This review was initiated as a result of a request from Florida Department of Transportations Office of Inspector General to review, analysis

and determination of possible complimentary bidding on contract E4L05 between South Florida Bushog Service (SFBS) and Knight Property Management Service (KPMS). The determination of possible complimentary bidding or collusion between contractors requires a long term bid review and bid analysis. Therefore, we analyzed and reviewed all contracts that SFBS submitted bids on since January 1, 2000 and searched for indicators that points to any possible illegal activities, especially on those contracts where KPMS also bid. The contract E4L05 was let on January 22, 2010 in Palm Beach County. Twenty three contractors requested proposals and eight contractors submitted bids on this contract. The bidders list on table below shows, SFBS as the low bidder and KPMS as the second low bidder and winner. Vendors Names SFBS KPMS A Quality Bushog Services Estimate Nextera Landscaping Eden Landscaping Greenscapes Inc, of South Florida Grading & Bush Hog Services J. D. Sunny Isle Inc. Status L W L L L L L L Vendors Total Bid $85,348 $124,630 $140,732 $142,425 $149,114 $149,747 $150,000 $155,316 $182,948 Amount Over the Low Bidder $39,282 $55,384 $57,077 $63,766 $64,399 $64,652 $69,968 $97,600

The bidders list on contract E4L05

Because of a large number of proposal holders and bidders on this contract, it is difficult to assume that SFBS and KPMS could coordinate their bids to pick a winner among themselves when other contractors such as A Quality Bushog Services, Greenscapes Inc, of South Florida and Grading & Bush Hog Services with a long history of winning the same type of contacts in Palm Beach County were on the potential bidders list. Complementary bids are normally found on contracts with a low number of proposal holders and a low number (2 or 3) of bidders. The purpose for a complementary bid is to prevent rejecting the low bid for the reasons such as single bid or high bid. Although, SFBS was the low bidder on the contract E4L05, it was awarded to KPMS for a total amount of $124,630 which is $39,282 more than SFBSs bid amount. On a letter send to the Contract Office on Feb 22, 2010, SFBS withdrew its bid. SFBS claimed that his bid at $85,348 was at 56% of the projected amount of $142,500 and the bonding company does not want to bond on amounts of less than 60% of the projected amount. 1

Since August 7, 2009, SFBS was the low bidder on contracts E4K63-R0 and E4L05. SFBS was awarded the contract E4K63-R0 and his bid amount was $35,410 at 44% of the estimated amount of $80,120. They didnt have a problem providing documents, including bonds, necessary to be awarded the contract. On Augustv2009, SFBS was able to get the bond for contract E4K63-R0 when his bid was at 44% of the estimated and KPMS was 5th on the bidders list, then on January 2010, SFBS claims that he was not able to get the bond for contract E4L05 when his bid was at 56% of the projected amount and KPMS was the second low bidder. Since the District Contract Offices do not require any prove of when a contractor claims his request for a bond was rejected by the bond company, contractors might see an opportunity to increase their profit illegally when that opportunity presents itself. The circumstance around the contract E4L05 created an opportunity for SFBS and KPMS to increase the cost of the project and the profit by making a possible false claim and benefiting on how contract offices in district process irregular biding. However, only one occurrence is not sufficient to reach a conclusion that SFBS and KPMS are involved in illegal activities. It is necessary to review and all the contracts that SFBS submitted bids on analysis those contracts that both SFBS and KPMS were first and second low bidder. Since January 1, 2000, SFBS submitted bids on 60 contracts. The table below shows the list of 8 contracts that both SFBS and KPMS were the first or second low bidder. The two contracts E8H55 and E8H73 were Fast Respond Contract. The Fast Respond Contracts have different letting and award process than other types of contracts. Contract Number
E8H55 E8H73 E4J09-R0 E8I29-R0 E4J17 E4J22 E8K06-R0 E4L05 Turnpike Turnpike Palm Beach Turnpike Palm Beach Broward Miami-Dade Palm Beach Jun 5, 2006 Jul 6, 2006 Apr 6, 2007 Jun 12, 2007 Jun 15, 2007 Jun 15, 2007 Aug 18, 2009 Jan 22, 2010

County

Letting Date

First Low Bidder

SFBS KPMS SFBS KPMS SFBS SFBS SFBS SFBS

Second Low Bidder

KPMS SFBS KPMS SFBS KPMS KPMS KPMS KPMS

Awarded Contractor
SFBS KPMS SFBS SFBS KPMS SFBS KPMS KPMS

Comment
Fast Respond Contract Fast Respond Contract SFBS withdrew his bid KPMS refused the award SFBS withdrew his bid SFBS withdrew his bid Error in SFBSs item unit prices SFBS withdrew his bid

