FLORIDA DEPARTMENT OF TRANSPORTATION CONTRACTS ADMINISTRATION OFFICE

MARKET ANALYSIS SECTION AREA SEVEN BID MONITORING AND MARKET ANALYSIS STUDY

Market Analysis Section Kwan-Li Ling Reviewed by: Nasser Pourfarzaneh September 25, 2010

CONFIDENTIAL
Per 337.168 F.S.

TABLE OF CONTENTS INTRODUCTION. SELECTION CRITERIA...... SELECT MODEL... 1 1-2 3

Proposal/Bid Analysis......................................................................................................................6 Single Bid Analysis..........................................................................................................................8 Market Share Analysis by Top Vendors........................................................................................10 Market Share Analysis by County..................................................................................................13 Charlotte County.............................................................................................................................14 Collier County................................................................................................................................14 Desoto County................................................................................................................................14 Glades County................................................................................................................................14 Hardee County................................................................................................................................14 Hendry County................................................................................................................................14 Highlands County...........................................................................................................................15 Lee County......................................................................................................................................15 Manatee County..............................................................................................................................15 Sarasota County..............................................................................................................................15 Okeechobee County........................................................................................................................15 Market Share Analysis by Year......................................................................................................16 Finding............................................................................................................................................18 Ajax Paving.....................................................................................................................................19 Better Roads....................................................................................................................................20 Apac-Southeast...............................................................................................................................21 Posen Construction.........................................................................................................................22 Prince Contracting..........................................................................................................................23 Cone & Graham..............................................................................................................................24 Findings..........................................................................................................................................25 Posen Construction.........................................................................................................................27 Prince Contracting..........................................................................................................................29 Cone & Graham..............................................................................................................................30 Contract Let By...............................................................................................................................31 ADDENDUM..28-29 SUMMARY... 30-31

INTRODUCTION This study monitors proposal and bidding patterns and performs market share analysis, vendor competition analysis and pricing analysis in Area Seven. The data was collected with specifications listed in Selection Criteria indicated below. SELECTION CRITERIA Area of Study: Manatee, Area Seven, a total of eleven counties (Charlotte, Collier, Desoto, Glades, Hardee, Hendry, Highlands, Lee,

Sarasota, Okeechobee). See Map 1. Contract Letting Date: Contract Types: Contract Letting Status: January 01, 2005 to December 31, 2009 All Construction and Traffic Operation contracts let by Central Office and Area Seven. All awarded contracts selected.

Contract Awarded Amount: > $250,000. BAMS/DSS Models: Other: Select Model, Market Share Model, Vendor Competition Model, Line Item Profile Model. Identifying asphalt facility locations by using LIMS Database report and telephone call to verify and update the most recent change of facility location together with in-house vendor maps, Microsoft Excel, DOT Application Software.

Map 1 4

SELECT MODEL Reports from the Select Model showed a total of 1175 proposals ordered, 626 bids submitted by vendors in Area Seven. It yielded a total of 180 awarded contracts with a total of $718,985,161 based on the sub-setting criteria for all eleven counties in Area Seven. Table 1 lists the total awarded contracts, total contract dollar amounts and percentages for each individual county in Area Seven. Awarde d Contra ct Numbe r (#)
16 19 9 9 13 6 9 31

County

Awarde d Contrac t Numbe r (%)

8.89% 10.56% 5.00% 5.00% 7.22% 3.33% 5.00% 17.22%

Awarded Contract Amount ($)

$44,192,598 $91,995,814 $24,789,342 $13,587,690 $26,225,741 $17,702,267 $17,051,304 $206,143,090

Awarded Contract Amount (%)

6.15% 12.80% 3.45% 1.89% 3.65% 2.46% 2.37% 28.67%

CHARLOTTE COLLIER DESOTO GLADES HARDEE HENDRY HIGHLANDS LEE

MANATEE SARASOTA OKEECHOBEE Total Statewide

37 24 7 180 1603

20.56% 13.33% 3.89% 100.00%

$131,045,805 $133,997,242 $12,254,268 $718,985,161 $10,883,212,919

18.23% 18.64% 1.70% 100.00%

Table 1 Manatee County received the most awarded contracts, 20.6% (37 contracts) of the entire Area Sevens total contracts. Lee County received the second highest awarded contracts, 17.22% (31 contracts). Sarasota County received the third highest awarded contracts, 13.3% (24 contracts). Lee, Sarasota, and Manatee were the counties received the highest awarded contract dollars, occupied 28.7%, 18.6%, and 18.2% respectively among Area Seven. The total 180 awarded contract number in Area Seven is 11.22% (180/1603) of statewide in this study period. The total $718,985,161 awarded contract dollar in Area Seven is 6.6% ($718,985,161/$10,883,212,919) of statewide.

