vs. )
DEPARTMENT OF GENERAL SERVICES, ) CASE NO. 87-0620RX
Intervenors. )
Pursuant to agreement of the parties, this case was submitted to the undersigned Hearing Officer upon the filing of briefs and proposed final orders. There are no disputed issues of material fact. The legal issue in this case is whether Rule 13A-1.002(3), Florida Administrative Code, is an invalid exercise of delegated legislative authority. The parties were represented as follows:
Petitioner: Richard A. Lotspeich, Esquire
Respondent: Sandra E. Allen, Esquire
Intervenors: Charles S. Ruberg, Esquire Knott Building
Paul W. Lambert, Esquire Post Office Box 11189 Tallahassee, Florida 32302 (Microdyne Corporation)
The parties' proposed final orders were filed on June 25, 1987 and a ruling on each proposed finding of fact is included in the Appendix to this Final Order.
On February 14, 1986, the Department of Education (DOE) issued Invitation to Bid (ITS) No. 86-54. Changes were made to the bid specifications
in the form of addenda on March 5, 1986 and March 17, 1986. Six companies, including satellite Television Engineering, Inc. (Satellite), responded to the modified bid. After reviewing the bids, DOE rejected all bids except that of Microdyne Corporation (Microdyne) which DOE determined was the sole responsive bidder.
Satellite protested the DOE rejection of its bid as being unresponsive to the ITB specifications and a DOAH hearing was held in DOAH Case No. 86- 1880BID. The hearing officer and the DOE final order in Case No. 86-1880BID found that the Satellite bid was not responsive.
Because Microdyne was the sole responsive bidder, and there were thus no competitive bids received, DOE was required to seek certification from the Department of General Services (DGS), pursuant to Rule 13A-1.002(3), in order to negotiate a contract with Microdyne, rather than rebid the project. DOE sought the certification required by Rule 13A-1.002(3) and on September 8, 1986, DOS gave notice of its intent to authorize DOE to negotiate the contract with Microdyne.
Satellite filed a notice of protest of this intended decision and a petition for formal hearing under Section 120.53(5), Florida Statutes. There being no disputed issues of material fact, an informal hearing was held before a DGS hearing officer on October 28, 1986.
The disputed issue of law in the case before the DGS hearing officer was whether DGS properly used its discretion in applying Rule 13A-1.002(3) in its review of the DOE bidding process and final decision.
On November 13, 1986, the DGS hearing officer entered a Corrected Recommended Order recommending that DGS enter a Final Order authorizing DOE to negotiate a contract with Microdyne. On December 3, 1986, the Governor and Cabinet entered a Final Order adopting the recommendation of the hearing officer. Satellite has appealed this decision to the First District Court of Appeal.
The satellite network equipment which is the subject of ITB No. 86-54 is available from sources other than Microdyne, including Satellite.
No emergency exists, and therefore this is not the basis for negotiations between DOE and Microdyne.
Satellite is substantially affected by the DGS application of Rule 13A- 1.002(3) to ITB No. 86-54 because the rule, as interpreted by DGS, deprives Satellite of the ability to participate in rebidding of this project.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter in this cause. Section 120.56, Florida Statutes. Satellite has standing to maintain this challenge to Rule 13A-1.002(3).
Rule 13A-1.002(3), Florida Administrative Code, which is the subject of this case, states in pertinent part that:
Receipt of No Competitive Bids/Proposals, in the First Invitation to Bid/Request for Proposal on Commodities Exceeding the
threshold amount for Category Two-- When no competitive bids/proposals are received for the purchase of a commodity or group of commodities
exceeding the threshold amount for Category Two in the bid/proposal solicitation, the agency shall review the situation in
order to determine the reasons, if any, why no competitive bids/proposals were
received before issuing a second invitation to bid/proposals; provided, however, if
the agency determines that commodities are available only from a single source, or that conditions and circumstances warrant negotiation on the best terms and conditions, then the agency head may make a certification, in writing, as to the
conditions and circumstances to the Division of Purchasing. In addition, a copy of the complete bid invitation or request for proposal, a copy of any bids/proposals received, along with a tabulation sheet noting "no bid/no proposal" responses, a list of vendors by name and address from whom bid invitations/proposals were solicited and a copy of the notice of intended award indicating no protest has been filed within the prescribed posting time must accompany the certification.
The Division may, in writing, authorize the purchase or negotiation or require issuance of a second invitation to bid
or request for proposal. (Emphasis added.)
