FLORIDA DEPARTMENT OF TRANSPORTATION

CONTRACTS ADMINISTRATION OFFICE

MARKET ANALYSIS SECTION

DISTRICT FIVE BID COLLUSION DETECTION STUDY

Cedric J. Thomas Reviewed by: Nasser Pourfarzaneh AUGUST 06, 2010

TABLE OF CONTENTS
INTRODUCTION ...1 PROPOSALS/BID ANALYSIS

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

BID RATIO ANALYSIS

District Five 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....6-8
VENDOR COMPETITION ANALYSIS

Ranger vs. Middlesex and Hubbard..........9 Middlesex vs. Ranger and Hubbard. ................10 Hubbard vs. Ranger and Middlesex..10
VENDOR ACTIVITIES MAPS (BIDS & WINS by COUNTY)

Ranger Construction Industries, Inc.11 Middlesex Corporation.....12 Hubbard Construction Company..13 Ranger & Middlesex....14
SUMMARY...........15

TABLE OF CONTENTS
INTRODUCTION ...1 PROPOSALS/BID ANALYSIS

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

BID RATIO ANALYSIS

District Five 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....6-8
VENDOR COMPETITION ANALYSIS

Ranger vs. Middlesex and Hubbard..........9 Middlesex vs. Ranger and Hubbard. ................10 Hubbard vs. Ranger and Middlesex..10
VENDOR ACTIVITIES MAPS (BIDS & WINS by COUNTY)

Ranger Construction Industries, Inc.11 Middlesex Corporation.....12 Hubbard Construction Company..13 Ranger & Middlesex....14
SUMMARY...........15

INTRODUCTION

This study focuses on Ranger Construction Industries, Inc., Middlesex Corporation and Hubbard Construction Companys bidding patterns and construction activities from January 1, 2004 to December 31, 2008. Our objective is to determine if there are possible indicators for bid rigging and/or bid collusion between Ranger, Middlesex, Hubbard and other contractors. SELECTION CRITERIA Area (counties): Letting Date: Contract Types: Letting status: Selected Vendors: Brevard, Flagler, Lake, Marion, Orange, Osceola, Seminole, Sumter and Volusia. January 1, 2004 to December 31, 2008. All Construction and Traffic Operations contracts let by Central and District Offices. Awarded contracts selected. Ranger Construction Industries, Inc., Middlesex Corporation 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 256 contracts and $2,494,709,895 were awarded to Ranger Construction Industries, Inc., Middlesex Corporation and Hubbard Construction Company during a period of January 1, 2004 to December 31, 2008.

PROPOSALS & BIDS ANALYSIS

The table below shows the number of proposals ordered, bids submitted, and contracts awarded to Ranger Construction, Middlesex Corporation, and Hubbard Construction Company. The top vendors submitted bids on 78% (296/380) of the proposals ordered and were awarded 59 contracts. The other vendors submitted bids on 74% (1,010/1,373) of the proposals ordered and were awarded 197 contracts. The vendors together submitted bids on 75% (1,306/1,753) of the proposals ordered and were awarded 256 contracts.
VENDORS PROPOSALS & BIDS

Vendor Ranger Construction Middlesex Corporation Hubbard Construction Total (Major Vendors) Other Vendors Total (All Vendors)

Proposals Ordered 130 139 111 380 1,373 1,753

Bids Submitted 111 111 74 296 1,010 1,306

Contracts Awarded 25 20 14 59 197 256

% of Bids vs. Proposals 85% 80% 67% 78% 74% 75%

Table 1

BID RATIO ANALYSIS

The tables below show the bid ratio by county for District Five and the statewide bid ratio. Orange County has the highest bid ratio of 6.12, which is an indicator of competitive bidding. Sumter County has the lowest bid ratio of 3.53, which shows that the competition is average due to the number of one and two-bid contracts. District Five has a bid ratio of 5.10, which shows that the area has a stable level of competitive bidding.