Proposal/Bid Analysis Average proposals per contract and average bids per contract were calculated from the statewide level and the Area Seven level by computing the ratio of total proposals to total contracts and the ratio of total bids to total contracts. These calculation baselines were used to judge the vendor participation activity level on ordering proposals and submitting bids. Area Sevens average participation levels (6.5, 3.5) on proposal and bid respectively were slightly lower than the statewide average levels (7.3, 4.1). The vendor participation level is computed for each county in Area Seven. Table 2 shows detailed information of proposal, bid, contract number and ratio numbers associated with each county in Area Seven. Contract Number
16 19 9 9 13 6 9 31

Location
CHARLOTTE COLLIER DESOTO GLADES HARDEE HENDRY HIGHLANDS LEE

Proposals Ordered
103 144 55 69 110 60 57 181

Bids Received
57 76 30 42 43 29 23 104

Avg. Proposals per Contract

6.44 7.58 6.11 7.67 8.46 10.00 6.33 5.84

Avg. Bids per Contract

3.56 4.00 3.33 4.67 3.31 4.83 2.56 3.35

MANATEE SARASOTA OKEECHOBEE

37 24 7 180 1603

175 147 70 1175 11684

106 72 44 626 6599

4.73 6.13 10.00 6.53 7.29

2.86 3.00 6.29 3.48 4.12

AREA 7 STATEWIDE

Table 2 Manatee, Lee, Desoto, Sarasota and Highlands County had the lowest vendor participation rate in purchasing proposals, below statewide average and Area Seven average. Highlands, Manatee, Sarasota, Hardee, Desoto and Lee were below statewide and Area Seven average on vendor submitting bid. Graph 1 demonstrates each individual county in vendor participation on purchasing proposals by comparing to statewide average. It shows the counties above statewide average in proposal participation are Collier, Glades, Hardee, Hendry, and Okeechobee.

Graph 1 Graph 2 shows vendor participation in submitting bids by comparing county average to statewide average. Collier, Glades, Hendry, and Okeechobee were the counties above statewide average in vendor submitting bids.

Graph 2

Single Bid Analysis Area Seven had approximately 3% higher in single bid (not include design build contracts) compared to statewide. Average non-CDB single bid contract with contract awarded amount greater than $250,000 from year 2005 to 2009 statewide is 5.2% (83/1603) and in Area Seven is 8.3% (15/180). Table 3 shows where the non-design-build single bid contracts reside in each county of Area Seven. It explains why Charlotte, Desoto, Highlands, Lee, Manatee and Sarasota counties have lower bid to contract ratio compared to statewide average. NonCDB Single Single Bid Bid Contrac Contrac t t Number Number
6 1 3 1 3 0 1 0

Location
CHARLOTTE COLLIER DESOTO GLADES

HARDEE HENDRY HIGHLANDS LEE MANATEE SARASOTA OKEECHOBEE

1 1 4 6 5 4 1

0 0 3 4 1 3 0 15 83

AREA 7 STATEWIDE

33 140

Table 3 Ajax Paving was the top vendor winning the most non-CDB single bid contracts, a total of five, in Area Seven. Line graph 3 shows that year 2005 in Area Seven was approximately 10% and 20% higher than statewide in percentage of contract number average and contract awarded dollar amount average respectively. Gradually from year 2006 to 2009 the non-CDB single bid dropped down to near one percent.

Graph 3

MARKET SHARE Market Share Analysis by Top Vendors District Seven received a total of 180 contracts with a total of $718,985,161 awarded contract dollars (not including small contracts less than $250,000) from year 2005 to 2009. From number of awarded contracts and dollars Ajax Paving, Better Roads, Apac-Southeast, Posen Construction, Prince Contracting and Cone & Graham are the chosen top major vendors. Table 4 demonstrates the number of contracts these six top vendors worked on and percentage associated with each county.
Ajax Paving Counties
# contracts and % in County

Better Roads
# contracts and % in County

ApacSoutheast
# contracts and % in County

Posen Const
# contract s and % in County

Prince Contrg
# contracts and % in County

Cone & Graham

# contracts and % in County

Others
# contracts and % in County

Total
# contracts and % in County

CHARLOT TE

5 31.25 % 1 5.26 % 2 22.22

2 12.50 % 6 31.58 % 5 55.56

1 6.25%

8 50.00%

16 8.89%

COLLIER DESOTO

3 15.79% 1 11.11%

9 47.37% 1 11.11%

19 10.56% 9 5.00%

10

GLADES

% 1 11.1 % 1 7.69%

% 4 44.44 % 1 7.69% 1 16.67 % 3 33.33 % 4 12.90 % 2 15.3 8%

4 44.44% 9 69.23% 5 83.33% 1 11.11% 5 16.13% 7 18.92% 2 8.33% 3 9.68 % 1 2.7% 1 4.17% 1 2.7% 3 12.50% 4 44.44% 11 35.48% 17 45.95% 13 54.17% 5 71.43% 22 12.22% 3 1.67 % 2 0.56% 4 2.22% 88 48.89%

9 5.00% 13 7.22% 6 3.33% 9 5.00% 31 17.22% 37 20.56% 24 13.33% 7 3.89% 180 100.00 %

