FLORIDA DEPARTMENT OF TRANSPORTATION

CONTRACTS ADMINISTRATION OFFICE

MARKET ANALYSIS SECTION

AREA EIGHT BID COLLUSION DETECTION STUDY

Cedric J. Thomas Reviewed by: Nasser Pourfarzaneh OCTOBER 15, 2010

CONFIDENTIAL PER 337.168 F. S.

TABLE OF CONTENTS
INTRODUCTION ...1

Select Criteria...1
PROPOSALS/BID ANALYSIS

Vendors Proposals and Bids........2 Proposals and Bids by County..........3

BID RATIO ANALYSIS

Area Eight Bid Ratio by County.......4 State Wide Bid Ratio.....4

MARKET SHARE ANALYSIS

Total Market Share Awarded Contract Dollars5 Awarded Contract Dollars by County.......5 Contracts Worked by County....6-7 Area Eight vs. State Wide Market Share...8
VENDOR COMPETITION ANALYSIS

Apac-Southeast vs. Hubbard and Superior........9 Hubbard vs. Superior and Apac-Southeast....................10 Superior vs. Apac-Southeast and Hubbard....10
VENDOR ACTIVITIES MAPS (BIDS & WINS by COUNTY)

Superior Construction Company...11 Hubbard Construction Company ......12 Apac-Southeast, Inc...13

CONTRACTS ANALYSIS ......14 SUMMARY. ...........15

INTRODUCTION

This study focuses on Superior Construction Company, Apac-Southeast, Inc. and Hubbard Construction Companys bidding patterns and construction activities from January 1, 2005 to December 31, 2009. Our objective is to determine if there are possible indicators for bid rigging and/or bid collusion between Superior, Apac-Southeast, Hubbard and other contractors. SELECTION CRITERIA Area (counties): Letting Date: Contract Types: Letting status: Selected Vendors: Duval, Flagler, Nassau, Putnam and St. Johns. January 1, 2005 to December 31, 2009. All Construction and Traffic Operations contracts let by Central and District Offices. Awarded contracts selected. Superior Construction Company, Apac-Southeast, Inc. and Hubbard Construction Company.

BAMS/DSS Models: Select, Contract profile, Line Item, Market Share and Vendor Competition. 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 113 contracts and $735,936,742 were awarded to Superior Construction Company, Apac-Southeast, Inc., Hubbard Construction Company and other vendors during a period of January 1, 2005 to December 31, 2009.

PROPOSALS & BIDS ANALYSIS

The table below shows the number of proposals ordered, bids submitted, and contracts awarded to Superior Construction Company, Hubbard Construction Company and Apac-Southeast, Inc. The top vendors submitted bids on 74% (116/156) of the proposals ordered and were awarded 37 contracts. The other vendors submitted bids on 48% (390/817) of the proposals ordered and were awarded 76 contracts. The vendors together submitted bids on 52% (506/973) of the proposals ordered and were awarded 113 contracts.
VENDORS PROPOSALS & BIDS

Vendor Superior Construction Hubbard Construction Apac-Southeast, Inc. Total (Major Vendors) Other Vendors Total (All Vendors)

Proposals Ordered 31 67 58 156 817 973

Bids Submitted 26 43 47 116 390 506

Contracts Awarded 11 11 15 37 76 113

% of Bids vs. Proposals 84 64 81 74 48 52

Table 1 BID RATIO ANALYSIS

The tables below show the bid ratio by county for Area Eight and the statewide bid ratio. Flagler County has the highest bid ratio of 6.00; however this is not an indicator of competitive bidding due to the low number of contracts (5) awarded during the five year period from January 2005-December 2009. Putnam County has the lowest bid ratio of 3.00, which shows that the level of competitive bidding is average due to the number of two and three-bid contracts that were awarded. Area Eight has a bid ratio of 4.48, which shows that the area has a stable level of competitive bidding.

AREA 8 BID RATIO by COUNTY

COUNTY

BIDS

CONTRACTS

BID RATIO

Duval Flagler Nassau Putnam St. Johns Area 8

274 30 42 39 121 506 Table 3

62 5 11 13 22 113

4.42 6.00 3.82 3.00 5.50 4.48

STATE WIDE BID RATIO

STATE WIDE TOTAL

BIDS

CONTRACTS

BID RATIO

6,600

1,603

4.11

Table 4

Findings: The state wide bid ratio of 4.11 is slightly lower than Area Eights (4.48) bid ratio, which indicates that the statewide level of competition is better than average, but not as stable compared to Area Eights 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

The Market Share analysis is based on the three major contractorss awarded contract dollars in Duval, Flagler, Nassau, Putnam and St. Johns counties. The table below shows Superior Construction Company was awarded 11 contracts and received $228,130,642 (31%) of the total awarded contract dollars. Hubbard Construction Company and Apac-Southeast, Inc. were awarded 11 and 15 contracts respectively, and received $103,397,091 and $88,498,161 of the total awarded contract dollars respectively. The other vendors received $315,910,848 (42.94%) of the total awarded contract dollars and were awarded 76 (67.27%) contracts.