DISTRICT 5 BID RATIOS by COUNTY

COUNTY BIDS CONTRACTS BID RATIO

Brevard Flagler Lake Marion Orange Osceola Seminol e

Table 3

234 31 179 118 306 93 91 53 201 1,306

BIDS

46 6 31 29 50 17 17 15 44 256
CONTRACTS

5.08 5.16 5.77 4.06 6.12 5.47 5.35 3.53 4.56 5.10
BID RATIO

Sumter Volusia
DISTRIC T5 STATE WIDE TOTAL

5,784

1,564

3.70

STATE WIDE BID RATIO

Table 4

Findings: The state wide bid ratio of 3.70 is lower than District Fives (5.10) bid ratio, which indicates that the statewide level of competition is not as stable as District Fives 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, 2004 - December 31, 2008.

MARKET SHARE ANALYSIS

The Market Share analysis is based on the three major contractorss awarded contract dollars in Brevard, Flagler, Lake, Marion, Orange, Osceola, Seminole, Sumter and Volusia counties. The table below shows Ranger Construction Industries, Inc. was awarded 25 contracts and received $208,536,772 (8.36%) of the total awarded contract dollars. Middlesex Corporation and Hubbard Construction Company were awarded 20 and 14 contracts respectively, and received $159,564,513 and $100,639,807 of the total awarded contract dollars respectively. The other vendors received $2,025,968,803 (81.21%) of the total awarded contract dollars and were awarded 197 (76.95%) contracts. Name Dollar Amount
$208,536,772 $159,564,51 3 $100,639,80 7 $468,741,092 $2,025,968,803 $2,494,709,895

Percent of Dollar Amount

8.36 6.40 4.03 18.79 81.21 100

No. of Contracts
25 20 14 59 197 256

Percent of Contracts
9.77 7.81 5.47 23.05 76.95 100

Ranger Construction Middlesex Corp. Hubbard Construction Major Vendors Total Other Vendors TOTAL

MARKET SHARE (AWARDED DOLLARS) Table 5

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
Count y RANGER CONST. MIDDLE SEX CORP. HUBBARD CONST. OTHER VENDORS TOTAL

Dollars

P c t .
5 . 2 1 1 1 3 . 1 9 1 5

Dollars

P c t .

Dollars

P c t .

Dollars

P c t.
94.40 100 66.85 98.86 69.85 84.76 79.03 77.64 74.22

Dollars

Brev ard Flagl er Lake Mari on Oran ge Osce ola Semi nole Sumt er Volu sia TOT AL

$31,850, 888 $35,096, 939 $88,041, 767 $4,479,9 27 $13,508, 768 $35,558, 483 $208,536,772

$539,425,392 $107,085,226 $12,835, 346 $1,846,0 00 $95,047, 829 $6,939,8 29 $14,868, 709 $2,029,0 06 $25,997, 794 $159,564,513 7 . 1 . 1 2 2 . 1 2 3 . 1 1 $7,422,7 94 $50,944, 656 $35,625, 560 $6,646,7 97 4 . 6 . 1 2 5 . $111,603,737 $159,753,942 $542,264,486 $236,738,513 $97,980,340 $53,942,138 $177,175,029 $2,025,968,803

$571,276,280 $107,085,226 $166,958,816 $161,599,942 $776,298,738 $279,303,902 $123,975,773 $69,479,912 $238,731,306 $2,494,709,895

$100,639,807

Table 6

CONTRACTS WORKED BY COUNTY

Cou nty RANGER CONST. MIDDLE SEX CORP.

Table 7 HUBBARD
CONST.

OTHER VENDORS

TOTA L

Cont racts
11 4 5 2 1 2 25

P c t.
2 3. 1 2. 1 0. 1 1. 6. 6 4. 5

Contr acts

Pct.

Contr acts

Pc t.

