FLORIDA DEPARTMENT OF TRANSPORTATION

CONTRACTS ADMINISTRATION OFFICE

MARKET ANALYSIS SECTION
AREA TEN BID COLLUSION DETECTION STUDY

Cedric J. Thomas Reviewed by: Nasser Pourfarzaneh
DECEMBER 10, 2010

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TABLE OF CONTENTS
INTRODUCTION …………………………………………………………...1

Select Criteria………………………………………………………...1
PROPOSALS/BID ANALYSIS Vendor’s Proposals and Bids……..………………………………......2 Proposals and Bids by County………………………….……….........3 BID RATIO ANALYSIS Area Ten Bid Ratio by County…………………………………..........4 State Wide Bid Ratio……………………………………………….....4 MARKET SHARE ANALYSIS Total Market Share Awarded Contract Dollars…………………….…5 Awarded Contract Dollars by County…………………………….......5 Contracts Worked by County…………………………………….…...6-7 Area Ten vs. State Wide Market Share………….……..……………..8 VENDOR COMPETITION ANALYSIS Community Asphalt vs. Ranger and Hubbard ……………..……........9 Ranger vs. Community Asphalt and Hubbard ...……………...............10 Hubbard vs. Community Asphalt and Ranger ………………………..10 VENDOR ACTIVITIES MAPS (BIDS & WINS by COUNTY) Ranger Construction Company….………………..…………….…….11 Community Asphalt Corporation…….. …………….………….….....12 Hubbard Construction Company ……………………………………..13 CONTRACTS ANALYSIS ……………….………………………….………....14 SUMMARY…………………. ……………………………………………...........15

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INTRODUCTION

This study has been prepared as a routine assignment to determine if there are possible indicators for bid rigging and/or bid collusion between Ranger Construction Industries, Inc., Community Asphalt Corporation, Hubbard Construction Company and other contractors in Area Ten. Our study period is from January 1, 2005 to December 31, 2009.
SELECTION CRITERIA

Area (counties): Letting Date: Contract Types: Letting status: Selected Vendors:

Indian River, Martin, Palm Beach and St. Lucie. January 1, 2005 to December 31, 2009. All Construction and Traffic Operations contracts let by Central and District Offices. Awarded contracts selected. Ranger Construction Industries, Inc., Community Asphalt Corporation and Hubbard Construction Company. Competition.

BAMS/DSS Models: Select, Contract profile, Line Item, Market Share and Vendor

Other:

The LIMS database was used to verify the location of asphalt facilities owned by contractors referenced in this study.

SELECT MODEL

In reference to our sub-setting criteria, the Select Model report shows 127 contracts and $900,495,295 were awarded to Ranger Construction Industries, Inc., Community Asphalt Corporation, Hubbard Construction Company and other vendors in Area Ten during a period of January 1, 2005 to December 31, 2009.

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PROPOSALS & BIDS ANALYSIS

The table below shows the number of proposals ordered, bids submitted, and contracts awarded to Community Asphalt Corporation, Ranger Construction Industries, Inc. and Hubbard Construction Company. The top vendors submitted bids on 83% (230/277) of the proposals ordered and were awarded 57 contracts. The other vendors submitted bids on 51% (401/781) of the proposals ordered and were awarded 70 contracts. The vendors together submitted bids on 60% (631/1,058) of the proposals ordered and were awarded 127 contracts. TOP VENDORS PROPOSALS & BIDS Vendor Community Asphalt Ranger Construction Hubbard Construction Total (Major Vendors) Other Vendors Total (All Vendors) Proposals Ordered 104 103 70 277 781 1,058 Bids Submitted 95 90 45 230 401 631 Contracts Awarded 24 27 6 57 70 127 % of Bids vs. Proposals 91 87 64 83 51 60%

Table 1

BID RATIO ANALYSIS

The tables below show the bid ratio by county for Area Ten and statewide bid ratio. St. Lucie County has the highest bid ratio of 5.65, which indicates that the level of competitive bidding is very good. Martin County has the lowest bid ratio of 4.25, showing that the level of competitive bidding is stable. Indian River and Palm Beach Counties have a bid ratio of 5.32 and 4.88 respectively, which indicates that the level of competitive bidding is good.

