STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CHUCK BUNDSCHU, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 82-0312BID

) STATE OF FLORIDA, DEPARTMENT OF ) HEALTH AND REHABILITATIVE )

SERVICES, )

)

Respondent, )

and )

) WALTER LEE JOHNSON d/b/a WALCO ) LEASING COMPANY, )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, a hearing was held before Charles C. Adams, a Hearing Officer with the Division of Administrative Hearings. This hearing was conducted in the City Council Chambers, City Hall, 2200 Second Street, Fort Myers, Florida, commencing at 10:45 A.M., April 27, 1982. 1/

APPEARANCES

For Petitioner: Terry V. Broughton, Esquire

Post Office Drawer DD 2207 1st Street

Ft. Myers, Florida 33902

For Respondent: Anthony N. Deluccia, Jr., Esquire

District VIII, Legal Counsel Department of Health and

Rehabilitative Services 8800 Cleveland Avenue South Post Office Box 06805

Fort Myers, Florida 33907

For Intervenor: Truman J. Costello, Esquire

Post Office Drawer 06205 1873 College Parkway

Fort Myers, Florida 33902

ISSUE

The questions presented here concern the entitlement of the Petitioner or Intervenor to be awarded lease rights under the Respondent's proposed Lease No.

590:8026, in that Petitioner and Intervenor have claimed that entitlement to the exclusion of the other party.

FINDINGS OF FACT

1. Respondent invited bid proposals for the provision of approximately 32,000 square feet of office space for its District VIII operation in Fort Myers, Florida. Petitioner, Chuck Bundschu, Inc., and Intervenor, Walter Lee Johnson d/b/a Walco Leasing Company, responded to the bid proposal by offering to provide the office space. Those responses may be found as part of the Composite Hearing Officer's Exhibit.

   
   

2. Following the October, 1981, submittal of bid proposals, a bid evaluation committee was appointed by the Subdistrict Administrator for District VIII to consider the bids. In turn, he afforded guidance to that committee on the subject of the evaluation of the proposed bids offered by Bundschu and Walco, the only bidders for the project.

   
   

3. The evaluation committee performed the task of weighing the bid proposals, in keeping with evaluation criteria which are outlined in Respondent's "Facilities, Acquisition and Management Manual" dealing with the procurement of lease space, which criteria are set forth in a form referred to as "HRSM 70-1, page A1-4-8," which is attached to chapter four of the manual. All criteria used for the evaluation process were drawn from that form with the exception of criterion No. 7, related to staff and client marking which was a product of this bid evaluation effort. (A copy of the HRS manual and forms may be found as Respondent's Exhibit No. 1, admitted into evidence. The evaluation committee's summarization utilizing the form criteria and the additional parking criterion may be found as a part of the Hearing Officer's Composite Exhibit, which is a replication of the original.)

   
   

4. The HRS manual for procuring leased space is a publication of February, 1980, and establishes uniform guidelines by which bid proposals are considered by local officials who are part of Respondent's organization. Nonetheless, the exact weight to be afforded each criterion outlined in the manual is determined by the local evaluation committee. Weighing concerns the subject of awarding numerical values for beach bidder related to the various criteria with a maximum possible score being 100 points.

   
   

5. On the basis of the evaluation performed by the committee, the Bundschu total was 88.25 points and the The Walco point total was 82 out of the possible

   100 points. Consequently, the evaluation committee recommended that Bundschu be awarded the lease. Mark Geisler, in his capacity as Subdistrict Administrator, for District VIII, concurred in this evaluation as may be seen in his November 6, 1981, transmittal of the bid materials and associated evaluation, which transmittal may be found as pert of the Hearing Officer's Composite Exhibit.

   
   

6. The District Administrator, District VII, in the person of Frances Clendenin, who was acting for the District Administrator, Ivor D. Groves, Ph.D., also recommended acceptance of the Bundschu bid. This position was made known by a memorandum of November 16, 1981. A copy of that recommendation is found as a part of the Hearing Officer's Composite Exhibit.

   
   

7. The recommendations spoken to thus far were made known to Lester C. Missman, an official within the Division of General Services of the Department of Health and Rehabilitative Services. This division was, at the time of the bid proposals, and is now, headed by Dr. Homer Ooten, whose function within

   Respondent's organization includes the responsibility to evaluate lease proposals involving the Respondent agency and to make a final decision on the question of the lease award, based upon a review of the local subordinate unit's recommendation. By this, it is meant that the lease by Health and Rehabilitative Services as "user agency" is signed by Ooten based upon a delegation of authority to him through the vehicle of correspondence signed by the agency head.