Contract E8I29-R0 was let on June 12, 2007 and received three bids from Redmans INC, KPMS and SFBS. Redmans INC total bid amount was $444,928 and he was the low bidder. According to the district office, Redmans INC couldnt provide bonds as was required for awarding the contracts. Redmans INCs bid was considered Non-Responsive

and rejected. The contract was offered to the second low bidder, KPMS. KPMSs total bid amount was $ 516,246. According to the district office, KPMS simply didnt accept the offer. The contract was offered and accepted by the third low bidder, SFBS for a total contract amount of $547,034. A review of all contracts that KPMS submitted bids on shows that on 10 occasions KPMS was offered to accept the award when they were not the low bidder. In nine occasions KPMS accepted the offer and the only one refused was contract E8I29-R0. Three days after contract E8I29-R0 was let, contract E4J17 was let on June 15, 2007. It received three bids from SFBS, KPMS and Greenscapes INC, of South FL. SFBSs total bid amount was $388,024 and he was the low bidder. SFBS simply withdrew its bid, and contract was awarded to the second low bidder, KPMS, for an amount of $429,004. SFBSs market area consists of Palm Beach, Broward and Miami-Dade Counties, where SFBS has been competing with other contractors. An analysis of all bids submitted by SFBS shows that SFBS and KPMS submitted bids on three contracts in Districts One and three contracts in District Two outside their normal area of activity that might suggest bid coordination. However, KPMS bid on several other contracts in Districts 1, 2 and 7, which SFBS did not bid. This is not unusual for contractors working on small maintenance contracts to submit bids on other districts outside the normal area of activities. Based on findings from analyzing all bids submitted by SFBS, it is clear that in two occasions SFBS withdrew his bids in favor of KPMS, and in one occasion, KPMS of SFBS. However, because of the low number of occurrences, it is difficult to reach a conclusive conclusion that SFBS and KPMS are indeed involved in illegal bidding practices. We recommend monitoring the bidding practices for another year to see if the current pattern continues to support illegal bidding practices between SFBS and KPMS. When District Contract Offices do not require any documentation from contractors when the bonding company refuses to bond the contract, it creates an opportunity for collusion or fraud. The Contract Administration Office (Central Office) will recommend that Districts Offices obtain documentation from the bonding company when the contractor states that the bonding company is refusing to bond the contract. 3

Summary Per your request, we analyzed and reviewed all contracts that South Florida Bushog Service (SFBS) submitted bids on since January 1, 2000 and searched for any illegal

activities, especially on those contracts where Knight Property Management Service (KPMS) also bid. Because of a large number of bidders in the market, the procedures or processes used to awarded contracts by District and Turnpike Contract Administration Offices and the low number of occurrences that might cause the findings to be circumstantial, it is difficult at this time to reach a conclusive result that supports any long-term practices of complementary bidding or bid rigging between SFBS and KPMS. A review of 60 contracts that SFBS submitted bids on shows that for reasons such as irregular bids, not being able to provide bonds or simply withdrawing bids and refusing an award, a total of 20 contracts were not awarded to the first low bidder. In addition to contract E4L05, we find two other contracts with the same circumstance as contract E4L05 involving SFBS and KPMS. Contract E8I29-R0 was let on June 12, 2007 and received three bids from Redmans INC, KPMS and SFBS. Redmans INC total bid amount was $444,928 and he was the low bidder. According to the district office, Redmans INC couldnt provide bonds as was required for awarding the contracts. Redmans INCs bid was considered Non-Responsive and rejected. The contract was offered to the second low bidder, KPMS. KPMSs total bid amount was $ 516,246. According to the district office, KPMS simply didnt accept the offer. The contract was offered and accepted by the third low bidder, SFBS for a total contract amount of $547,034. A review of all contracts that KPMS submitted bids on shows KPMS accepted nine contracts when they were not the low bidder. Three days after contract E8I29-R0 was let, contract E4J17 was let on June 15, 2007. It received three bids from SFBS, KPMS and Greenscapes INC, of South FL. SFBSs total bid amount was $388,024 and he was the low bidder. SFBS simply withdrew its bid, and contract was awarded to the second low bidder, KPMS, for an amount of $429,004. Since August 7, 2009, SFBS was the low bidder on contracts E4K63-R0 and E4L05. SFBS claims that the bonding company rejected their request to provide a bond for contract E4L05 because their bid was at 56% of the projected amount; therefore SFBSs bid was withdrawn, and contract E4L05 was awarded to the next low bidder, KPMS. SFBSs bid amount for contract E4K63-R0 was $35,410, which is at 44% of the estimated amount of $80,120. They didnt have a problem providing documents, including bonds, necessary to be awarded the contract. 4 SFBSs market area consists of Palm Beach, Broward and Miami-Dade Counties, where SFBS has been competing with other contractors. An analysis of all bids submitted by SFBS shows that SFBS and KPMS submitted bids on three contracts in Districts One and three contracts in District Two outside their normal area of activity that might suggest bid coordination. However, KPMS bid on several other contracts in Districts 1, 2 and 7, which SFBS did not bid. This is not unusual for contractors working on small

maintenance contracts to submit bids on other districts outside the normal area of activities. Because of the low number of occurrences and circumstances surrounding awarding contracts by districts, we recommend monitoring bidding practices for another year to see if a stronger pattern develops to support illegal bidding practices between SFBS and KPMS.