MARKET SHARE (AWARDED DOLLARS)

Table 5

Name

Dollar Amount $228,130,642 $103,397,091 88,498,161 $420,025,894 $315,910,848 $735,936,742

Percent of Dollar Amount 31.00 14.04 12.02 57.06 42.94 100

No. of Contracts 11 11 15 37 76 113

Percent of Contracts 9.73 9.73 13.27 32.73 67.27 100

Superior Construction Hubbard Construction Apac-Southeast, Inc. Major Vendors Total Other Vendors TOTAL

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

SUPERIOR CONST.

HUBBARD CONST.

APACSOUTHEAST

OTHER VENDORS

TOTAL

Dollars

P c t. 38.06 50.79 6.95

Dollars

P c t. 18.62 11.42 2.88

Dollars

P c t. 4.64 12.23 60.83 15.12

Dollars

P c t. 38.68 100 25.56 39.17 75.05

Dollars

Duval Flagler Nassau Putnam St. Johns

TOT AL

$196,734,465 $27,332,148 $4,064,029 $228,130,642

$95,565,997 $6,144,665 $1,686,429 $103,397,091

$23,809,976 $6,582,672 $49,263,958 $8,841,555 $88,498,161

$197,177,235 $29,391,432 $13,745,889 $31,721,035 $43,875,257 $315,910,848

$513,287,673 $29,391,432 $53,805,374 $80,984,993 $58,467,270 $735,936,742

Table 6

CONTRACTS WORKED BY COUNTY

SUPERIOR Count y HUBBARD APAC-S.E., INC. OTHER VENDORS TOTA L

Cont racts

P c t . 1 1 1 8 9 .

Cont racts

P c t. 1 2 1 8 4 .

Cont racts

P c t . 8 . 1 8 3 0 1 8

Cont racts

Pc t.

Contr acts

Duval Flagler Nassau Putnam St. Johns

TOTA L

7 2 2 11

8 2 1 11

5 2 4 4 15

42 5 5 9 15 76

67 .7 10 0 45 .4 69 .2 68 .1

62 5 11 13 22 113

Table 7

Duval County Superior Construction Company dominated the market share in Duval County, working on seven (11.29%) contracts and receiving $196,734,465 (38.06%) of the awarded contract dollars. Hubbard Construction Company received $95,565,997 (18.62%) of the awarded contract dollars and worked on eight (12.9%) contracts. Apac-Southeast, Inc. received $23,809,976 (4.64%) of the awarded contract dollars, and worked on five (8.06%) contracts. The other contractors received $197,177,235 (38.68%) of the awarded contract dollars and worked on 42 (67.75%) contracts. Sixty-two contracts were awarded and $513,287,673 was expended in Duval County.

Flagler County There were no major contractors active in Flagler County. The other contractors received $29,391,432 (100%) of the awarded contract dollars and worked on five contracts. Nassau County Three major contractors were active in Nassau County. Superior received $27,332,148 (50.79%) of the awarded contract dollars and worked on two (18.18%) contracts. Hubbard received $6,144,665 (11.42%) of the awarded contract dollars and worked on two (18.18%) contracts. Apac-Southeast received $6,582,672 (12.2%) of the awarded contract dollars and worked on two (18.18%) contracts. The other contractors received $13,745,889 (25.56%) of the awarded contract dollars and worked on five (45.46%) contracts. Eleven contracts were awarded and $53,805,374 was expended in Nassau County. Putnam County Apac-Southeast was the only major contractor active in Putnam County, receiving $49,263,958 (60.8%) of the awarded contract dollars, and working on four (30.7%) contracts. The other contractors received $31,721,035 (39.17%) of the awarded contract dollars and worked on nine (69.23%) contracts. The total expenditure for Putnam County was $80,984,993 and 13 contracts awarded. St. Johns County St. Johns County shows three major contractors were active in this area. Superior received $4,064,029 (6.95%) of the awarded contract dollars and worked on two (9.09%) contracts. Hubbard received $1,686,429 (2.88%) of the awarded contract dollars and worked on one (4.55%) contract. Apac-Southeast received $8,841,555 (15.1%) of the awarded contract dollars and worked on four (18.18%) contracts. The other contractors received $43,875,257 (75.05%) of the awarded contract dollars and worked on 15 (68.18%) contracts. Twenty-two contracts were awarded and $58,467,270 was expended in St. Johns County.

