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

CONFIDENTIAL Per 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 APACs 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 APACs 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

In Late 1990s APACs 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 APACs 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 construction firm who could compete consistently in these counties as compared to the market areas. 3

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, APACs 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.

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. 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.

8 7 6 5 4 3 2 1 0 1998 1999 2000 2001 2001 2003 2004 2005 2006 2007 2008 2009 2010 Wes Area t Eas Area t

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 1980s 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

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 1990s 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 1990s 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 bids was 15% over the low bidders 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 Constructions 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 APACs aggressive competition decreased during 2003 and close his facility in Madison County and 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 TRANSPORTATION LOW BID SHEET LETTING DATE: September 20, 2006 -------------------------------------------------------------------------------001 . ACIM-ACNHF-I065(366) COUNTY: MONTGOMERY 4.325 MILES ADDITIONAL LANES (GRADE, DRAINAGE, PAVEMENT AND BRIDGES) ON I-65 FROM THE CATOMA CREEK BRIDGE (MP 167.103) TO THE ALABAMA RIVER BRIDGE (MP 171.995) IN MONTGOMERY 1. WIREGRASS CONSTRUCTION COMPANY, INC., $167,564,791.46 C.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 TRANSPORTATION LOW BID SHEET LETTING DATE: May 18, 2007 ------------------------------------------------------------------------------001. IM-NHF-I065(375) COUNTY: MONTGOMERY 4.613 MILES ADDITIONAL LANES (GRADE, DRAINAGE AND BRIDGE WIDENING) ON I-65 FROM THE NORTH END OF THE CATOMA CREEK BRIDGE TO THE SOUTH END OF THE ALABAMA RIVER BRIDGE IN MONTGOMERY 1. BRASFIELD & GORRIE, L.L.C. 3021 7th AVENUE SOUTH BIRMINGHAM , AL 35233 $79,590,662.93

2. WIREGRASS CONSTRUCTION & C. W. ROBERTS $82,377,046.25 8974 N. US HWY 231 / 3372 CAPITAL CIR NE , TALLAHASSEE, FL ARITON , AL 36311

Review of letting results from Alabama doesnt show that C. W. Roberts compete in this state in regular bases. Until now, C. W. Roberts involvement in Alabama began with working with Wiregrass as a joint venture and ended with submitting a bid as a joint venture with 9

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 APACs market share was 1.30% of the contract dollars statewide while Anderson market share was 6.13%. In 1999 APACs 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.

120 100 80 60 40 20 0
20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10

Wes Maeket t Anders on APAC

10

120 100 80 60 40 20 0
20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 20 10

Eas Area t Anders on APAC

Contract Year 1998 1999 TOTA L West Area $1,493,195 $1,994,313 $3,487,50 8 East Area $0 $0 $0

Dollars Statewide $15,798,364 $35,698,151 $51,496,515 West + East $1,493,195 $1,994,313 $3,487,508

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

$30,105,56 1 $13,377,72 4 $22,821,02 3 $7,904,665 $7,212,958 $50,734,24 9 $15,524,47 1 $4,918,543 $23,030,38 4 $348,843 $4,620,276

$1,982,001 $10,646,723 $10,706,640 $4,241,893 $6,382,649 $15,455,998 $52,244,170 $25,608,842 $18,675,543 $17,539,384 $9,276,053

$87,616,846 $94,803,497 $170,095,085 $98,781,967 $156,386,165 $216,168,394 $190,753,050 $79,986,589 $86,802,974 $92,388,250 $46,606,168

$32,087,562 $24,024,447 $33,527,663 $12,146,558 $13,595,607 $66,190,247 $67,768,641 $30,527,385 $41,705,927 $17,888,227 $13,896,329

11

$180,598, 697

$172,759,8 96

$1,320,388, 985

$353,358,59 3

20000 5000 20000 0000 10000 5000 10000 0000 5000 0000 0 19 19 20 20 20 20 20 20 20 20 20 20 98 99 00 01 02 03 04 05 06 07 08 09 S tewide ta West & E ast

APAC as a APAC as a Group Anderson Columbia Group 1272 360 306 112 Bids .28 Bids .36

Anderson Columbia 306 Bids 96 642 293 .31 Bids .45

Community Asphalt 260 Bids 53 .20

Ranger Construction 172 Bids 41 .23

Hubbard Construction 235 Bids 60 .25

C.W. Roberts 96 Bids 17 152 68 .17 Bids .45

12

Community Asphalt Ranger

260 61 172

Bids .23 Bids .21 Bids .24 Bids .25 152 38 Bids .25

745 175

Bids .23 574 128 Bids .22 539 117 Bids .22 310 99 Bids .31

Construction 37 Hubbard 235 Construction 57 C.W. 96 Roberts 24

County Alachua Baker Bradford Columbia Dixie Gilchrist Hamilton Lafayette Madison Suwannee Taylor Union Clay Putnam