   
   

8. Ooten, upon considering the recommendation of the District Administrator's office, the Subdistrict Administrator and the evaluation committee, did not find fault with the criteria nor the point weighing scheme used in the evaluation process. He did question the cost analysis performed by the evaluation committee on the subject of client mileage for those clients receiving services from Respondent in a move from the HRS office in the Bundschu building where they were located at the time, to the building where Walco intended to let property. This was a distance of seven/tenths (7/10) of a mile and based upon the number of clients receiving services, there would be an estimated $100,000.00 in client mileage cost increase. This item was not deemed to be an appropriate consideration by Ooten and was disregarded in his review of the cost analysis performed by the evaluation committee. That cost analysis may be found as part of Respondent's Composite Exhibit No. 2, and includes interlineations by Ooten in his opinion on the subject of the cost analysis.

   
   

9. That analysis had indicated an overall advantage of approximately

   $11,000.00 in favor of Bundschu and was premised upon costs related to Item 12 in the criteria, which criterion is cost of moving. It assumed a difference of over $131,000.00 in moving costs, the majority of which costs pertained to client inconvenience ($100,000.00), discounting $120,000.00 plus dollars related to the difference in the bid amount between the Walco and Bundschu bids which bid estimate was in favor of Walco. Ooten's opinion on the subject of the priority of including $100,000.00 plus dollars in clients' travel costs, when considered in the context of point awards under Item 12 in the criteria, lead Ooten to believe that the differential in point awards would not result in a

   9.25 value of Bundschu versus a zero value for Walco. In his mind, the differential would be much less.

   
   

10. Ooten made his own evaluation of moving costs per se, and through that process determined that approximately $15,600.00 would be necessary for a move into the Walco facility whereas $5,600.00 would be involved in the Bundschu move, which required the expansion of existing space in the Bundschu facility.

    
    

11. Based upon an evaluation of the point differential in the rental rate criterion which was a differential of 2, that is 30 points out of a possible 30 for Walco and 28 points out of a possible 30 for Bundschu, Ooten also opined the this was an unreasonable assessment in view of the fact that the Walco bid amount was more than $120,000.00 less than the Bundschu bid. This taken together with the fact that there only existed approximately a $9,000.00 difference on moving costs between Bundschu and Walco, which was in favor of Bundschu, and there having been indicated a 9.25 out of a possible 10 point difference in Item 12 on the question of costs related to moving, led Ooten to believe that the true factual status of criteria Nos. 1 and 12 was not as depicted by the evaluation committee. Per Ooten, with proper assessment Walco would have received a higher point count than Bundschu through the process of applying the bid criteria, as well as being the lower bidder from the point of view of rental rates alone.

12. After several exchanges with the District level personnel of Respondent who had been involved in the lease evaluation process, in which, on two (2) occasions, the local officials continued to support their initial opinion of the propriety of the award to Bundschu, a decision was made at the District VIII level to support the award of the lease to Walco as may be seen in the January 6, 1982, correspondence from the District Administrator to Missman, a copy of which may be found as Respondent's Exhibit No. 4, admitted into evidence.

    
    

13. On January 6, 1982, Ooten issued a letter to the District VIII Administrative Services Director indicating the authority to award Lease No. 590:8026, formerly referred to as No. 590:1472, for the benefit of Walter Lee Johnson d/b/a Walco Leasing Company. Having learned of this decision and in keeping with the provision Subsection 120.53(5), Florida Statutes, Bundschu, through counsel, indicated opposition to that award on January 12, 1982, followed by a formal petition letter setting forth grounds for the opposition, which petition was filed on January 19, 1982. This series of documents is part of the Hearing Officer's Composite Exhibit, through copies.

    
    

14. Subsequently, Items 4 and 6 in the petition letter were resolved between the parties without the necessity of a hearing and this is borne out by a copy of the February 1, 1982, correspondence from counsel for the Respondent to counsel to the Petitioner, part of the Hearing Officer's Composite Exhibit. The matter was then referred to the Division of Administrative Hearings for a formal Subsection 120.57(1), Florida Statutes, hearing by correspondence from the Assistant General Counsel for Respondent, dated February 4, 1982, a copy of which may be found as a part of the Hearing Officer's Composite Exhibit. There followed the intervention of Walter Lee Johnson as a party of record and the hearing was held on April 27, 1982.

    
    

15. Petitioner's first contention deals with the idea of discounting the lease value based on the value of the "stream of future lease payments." This theory is contended for through Robert Sizemore, C.P.A., expert witness of the Petitioner. He would call for the discount of lease payments on the theory that present dollars will have a discounted value in the future, as the lease period unfolds.

    
    

16. Taking into account the method of payment by the Respondent and the vicissitudes involved in attempting to establish the value of today's dollar at a future time, this theory of discounted dollars at a 10 percent or 12 percent rate per annum in succeeding years is not indicated. Assessment through the legislative appropriations process of sufficient funds to meet lease payment demands is not contingent upon the value of the dollar at any given point in the history of the lease. Therefore, the "stream of future lease payments" concept is inapplicable here. Likewise, trying to project the value of today's dollar at some future date is so tenuous as to be an unacceptable method to evaluate the competing lease proposals. Finally, even if this method was used, a 10 percent discount rate for inflation would leave approximately a $67,000.00 difference in the bid proposals and a 12 percent per annum discount rate related to inflation would leave approximately $52,000.00 difference in the bid proposals, in favor of the Walco bid.

