FLORIDA DEPARTMENT OF TRANSPORTATION

CONTRACTS ADMINISTRATION OFFICE

MARKET ANALYSIS SECTION

APAC & ANDERSON

10 Years Historical Analysis

BID MONITORING AND MARKET ANALYSIS STUDY

Market Analysis Section

Nasser Pourfarzaneh

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CONFIDENTIALPer 337.168 F. S.

INTRODUTION

The findings from our recent annual studies points out to lack competition in several counties in District Two and Three. We have discovered signs that show in many counties in these districts, the construction market is controlled by a hand full of contractors such as Anderson Columbia, C.W. Roberts and APAC. The lack of interest by one of the top ranked statewide contractor APAC to aggressively compete against Anderson Columbia and C.W. Roberts is the primary indicator of controlling the construction market in these counties. Our reports show inconsistency in overall APAC’s efforts in competing in these counties as compared to the other market areas in Florida. The purpose of this study is to demonstrate that, the construction market in these counties is lacking sufficient competition and learn more about the role of APAC activities in these counties. Based on findings from our analysis we will make recommendation on how to improve the market competition in these counties.

SELECTION CRITERIA

Period: We created a DSS data view for all contracts awarded after January 1, 1998 to the date data view created. Based on analyzing the findings and APAC’s pattern of competing in certain counties, different periods have been studied in different counties.

Market Area:

District Two (Madison, Taylor, Hamilton, Suwannee, Lafayette, Dixie, Baker, Columbia, Union, Gilchrist, Levy, Union, Bradford, Alachua and

Putnam Counties)

District Three (Jefferson, Bay, Washington, Holmes, Jackson, Walton, Okaloosa, Santa Rosa and Escambia Counties)

Contract Types: All Construction contracts with awarded amount > $250,000

HISTORICAL ANALYSIS

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In Late 1990’s APAC’s area of activity was limited to several counties in District Seven and Escambia County in District Three. In 1998 he was the low bidder on 11 contracts for a total awarded amount of $15,798,364 including only one contract in Escambia County for awarded amount of $1,493,195. In 1999 he was the low bidder on 11 contracts for a total awarded amount of $35,698,151 including only two contracts in Escambia County for a total awarded amount of 1,994,313.

In early 2000, APAC purchased Couch Construction Company and took over all his asphalt facilities including those in Walton and Madison Counties. Since then APAC’s market area grown to the points that today he is the leading major contractor in state of Florida and owns over 18 active asphalt facilities in Florida based on report from LIMS database. Since January 2000, APAC was the low bidder on 357 contracts for a total awarded amount of $1,320,388,986 more than any other contractors statewide. For the same period, Anderson Columbia received $1,317,921,803 in awarded amount and was the low bidder on 281 contracts. Although, the awarded amounts that both contractors received are almost equal, APAC worked on more contracts in much larger market area than Anderson Columbia which his market area consists of counties in Districts Two and Three.

One major event that had impacted the market competition in Districts Two and Three was the suspension of White Construction Company in year 2001. White Construction Company was the major contractor in Districts Two and Three and the top ranked contractor in several counties such as Taylor, Walton, Washington and Putnam. The contractors who benefited from White Construction Company suspension are Anderson Columbia and C. W. Roberts. Anderson Columbia now dominates many counties in Districts Two and Three and C.W. Roberts became the major contractors and same as Anderson dominates several counties in Districts Two and Three.

CRITIAL OBJECTIVES

Our studies on market areas within districts two and three show lack of competition in several counties in districts two and three. The competition in these counties is suffering from number of competitors. The bid ratios for these counties are below the statewide bid ratio and the number of awarded contractors is well below the expectations. There is a noticeable lack of entry by any new

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construction firm who could compete consistently in these counties as compared to the market areas. Except in several counties in district two (Leon, Escambia and Santa Rosa) and several counties in District three (Alachua, Clay, Nassau, Duval and St. Johns) the market competition in other counties in these districts is below the expectations and it is dominated by the combination of Anderson Columbia and C. W. Roberts.