HARDEE

HENDRY HIGHLAN DS LEE MANATEE SARASOT A OKEECHO BEE Total 37 20.56 % 1 11.11 % 8 25.81 % 11 29.73 % 7 29.17 %

2 28.57 % 28 15.56 %

Table 4 Ajax Paving won a total of 37 contracts and $91,295,046 contract dollars in Area Seven; it was highest among selected major contractors. Better Roads received the second highest both in contract numbers and contract dollars, 28 contracts and $51,341,967. Apac-Southeast had third highest in contract number, 22, but awarded amount was less than Posen Construction. The detail awarded dollar amount and percentage of top major vendors and the other vendors associated with each county in Area Seven is showed in Table 5.
Ajax Paving
# contracts and % in County 15,908,8 90

Counties

Better Roads
# contracts and % in County 1,026,90 0

ApacSoutheast
# contracts and % in County

Posen Const
# contracts and % in County

Prince Contrg
# contracts and % in County

Cone & Graham

# contracts and % in County

Others
# contracts and % in County

Total
# contracts and % in County

CHARLOT TE COLLIER

36.0 0%
1

1,566,084

25,690,72 4

44,192,59 8

2.32%
20,107, 995

3.54%
5,476,508

58.13%
62,802,46 0

6.15%
91,995,81 4

3,608,85

3.9

2%

21.86%

5.95%

68.27%

12.80%

11

DESOTO GLADES HARDEE HENDRY HIGHLAN DS LEE MANATEE SARASOT A OKEECHO BEE Total

3,090,693

12.47%
837,862

67.56%
8,453,04 0

16,747,9 60

655,334

2.64%

4,295,355

17.33%

24,789,34 2 13,587,69 0

3.45% 1.89%

4,296,788

6.17%
5,265,915

62.21%
980,000

31.62%
3,538,000

20.08%

3.74% 3.83%

13.49%

16,441,82 6 17,024,52 0

62.69% 96.17%

26,225,74 1 17,702,26 7

3.65% 2.46%

677,747 11,277,7 75 15,841,2 47

573,240

3.36%

66.14% 7.68%

1,833,000

10.75%
66,856,89 5

3,367,289

40.60% 55.46%

17,051,30 4

2.37%

22,933,59 5

16,826,714

83,684,63 9 72,675,17 3 59,655,67 0

206,143,0 90

11.13%
17,077,88 0 21,998,12 0

8.16%
14,319,937

34.43%
23,534,107

28.67%
131,045,8 05

13.03% 16.42%
1,018,07 7

10.93% 5.32%

17.96%

3,438,708

2.62%

55.46% 44.52%

18.23% 18.64%

7,126,390

14,667,050

30,550,01 2

133,997,2 42 12,254,26 8

10.95%

22.80%

8.31%
51,341,967 66,856,89 5 38,201,157 33,988,72 0

11,236,19 1

91.69% 50.23%

1.70%

91,295,04 6

76,130,7 41

361,170,6 35

718,985,1 61

12.70%

10.59%

7.14%

9.30%

5.31%

4.73%

100.00%

Table 5 Ajax Paving, Better Roads, Apac-Southeast, Posen Construction, Prince Contracting and Cone & Graham received 12.7%, 10.6%, 7.1%, 9.3%, 5.3%, and 4.7% respectively of Area Seven contract dollars. Together these six top vendors worked on approximately half of Area Sevens market and the other vendors worked on the other half. Graph 4 shows the market condition, demonstrating strong competition between non-major and major vendors.

Market Shares Total Dollars in Area Seven

Contract Awarded Amount > $250,000 Year 2005 2009

12

Graph 4 Graph 5 shows Better Roads standing out in Desoto, Glades and Highlands counties, greater than 60% of total dollars in each county. Ajax Paving did well in Charlotte, Hardee, Sarasota, Manatee and Desoto Counties. Apac-Southeasts businesses spread over eight counties with smaller percentages of total dollars. Posen Construction was only working in one county, Lee.

Graph 5 Market Share Analysis by County

13

Charlotte County Ajax Paving, Apac-Southeast, and Better Roads received 36%, 3.5% and 2.3% respectively of awarded contract dollars in Charlotte County. Together these three major contractors occupied 42% of the market in Charlotte County and the other contractors shared the remaining 58%. This county had three non-CDB single bid contracts out of a total of 16 contracts they received. It shared 6% of dollar market in Area seven. Collier County Collier County received 12.8% of the dollar market in Area Seven, a total of $91,995,814. Better Roads, Apac-Southeast and Ajax Paving had 22%, 6% and 4% respectively in awarded contract dollars. They received 32% of entire Collier Countys market, a total of $29,193,354 contract dollars. Desoto County Desoto County only occupied 3.5% of Area Sevens dollar market, a total of $24,789,342 contract dollars. Better Roads, Ajax paving, and Apac-Southeast were the top vendors who received 67.6%, 12.5%, and 2.6% of Desoto County contract dollars respectively. These three top vendors together occupied a total of 83% and the other vendors had 27% of market in Desoto County. Glades County Glades County received the second lowest contract dollars in Area Seven, 2%, a total of $13,587,690 contract dollars. Two major contractors, Better Roads and Ajax Paving, worked on 62%, 6% respectively of contract dollars in this county. Hardee County Hardee was one of smallest counties sharing 3.7% of contract dollars in Area Seven, a total of $26,225,741 contract dollars. Ajax Paving, Apac-Southeast and Better Roads received 20%, 14%, and 4% contract dollars respectively. These three major contractors had a total of 37% of market; the other contractors shared a total of 63% in Hardee County.