Anderson $17,173,761 / 3 $8,141,195 / 2 $4,211,077 / 2 $18,503,322 / 3 $8,632,998 / 2 $2,810,162 / 2 $1,384,150 / 1 $18,556,943 / 4 $6,052,577 / 3

1998- 2000 Market Share West Area White Cons. Couch Cons. APAC $14,253,067 / 3 $2,271,355 / 1 $3,643,425 / 1 $1,982,001 / 1 $9,048,694 / 1 $7,530,395 / 4 $3,711,677 / 1 $2,010,075 / 1

Whitehurst V. E. $6,067,342 / 6

$2,269,462 / 1

$7,407,116 / 3 $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 In Putnam, COXWELL, J. B. $11,288,667 In Clay, COXWELL, J. B. $3,477,931 73.27% 34.70% 26.27% 2 contracts. 3 contracts One contract

13

1999- 2001 Market Share East Area Awarded % Over Contractors Anderson Columbia White Construction Couch Construction APAC-Florida INC C. W. Roberts Whitehurst V. E. Amount $133,949,310 / 39 $53,175,766 / 13 $32,573,141 / 9 $45,575,199 / 18 $31,471,832 / 6 ----Anderson ----39.7% 24.3% 34% 23.4% -----

West Area Awarded Amount $92,567,311 / 33 $16,662,109 / 4 $3,711,677 / 1 $17,138,361 / 10 ----$15,579,982 / 9 % Over Anderson ----18% 4% 18.5% ----16.8%

County Bay Escambia Holmes Jackson Okaloosa Santa Rosa Walton Washington

Anderson $12,158,303 / 3 $28,624,965 / 7 $3,817,694 / 2 $34,417,488 / 8 $17,108,591 / 10 $26,529,392 / 4 $4,478,195 / 2 $6,814,682 / 3

1999- 2001 Market Share East Area White Cons. Couch Cons. APAC $5,158,608 / 4 $3,115,193 / 2 $21,470,157 / 10 $6,637,553 / 1 $2,944,400 / 1 $4,268,306 / 2 $225,444 / 1 $493,774 / 1 $17,284,348 / 4 $6.448,367 / 3 $9,968,166 / 1 $10,157,420 / 2 $26,205,807 / 3 $4,061,081 / 1 $10,905,492 / 3

C. W. Roberts

$2,138,684 / 1 $29,333,149 / 5

County Alachua Baker Bradford Columbia Dixie Gilchrist

Anderson $17,229,532 / 5 $13,457,582 / 5 $921,675 / 1 $4,698,525 / 3 $6,612,998 / 1 $6,160,162 / 3

1999- 2001 Market Share West Area White Cons. Couch Cons. APAC $7,269,242 / 1

Whitehurst V. E. $12,253,448 / 6

$3,643,425 / 1

$2,269,462 / 1

14

Hamilton Lafayette Madison Suwannee Taylor Union Clay Putnam

$1,384,150 / 1 $8,832,116 / 2 $10,441,524 / 1 $8,222,519 / 4 $8,902,116 / 4 $5,704,412 / 3 $5,749,442 / 2

$1,982,001 / 1 $4,977,694 / 2 $3,711,677 / 1 $4,364,767 / 2 $5,813,899 / 5 $1,057,072 / 2

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

2000- 2002 Market Share East Area Awarded % Over Contractors Anderson Columbia White Construction APAC-Florida INC C. W. Roberts Whitehurst V. E. Amount $132,047,180 / 41 $37,042,781 / 6 $66,401,909 / 25 $31,545,820 / 7 ----Anderson ----28% 50.3%% 23.9% -----

West Area Awarded % Over Anderson ----6.1% 30.2% ----28.4%

Amount $102,924,131 / 33 $6,316,867 / 2 $31,041,065 / 16 ----$29,264,587 / 10

County Bay Escambia

2000- 2002 Market Share East Area Anderson White Cons. APAC $12,678,472 / 4 $1,049,907 / 1 $4,232,654 / 1 $28,175,885 / 9 $22,658,879 / 10

C. W. Roberts $73,988 / 1

15

Holmes Jackson Okaloosa Santa Rosa Walton Washington

$3,817,694 / 2 $18,972,057 / 7 $18,446,642 / 10 $19,455,419 / 3 $23,686,329 / 3 $6,814,682 / 3

$6,637,553 / 1 $2,223,148 / 1 $25,229,144 / 2 $1,903,028 / 1

$7,748,953 / 2 $4,431,180 / 3 $10,840,316 / 5 $12,428,847 / 3 $4,061,081 / 1

$2,138,684 / 1 $29,333,149 / 5

16

17