MARKET AREA

As a leading major contractor in Florida, APAC’s market area covers most counties in Florida except those counties that are dominated by C.W. Roberts with the exception of Walton County where he owns two asphalt facilities. As of year 2000, he did not bid in St Lucie and Monroe Counties in South Florida. In central Florida he did not bid in Citrus County which C.W. Roberts is a major contractor. He did not bid in Wakulla, Liberty, Franklin, Gulf and Calhoun Counties which they are dominated by C. W. Roberts.

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As a low bidder, APAC had some difficulty winning contracts in counties dominated with both Anderson Columbia and C. W. Roberts. Since year 2000, APAC was the leading major contractor in only Okeechobee and Holmes Counties.

Based on his market area as a bidder and as a winner, we divided the overall market are in Districts Two and Three to three market areas. First: Those counties that he did not show interest to compete (Calhoun, Gulf, Gadsden, Leon, Liberty, Franklin, Wakulla and Jefferson) or counties the Anderson Columbia or C. W. Roberts did not compete with APAC (Clay, Duval, Nassau, and St. Johns). These counties are excluded from market share analysis. Second: The West Area that includes Escambia, Santa Rosa, Okaloosa, Walton, Holmes, Washington Jackson and Bay counties.

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Third: The East Area that includes Madison, Taylor, Hamilton, Lafayette, Baker, Columbia, Union, Bradford, Suwannee, Gilchrist, Levy Dixie and Putnam Counties.

Anderson Columbia shown that he is capable of control the market in majority of counties in selected East Area with the support of C.W. Robert and Peavey & Son and their possible complementary bidding in Taylor and Madison Counties. On the other hand, we have find evidences that shows that controlling the market in selected West Area counties requires more corporations from a particular group of contractors to manage a long term control of the market.

Rejected Contracts

As Char below shows, in 1999 and 2000, there were an unusual high number of rejected contracts in West Area. A total of 16 contracts were rejected and most of these contracts are labeled as “NOBS” which indicates No Bid Received. There were two major events during these years on both West and East Area. The purchase of Couch Construction by APAC and the beginning of the fraud investigation involving White Construction who was one of the leading major contractors in both areas.

Although, the contractors involved in these major events (White Construction, and Couch Construction) were both active in both areas, we received high number of rejected bids and experienced problems only in West Area market. This is a great indication that market in West Area differs from the market in East Area and required more coordination among contractors who main primary goal was to control the market and to prevent an entry by any new construction firms. The market in East Area is dominated by Anderson Columbia. With help of contractors such as C.W. Roberts and Peavey & Son, by submitting possible complementary bids in Madison, Taylor and Columbia Counties and unusual high number of single bids, Anderson Columbia is in charge and control of the East Area.

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The contractors involved in controlling the market in West Area also shown interest to compete in South Alabama. We seriously believe, there is unique relationship since early 1980’s among several contractors in North West Florida and Wiregrass Construction from South Alabama and that allowed them to control the market successfully in many counties in North West Florida and South Alabama. After years of monitoring the behavior and bidding pattern of the contractors in North West Florida and South Alabama, we learned that because of this relationship no matter who entered or left the market for any reasons, the market remained in control by a few contractors.

Contractors Relationship

Historically, we can divide these contractors to two groups with two different behaviors and yet through the bidding pattern observer favoritism they give each other to win contracts and control the markets. The first or the dominate group consist of Anderson Columbia and C.W. Roberts. For Years, these contractors dominated majority of the counties in Districts Two and Three.

The second group consists of Chadbourn, Couch Construction, APAC and Wiregrass Co. from Alabama. APAC and Wiregrass are still active from this group and with their help Anderson Columbia and C.W. Roberts prevented other construction firms to enter the market area and compete in regular bases.

Indicators

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In 1983, Chadbourn and Wiregrass Company were the only bidders on a contract let in Escambia County. Wiregrass was the low bidder and was awarded the contracts. Chadbourn worked as a subcontractor on all asphalt items. All other items except Mobilization were sub to other contractors.

Couch Construction purchased Chadbourn in mid 1990’s and at the same opened asphalt facilities in Madison and Walton Counties and started to compete with White Construction and Anderson Columbia in Jefferson, Taylor and Madison Counties as well as several counties in West Area. He also expended his market area to South Alabama and started to compete with Wiregrass Company and APAC. In the West Area, Anderson Columbia purchased Okaloosa Asphalt in mid 1990’s and started to compete against APAC and Couch Construction in Okaloosa and Escambia Counties.