Hendry County

14

Hendry was one of smallest counties sharing 2.5% of contract dollars in Area Seven, a total of $17,702,267 contract dollars. Better Roads was the only major contractor receiving 3.8% of contract dollars in this county. Highlands County Highlands was one of smallest counties sharing 2.4% of contract dollars in Area Seven, a total of 17,051,304 contract dollars. Top vendors, Better Roads, Apac-Southeast and Ajax Paving occupied the majority of dollar market, 80%, in this county. Lee County Lee County received the highest percentage of contract dollars in Area Seven, 29%. Posen Construction, Ajax Paving, Apac-Southeast and Better Roads had 32.4%, 11.1%, 8.2%, and 7.7% respectively of dollar market in this county. These four top vendors occupied 59% and the other vendor had 41% of Lee County market. Manatee County Manatee County received the third highest percentage of contract dollars in Area Seven, 18.2%. Prince Contracting, Ajax Paving, Apac-Southeast and Cone & Graham were the major players in this county. They occupied 44.5% of market and the other vendors had 55.5%. Sarasota County Sarasota County received the second highest percentage of contract dollars in Area Seven, 18.6%. Cone & Graham, Ajax Paving, Prince Contracting, Apac-Southeast had 22.8%, 16.4%, 11.0%, and 5.3% contract dollars respectively in this county. Together these four top vendors had 55.5% and the other vendors had 44.5% of markets. Okeechobee County Okeechobee received the smallest percentage in contract dollars of Area Seven, 1.7%. Better Roads was the only top vendor working on 8.3% of contract dollars, the other vendors had 91.7% in this county.

15

Market Share Analysis by Year

None of these six major vendors dominated Area Sevens market; Graph 6 demonstrates the dynamic market shares with percentage contract awarded dollar amount by year. It shows that the market was very competitive. There was no sign of business track impacting by new vendor entering the market.

Graph 6 Better Roads business was going down while Ajax Paving, Apac-Southeast and Posen Constructions business were going up. It is alarming that Ajax Paving and Apac-Southeast were non-competitive.

16

VENDOR COMPETITION In this section we analyze how top vendors compete with each other. The top vendors in Area Seven were chosen by highest contract numbers and contract dollars that they received. Vendor competition matrix report provides the information on who were the top vendors, how often top vendors submitted bids, what were the success rates on those bids they submitted, how often the competitors bid together and what were their success rates together. VENDOR COMPETITION MATRIX
SUPPLEMENTED WITH TOP VENDORS RANKED BY CONTRACT # and $

SELECTED VENDORS

AJAX PAVING

BETTER ROADS

APACSOUTHEAST

POSEN CONST

PRINCE CONTR

CONE & GRAHAM

AJAX PAVING BETTER ROADS APACSOUTHEAST POSEN CONST PRINCE CONTR CONE & GRAHAM

92 37 42 16 60 18 6 2 2 1 5 2

0.51 0.40 0.68 0.38 0.79 0.30 0.60 0.33 0.40 0.50 0.28 0.40

42 11 62 28 38 9 5 1 1 0 0 0

0.46 0.26 0.34 0.45 0.50 0.23 0.50 0.20 0.20 0.00 0.00 0.00

60 23 38 12 76 22 5 1 2 0 5 1

0.65 0.38 0.61 0.32 0.42 0.29 0.50 0.20 0.40 0.00 0.28 0.20

6 1 5 1 5 0 10 3 2 0 2 0

0.06 0.17 0.08 0.20 0.07 0.00 0.06 0.30 0.40 0.00 0.11 0.00

2 0 1 0 2 0 2 2 5 2 0 0

0.02 0.00 0.02 0.00 0.03 0.00 0.20 1.00 0.03 0.40 0.00 0.00

5 0 0 0 5 2 2 0 0 0 18 4

0.05 0.00 0.00 0.00 0.07 0.40 0.20 0.00 0.00 0.00 0.10 0.22

Diagonally the vendor competition matrix above shows top vendors: Ajax Paving submitted 92 bids and won 37 contracts; Better Roads submitted 62 bids and won 28 contracts; Apac-Southeast submitted 76 bids and won 22 contracts; Posen Construction submitted 10 bids and won 3 contracts; Prince Contracting submitted 5 bids and won 2 contracts; Cone & Graham submitted 18 bids and won 4 contracts. Ajax Paving, number one top vendor, submitted the most bids and won most contracts. It shows that the top vendors winning contract rates were Ajax Paving 40%, Better Roads 45%, Apac-Southeast 29%, Posen Construction 30%, Prince Contracting 40% and Cone &