DGS relies upon the following statutory provisions as authority for the adoption of Rule 13A-1.002(13):
287.042 Powers, duties and functions.--
The division (of purchasing) shall have
the following powers, duties and functions: (1)(a) To canvas all sources of supply,
establish and maintain a vendor list, and contract for the purchase, lease, or acquisition in any manner, including purchase by installment sales or lease- purchase contracts which may provide for the payment of interest on unpaid portions of the purchase price, of all commodities required by any agency under competitive bidding or by contractual negotiation. Any contract providing for deferred payments and the payment of interest shall be subject to specific rules adopted by the division.
* * *
(13) Except as otherwise provided herein, to adopt rules necessary to carry out the
purposes of this section, including the authority to delegate to any state agency any and all of the responsibility conferred by this section, retaining to the division any and all authority for supervision thereof. Such purchasing of commodities and procurement of contractual services by
state agencies shall be in strict accordance with the rules and procedures prescribed by the Department of General Services.
287.062 Competitive bids, when required; exception; deferred-payment purchases.--
No purchase of commodities may be made when the purchase price thereof
is in excess of the threshold amount provided in Section 287.017 for
CATEGORY TWO unless made upon competitive bids received, except:
If the head of any state agency maintains that an emergency exists
in regard to the purchase of any commodity, so that the delay incident to giving opportunity for competitive bidding would be detrimental to the interests of the state, then the head of such agency shall file with the division a statement under oath certifying the conditions and circumstances. In the case of the emergency purchase of insurance,
the period of coverage of such insurance shall not exceed a period of 30 days; and all such emergency purchases shall be reported to the head of the Department of General Services.
Purchasing agreements, contracts, and maximum price regulations executed by the division are excepted from bid requirements.
Commodities available only from a single source may be excepted from the bid requirements upon the filing by the head of any agency of a certification
of conditions and circumstances with
the division if, subsequent thereto, the division authorizes the exception in writing.
When it is in the best interest of the state, the head of the Department
of General Services may authorize the division director to purchase insurance by negotiation, but this shall be done only under conditions most favorable
to the public interest and upon a showing that such purchase will result
in the lowest ultimate cost for the coverage obtained.
* * *
If no competitive bids or Proposals for commodity purchases are received, the division may negotiate on the best terms and conditions. (Emphasis added.)
Petitioner argues that the above-cited provision of Section 287.062(1), Florida Statutes, requires that when there is only one responsive bid to an invitation to bid, the agency must rebid unless an emergency exists, or the commodities are available only from a single source, or certain other conditions not pertinent hereto, which are specified in Section 287.062(1), are present. Respondent and Intervenors urge that Section 287.042(13), above, authorizes the Division of Purchasing to delegate to any state agency any and all responsibility conferred upon the Division, including its power to contract for the purchase or acquisition in any manner of commodities required by any agency under competitive bids. See Section 287.042(1)(a) above. Further, they point out that Section 287.062(2) specifically authorizes the Division to negotiate on the best terms and conditions when no competitive bids for commodities are received. Given this statutory authority, and in view of the overall responsibilities conferred upon the Division by Chapter 287, Florida Statutes, they contend that Petitioner's challenge to Rule 13A-1.002(3) is ill- founded. See Section 287.032(1)(2), Florida Statutes.
Petitioner responds that Section 287.062(2) authorizes the Division, not individual agencies, to negotiate when no competitive bids are received, and further that when an agency rejects all but one bid, and therefore has only one responsive bid, it does not have a situation where "no competitive bids" have been received, so as to even consider Section 287.062(2). Rather, Petitioner argues, that DGS has created an exception to competitive bidding that exceeds the specified exceptions set forth in Section 287.062(1), especially in light of the decision in Amdahl Corporation v. Florida Department of General Services, DOAH Case No. 79-625R, per curiam affirmed, 384 So.2d 1377 (Fla. 1st DCA 1980).
In Amdahl, the hearing officer found that if only one bid is received, a purchase cannot be made without rebidding unless it is under one of the exceptions set out in Section 287.062(1). The hearing officer decided that since one bid cannot be construed as "competitive bids received," the purchase of commodities when there is only one responsive bid must be done only when the specified exceptions provided in Section 287.062(1), or only after rebid.