Area Ten has a bid ratio of 4.96, which shows that the area has an excellent level of competitive bidding. 4

AREA 10 BID RATIO by COUNTY
COUNTY BIDS CONTRACTS BID RATIO

Indian River Martin Palm Beach St. Lucie Area 10

101 85 332 113 631 Table 3

19 20 68 20 127

5.32 4.25 4.88 5.65 4.96

STATEWIDE BID RATIO
STATE WIDE TOTAL BIDS CONTRACTS BID RATIO

6,456 Table 4

1,570

4.11

Findings: The statewide bid ratio of 4.11 is lower than Area Ten’s (4.96) bid ratio, which indicates that the statewide level of competition is better than average, but not as stable compared to Area Ten’s level of competition. This is primarily due to the number of one and two-bid contracts that were awarded during the period of January 1, 2005 - December 31, 2009.

MARKET SHARE ANALYSIS

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The Market Share analysis is based on the three major contractors’ awarded contract dollars in Indian River, Martin, Palm Beach and St. Lucie counties. The table below shows Ranger Construction Industries, Inc. was awarded 27 contracts and received $176,508,387 (19.6%) of the total awarded contract dollars. Community Asphalt Corporation and Hubbard Construction Company were awarded 24 and six contracts respectively, and received $161,762,120 (17.96%) and $65,903,550 (7.32%) of the total awarded contract dollars respectively. The other vendors received $496,321,238 (55.12%) of the total awarded contract dollars and were awarded 70 (55.12%) contracts.
MARKET SHARE (AWARDED DOLLARS)

Name
Ranger Construction Community Asphalt Hubbard Construction Major Vendors Total Other Vendors TOTAL

Dollar Amount $176,508,387 $161,762,120 $65,903,550 $404,174,057 $496,321,238 $900,495,295

Percent of Dollar Amount 19.60 17.96 7.32 44.88 55.12 100
Table 5

No. of Contracts 27 24 6 57 70 127

Percent of Contracts 21.26 18.90 4.72 44.88 55.12 100

MARKET SHARE BY COUNTY

The two tables below show the dispersion of awarded contract dollars and contracts worked among contractors by each county.
AWARDED CONTRACT DOLLARS BY COUNTY
COUNTY RANGER CONSTRUCTION COMMUNITY ASPHALT HUBBARD CONSTRUCTION OTHER VENDORS TOTAL

I. River Martin P. Beach St. Lucie
TOTAL

Dollars $18,496,793 $27,256,712 $92,581,561 $38,173,321 $176,508,387

Pct. 15.05 16.43 20.50 23.84

Dollars $43,761,209 $11,184,831 $84,085,272 $22,730,808 $161,762,120

Pct. 35.61 6.74 18.62 14.20

Dollars

Pct.

$41,049,930 $24,853,620 $65,903,550

9.09 15.52

Dollars $60,624,339 $127,504,423 $233,857,163 $74,335,314 $496,321,239

Pct. 49.34 76.83 51.79 46.44

Dollars $122,882,341 $165,945,966 $451,573,926 $160,093,062 $900,495,295

Table 6

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CONTRACTS WORKED BY COUNTY
County RANGER CONSTRUCTION COMMUNITY ASPHALT HUBBARD CONSTRUCTION OTHER VENDORS TOTAL

I. River Martin P. Beach St. Lucie
TOTAL

Contracts 1 5 16 5 27

Pct. 5.26 25.00 23.5 3 25.00

Contracts 8 4 10 2 24

Pct. 42.11 20.00 14.71 10.00

Contracts

Pct.

5 1 6

7.35 5.00

Contracts 10 11 37 12 70

Pct. 52.63 55.00 54.41 60.00

Contracts 19 20 68 20 127

Table 7

Indian River County Community Asphalt Corporation and Ranger Construction Industries, Inc. were the two major contractors active in Indian River County. Community received $43,761,209 (35.61%) of the awarded contract dollars and worked on eight (42.11%) contracts. Ranger Construction received $18,496,793 (15.05%) of the awarded contract dollars and worked on one (5.26%) contract. The other contractors received $60,624,339 (49.34%) of the awarded contract dollars and worked on 10 (52.63%) contracts. Nineteen contracts were awarded and $122,882,341 was expended in Indian River County. Martin County Martin County shows two major contractors were active in this area. Ranger received $27,256,712 (16.43%) of the awarded contract dollars and worked on five (25%) contracts. Community received $11,184,831 (6.74%) of the awarded contract dollars and worked on four (20%) contracts. The other contractors received $127,504,423 (76.83%) of the awarded contract dollars and worked on 11 (55%) contracts. The total expenditure for Martin County was $165,945,966 and 20 contracts awarded. Palm Beach County Ranger dominated Palm Beach County, while working on 16 (23.53%) contracts and receiving $92,581,561 (20.50%) of the awarded contract dollars. Community received $84,085,272 (18.62%) of the awarded contract dollars and worked on 10 (14.71%) contracts. Hubbard received $41,049,930 (9.09%) of the awarded contract dollars and worked on five (7.35%) contracts. The other contractors received $233,857,163 (51.79%) of the awarded contract dollars and worked on 37 (54.41%) contracts. Sixty-eight contracts were awarded and $451,573,926 was expended in Palm Beach County. St. Lucie County Three major contractors were active in St. Lucie County. Ranger received $38,173,321 (23.84%) of the awarded contract dollars and worked on five (25%) contracts. Community received $22,730,808 (14.20%) of the awarded contract dollars and worked on two (10%) contracts. Hubbard received $24,853,620 (15.52%) of the awarded contract dollars and worked on one (5%) contract. The other contractors received $74,335,314 (46.44%) of the awarded contract dollars and worked on 12 (60%) contracts. The total expenditure for St. Lucie County was $160,093,063 and 20 contracts awarded.