Cont racts
35 6

Pc t.
76. 09 10 0 58. 07 96. 55 60. 00 82. 36 64. 71 86. 66 93. 18

Contr acts
46 6 31 29 50 17 17 15 44 256

Bre vard Flag ler Lak e Mar ion Ora nge Osc eola Sem inol Sum ter Vol usia TO TA

5 1 9 2 1 1 1 20

16.13 3.45 18.00 11.76 5.88 6.67 2.27

4 6 1 3

12. 90 12. 00 5.8 8 17. 65

18 28 30 14 11 13 42 197

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Brevard County Ranger Construction Industries, Inc. was the only contractor active in Brevard County, receiving $31,850,888 (5.60%) of the awarded contract dollars and working on 11 (23.91%) contracts. The other contractors received $539,425,392 (94.4%) of the awarded contract dollars and worked on 35 (76.09%) contracts. Forty-six contracts were awarded and $571,276,280 was expended in Brevard County. Flagler County There were no major contractors active in Flagler County. The other contractors received $107,085,226 (100%) of the awarded contract dollars and worked on six contracts. Lake County Three major contractors were active in Lake County. Ranger dominated the market share in this county, working on four (12.90%) contracts and receiving $35,096,939 (21.02%) of the awarded contract dollars. Middlesex received $12,835,346 (7.80%) of the awarded contract dollars and worked on five (16.13%) contracts. Hubbard received $7,422,794 (4.51%) of the awarded contract dollars, and worked on four (12.9%) contracts. The other contractors received $111,603,737 (66.85%) of the awarded contract dollars and worked on 18 (58.07%) contracts. Thirty-one contracts were awarded and $166,958,816 was expended in Lake County. Marion County Middlesex was the only major contractor active in Marion County, receiving $1,846,000 (1.16%) of the awarded contract dollars, and working on one (3.45%) contract. The other contractors received $159,753,942 (98.86%) of the awarded contract dollars and worked on 28 (96.55%) contracts. The total expenditure for Marion County was $161,599,942 and 29 contracts awarded.

Orange County Middlesex dominated Orange County, while working on nine (18%) contracts and receiving $95,047,829 (12.28%) of the awarded contract dollars. Ranger received $88,041,767 (11.38%) of the awarded contract dollars and worked on five (10%) contracts. Hubbard received $50,944,656 (6.58%) of the awarded contract dollars, and worked on six (12%) contracts. The other contractors received $542,264,486 (69.85%) of the awarded contract dollars and worked on 30 (60%) contracts. Fifty contracts were awarded and $776,298,738 was expended in Orange County. Osceola County

Hubbard and Middlesex were the two major contractors active in Osceola County. Hubbard received $35,625,560 (12.86%) of the awarded contract dollars and worked on one (5.88%) contract. Middlesex received $6,939,829 (2.51%) of the awarded contract dollars and worked on two (11.76%) contracts. The other contractors received $236,738,513 (84.76%) of the awarded contract dollars and worked on 14 (82.36%) contracts. The total expenditure for Osceola County was $279,303,902 and 17 contracts awarded. Seminole County Seminole County shows three major contractors were active in this area. Middlesex received $14,868,709 (12.23%) of the awarded contract dollars and worked on one (5.88%) contract. Hubbard received $6,646,797 (5.47%) of the awarded contract dollars and worked on three (17.65%) contracts. Ranger received $4,479,927 (3.68%) of the awarded contract dollars and worked on one (6.67%) contract. The other contractors received $97,980,340 (79.03%) of the awarded contract dollars and worked on 11 (64.71%) contracts. Seventeen contracts were awarded and $123,975,773 was expended in Seminole County. Sumter County Ranger and Middlesex were the two major contractors active in Sumter County. Ranger received $13,508,768 (19.44%) of the awarded contract dollars and worked on one (6.67%) contract. Middlesex received $2,029,006 (3.02%) of the awarded contract dollars and worked on one (6.67%) contract. The other contractors received $53,942,138 (77.64%) of the awarded contract dollars and worked on 13 (86.66%) contracts. The total expenditure for Sumter County was $69,479,912 and 15 contracts awarded. Volusia County Volusia County shows two major contractors were active in this area. Ranger received $35,558,483 (15.04%) of the awarded contract dollars and worked on two (4.55%) contracts. Middlesex received $25,997,794 (11%) of the awarded contract dollars and worked on one (2.27%) contract. The other contractors received $177,175,029 (74.22%) of the awarded contract dollars and worked on 42 (93.18%) contracts. Forty-four contracts were awarded and $238,731,306 was expended in Volusia County. Findings: Our market share analysis shows that Ranger, Middlesex and Hubbard were very competitive in Orange County. Ranger received 42% ($88,041,767) of the vendors total awarded contract dollars and was awarded five contracts. Middlesex received 60% ($95,047,829) of the vendors total awarded contract dollars and was awarded nine contracts. Hubbard received 50% ($50,944,656) of the vendors total awarded contract dollars and was awarded six contracts. Flagler County is a small market area where six contracts were awarded during a five year period (Jan. 2004 - Dec. 2008). Ranger, Middlesex and Hubbard were not active in 10

this area, although Ranger and Hubbard ordered three and four proposals respectively. Ranger submitted three bids and Hubbard did not bid. Middlesex did not order any proposals and did not bid in Flagler County.