17

Graham 22%. Better Roads was the best performer on winning contracts, 45%. Ajax Paving and Prince Contracting both were the second best performer, 40%. It also shows that the frequency of submitting bids were Ajax Paving 51%, Better Roads 34%, Apac-Southeast 42%, Posen Construction 6%, Prince Contracting 3% and Cone & Graham 10% on those contracts (180) being worked in Area Seven. Off-diagonal elements in the vendor competition matrix show the frequency with which each vendor competes with its rivals. Both Ajax Paving and Better Roads submitted 42 bids in the same contracts. Ajax Paving won 11 contracts and Better Roads won 16 contracts. If both teamed up, their success rate of winning a contract was 64%. Ajax Paving and Apac-Southeast submitted a total of 60 bids together in the same contracts; Ajax Paving won 23 contracts (38%) and Apac-Southeast won 18 contracts (30%). If both of them teamed up, their chance of winning a contract was 68%. Ajax Paving and Posen Construction were bidding in the same contract six times. Ajax Paving won one contract and Posen Construction won 2 contracts. If both of them team up, their chance of winning a contract was 50%. Ajax Paving and Prince Contracting were bidding in the same contract two times, both times won by Prince Contracting. If both of them teamed up, their chance of winning a contract was 40%. Ajax Paving and Cone & Graham were competing in 5 contracts. Ajax Paving did not win any contract and Cone & Graham won two contracts. If both of them teamed up, their chance of winning a contract was 40%. Better Roads and Apac-Southeast were bidding together in 38 contracts. Better Roads won 12 contracts and Apac-Southeast won 9 contracts. If both of them teamed up, their chance of winning a contract was 65%. Apac-Southeast and Cone & Graham were competing in 5 contracts. Apac-Southeast won two contracts (40%); Cone & Graham won one contract (20%). If both of them teamed up, their chance of winning a contract was 60%.

Finding Apac-Southeast was 79% (60/76) bidding against Ajax Paving. Ajax Paving was 65% (60/92) bidding against Apac-Southeast. Apac-Southeast and Ajax Paving had a high frequency of bidding against each other.

18

VENDOR ACTIVITY MAPS In this section we analyze the top vendors facilities location associating with the number of contracts they won and lost in Area Seven. Yellow color represents the vendor won contracts; while red color shows only lost contracts. Facility locations are shown by F letter with green color. Ajax Paving Ajax Paving received a total of 37 contracts, a number one top contractor in Area Seven. They have a total of four facilities in Area Seven. They located in Charlotte19, Parg , Lee, Manatee, and Sarasota Counties. Ajax Paving did not submit any bids in Okeechobee County. They did not win any contracts in Hendry County. They submitted the most bids, won the most contracts, and lost the most contracts in Manatee County.

Area Seven Ajax Paving

Year 2005 - 2009

Map 2 19

Better Roads Better Roads won a total of 28 contracts, ranked number 2nd among major contractors. They have a total of three facilities in Area Seven. These facilities are located in Charlotte, Collier, and Highlands Counties. They submitted and won the most contracts in Collier County. They did not submit any bids in Manatee and Sarasota Counties. They submitted the most bids and won the most contracts in Collier County. They did not lose any contracts in Highlands County.

Area Seven Better Roads

Year 2005 - 2009

Map 3

20

Apac-Southeast Apac-Southeast is ranked the third major contractor for the number of contracts they won (22) in Area Seven. They have a total of three facilities in Area Seven, one in Collier, one in Highlands and one in Sarasota County. They did not submit any bids in Hendry County. They submitted the most bids, won the most contracts and lost the most contracts in Manatee County. They did not win any contracts in Glades and Okeechobee Counties.

Area Seven Apac-Southeast

Year 2005 - 2009

Map 4

21

Posen Construction Posen Construction is chosen as the 4th major contractor for the number of contracts they won and contract dollars they received in Area Seven. They did not have any facility in Area Seven. They won three contracts in Lee County. They did not submit any contracts in Collier, Highlands, Okeechobee and Sarasota Counties. They did not win any contracts in Charlotte, Desoto, Glades, Hardee, Hendry, and Manatee Counties.

Area Seven Posen Construction

Year 2005 - 2009

Map 5

22

Prince Contracting Prince Contracting received 38 million contract dollars on two contracts they won. They are chosen as the 4th major contractor. They did not have a facility in Area Seven. They only submitted contracts in Lee, Manatee and Sarasota Counties. They won one contract in Manatee and one in Sarasota. They did not win any contracts in Lee County.

Area Seven Prince Contracting

Year 2005 - 2009

Map 6

23

Cone & Graham Cone & Graham won 33 million contract dollars on four contracts. They are chosen as the 5th major contractor in Area Seven. Cone & Graham do not have any facilities in Area Seven. They did not win any contracts in Charlotte, Collier, Glades, and Hardee County. They submitted the most bids and won the most contracts in Sarasota County.