DGS responds to the Amdahl case by pointing out the historical context in which Amdahl was decided. In 1979, the present Section 287.062(2) was found at Section 287.042(6) and the specific language of this section was slightly, but significantly, different. At the time of Amdahl, the statute applied to a bidding process in which "no bids are received." In 1980 Section 287.042(6) was moved to Section 287.062(3), and in 1983 was renumbered to the present Section 287.062(2) and amended to apply to situations when "no competitive bids" are received. DGS points out that by adding the word "competitive" in 1983, the legislature substantially amended the applicable standard so as to make the Amdahl decision inapplicable.
The rule under challenge in Amdahl concerned the situation where only one responsive bid was received. Rule 13A- 1.02(3). However, in 1979 there was no specific statutory provision concerned with the receipt of one responsive bid, but rather the applicable provision of then Section 287.042(6) referred to
a situation wherein no bids are received. In 1983 the language of present Section 287.062(2) was changed to refer to situations in which no competitive bids are received. Chapter 83-99, Section 4, and Chapter 83-132, Section 5, Laws of Florida. The language of Rule 13A-1.002(3) is consistent with Section 287.062(2) in that it also references the situation in which "no competitive bids" are received, and therefore DOS persuasively urges that Amdahl is distinguishable from and does not govern the case at issue. Specifically, in 1980 when Rule 13A-1.02(3) was invalidated, the enabling statute authorized negotiation when no bids had been received, while the rule sought to allow negotiation when only one bid was received. There is a significant difference between receiving no bids at all, and receiving no competitive bids (i.e.) only one responsive bid.
As reiterated in Austin v. Department of Health and Rehabilitative Services, 495 So.2d 777 (Fla. 1st DCA 1986):
. . . . agencies are given wide discretion in the exercise of their lawful rulemaking authority. "An agency's construction of a statute is entitled to great weight and is not to be overturned unless clearly erroneous."
Department of Professional Regulation, Board of Medical Examiners v. Durrani, 455 So.2d 515, 517 (Fla. 1st DCA 1984). This court in Agrico Chemical Co. v. Department of Environmental Regulation, 365 So.2d 759, 763 (Fla. 1st DCA 1978), cert. den. sub nom.
Askew v. Agrico Chemical Co., 376 So.2d 74 (Fla. 1979), stated that a court must uphold the validity of a proposed rule, if the rule is reasonably related to the purpose of the enabling legislation, and is not arbitrary and capricious. The burden is on one who attacks a rule to show that the rule exceeds its statutory delegated authority. The person attacking the rule must show also that the rule is arbitrary and capricious by a preponderance of evidence. Id.
See also General Telephone Company of Florida, et al. v. Florida Public Service Commission, 446 So.2d 1063 (Fla. 1984); Florida Waterworks Association v.
Florida Public Service Commission, 473 So.2d 237 (Fla. 1st DCA 1985); and State of Florida, Marine Fisheries Commission v. Organized Fishermen of Florida, 503 So.2d 935 (Fla. 1st DCA 1987).
Petitioner bears the burden in this case, and therefore must establish that the challenged rule exceeds DGS' delegated statutory authority, is not reasonably related to the enabling legislation and the intent of the legislature as expressed therein, or that DGS has acted arbitrarily or capriciously in the interpretation and application of Chapter 287, Florida Statutes. It is concluded that Satellite, as Petitioner, has not sustained its burden of proof in this case. It has not shown that the DGS interpretation of its own statutes is unreasonable, arbitrary or capricious, or that Rule 13A-1.002(3) is beyond delegated legislative authority.
Where, as here, an agency construes the statute in its charge in a permissible way, that interpretation must be sustained though another may be possible or even, in the view of some, preferable. State, Department of Health and Rehabilitative Services v. Framat Realty, Inc., 407 So.2d 238, 241 (Fla. 1st DCA 1981); Pan American World Airways, Inc. v. Florida Public Service Commission and Florida Power and Light Co., 427 So.2d 716, 719 (Fla. 1983). The Petitioner has failed to show that DGS' interpretative rule is clearly erroneous or unauthorized. See, Department of Revenue v. Skop, 383 So.2d 678 (Fla. 5th DCA 1980); ABC Liquors, Inc. v. Department of Business Regulation, 397 So.2d 696, 697 (Fla. 1st DCA 1981).