VENDOR COMPETITION ANALYSIS

The Vendor Competition Profile shows the competition by number of bids and awarded contracts for each vendor. Our analysis focuses on Ranger Construction Industries, Inc., Middlesex Corporation, and Hubbard Construction Company who were the top three bidders in District Five. We will analyze Middlesex, Ranger and Hubbards bidding practices when competing against each other to determine any suspicious bidding patterns and/or coordinated behavior amongst the vendors. SELECTED VENDORS ---------------------------RANGER MIDDLESEX 550 HUBBARD 554 169 14 .189 OTHERS ----RANGER -------------111 .434 25 .225 78 .703 17 .218 62 .838 6 .146 55 .111 19 .345 61 .123 26 .426 41 .083 17 .415 494 134 .271 MIDDLESEX HUBBARD OTHERS ----------------- --------------- ------------78 .703 62 .559 55 .495 17 .218 12 .194 11 .200 111 .434 20 .180 59 .797 59 .532 15 .254 74 .289 13 .210 61 . 10 .164 41 . 10 .

RANGER CONSTRUCTION Ranger submitted bids on 43% (111/256) of the contracts, and was awarded 25 contracts. Ranger won 22% (25/111) of the contracts when bidding in District Five. RANGER CONSTRUCTION vs. MIDDLESEX CORPORATION 11

Ranger submitted 78 bids against Middlesex and won 17 contracts. Seventy percent of Rangers bids were against Middlesex with a win/bid ratio of .21. Ranger and Middlesex each won 21% (17/78) of the contracts when bidding against each other. RANGER CONSTRUCTION vs. HUBBARD CONSTRUCTION Ranger submitted 62 bids against Hubbard and won 12 contracts. Fifty-five percent of Rangers bids were against Hubbard with a win/bid ratio of .19. Ranger won 19% (12/62) of the contracts when bidding against Hubbard compared to Hubbard winning 21% (13/62) of the contracts. MIDDLESEX CORPORATION Middlesex submitted bids on 43% (111/256) of the contracts and was awarded 20 contracts. Middlesex won 18% (20/111) of the contracts when bidding in District Five. MIDDLESEX CORPORATION vs. RANGER CONSTRUCTION Middlesex submitted 78 bids against Ranger and won 17 contracts. Seventy percent of Middlesexs bids were against Ranger with a win/bid ratio of .21. Middlesex and Ranger each won 21% (17/78) of the contracts when bidding against each other. MIDDLESEX CORPORATION vs. HUBBARD CONSTRUCTION Middlesex submitted 59 bids against Hubbard and won 15 contracts. Fifty-three percent of Middlesexs bids were against Hubbard with a win/bid ratio of .25. Middlesex won 25% (15/59) of the contracts when bidding against Hubbard as compared to Hubbard winning 16% (10/59) of the contracts. HUBBARD CONSTRUCTION Hubbard submitted bids on 28% (74/256) of the contracts and was awarded 14 contracts. Hubbard won 18% (14/74) of the contracts when bidding in District Five.

HUBBARD CONSTRUCTION vs. RANGER CONSTRUCTION Hubbard submitted 62 bids against Ranger and won 13 contracts. Eighty-three percent of Hubbards bids were against Ranger with a win/bid ratio of .21. Hubbard won 21% (13/62) of the contracts when bidding against Ranger compared to Ranger winning 19% (12/62) of the contracts.

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HUBBARD CONSTRUCTION vs. MIDDLESEX CORPORATION Hubbard submitted 59 bids against Middlesex and won 10 contracts. Seventy- nine percent of Hubbards bids were against Middlesex with a win/bid ratio of .16. Hubbard won 16% (10/59) of the contracts when bidding against Middlesex compared to Middlesex winning 25% (15/59) of the contracts. Findings: Our analysis shows that Ranger and Middlesex are bid partners where we see both vendors submitted 111 bids on 256 contracts. Ranger and Middlesex bid against each other 78 times and each won 17 contracts. Our concern is that this looks suspicious for Ranger and Middlesex to bid on the same number of proposals (111) and each vendor wins 17 contracts when bidding against each other.