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Findings: Our market share analysis shows that Ranger Construction Industries, Inc., Community Asphalt Corporation and Hubbard Construction Company were very competitive in Palm Beach County. Ranger received 52% ($92,581,561) of the vendor’s total awarded contract dollars and was awarded 16 contracts. Community received 52% ($84,085,272) of the vendor’s total awarded contract dollars and was awarded 10 contracts. Hubbard received 62% ($41,049,930) of the vendor’s total awarded contract dollars and was awarded five contracts in Palm Beach County. Fifty percent of Area Ten’s market share dollars were expended in Palm Beach County. Hubbard ordered eight proposals and submitted two bids, but did not win a contract in Indian River County. Also, Hubbard ordered 10 proposals and submitted six bids, but did not win a contract in Martin County.

MARKET SHARE ANALYSIS AREA TEN vs. STATEWIDE

The table below compares Area Ten (Indian River, Martin, Palm Beach and St. Lucie Counties) and statewide awarded contract dollars and awarded contracts from January 2005 through December 2009.
AREA TEN vs. STATEWIDE MARKET SHARE Dollars Contracts % Area 10 % Area 10 % State Wide Dollars Contracts Dollars 13.65 14.96 1.13 $122,882,341 19 18.43 15.75 1.53 $165,945,966 20 50.14 53.54 4.16 $451,573,926 68 17.78 15.75 1.47 $160,093,063 20 $900,495,296 $10,854,538,031 127 1,570 100% Table 8 100% 8.30

County

Indian River Martin Palm Beach St. Lucie
TOTAL AREA 10 STATEWIDE

% State Wide Contracts 1.21 1.27 4.33 1.27 8.08

Findings: Based on our analysis, Palm Beach County was expended $451,573,926 contract dollars and 68 contracts were awarded, which contributed to 4.16 % and 4.33% of the statewide awarded contract dollars and awarded contracts respectively. Fifty percent of Area Ten’s market share dollars and 53% of the contracts were awarded in Palm Beach County. The total awarded contract dollars for Area Ten was $900,495,296, which contributes to 8.30 % of state wide awarded contract dollars. There were 127 contracts awarded in Area Ten, which contributes to 8.08 % of statewide awarded contracts.

VENDOR COMPETITION ANALYSIS

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The Vendor Competition Profile shows the competition by number of bids and awarded contracts for each vendor. Our analysis focuses on Community Asphalt Corporation, Ranger Construction Industries, Inc., and Hubbard Construction Company who were the top three bidders in Area Ten. We will analyze Community’s, Ranger’s and Hubbard’s bidding practices when competing against each other to determine any suspicious bidding patterns and/or coordinated behavior amongst the vendors. SELECTED VENDORS ---------------------------COMMUNITY RANGER HUBBARD COMMUNITY RANGER HUBBARD --------------------------------------------94 .740 85 .904 44 .468 24 .255 22 .259 9 .205 85 26 44 5 .955 .306 .978 .114 89 .700 27 .303 41 5 .911 .122 41 14 45 6 .461 .341 .354 .133