Findings: Our market share analysis shows that Superior and Hubbard were very competitive in Duval County. Superior received 86% ($196,734,465) of the vendors total awarded contract dollars and was awarded seven contracts. Hubbard received 92% ($95,565,997) of the vendors total awarded contract dollars and was awarded eight contracts. Apac-Southeast received 27% ($23,809,976) of the vendors total awarded contract dollars and was awarded five contracts. Flagler County is a small market area where five contracts were awarded during a five year period (Jan. 2005 - Dec. 2009). Superior, Hubbard and Apac-Southeast were not active in this area, although Superior and Hubbard each ordered three proposals and submitted one bid. Apac-Southeast did not order any proposals and did not bid in Flagler County.

MARKET SHARE ANALYSIS AREA EIGHT vs. STATE WIDE

The table below compares Area Eight (Duval, Flagler, Nassau, Putnam and St. John Counties) and state wide awarded contract dollars and awarded contracts from January 2005 through December 2009.
County Duval Flagler Nassau Putnam St. Johns
TOTAL AREA 8 STATE WIDE

Dollars $513,287,67 3 $29,391,432 $53,805,374 $80,984,993 $58,467,270 $735,936,742 $10,883,915,920

Contr acts 62 5 11 13 22 113 1,603

% Area 8 69.75 4.00 7.31 11.00 7.94 100%

% Area 8 54.87 4.43 9.73 11.50 19.47 100%

% State Wide 4.71 0.27 0.49 0.74 0.55 6.76

% State Wide 3.86 0.31 0.70 0.81 1.37 7.05

AREA EIGHT vs. STATEWIDE MARKET SHARE Table 8

Findings: Based on our analysis Duval County shows that $513,287,673 was expended and 62 contracts were awarded, which contributed to 4.71 % and 3.86% of the state wide awarded contract dollars and contracts awarded respectively. Sixty-nine percent of Area Eights market share dollars, and 54.00% of the contracts were awarded in Duval County. The total awarded contract dollars for Area Eight was $735,936,742, which contributes to 6.76 % of state wide awarded contract dollars. There were 113 contracts awarded in Area Eight, which contributes to 7.05 % of state wide awarded contracts.
VENDOR COMPETITION ANALYSIS

The Vendor Competition Profile shows the competition by number of bids and awarded contracts for each vendor. Our analysis focuses on Superior Construction Company, Hubbard Construction Company and Apac-Southeast, Inc. who were the top three bidders in Area Eight. We will analyze Superior, Hubbard and Apac-Southeasts bidding practices when competing against each other to determine any suspicious bidding patterns and/or coordinated behavior amongst the vendors. SELECTED VENDORS ---------------------------APAC-S.E. APAC-S.E. HUBBARD SUPERIOR ------------------------------ --------------47 .416 30 .638 1 .021 15 .319 8 .267 0 .000

HUBBARD SUPERIOR

30 .698 10 .333 1 .040 0 .000

43 .381 11 .256 5 .192 1 .200

5 1 26 11

.116 .200 .230 .423

APAC-SOUTHEAST Apac-Southeast submitted bids on 41% (47/113) of the contracts, and was awarded 15 contracts. Apac-Southeast won 31% (15/47) of the contracts when bidding in Area Eight. APAC-SOUTHEAST vs. HUBBARD CONSTRUCTION Apac-Southeast submitted 30 bids against Hubbard and won eight contracts. Sixty-three percent of Apac-Southeasts bids were against Hubbard with a win/bid ratio of .26. ApacSoutheast won 26% (8/30) of the contracts when bidding against Hubbard as compared to Hubbard winning 33% (10/30) of the contracts when bidding against Apac-Southeast. APAC-SOUTHEAST vs. SUPERIOR CONSTRUCTION Apac-Southeast submitted one bid against Superior and did not win a contract. Two percent of Apac-Southeasts bids were against Superior. Apac-Southeast and Superior did not win a contract when bidding against each other.

HUBBARD CONSTRUCTION Hubbard submitted bids on 38% (43/113) of the contracts and was awarded 11 contracts. Hubbard won 25% (11/43) of the contracts when bidding in Area Eight. HUBBARD CONSTRUCTION vs. APAC-SOUTHEAST Hubbard submitted 30 bids against Apac-Southeast and won 10 contracts. Sixty-nine percent of Hubbards bids were against Apac-Southeast with a win/bid ratio of .33. Hubbard won 33% (10/30) of the contracts when bidding against Apac-Southeast compared to Apac-Southeast winning 26% (8/30) of the contracts when bidding against Hubbard.