The interpretation of Sections 287.042(1)(a), (13) and 287.062(1), (2), Florida Statutes, given by DOS is reasonable and permissible, and gives effect to legislative intent expressed in those statutes. P. Crosby Associates
v. State Board of Independent Colleges, 506 So.2d 490 (Fla. 5th DCA 1987). Under this interpretation, the authority of the Division of Purchasing concerning the acquisition of commodities through competitive bids which is
conferred by Sections 287.042(1)(a) and 287.062(2), may be delegated to agencies for which the acquisition is to he made pursuant to Section 287.042(13). This interpretation is particularly persuasive when the historical evolution of Section 287.062(2) is considered. Specifically, Section 287.062(2) was formerly Subsection (6) of 287.042 at the time of Amdahl and referred to situations when no bids are received. Thereafter, legislative changes in 1983 renumbered present Section 287.062(2) and amended it to refer to situations in which "no competitive bids" are received.
Rule 13A-1.002(3) parallels Section 287.062(2) by referring to situations in which "no competitive bids" are received, and further authorizes negotiation for commodities in such instance "on the best terms and conditions." The rule requires the Division to review the agency's certification of the justification for negotiation, and specifies that the Division "may" authorize such negotiation "in writing." Thus, the Division, through its review and written authorization, does in fact have to make a determination of when a negotiation results in "the best terms and conditions" for the state. On the other hand, if the Division finds that negotiation is not proper and the acquisition should be rebid, Rule 13A-1.002(3) allows such rebid. Thus, the challenged rule preserves for the Division the ultimate authority to decide when a negotiated purchase may proceed, consistent with Section 287.062(2), Florida Statutes.
Section 287.062(1)(a), Florida Statutes, does not limit the authority conferred by Section 287.062(2), but rather represents supplemental and additional authority of the Division. Section 287.062(1)(a) sets forth exceptions to the competitive bidding process which may obviate the need to initiate a competitive bidding process in the first instance when an emergency exists, or a single-source commodity, insurance, or purchasing agreements and contracts are involved. Section 287.062(2) clearly contemplates that competitive bids have been sought since it refers to none having been received, and then authorizes negotiation in such instance "on the best terms and conditions." Rule 13A-1.002(3) is captioned, "Receipt of No Competitive Bids/Proposals in the First Invitation to Bid..." Thus, the rule in question is consistent with the situation envisioned in Section 287.062(2) since they both deal with processes in which an invitation to bid has been issued but no competitive bids have been received. In contrast, Section 287.062(1)(a) sets forth certain exceptions which obviate the need to seek competitive bids in the first instance. Thus, Satellite's argument that Rule 13A-1.002(3) is in conflict with Section 287.062(1)(a) is not well-founded since Section
287.062(1)(a) is not applicable to the situation referred to in Section 287.062(2), to which this rule is directed.
ORDERED that the challenge to Rule 13A-1.002(3) of Petitioner Satellite Television Engineering, Inc., is hereby DISMISSED and the relief sought therein is DENIED.
DONE and ORDERED this 22nd day of July, 1987, in Tallahassee, Florida.
DONALD D. CONN
Filed with the Clerk of the Division of Administrative Hearings this 22nd day of July, 1987.
APPENDIX TO FINAL ORDER, CASE NO. 87-0620RX
1 - 9. Adopted in Findings of Fact 1 - 9.
1 - 8. Adopted in Findings of Fact 1 - 9.
this does represent an appropriate finding of fact based upon the fact that all parties have stipulated that Microdyne was the sole responsive bidder.
Richard A. Lotspeich, Esquire Post Office Box 271 Tallahassee, Florida 32302
Sandra E. Allen, Esquire Room 452, Larson Building
Charles S. Ruberg, Esquire Knott Building
Paul W. Lambert, Esquire Post Office Box 11189 Tallahassee, Florida
32302 Ronald W. Thomas Executive Director
Department of General Services Room 133, Larson Building Tallahassee, Florida 32399-0955
A PARTY WHO IS ADVERSELY AFFECTED BY THIS FINAL ORDER IS ENTITLED TO JUDICIAL REVIEW PURSUANT TO SECTION 120.68, FLORIDA STATUTES. REVIEW PROCEEDINGS ARE GOVERNED BY THE FLORIDA RULES OF APPELLATE PROCEDURE. SUCH PROCEEDINGS ARE COMMENCED BY FILING ONE COPY OF A NOTICE OF APPEAL WITH THE AGENCY CLERK OF THE DIVISION OF ADMINISTRATIVE HEARINGS AND A SECOND COPY, ACCOMPANIED BY FILING FEB PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, OR WITH THE DIS- TRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE PARTY RESIDES. THE NOTICE OF APPEAL MUST BE FILED WITHIN 30 DAYS OF RENDITION OF THE ORDER TO BE REVIEWED.