In May 29, 1998, contracts 20157 and 20158 were let in Holmes County. Couch Construction was the low bidder on contract 20158. White Construction, Anderson Columbia and Florida Asphalt Paving were the other bidders. Contract 20157 received a total of six bids. Wiregrass was the low bidder on and the other bidders were Couch Construction (second low bidder), White Construction, Chadbourn, Anderson Columbia and Florida Asphalt Paving. Wiregrass filed to be qualified to bid in Florida dated about two months before the letting of the contracts. Based on his prequalification file, he leased an asphalt facility from Couch Construction for about $1,400,000 two months before the letting date. Wiregrass leasing an asphalt facility from Couch Construction raises several questions.

“How did Wiregrass know, he will be the low bidder on contract 20157 to risk and lease an asphalt facility from Couch for $1,400,000 before the letting or even advertizing of the contract? Why did Couch leased his asphalt facility to Wiregrass and then bid against him and lose? Finally, why did Anderson Columbia or White Construction who owned asphalt facilities close to location of contract bid higher than Wiregrass and allow him to win in a county dominated b them. Anderson Columbia bid’s was 15% over the low bidder’s bid (Wiregrass)”.

In late 1999, APAC purchased Couch Construction and increased his market to other counties in District Three and also in District Two. In District Two with purchased of new asphalt facility from Couch in Madison County, he started to compete with Anderson Columbia and White Construction in Madison, Jefferson Columbia and Suwannee Counties. In District Three he expanded his market area from Escambia County to Santa Rosa, Okaloosa, Walton, Bay, Holmes, Jackson and Washington Counties.

In 2001, White Construction was suspended from bidding and left the market. According to our analysis, White Construction suspension benefited only Anderson Columbia and C. W. Roberts. APAC not only was not able to take an advantage of White Construction’s suspension and strength his position in the market area, they actually end up with smaller market area by year 2003. Like Couch Construction, APAC was competing aggressively with Anderson Columbia and White Construction in Madison, Taylor and Jefferson Counties during 2003. For some unknown reasons APAC’s aggressive competition decreased during 2003 and close his facility in Madison County and

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opened a new facility in Bradford County. However, he maintained his level of completion in West area but doing poorly as compared to rest of his market area.

In September 20, 2006 the combination of Wiregrass, C. W. Roberts and Dawson Bridge Company were awarded a contract for a total awarded amount of $167,564,791 in Montgomery Alabama.

ALABAMA DEPARTMENT OF TRANSPORTATIONLOW BID SHEETLETTING DATE: September 20, 2006--------------------------------------------------------------------------------001 . ACIM-ACNHF-I065(366)COUNTY: MONTGOMERY 4.325 MILESADDITIONAL LANES (GRADE, DRAINAGE, PAVEMENT AND BRIDGES)ON I-65 FROM THE CATOMA CREEK BRIDGE (MP 167.103) TO THE ALABAMARIVER BRIDGE (MP 171.995) IN MONTGOMERY

1. WIREGRASS CONSTRUCTION COMPANY, INC., $167,564,791.46C.W. ROBERTS CONTRACTING INC. &R.R. DAWSON BRIDGE COMPANY, LLC

ARITON, AL / HOSFORD, FL / BESSEMER , AL

In May 18, 2007 the combination of Wiregrass, C. W. Roberts submit a bid for a bid amount of $82,377,046 in Montgomery County in Alabama and lost.

ALABAMA DEPARTMENT OF TRANSPORTATIONLOW BID SHEETLETTING DATE: May 18, 2007--------------------------------------------------------------------------------001. IM-NHF-I065(375)COUNTY: MONTGOMERY 4.613 MILESADDITIONAL LANES (GRADE, DRAINAGE AND BRIDGE WIDENING)ON I-65 FROM THE NORTH END OF THE CATOMA CREEK BRIDGE TO THE SOUTHEND OF THE ALABAMA RIVER BRIDGE IN MONTGOMERY

1. BRASFIELD & GORRIE, L.L.C. $79,590,662.933021 7th AVENUE SOUTHBIRMINGHAM , AL 35233

2. WIREGRASS CONSTRUCTION & C. W. ROBERTS $82,377,046.258974 N. US HWY 231 / 3372 CAPITAL CIR NE , TALLAHASSEE, FL

ARITON , AL 36311

Review of letting results from Alabama doesn’t show that C. W. Roberts compete in this state in regular bases. Until now, C. W. Robert’s involvement in Alabama began with working with Wiregrass as a joint venture and ended with submitting a bid as a joint venture with

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Wiregrass. On the other hand, letting result and the bidders list from Alabama, show Anderson Columbia stared to bid with Wiregrass and APAC Mid-south in south Alabama.