HUBBARD CONSTRUCTION vs. SUPERIOR CONSTRUCTION Hubbard submitted five bids against Superior and won one contract. Eleven percent of Hubbards bids were against Superior with a win/bid ratio of .20. Hubbard and Superior each won 20% (1/5) of the contracts when bidding against each other. SUPERIOR CONSTRUCTION Superior submitted bids on 23% (26/113) of the contracts and was awarded 11 contracts. Superior won 42% (11/26) of the contracts when bidding in Area Eight. SUPERIOR CONSTRUCTION vs. APAC-SOUTHEAST Superior submitted one bid against Apac-Southeast and did not win a contract. Four percent of Superiors bids were against Apac-Southeast. Superior and Apac-Southeast did not win a contract when bidding against each other. SUPERIOR CONSTRUCTION vs. HUBBARD CONSTRUCTION Superior submitted 5 bids against Hubbard and won one contract. Nineteen percent of Superior bids were against Hubbard with a win/bid ratio of .20. Superior and Hubbard each won 20% (1/5) of the contracts when bidding against each other. Findings: Our analysis shows that Apac-Southeast and Hubbard bid against each other frequently. Apac-Southeast submitted 63% (30/47) of the vendors bid against Hubbard compared to Hubbard submitting 69% (30/43) of the vendors bid against Apac-Southeast. Superior submitted bids on 23% (26/113) of the contracts and won 42% (11/26) of the contracts when bidding in Area Eight. Superior rarely bid against Apac-Southeast and Hubbard; submitting one bid against Apac-Southeast and five bids against Hubbard.
VENDOR ACTIVITY MAP SUPERIOR CONSTRUCTION COMPANY

The map below shows the counties where Superior Construction Company bid and contracts awarded from January 2005 through December 2009. Superior was awarded 11 contracts in Duval, Nassau and St. Johns Counties. Superior ordered 18 proposals, submitted 16 bids and was awarded seven contracts in Duval County. Flagler County shows Superior ordered three proposals submitted one bid and did not win a contract. In Nassau County, Superior ordered four proposals, submitted three bids and was awarded two contracts. Superior ordered one proposal, submitted one bid and did not win a contract in Putnam County. St. Johns County shows Superior ordered five proposals submitted five bids and were awarded two contracts. Superior does not own any asphalt facilities in Florida.

Map 1

HUBBARD CONSTRUCTION COMPANY

The map below shows the counties where Hubbard Construction Company bid and contracts awarded from January 2005 through December 2009. Hubbard was awarded 11 contracts in Duval, Nassau and St. Johns Counties. Hubbard ordered 34 proposals, submitted 26 bids and was awarded eight contracts in Duval County. Flagler County shows Hubbard ordered three proposals, submitted one bid and did not win a contract. In Nassau County, Hubbard ordered nine proposals, submitted eight bids and was awarded two contracts. Hubbard ordered nine proposals, submitted two bids and did not win a contract in Putnam County. St. Johns County shows Hubbard ordered 12 proposals, submitted six bids and was awarded one contract. Hubbard does not own any asphalt facilities in Area Eight, but the vendor own asphalt facilities in Orange (2) and Seminole Counties.

Map 2

APAC-SOUTHEAST, INC.

The map below shows the counties where Apac-Southeast, Inc. bid, contracts awarded and asphalt facility locations from January 2005 through December 2009. Apac-Southeast, Inc. was awarded 15 contracts in Duval, Nassau, Putnam and St. Johns Counties. Apac-Southeast ordered 26 proposals, submitted 21 bids and was awarded five contracts in Duval County. Apac-Southeast, Inc. did not order any proposals and did not bid in Flagler County. In Nassau County, Apac-Southeast ordered eight proposals, submitted seven bids and was awarded two contracts. Putnam County shows Apac-Southeast ordered 10 proposals submitted eight bids and were awarded four contracts. Apac-Southeast ordered 14 proposals, submitted 11 bids and was awarded four contracts in St. Johns County. Apac-Southeast, Inc. owns two asphalt facilities in Duval County.

Map 3

VENDOR ACTIVITY ANALYSIS

RANGER & MIDDLESEX Our data shows that Middlesex ordered 18 proposals, submitted 14 bids and did not win a contract in Brevard County. Ranger ordered 29 proposals, submitted 25 bids and won 11 contracts. Our concern is that Middlesex did not win any contracts in this County where the vendor has an asphalt facility located in Orange County adjacent to Brevard County. We see evidence of coordinated behavior among both vendors with Middlesex not bidding on four (T5049, T5178, T5215 & T5249) of eleven contracts that Ranger won in Brevard County. Contract T5262 that Middlesex bid on appears to be a complimentary bid.