Area Seven Cone & Graham

Year 2005 - 2009

Map 7

24

Findings Top vendor Posen Construction, Prince Contracting and Cone & Graham do not have facilities in Area Seven. These three vendors all received large size contracts and they rely on the vendor who own facilities to do asphalt work. We found these three top vendors all hire Ajax Paving as subcontractor in Lee and Sarasota Counties where Ajax Pavings facilities reside. We also found that Cone & Graham subcontract to Apac-Southeast in Sarasota County where Apac-Southeast owns a facility.

25

SUBCONTRACT ANALYSIS Both Ajax Paving and Apac-Southeast were primary bidder and subcontractor for the contract winner. Table 6 lists detailed information of involving contracts and low bidders. Awarded Let Date Contract Amount ($)
06/17/2009 04/29/2009 05/24/2006 10/30/2008 $29,755,075 $14,667,050 $18,839,427 $3,417,313

Contra ct ID
T1329 T1322 T1173 E1G79

County

Low Bidder
Posen Construction Prince Contracting Cone & Graham Cone & Graham

Subcontrac tor
Ajax Paving Ajax Paving Ajax Paving Apac-Southeast

Sub Contrac t Amount ($)

$3,460,990 $3,320,470 $5,448,935 $177,679

LEE SARASOTA SARASOTA SARASOTA

Table 6 It can be a part of bid-rigging scheme that Ajax Paving frequently submitted losing bids in exchange for subcontracts. Further investigation is an essential.

26

PRICE ANALYSIS From the previous Subcontract Analysis section we learn that top vendor Ajax Paving lost in primary bids and were hired as subcontractor three times in this study period. Bid tabs of asphaltic concrete items which Ajax Paving worked on as subcontractor of these three contracts, T1329, T1322, T1173, are analyzed. Posen Construction Ajax Paving received 12.2% ($3,620,646) of awarded contract dollars as subcontractor from low bidder Posen Construction. It was within 60% of legal maximum subcontract amount for contract T1329. Table 7 lists all asphalt concrete items unit price, quantity and sub-total bid amount on the item that Ajax Paving submitted on primary contract (data came from DSS bid tabs file) and worked as subcontractor (data came from sublet paper) for low bidder Posen Construction on contract T1329.
T1329

Item No.

T1329

Prima ry Bid Qty

Posen Prima ry Unit Price

$69.80 $57.33 $100.6 5 $113.0 1 $68.33 $86.81 $168.2 2 $88.31 $102.3 1

Posen Primar y Bid Amoun t

$89,288 $1,299,5 62 $8,434 $7,154 $1,262,1 85 $471,38 7 $5,989 $234,40 1 $40,013 $3,418,4 14

Ajax Prima ry Unit Price

$68.30 $60.95 $96.00 $94.50 $72.80 $106.9 0 $92.80 $89.40 $77.00

Ajax Primar y Bid Amoun t

$87,369 $1,381,6 21 $8,045 $5,982 $1,344,7 54 $580,47 8 $3,304 $237,29 4 $30,115 $3,678,9 62

Ajax Subcon Bid Qty

1,279 22,668 84 63 18,472 5,430 36 2,654 391

Ajax Subcon Unit Price

$66.56 $58.31 $92.88 $90.75 $69.81 $102.93 $90.09 $86.09 $74.10

Ajax Sub-con Bid Amount

0334 11 0334 14 0334 22 0334 23 0334 24 0337 22 0337 43 0337 45 0339

1 1 1 1 1 7 7 7 1

1,279 22,668 84 63 18,472 5,430 36 2,654 391

$83,864 $1,321,7 77 $7,783 $5,744 $1,289,5 23 $558,920 $3,207 $228,509 $28,980 $3,528,3 09

Total

Table 7 27

Posen Construction did not have an asphalt facility, but their total bid price on asphalt concrete items was $260,548 (compared $3,418,414 to $3,678,962 on Table 7) less than Ajax Paving. Meanwhile they were willing to pay more on their subcontract ($3,528,309) than their primary bid ($3,418,414) on these asphalt concrete items. It is hard to accept the concept. Note: Sublet paper and Site Manager t_subcont_itm not matching on Table 7 items. Posen Construction bid tabs items on Table 7 were matching with Site Manager t_suncont_itm. It is being verified with the district to find out what is going on. Say sublet paper is wrong and Site Manager t_subcont-itm data is correct. Ajax Paving is still subjected to a question: did they intentionally bid high to lose in primary? Ajax Pavings primary bid price for all asphalt concrete items on Table 7 was $3,678,962 which was $150,653 higher than $3,528,309 that they received for T1329 as subcontractor.

28

Prince Contracting Prince Contracting was a low bidder for contract T1322 without a facility in the near area. Their primary bidding on asphalt concrete sub-total ($2,627,525) was higher than Ajax Pavings primary bidding ($2,404,720). It made sense since they did not have a facility. Ajax Paving was not low bidder on contract T1322. They were hired by Prince Contracting later as subcontractor. Table 8 shows that Ajax pavings sub-total on asphalt concrete as subcontractor was identical to Prince Contracting sub-total in primary bidding. It shows Prince Contracting and Ajax Paving having identical bids because they knew each others prices. It is normal for primary vendor to obtain subcontractors prices before bidding on primary contract.
T1322

Item No.