The high number of rejected contracts and the unique relationship among the contractors that surfaces rarely in West Area but not in East Area shows that due to number of contracts and number of active contractors controlling the market in West Area requires more coordination and synchronization.

MARKET SHAR

APAC emerge as a leading major contractor in Florida after purchasing Couch Construction in late 1999. In 1998 APAC’s market share was 1.30% of the contract dollars statewide while Anderson market share was 6.13%. In 1999 APAC’s market share was 3.329% of the contract dollars statewide while Anderson market share was 8.60%.

Since year 2000, APAC increased his market area and his market share also increased. Since then his market share from contract dollars was about $1,320,388,985 and was the low bidder on 357 contracts. For the same period, Anderson Columbia received $1,317,921,804 and was the low bidder on 272 contracts.

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Contract Dollars

Year West Area East Area Statewide West + East

1998 $1,493,195 $0 $15,798,364 $1,493,1951999 $1,994,313 $0 $35,698,151 $1,994,313

TOTAL

$3,487,508 $0 $51,496,515 $3,487,508

2000$30,105,56

1 $1,982,001 $87,616,846 $32,087,562

2001$13,377,72

4$10,646,72

3 $94,803,497 $24,024,447

2002$22,821,02

3$10,706,64

0 $170,095,085 $33,527,6632003 $7,904,665 $4,241,893 $98,781,967 $12,146,5582004 $7,212,958 $6,382,649 $156,386,165 $13,595,607

2005$50,734,24

9$15,455,99

8 $216,168,394 $66,190,247

2006$15,524,47

1$52,244,17

0 $190,753,050 $67,768,641

2007 $4,918,543$25,608,84

2 $79,986,589 $30,527,385

2008$23,030,38

4$18,675,54

3 $86,802,974 $41,705,9272009 $348,843 $17,539,38 $92,388,250 $17,888,227

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42010 $4,620,276 $9,276,053 $46,606,168 $13,896,329

$180,598,697

$172,759,896

$1,320,388,985

$353,358,593

APAC as a

Group

Anderson

Columbia

Community

Asphalt

Ranger

Construction

Hubbard

Construction

C.W.

Roberts

APAC as a

Group

1272 Bids 306 Bids 260 Bids 172 Bids 235 Bids 96 Bids

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360 .28 96 .31 53 .20 41 .23 60 .25 17 .17

Anderson

Columbia

306 Bids

112 .36

642 Bids

293 .45

152 Bids

68 .45

Community

Asphalt

260 Bids

61 .23

745 Bids

175 .23

Ranger

Construction

172 Bids

37 .21

574 Bids

128 .22

Hubbard

Construction

235 Bids

57 .24

539 Bids

117 .22

C.W.

Roberts

96 Bids

24 .25

152 Bids

38 .25

310 Bids

99 .31

1998- 2000 Market Share West Area

County Anderson White Cons. Couch Cons. APAC Whitehurst V. E.

Alachua $17,173,761 / 3 $14,253,067 / 3 $6,067,342 / 6

Baker $8,141,195 / 2

Bradford $4,211,077 / 2

Columbia $18,503,322 / 3 $2,271,355 / 1

Dixie $8,632,998 / 2

Gilchrist $2,810,162 / 2 $3,643,425 / 1 $2,269,462 / 1

Hamilton $1,384,150 / 1

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Lafayette $1,982,001 / 1

Madison $18,556,943 / 4 $9,048,694 / 1

Suwannee $6,052,577 / 3

Taylor $7,530,395 / 4 $3,711,677 / 1

Union $7,407,116 / 3

Clay $2,010,075 / 1

Putnam $5,427,388 / 2 $5,749,442 / 2 $804,879 / 1

Union, Suwannee, Hamilton, Dixie, Baker, 100% anderson

In Bradford, COXWELL, J. B. $12,315,000 73.27% 2 contracts.