COMMUNITY ASPHALT Community Asphalt submitted bids on 74% (94/127) of the contracts, and was awarded 24 contracts. Community Asphalt won 25% (24/94) of the contracts when bidding in Area Ten. COMMUNITY ASPHALT vs. RANGER CONSTRUCTION Community Asphalt submitted 85 bids against Ranger and won 22 contracts. Ninety percent of Community Asphalt’s bids were against Ranger with a win/bid ratio of .25. Community Asphalt won 25% (22/85) of the contracts when bidding against Ranger compared to Ranger winning 30% (26/85) of the contracts when bidding against Community Asphalt. COMMUNITY ASPHALT vs. HUBBARD CONSTRUCTION Community Asphalt submitted 44 bids against Hubbard and won nine contracts. Forty-six percent of Community Asphalt’s bids were against Hubbard with a win/bid ratio of .20. Community Asphalt won 20% (9/44) of the contracts when bidding against Hubbard compared to Hubbard winning 11% (5/44) of the contracts when bidding against Community Asphalt. RANGER CONSTRUCTION Ranger Construction submitted bids on 70% (89/127) of the contracts and was awarded 27 contracts. Ranger won 30% (27/89) of the contracts when bidding in Area Ten. RANGER CONSTRUCTION vs. COMMUNITY ASPHALT Ranger submitted 85 bids against Community Asphalt and won 26 contracts. Ninety-five percent of Ranger’s bids were against Community Asphalt with a win/bid ratio of .30. Ranger won 30% (26/85) of the contracts when bidding against Community Asphalt compared to Community Asphalt winning 25% (22/85) of the contracts when bidding against Ranger.

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RANGER CONSTRUCTION vs. HUBBARD CONSTRUCTION Ranger submitted 41 bids against Hubbard and won 14 contracts. Forty-six percent of Ranger’s bids were against Hubbard with a win/bid ratio of .34. Ranger won 34% (14/41) of the contracts when bidding against Hubbard compared to Hubbard winning 12% (5/41) of the contracts when bidding against Ranger. HUBBARD CONSTRUCTION Hubbard submitted bids on 35% (45/127) of the contracts and was awarded six contracts. Hubbard won 13% (6/45) of the contracts when bidding in Area Ten. HUBBARD CONSTRUCTION vs. COMMUNITY ASPHALT Hubbard submitted 44 bids against Community Asphalt and won five contracts. Ninety-seven percent of Hubbard’s bids were against Community Asphalt with a win/bid ratio of .11. Hubbard won 11% (5/44) of the contracts when bidding against Community Asphalt compared to Community Asphalt winning 20% (9/44) of the contracts when bidding against Hubbard. HUBBARD CONSTRUCTION vs. RANGER CONSTRUCTION Hubbard submitted 41 bids against Ranger and won five contracts. Ninety-one percent of Hubbard’s bids were against Ranger with a win/bid ratio of .12. Hubbard won 12% (5/41) of the contracts when bidding against Ranger compared to Ranger winning 34% (14/41) of the contracts when bidding against Hubbard. Findings: Our analysis shows that Community Asphalt and Ranger Construction bid against each other frequently. Community Asphalt submitted 90% (85/94) of the vendor’s bid against Ranger Construction compared to Ranger Construction submitting 95% (85/89) of the vendor’s bid against Community Asphalt. Hubbard Construction submitted 97% (44/45) and 91% (41/45) of the vendor’s bid against Community Asphalt and Ranger Construction respectively compared to Community Asphalt and Ranger Construction each submitting 46% of the vendor’s bid against Hubbard

VENDOR ACTIVITY MAP

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RANGER CONSTRUCTION COMPANY

The map below shows the counties where Ranger Construction Industries, Inc. bid, contracts awarded and asphalt facility locations from January 2005 through December 2009. Ranger was awarded 27 contracts in Indian River, Martin, Palm Beach and St. Lucie Counties. Ranger ordered 15 proposals, submitted 13 bids and was awarded one contract in Indian River County. Martin County shows Ranger ordered 16 proposals submitted 13 bids and was awarded five contracts. In Palm Beach County, Ranger ordered 52 proposals, submitted 44 bids and was awarded 16 contracts. Ranger ordered 20 proposals, submitted 20 bids and was awarded five contracts in St. Lucie County. Ranger owns one asphalt facility in St. Lucie and Palm Beach Counties.

Map 1
COMMUNITY ASPHALT CORPORATION

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The map below shows the counties where Community Asphalt Corporation bid, contracts awarded and asphalt facility locations from January 2005 through December 2009. Community was awarded 24 contracts in Indian River, Martin, Palm Beach and St. Lucie Counties. Community ordered 16 proposals, submitted 14 bids and was awarded eight contracts in Indian River County. Martin County shows Community ordered 15 proposals, submitted 13 bids and was awarded four contracts. In Palm Beach County, Community ordered 53 proposals, submitted 49 bids and was awarded 10 contracts. Community ordered 20 proposals, submitted 19 bids and was awarded two contracts in St. Lucie County. Community owns one asphalt facility in Indian River and Palm Beach Counties.

