACTSFLORIDA • Preparing and submitting the bid or proposal. • 6. Attend and participate in any pre-bid conference; if there are questions, request clarifications publicly. • Issues which should have properly been raised during prebid activities will not be accepted as the basis for a post bid award protest.

25. PUBLIC CONTRACTSFLORIDA • AWARD of CONTRACT • Typically • Notice of Intent to award

26. PUBLIC CONTRACTSFLORIDA • Agency discretion in evaluating submissions. • Contracting officers have wide discretion in source selection decisions for public procurement. • Court does not wish to interfere with the day to day functioning of an agency • Courts will overturn an agency award only when decision can be shown to be arbitrary, capricious, or beyond the scope of its discretion.

27. PUBLIC CONTRACTSFLORIDA • Agency discretion in evaluating submissions. • Award may be successfully protested when the agency: • Does not evaluate and select on the basis of the criteria placed in the IFB or RFP; • Does not evaluate all offerors equally; • Does not evaluate respondent’s submission properly; • Makes a decision that is clearly erroneous.

28. PUBLIC CONTRACTSFLORIDA • Typical Evaluation Criteria. Similar Experience Past Performance Evaluations Technical Proposal Price

29. PUBLIC CONTRACTSFLORIDA • AWARDING A BID • Contractor must be: • Responsible • Florida Statutes 287.012(24) “’[r]esponsible vendor’ means a vendor who has the capability in all respects to fully perform the contract requirements and the integrity and reliability that will assure good faith performance” • Responsive • Florida Statutes 287.012(12) “responsive bidder” or “responsive offeror” is “a person who has submitted a bid which conforms in all material respects to the invitation to bid or request for proposals”

30. PUBLIC CONTRACTSFLORIDA • AWARDING A BID • Most agencies reserve the right to reject all bids. • Agency may waive minor irregularities in bids.

31. PUBLIC CONTRACTSFLORIDA • AWARDING A BID PROTESTS – Florida state agencies Pre award Post award • Florida state agencies subject to the Administrative Procedures Act (APA) • Florida Statutes 120.57(3) • Not all jurisdictions subject to the APA. Counties and cities may have different protest procedures. • Duval County; City of Jacksonville • Department of Administrative Hearings

32. PUBLIC CONTRACTSFLORIDA • AWARDING A BID PROTESTS POST AWARD – Florida state agencies • Florida Statutes 120.57(3) • Petitioner must file Notice of Protest in writing within 72 hours. • Petitioner must file formal written protest within 10 days after Notice of Protest. • Agency to stop procurement solicitation or award until decision or settlement of protest. • Department of Administrative Hearings will hold a hearing within 30 days of protest, and produce recommended order within 30 days of hearing. • Agency can accept or appeal recommended order. • Protestor can recover costs of successful protest and interest.

33. PUBLIC CONTRACTSFLORIDA • Contracting Officer Authority - Florida • The case for written Change Orders - Sovereign Immunity • MEI’s extra work claims are for work totally outside the terms of the contract.Without a written change order, the doctrine of sovereign immunity precludes recovery for the cost of the extra work. One final point must be addressed. MEI asserts that the County waived the written change order requirements by directing work changes without following its own formalities. We decline to hold that the doctrines of waiver and estoppel can be used to defeat the express terms of the contract. Otherwise, the requirement of Pan Am that there first be an express written contract before there can be a waiver of sovereign immunity would be an empty one. An unscrupulous or careless government employee could alter or waive thee terms of the written agreement, thereby leaving the sovereign with potentially unlimited liability. County of Brevard v. Miorelli Engineering, Inc., 703 So.2d 1049 (Fla.1997) • Sovereign immunity bars a contractor recovering in quantum meruit against a government. See, e.g., Champagne-Webber, Inc. v. City of Fort Lauderdale, 519 So.2d 696 (Fla. 4th DCA 1988); Lee County v. Southern Roadbuilders, 495 So.2d 189 (Fla. 2d DCA 1986), review denied, 504 So.2d 768 (Fla. 1987)

34. PUBLIC CONTRACTSFLORIDA • CONSULTANTS COMPETITVE NEGOTIATION ACT • CCNA • FS 287.055 • Selection method for engineers, architects, surveyors • Applies to almost every public body in the state of Florida

35. PUBLIC CONTRACTSFLORIDA • CCNA • Establishes both the process and the criteria to be used in selecting professional services • For a “project” • The Contractor may not hire an engineer or architect to get around this statute

36. PUBLIC CONTRACTSFLORIDA • CCNA • Three step process • Public Announcement • Typically the public announcement is the scope of the project • Competitive Selection Process • The criteria for selection is contained in the CCNA • The agency will choose the three most qualifed firms • Competitive Negotiation • The agency may then negotiate with the first ranking firm for services. • Fees may not be discussed until this step

37. PUBLIC CONTRACTSFLORIDA • Liquidated Damages • May be enforced as long as • not so excessive as to constitute a penalty and • damages were not ascertainable at the time the contract was entered into by the parties.

38. PUBLIC CONTRACTSFLORIDA • No Damage for Delay Clause (1) Generally enforceable. See, e.g., Triple R Paving, Inc. v. Broward County, 774 So.2d 50 (Fla. 4th DCA 2000); C. A. Davis, Inc. v. City of Miami, 400 So.2d 536 (Fla. 3rd DCA 1981) (.”[t]he law in Florida is that so long as a public authority does not willfully or knowingly delay job progress it will avoid liability under a ‘no damage for delay’ clause”). (2) Generally strictly construed (3) But exceptions to enforcing no-damages-for-delay.. “Florida law recognizes several exceptions to the enforcement of a No Damage for Delay Clause, such as an owner’s or its agent’s knowing and unreasonable delay of a project, or interference with the project.” Metropolitan Dade County v. Frank J. Rooney, Inc., 627 So.2d 1248 (Fla. 3rd DCA 1993), citing Southern Gulf Utilities, Inc. v. Boca Ciega Sanitary District, 238 So.2d 458 (Fla. 2d DCA), cert. denied, 240 So.2d 813 (Fla. 1970). (4) Florida courts have permitted government contractors to use the Eichleay formula to recover unabsorbed home office overhead stemming from delays and inefficiencies.