VENDOR ACTIVITY MAP RANGER CONSTRUCTION INDUSTRIES, INC.

The map below shows the counties where Ranger Construction Industries, Inc. bid, contracts awarded and asphalt facility locations from January 2004 through December 2008. Ranger was awarded 25 contracts in Brevard (11), Lake (4), Orange (5), Seminole (2), Sumter (1) and Volusia (2) Counties. Ranger bid but did not win in Flagler and Osceola Counties, 13

and did not bid in Marion County. Ranger owns asphalt facilities in Brevard, Broward, MiamiDade, Orange, Palm Beach, St. Lucie and Volusia Counties.

Map 1
MIDDLESEX CORPORATION

The map below shows the counties where Middlesex Corporation bid, contracts awarded and asphalt facility locations from January 2004 through December 2008. Middlesex was awarded 20 contracts in Lake (5), Marion (1), Orange (9), Osceola (2), Seminole (1), Sumter (1) and Volusia (1) Counties. Middlesex bid but did not win in Brevard County, and did not bid in Flagler County. Middlesex owns asphalt facilities in Lake and Orange Counties. 14

Map 2

HUBBARD CONSTRUCTION COMPANY

The map below shows the counties where Hubbard Construction Company bid, contracts awarded and asphalt facility locations from January 2004 through December 2008. Hubbard was awarded 14 contracts in Lake (4), Orange (6), Osceola (1), and Seminole (1) Counties. Hubbard bid but did not win in Brevard, Sumter and Volusia Counties, and did not bid in Flagler and Marion Counties. Hubbard owns asphalt facilities in Orange (2) and Seminole Counties. 15

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. 16

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.

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., Middlesex Corporation, Hubbard Construction Company and other contractors in District Five (Brevard, Flagler, Lake, Marion, Orange, Osceola, Seminole, Sumter and Volusia Counties).

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Our study period is from January 1, 2004 to December 31, 2008. FINDINGS: The Proposals and bids analysis show the three major vendors were very competitive in Orange County, where Ranger submitted bids on 83% (25/30) of proposals ordered. Middlesex submitted bids on 85% (29/34) of proposals ordered, and Hubbard submitted bids on 89% (31/35) of proposals ordered. Ranger submitted bids on each proposal ordered in Flagler, Seminole and Sumter Counties. Our market share analysis indicates that Ranger, Middlesex and Hubbard were very competitive in Orange County. Ranger received 42% ($88,041,767) of the vendors total awarded contract dollars and was awarded five contracts. Middlesex received 60% ($95,047,829) of the vendors total awarded contract dollars and was awarded nine contracts. Hubbard received 50% ($50,944,656) of the vendors total awarded contract dollars and was awarded six contracts. Flagler County is a small market area where six contracts were awarded during a five-year period (Jan. 2004 - Dec. 2008). Ranger, Middlesex and Hubbard were not active in this area, although Ranger and Hubbard ordered three and four proposals respectively. Ranger submitted three bids, and Hubbard did not bid. Middlesex did not order any proposals and did not bid in Flagler County. The low bid ratio in Sumter (3.53) county is a small concern, but not an indicator of a non-competitive market. Flagler and Sumter Counties have the potential to become a larger and more competitive market area due to the surrounding counties and its economic growth. The level of competition in this area appears to be stable, which is evident in reference to the major contractors market shares and bid ratio (5.10) for District Five. The statewide bid ratio of 3.70 is lower than District Fives (5.10) bid ratio, which indicates that the statewide level of competition is not as stable as District Fives 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, 2004 December 31, 2008. CONCERNS: Middlesex Corporation has an asphalt facility located in Orange County, which is adjacent to Brevard County, but did not bid on four (T5049, T5178, T5215 & T5249) of 11 contracts that Ranger Construction Industries, Inc. won in Brevard County. 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., Middlesex Corporation and other contractors bidding practices and construction activities in District Five. Also, we would like to see a substantial increase in the level of competition in Flagler and Sumter Counties.

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