Map 2
HUBBARD CONSTRUCTION COMPANY

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The map below shows the counties where Hubbard Construction Company bid, contracts awarded and asphalt facility locations from January 2005 through December 2009. Hubbard was awarded six contracts in Palm Beach and St. Lucie Counties. Hubbard ordered eight proposals, submitted two bids and did not win a contract in Indian River County. In Martin County, Hubbard ordered 10 proposals, submitted six bids and did not win a contract. Palm Beach County shows Hubbard ordered 44 proposals, submitted 34 bids and was awarded five contracts. Hubbard ordered eight proposals, submitted three bids and was awarded one contract in St. Lucie County. Hubbard owns one asphalt facility in Palm Beach County.

Map 3
CONTRACTS ANALYSIS

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CONTRACTS LET BY CENTRAL & DISTRICT OFFICES

The contracts analysis shows the contracts that were let by Central and District offices (Area 10 and Statewide) from January 2005 through December 2009. Our analysis will include contracts that were let and awarded to Ranger Construction Company, Community Asphalt Corporation and Hubbard Construction Company. The table below shows Ranger, Community Asphalt and Hubbard were awarded over 66% of their contracts that were let by central office. Sixty-two percent of the contracts that were let in Area Ten were let by central office, and 38 % were let by district offices.
CONTRACTS LET IN AREA TEN

CENTRAL

DISTRICT

Vendor Ranger Construction Community Asphalt Hubbard Construction Area Ten Total

Contracts Percentage 20 74.07 21 87.50 4 66.67 81 63.78

Contracts Percentage 7 25.93 3 12.50 2 33.33 46 36.22

Table 9 The table below shows Ranger, Community Asphalt and Hubbard were awarded over 75% of their contracts that were let statewide by central office. Ranger Construction Company received 24% of their contracts that were let statewide by district offices. Community Asphalt and Hubbard received 19% and 22% respectively of their contracts that were let statewide by district offices. Sixty-eight percent of the contracts that were let statewide were let by central office and 32 % were let by district offices.

CONTRACTS LET STATEWIDE

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SUMMARY PURPOSE: This study has been prepared as a routine assignment to determine if there are possible indicators for bid rigging and/or bid collusion between Ranger Construction Industries, Inc., Community Asphalt Corporation, Hubbard Construction Company and other contractors in Area Ten (Indian River, Martin, Palm Beach and St. Lucie Counties). Our study period is from January 1, 2005 to December 31, 2009. FINDINGS: The Proposals and bids analysis show the three major vendors were very competitive in Palm Beach County, where Ranger submitted bids on 85% (44/52) of proposals ordered. Community Asphalt submitted bids on 92% (49/53) of proposals ordered, and Hubbard submitted bids on 77% (34/44) of proposals ordered. Our market share analysis indicates that Ranger, Community Asphalt and Hubbard were very competitive in Palm Beach County. Ranger received 52% ($92,581,561) of the vendor’s total awarded contract dollars and was awarded 16 contracts. Community Asphalt received 52% ($84,085,272) of the vendor’s total awarded contract dollars and was awarded 10 contracts. Hubbard received 62% ($41,049,930) of the vendor’s total awarded contract dollars and was awarded five contracts. Our vendor competition analysis shows that Community Asphalt and Ranger Construction bid against each other frequently. Community Asphalt submitted 90% (85/94) of the vendor’s bids against Ranger Construction compared to Ranger Construction submitting 95% (85/89) of the vendor’s bids against Community Asphalt. The level of competition in this area appears to be stable, which is evident in reference to the major contractors’ market share dollars and bid ratio (4.96) for Area Ten. The statewide bid ratio
CENTRAL DISTRICT

Vendor Contracts Percentage Contracts Percentage Ranger Construction 41 75.93 13 24.07 Community Asphalt 58 80.56 14 19.94 Hubbard Construction 37 77.08 11 22.92 State Wide Total 1,062 67.64 508 32.36 of 4.11 is lower than Area Ten’s (4.96) bid ratio, which indicates that the statewide level of competition is not as stable as Area Ten’s level of competition. This is primarily due to the number 15

of one and two-bid contracts that were awarded during the period of January 1, 2005 - December 31, 2009. CONCERNS: Based on our observations and analysis we would like to see Hubbard Construction Company become more competitive in Indian River and Martin Counties. RECOMMENDATION: We will continue to monitor this area to observe if there are indicators of bid collusion and/or evidence of coordinated behavior between Ranger Construction Industries, Inc., Community Asphalt Corporation, Hubbard Construction Company and other contractors’ bidding practices and construction activities in Area Ten. Based on our observations and analysis during this study there was no history and/or pattern of possible bid rigging or collusion among the major contractors and other contractors.

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