Prince Primar Prim y Unit Bid Price Qty

T1322
2,051.0 4,510.0 10,369. 0 13,242. 0 11,859. 4 8,289.3 27.0 $45.00 $55.00 $3.50 $2.20 $110.0 0 $110.0 0 $200.0 0

Prince Primary Bid Amount

$92,295 $248,050 $36,292 $29,132 $1,304,5 34 $911,823 $5,400 $2,627,5 25

Ajax Prim Unit Price

$39.0 1 $47.9 7 $3.19 $1.83 $101. 64 $101. 04 $300. 56

Ajax Primary Bid Amount

$80,010 $216,345 $33,077 $24,233 $1,205,3 89 $837,551 $8,115 $2,404,7 20

Ajax Subco n Bid Qty

2,051.0 4,510.0 10,369. 0 13,242. 0 11,859. 4 8,289.3 27.0

Ajax Subco n Unit Price

$45.00 $55.00 $3.50 $2.20 $110.0 0 $110.0 0 $200.0 0

Ajax Subcon Bid Amount

$92,295 $248,050 $36,291 $29,132 $1,304,5 34 $911,823 $5,400 $2,627,5 25

0285 7 12 0285 7 15 0327 70 4 0327 70 6 0334 1 23 0337 7 43 0339 1

Total

Table 8

29

Ajax Paving primary bid prices of sub-total ($2,404,720) on asphalt concrete items were $222,805 less than subcontracts sub-total ($2,627,525). We did not see a problem in this case.

Cone & Graham Cone & Graham was a low bidder for two bidder contract T1173 without an asphalt facility near the area. They hired contract T1173 primary bidder Ajax Paving as subcontractor to do asphalt concrete work. Table 9 lists subcontract asphalt concrete bid items between Cone & Graham primary bid and Ajax Paving primary and subcontract bids.
T1173 T117 3

Item No.

Prim ar Bid Qty

Cone & Prima ry Unit Price

$184,0 00 $43.00 $39.00 $90.00 $13.85 $89.25 $117.5 5 $200.0 0

Cone & Primar y Bid Amoun t

$184,00 0 $877,54 4 $876,95 4 $17,910 $9,251 $1,630,5 17 $1,266,4 48 $210,06 0 $5,072,6 85

Ajax Prima ry Unit Price

$128,4 25 $32.30 $33.03 $56.95 $13.86 $89.39 $117.7 3 $158.8 5

Ajax Primar y Bid Amoun t

$128,42 5 $659,17 8 $742,71 2 $11,333 $9,258 $1,633,0 74 $1,268,3 87 $166,84 0 $4,619,2 11

Ajax Subco n Bid Qty

1,150 20,408 22,486 199 668 18,269 10,773 1,050

Ajax Subco n Unit Price

$135.0 0 $33.00 $32.00 $60.00 $13.85 $89.25 $117.5 5 $160.0 0

Ajax Subcon Bid Amount

0102 2 1 0285701 0285709 0286 1 0327 70 12 0334 1 12 0337 7 20 0339 1

1 20,40 8 22,48 6 199 668 18,26 9 10,77 3 1,050

$155,250 $673,464 $719,552 $11,940 $9,251 $1,630,51 7 $1,266,44 8 $168,048 $4,634,4 71

Total

30

Table 9 There are three items having identical unit price and bid amount on Cone & Graham primary bid and Ajax Paving subcontract bid. This indicates that Cone & Graham and Ajax Paving knew each others prices. It is normal for primary vendor to obtain subcontractors prices before bidding. Ajax Paving primary bid prices of sub-total ($4,619,211) on asphalt concrete items were $15,260 less than subcontracts sub-total ($4,634,471). We did not see problem in this case.

ADDENDUM Contract Let By All contracts were let by either central office or district. This section studies top vendor Ajax Paving, Better Roads and Apac-Southeast where contracts let location compared with Area Seven and Statewide. Table 10 shows the number of contracts and percentages let by Central office and District in Area Seven. Contract Let in Area Seven Central Office District Contract Percenta Contract Percenta # ge # ge
32 21 17 133 86.5% 75.0% 79.3% 73.9% 5 7 5 47 13.5% 25.0% 22.7% 26.1%

Vendor Ajax Paving Better Roads ApacSoutheast Area Seven Total

31

Table 10 Table 11 shows the number of contracts and percentages let by Central office and District in statewide. Contract Let in Florida Statewide Central Office District Contract Percenta Contract Percenta # ge # ge
49 21 105 1063 77.8% 75.0% 73.4% 66.3% 14 7 38 540 22.2% 25.0% 26.6% 33.7%