    
    

17. Petitioner has contended that Respondent failed to properly account for direct moving expenses. In that regard, the calculations made by Ooten on the question of moving expenses as reported above are accepted as fact.

18. As a third claim, Petitioner has alleged the agency s disregard for recommendation of its evaluation committee in making the lease award. While the initial recommendations of the evaluation committee and staff were disregarded, the District Administrator eventually accepted the point of view of the Division of General Services within the Respondent's Department. Moreover, even if the local officials within the Respondent's Department had not accepted Ooten's viewpoint, the initial evaluation committee's development of criteria was flawed and the Ooten perception was correct, leading to a decision in favor of Walco.

    
    

19. Finally, the contention by Petitioner that the agency did not seek adequate input from third parties affected by the relocation of the facility was not demonstrated through testimony. The method for review of the proposed lease was acceptable and to the extent that it required an appreciation and response to the needs of others not directly involved in the lease process, it has been amply afforded. Evaluation was in keeping with Respondent's "Facilities, Acquisition and Management Manual, HRSM 70-1, fourth chapter" and the award is based upon concurrence of the Division Director of the General Services Division of HRS pursuant to that chapter.

    
    

20. Through argument, counsel for the Petitioner has also referred to the fact that in the initial evaluation process set forth in the sixth criterion, superior points of 2.5 for Walco as opposed to 2.25 for Bundschu had been awarded, when in fact the narrative summary of the reasons for such awards indicate an advantage to Bundschu. Even if the .25 points were allowed in the favor of Bundschu, this would not change the result.

    
    

    CONCLUSIONS OF LAW

    
    

21. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties to this action.

    
    

22. This project involving leased space exceeded more than 2,000 square feet and therefore it was necessary that the lease be awarded to the "lowest and best bidder" on the basis of the advertisement for and receipt of competitive bids. Subsection 255.25(3)(a), Florida Statutes. 2/

    
    

23. In keeping with Rule Section 13D-7.092(6)(d), Florida Administrative Code, selection of the "lowest and best bidder" is the province of the "user agency." In this instance, Respondent, Health and Rehabilitative Services, is the "user agency."

    
    

24. To effect these purposes and in the way of emerging or developing agency policy, the Respondent agency has prepared HRSM No. 70-1, dealing with procurement of leased space. This manual includes guidelines for the evaluation of the bid proposals by a local evaluation committee, the review of the recommendation of that committee by the Director of General Services for the Department of Health and Rehabilitative Services and his concurrence. These steps were followed in the course of this bid proposal, Lease No. 590:8026, formerly 590:1472.

    
    

25. Based upon consideration of these matters, it is concluded that the method for reviewing the question of the "lowest and best bidder," by the establishment of guidelines in the aforementioned manual and compliance by the Respondent with those requirements on this occasion, justifies the decision to award the disputed lease to Walter Lee Johnson d/b/a Walco Leasing Company. It is, therefore,

RECOMMENDED:

That a final order be entered awarding Lease No. 590:8026, formerly No.

590:1472, to Walter Lee Johnson d/b/a Walco Leasing Company.

DONE and ENTERED this 15th day of June, 1982, in Tallahassee, Florida.

CHARLES C. ADAMS, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 15th day of June, 1982.

ENDNOTES

1/ The parties to this action have submitted proposed findings of fact, conclusions of law and recommended dispositions, together with legal argument. These matters have been reviewed prior to the entry of this Recommended Order. To the extent that the materials are consistent with the Recommended Order, they have been utilized. To the extent that they are inconsistent with this Recommended Order, they are hereby rejected.

2/ No state agency shall enter into a lease as lessee for the use of 2,000 square feet or more of space in a privately owned building except upon advertisement for and receipt of competitive bids and award to the lowest and best bidder.

COPIES FURNISHED:

Terry V. Broughton, Esquire Post Office Drawer DD

2207 First Street

Fort Myers, Florida 33902

Anthony N. Deluccia, Jr., Esquire District VIII, Legal Counsel Department of HRS

8800 Cleveland Avenue South Post Office Box 06805

Fort Myers, Florida 33907

Truman J. Costello, Esquire Post Office Drawer 06205 1873 College Park Way

Fort Myers, Florida 33902

Beverly E. Myers, Esquire (Information Copy) Post Office Box 2366

Fort Myers, Florida 33902

David Pingree, Secretary Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32301

Docket for Case No: 82-000312

Orders for Case No: 82-000312