In Putnam, COXWELL, J. B. $11,288,667 34.70% 3 contracts

In Clay, COXWELL, J. B. $3,477,931 26.27% One contract

1999- 2001 Market Share

East Area West Area

Contractors

Awarded

Amount

% Over

Anderson

Awarded

Amount

% Over

Anderson

Anderson Columbia $133,949,310 / 39 ----- $92,567,311 / 33 -----

White Construction $53,175,766 / 13 39.7% $16,662,109 / 4 18%

Couch Construction $32,573,141 / 9 24.3% $3,711,677 / 1 4%

APAC-Florida INC $45,575,199 / 18 34% $17,138,361 / 10 18.5%

C. W. Roberts $31,471,832 / 6 23.4% ----- -----

Whitehurst V. E. ----- ----- $15,579,982 / 9 16.8%

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1999- 2001 Market Share East Area

County Anderson White Cons. Couch Cons. APAC C. W. Roberts

Bay $12,158,303 / 3 $5,158,608 / 4

Escambia $28,624,965 / 7 $3,115,193 / 2 $21,470,157 / 10

Holmes $3,817,694 / 2 $6,637,553 / 1 $2,944,400 / 1

Jackson $34,417,488 / 8 $4,268,306 / 2 $225,444 / 1 $493,774 / 1

Okaloosa $17,108,591 / 10 $17,284,348 / 4 $6.448,367 / 3 $2,138,684 / 1

Santa Rosa $26,529,392 / 4 $9,968,166 / 1 $10,157,420 / 2

Walton $4,478,195 / 2 $26,205,807 / 3 $4,061,081 / 1 $29,333,149 / 5

Washington $6,814,682 / 3 $10,905,492 / 3

1999- 2001 Market Share West Area

County Anderson White Cons. Couch Cons. APAC Whitehurst V. E.

Alachua $17,229,532 / 5 $7,269,242 / 1 $12,253,448 / 6

Baker $13,457,582 / 5

Bradford $921,675 / 1

Columbia $4,698,525 / 3

Dixie $6,612,998 / 1

Gilchrist $6,160,162 / 3 $3,643,425 / 1 $2,269,462 / 1

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Hamilton $1,384,150 / 1

Lafayette $8,832,116 / 2 $1,982,001 / 1

Madison $10,441,524 / 1 $4,977,694 / 2

Suwannee $8,222,519 / 4

Taylor $3,711,677 / 1

Union $8,902,116 / 4

Clay $4,364,767 / 2

Putnam $5,704,412 / 3 $5,749,442 / 2 $5,813,899 / 5 $1,057,072 / 2

Union, Suwannee, Hamilton, Dixie, Baker, 100% Anderson

2000- 2002 Market Share

East Area West Area

Contractors

Awarded

Amount

% Over

Anderson

Awarded

Amount

% Over

Anderson

Anderson Columbia $132,047,180 / 41 ----- $102,924,131 / 33 -----

White Construction $37,042,781 / 6 28% $6,316,867 / 2 6.1%

APAC-Florida INC $66,401,909 / 25 50.3%% $31,041,065 / 16 30.2%

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C. W. Roberts $31,545,820 / 7 23.9% ----- -----

Whitehurst V. E. ----- ----- $29,264,587 / 10 28.4%

2000- 2002 Market Share East Area

County Anderson White Cons. APAC C. W. Roberts

Bay $12,678,472 / 4 $1,049,907 / 1 $4,232,654 / 1 $73,988 / 1

Escambia $28,175,885 / 9 $22,658,879 / 10

Holmes $3,817,694 / 2 $6,637,553 / 1 $7,748,953 / 2

Jackson $18,972,057 / 7 $2,223,148 / 1 $4,431,180 / 3

Okaloosa $18,446,642 / 10 $10,840,316 / 5 $2,138,684 / 1

Santa Rosa $19,455,419 / 3 $12,428,847 / 3

Walton $23,686,329 / 3 $25,229,144 / 2 $4,061,081 / 1 $29,333,149 / 5

Washington $6,814,682 / 3 $1,903,028 / 1

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