39. PUBLIC CONTRACTSFLORIDA • Differing Site Conditions • See JEA contract • Clause will only be triggered where an inaccurate representation has been relied on • If there is no representation, there will be no recovery if the contractor relies on his own inadequate representation.

40. Part VPublic Contract Review • Jacksonville Electric Authority (JEA) • Provides electric, water, and sewer for Duval County and the City of Jacksonville • Progressive procurement procedures • Not subject to the Administrative Procedures Act (Florida Statutes) • Information on JEA, current solicitations, and contracts available online at http://externalapps.jea.com/eprocurement/bid_info.asp

41. Public Contract Review • ABOUT JEA • Electric SystemJEA owns and operates three generating plants and all transmission and distribution facilities. A fourth power plant, the St. Johns River Power Park (SJRPP), is owned jointly by JEA and the Florida Power & Light Company (FPL) and operated by JEA. JEA and FPL are also joint owners of Unit 4 at Georgia Power Company's coal-fired Robert W. Scherer Plant (Plant Scherer), which is located in Macon, Georgia. JEA owns a 200 net megawatt share of Unit 4. JEA's ownership interest in Scherer is structured as a separate JEA bulk power supply system. In addition, JEA produces 3.2 megawatts from a methane-fueled generating facility at the Girvin Road Landfill. JEA's net generating capability is 2,361 megawatts. • Capacity expansion and renovation projects demonstrate JEA's commitment to environmental leadership, fuel diversification and rate stability. JEA's newest generating facility is Brandy Branch, located in west Jacksonville, home to three 170 megawatt combustion turbine units. These units are capable of operating on both natural gas and diesel fuel. Units1 and 2 went into commercial operation May 31, 2001, followed by Unit 3 on October 12, 2001. • The Northside Generating Station Repowering Project made Jacksonville home to two of the largest circulating fluidized bed combustors, or CFBs, in the world. These CFBs produce nearly 300 megawatts each and utilize coal and petroleum coke as fuels. • Water and Sewer SystemsJEA's Water System consists of 150 artesian wells tapping the Floridian Aquifer, which is one of the world's most productive aquifers. Water is distributed through 44 water treatment plants and 3,480 miles of water lines. More than 2,500 miles of collection lines and six regional sewer treatment plants comprise the JEA sewer system. • JEA is committed to improving water quality of the St. Johns River. One outstanding example of how we're working to meet our goal to reduce nitrogen release into the river is through the use of reclaimed water for irrigation. • The Energy AuthorityJEA is also a founding member of The Energy Authority (TEA), which was created in August 1997 to represent its member utilities in the sale and purchase of wholesale electricity. Today, TEA membership consists of 11 public power utilities in seven states. • Water and Sewer Expansion AuthorityThe Water and Sewer Expansion Authority was established in 2003 for the purpose of addressing challenges experienced by the approximately 175,000 homeowners dependent upon septic systems in connecting to municipal water and sewer. Many of these septic systems are aged and failing, which not only causes difficulties for homeowners in those areas, but presents environmental challenges to Duval County creeks and waterways.

42. Public Contract Review • Floradale Water Sewer and Drainage Improvements • WCS-015-05 • Standard type of JEA contract • Available online at http://externalapps.jea.com/eprocurement/bid_info.asp

43. Public Contract Review • RTFC • THERE ARE NO “STANDARD” OR “TYPICAL” CONTRACTS OR SOLICITATIONS • The Engineer/Contractor at most risk is the contractor that assumes this contract is like the last 40 contracts.

44. Public Contract Review • Contract Review • Make a working copy of the contract. • Label it the working copy with your name on it • Get a marker • Get several boxes of tabs • Get several colors of ink pens • Get a fresh cup of coffee/beverage

45. Public Contract Review • Highlight all suspect clauses • Identify all questions • Make notes with one color ink • Tab all pages with questions • Place a check at the bottom of all pages without a question • When you find answers, go back to the questions and write down the answer and who provided the answer

46. Public Contract Review • Always keep your working copy • Always call the agency to ask questions about the contract, but don’t rely on those answers exclusively • Should you feel the need to consult with an attorney, mark the questions in the contract that concern you to focus their attention

47. Contract Clauses Specific Issues • Escalation Clauses • Steel • Concrete • Fuel • Pay when paid • Paperless contracting

48. Disclaimer All rights are reserved.  These materials are designed to provide general information on the seminar topic presented, and are provided with the understanding that the publisher is not engaged in rendering any legal or professional services.  Although these materials are prepared by professionals, they should not be used as a substitute for professional services.  If legal or other professional advice is required, the services of a professional should be sought.

49. Questions? Feel free to contact me James E. Krause, Attorney Regan Zebouni & Walker PA 9905 St Augustine Road, Suite 400 Jacksonville, Florida 32257 Direct 904.861.0192 Mainline 904.356.1300 Cell 904.553.0336 Email jkrause@rzwlaw.com Thanks to the Associated General Contractors for their support in providing slides and illustrations for this presentation. For additional information on the AGC visit their website at agc.org.