Vendor Ajax Paving Better Roads ApacSoutheast FL Statewide Total

Table 11 From Table 10 and 11 we learn that Ajax Paving had 58.7% of business in Area Seven. Better Roads received all their contracts in Area Seven. Apac-Southeast only got 15.4% of contracts in Area Seven. Table 12 shows the contract awarded amount and percentages let by Central office and District in Area Seven. Both top vendors Ajax Paving and Better Roads had 96% and 94% respectively of contract awarded dollar amount let by central office, whereas Apac-Southeast only had 71% let by central office. Contract Let in Area Seven Central Office District Contract Percenta Contract Percenta $ ge $ ge
87,815,81 7 71,749,74 6 36,328,73 8 547,370,0 47 96.19% 94.25% 70.76% 76.13% 3,479,227 4,380,995 15,013,22 7 171,615,1 14 3.81% 5.75% 29.24% 23.87%

Vendor Ajax Paving Better Roads ApacSoutheast Area Seven Total

Table 12 Table 13 shows the contract awarded amount and percentages let by Central office and District in Florida Statewide. Both top vendors Ajax Paving and Better Roads had 80% and 94% 32

respectively of contract awarded dollar amount let by central office, whereas Apac-Southeast only had 68% let by central office in Florida statewide. Contract Let in Florida Statewide Central Office District Contract $ Percenta Contract $ Percenta ge ge
170,517,780 71,496,004 516,961,547 10,883,212, 919 79.75% 94.23% 67.69% 72.80% 43,299,924 4,380,995 246,773,53 6 4,066,533, 530 20.25% 5.77% 32.31% 27.20%

Vendor Ajax Paving Better Roads ApacSoutheast FL Statewide Total

Table 13

SUMMARY This study analyzes business activity using Select model collecting data from Area Seven during period years 2005 to 2009. Area Seven covers all counties in District One except Polk County. There were a total of 1175 proposals being ordered, 626 bids submitted and 180 contracts awarded with $718,985,161 dollars. Lee, Sarasota and Manatee were the largest counties and occupied a total of 66% of awarded contract dollars in Area Seven. From the Proposal and bid analysis section we learn that these three counties were also where the low bidder contracts resided. 33

Area Seven single bid contracts (18.3%) were 10% higher than statewide (8.7%) in this study period. But non-design-build single bid contracts were only 3% higher than statewide. Ajax Paving, Apac-Southeast and Better Roads were the vendors winning the most single bid contracts, 7, 3, 3 respectively. Ajax Paving was the only top vendor that earned most non-design-build single bid contracts, a total of five. Non-design-build single bid contracts dropped near 1% after year 2006 in Area Seven. Ajax Paving, Better Roads, Apac-Southeast, Posen Construction, Prince Contracting and Cone & Graham were the chosen major top vendors. Major and non-major vendor each occupied half of the market in Area Seven. Dynamic market Analysis by year shows that Ajax Paving and Apac-Southeast were noncompetitive. Meanwhile vendor competition reveals Ajax Paving and Apac-Southeast bidding together more than 65% of the time. Vendor activity map section shows that Ajax Pavings facilities reside in Manatee, Sarasota, Charlotte and Lee Counties where their business was most active. Top vendors Posen Construction, Prince Contracting and Cone & Graham did not have facilities in Area Seven and subcontracted Ajax Paving and Apac-Southeast for their asphalt concrete work. Posen Construction was most active in Lee County. Prince Contracting and Cone & Graham were most active in Manatee and Sarasota Counties. Subcontract analysis section demonstrates that Ajax Paving and Apac-Southeast both were primary bidder and subcontractor for low bidders. Apac-Southeast received one small project (less than $200,000) as subcontractor from Cone & Graham. We skip analyzing their asphalt concrete bid tab items and only focus on Ajax Paving who was primary bidder and subcontractor for low bidders three times. Price Analysis section reveals that three primary winners, Posen Construction, Prince Contracting, and Cone & Graham subcontracted to primary loser Ajax Paving Posen Construction was low bidder for contract T1329. Posen Construction was paying $109,895 more on subcontract in asphalt/concrete items to Ajax Paving than their primary bid. It showed that there might be more sinister activities behind the scene. Note: there are possible errors on sublet paper because they are not matching with Site Manager subcontract data on asphalt/concrete items. It is now under process of verification by district. Prince Contracting was low bidder for contract T1322 and they hired one of their primary competitors, Ajax Paving, as subcontractor. Identical bid price on asphalt concrete items between Prince Contracting primary bidding and their subcontractor Ajax Paving subcontract bidding showed that they had agreement in prices. It is normal for primary contractor obtaining prices from subcontractor. Cone & Graham was low bidder for two bidders contract T1173 and they hired their only primary competitor, Ajax Paving, as subcontractor. They did not have a facility, but their bidding

34

prices on major asphalt concrete items, 0327, 0334, 0337, were lower than Ajax Paving who owns facilities. Identical bid price on major asphalt concrete items between Cone & Graham primary bidding and their subcontractor Ajax Paving subcontract bidding showed that they had agreement in prices. In this study we found four cases in which competitors assign subcontracts to each other. Collusion occurring among contractors often takes the form of agreements whereby competitors assign each other a subcontract. To prevent this happening we recommend that DOT further inquire into these possible troubled vendors identified in this study to provide adequate justification.

35