Also, we discovered a similar pattern of Ranger and Middlesex not bidding when capable and what appear to be complimentary bids on several contracts in Lake, Orange, Osceola, Seminole and Volusia Counties.

ONTRACTS ANALYSIS CONTRACTS LET BY CENTRAL & DISTRICT OFFICES

The contracts analysis shows the contracts that were let by Central and District offices (area 8 and state wide) from January 2005 through December 2009. Our analysis will include contracts that were let and awarded to Superior Construction Company, Hubbard Construction Company and Apac-Southeast, Inc. The table below shows Superior, Hubbard and Apac-Southeast, Inc. received over 53% of their contracts that were let by district offices, and over 45% let by central office. Sixty percent of

the contracts that were let in Area Eight were let by district offices, and 39.82 % were let by central office.

CONTRACTS LET IN AREA EIGHT

Table 9
CENTRAL DISTRICT

Vendor Contracts Percentage Contracts Percentage Superior Construction 5 45.45 6 54.55 Hubbard Construction 5 45.45 6 54.55 Apac-Southeast, Inc. 7 46.67 8 53.33 Area Eight Total 68 60.18 45 39.82 The table below shows Superior Construction Company received 50% of their contracts that were let state wide by district and central offices. Hubbard and Apac-Southeast, Inc. received 77% and 73% respectively of their contracts that were let state wide by central office. Sixty-six percent of the contracts that were let state wide were let by central office and 33.69 % were let by district offices.

CONTRACTS LET STATE WIDE

CENTRAL

DISTRICT

Vendor Superior Construction Hubbard Construction Apac-Southeast, Inc. State Wide Total

Contracts 8 37 105 1,063

Percentage 50 77.08 73.43 66.31

Contracts Percentage 8 50 11 22.92 38 26.57 540 33.69

SUMMARY
The purpose of this study is for routine monitoring of Area Eight (Duval, Flagler, Nassau, Putnam and St. Johns Counties). Our primary focus is to review and analyze the bidding patterns and construction activities of Superior Construction Company, Apac-Southeast, Inc. and Hubbard Construction Companys bidding patterns and construction activities from January 1, 2005 to December 31, 2009. The Proposals and bids analysis show the three major vendors were very competitive in Duval County, where Superior submitted bids on 89% (16/18) of proposals ordered, while Hubbard submitted bids on 76% (26/34) of proposals ordered and Apac-Southeast submitted bids on 81% (21/326) of proposals ordered. Superior & Apac-Southeast submitted bids on 84% (26/31) and 81% (47/58) respectively of proposals ordered in Duval, Flagler, Nassau, Putnam and St. Johns counties. Our market share analysis shows that Superior and Hubbard were very competitive in Duval County. Superior received 86% ($196,734,465) of the vendors total awarded contract dollars and was awarded seven contracts. Hubbard received 92% ($95,565,997) of the vendors total awarded contract dollars and was awarded eight contracts. Apac-Southeast received 27% ($23,809,976) of the vendors total awarded contract dollars and was awarded five contracts. Flagler County is a small market area where five contracts were awarded during a five year period (Jan. 2005 - Dec. 2009). Superior, Hubbard and Apac-Southeast were not active in this area, although Superior and Hubbard each ordered three proposals and submitted one bid. Apac-Southeast did not order any proposals and did not bid in Flagler County. The Vendor competition analysis shows that Apac-Southeast and Hubbard bid against each other frequently. Apac-Southeast submitted 63% (30/47) of the vendors bid against Hubbard compared to Hubbard submitting 69% (30/43) of the vendors bid against ApacSoutheast. The statewide bid ratio of 4.11 is lower than Area Eights (4.48) bid ratio, which indicates that the statewide level of competition is not as stable as Area Eights 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.

Based on our analysis the level of competition in this area appears to be stable, the low bid ratio in Nassau (3.82) and Putnam (3.00) counties is a small concern. Due to economic growth in surrounding counties, Flagler, Putnam and Nassau Counties have the potential to become more competitive market areas. We would like to see a substantial increase in the level of competition in Flagler, Putnam and Nassau Counties. Our recommendation is to continue to monitor Area Eight as a routine study to observe any indicators and or evidence of coordinated behavior and bidding patterns amongst vendors in this area. Our data compiled and analysis shows during this study there was no history, and or pattern of possible bid rigging or collusion among the major contractors.