STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

INTERCONTINENTAL PROPERTIES, INC. ) and NU-WEST FLORIDA, INC., )

)

Petitioners, )

)

vs. )

)

DEPARTMENT OF REVENUE, ) CASE NO. 88-3422BID

)

Respondent, )

and )

)

241 E. 76TH STREET COMPANY d/b/a ) FOUNTAINS OF PLANTATION, )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on July 27, 1988, in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: Clifford A. Kornfield, Esquire Intercontinental 701 Southwest 27th Avenue Properties, Inc.: Miami, Florida 33135

For Petitioner: Michael W. Ford, Esquire Nu-West Florida, Inc.: Southeast Financial Center

200 South Biscayne Boulevard Suite 4500

Miami, Florida 33131-2387

For Respondent: Gene T. Sellers, Esquire

C. Lynne Chapman, Esquire Post Office Box 6668

Tallahassee, Florida 32399-6668

For Intervenor: Charles L. Curtis, Esquire

1177 Southeast Third Avenue Fort Lauderdale, Florida 33316

BACKGROUND

On June 22, 1988, respondent, Department of Revenue (DOR), issued proposed agency action in the form of a letter advising all bidders that intervenor, 241 East 76th Street Company, d/b/a Fountains of Plantation, had been awarded Lease Bid No. 720-0083 to supply office space for DOR in Broward County, Florida. The

letter also advised petitioner Intercontinental Properties, Inc. and Nu-West Florida, Inc., that their bids had been rejected as being nonresponsive.

Thereafter, petitioners timely filed their notices of protest on July 1, 1988. In their protests, petitioners alleged generally that he agency had acted in an arbitrary and capricious manner in rejecting their proposals and awarding the contract to intervenor.

The matter was referred by DOR to the Division of Administrative Hearings (DOAH) on July 14, 1988 with a request that a hearing officer be assigned to conduct a hearing. By notice of hearing dated July 15, 1988, a final hearing was scheduled for July 27, 1988 in Fort Lauderdale, Florida.

At final hearing petitioner Intercontinental presented the testimony of Nestor Mendoza, its leasing agent, and offered Intercontinental exhibits 1 and

1. An objection to exhibit 1 was sustained. Petitioner Nu-West presented the testimony of Philip Saia, its director of marketing and leasing. It also offered Nu- West exhibits 1-3. All exhibits were received in evidence. Respondent DOR presented the testimony of John Driggers, DOR assistant bureau chief for field services, Bernard Fox, DOR district administrator for Broward County, Thomas D. Cooper, DOR assistant director of administration, Philip Saia, and Sam D. Alexander, then DOR acting executive director. DOR also offered DOR exhibit 1 which was received in evidence. Intervenor Fountain offered Fountain exhibit 1 which was received in evidence. The parties stipulated into evidence joint exhibits 1-16. Finally, by post-hearing motion of DOR, exhibits A and B were received in evidence.

   
   

   The transcript of hearing (two volumes) was filed on September 15, 1988.

   1/ Proposed findings of fact and conclusions of law were filed by Nu-West, DOR and Plantation on September 26, 1988. A ruling on each proposed finding is made in the Appendix attached to this Recommended Order.

   
   

   At the outset of hearing, motions to dismiss the protest of The Urban Group, Inc. were granted. A brief discussion of that ruling is found in the Conclusions of Law portion of this Recommended Order.

   
   

   The issue is whether respondent acted arbitrarily and capriciously in rejecting petitioners' proposals as being nonresponsive and in awarding the contract to intervenor.

   
   

   Based upon all of the evidence, the following findings of fact are determined:

   
   

   1/ The delay in issuing this Recommended Order is attributable to the transcript of hearing not being filed until more than seven weeks after the final hearing.

   
   

   FINDINGS OF FACT

   
   

   1. Introduction

      
      

      1. In February, 1988 respondent, Department of Revenue (DOR), issued a Request for Proposal and Bid Proposal Submittal Form (RFP) inviting qualified and interested vendors to submit proposals for providing approximately 19,300 square fee of office space in the central area of Broward County for DOR's district office. The contract was identified as Lease Bid No. 730-0083. The space was to be made available on July 1, 1988 or 30 days after the bid was

         awarded, whichever was later. According to the RFP, the term of the lease was five years with an option to renew for a second five year period. Sealed bids were to be filed in Tallahassee no later than 2:00 p.m. on May 2, 1988. The RFP scheduled a "preproposal conference" on April 4, 1988 at DOR's district office. It stated further, that any questions concerning the specifications should be directed to Thomas D. Cooper, DOR's assistant director of administration.

         
         

      2. Under DOR's bidding process, a four person evaluation committee made up of DOR district employees was assigned the responsibility of reviewing all bids and inspecting the proposed office sites. Using twelve prescribed evaluation criteria, one of which was the rental rate, the committee assigned numerical scores to the top seven bids. Its report was then forwarded to Tallahassee as a nonbinding recommendation. There, the assistant director of administration was charged with the responsibility of reviewing the committee's recommendations and to make a further recommendation to the executive director. As always, the final decision rested with DOR's then acting executive director, Sam D. Alexander. It was DOR's intention to ultimately award the contract to the vendor submitting the lowest and best proposal.

         
         

      3. Fifteen proposals were timely filed by various vendors, including petitioners, Intercontinental Properties, Inc. (Intercontinental) and Nu-West Florida, Inc. (Nu-West) , and intervenor, 241 East 76th Street Company d/b/a Fountains of Plantation (Plantation). After reviewing the proposals and office sites, the DOR evaluation committee assigned the following numerical scores to the top three bidders: Intercontinental-87 percent; Nu-West - 87 percent, and Plantation - 85 percent. However, it recommended that the bid not be awarded to Intercontinental because of its unfavorable site location and because no local government permits had been obtained to construct a drive-through facility. The committee characterized Nu-West's proposal as a "class operation" and noted that 1the committee is unanimous in it's (sic) recommendation that Nu-West Florida Inc.'s bid offers more for the Department when all factors are considered." Finally, the committee criticized Plantation's site location and anticipated delays in remodeling its building. This evaluation was forwarded to DOR's acting executive director on May 17, 1988.

         
         

      4. On Wednesday, June 1, 1988 DOR's assistant purchasing director, Barbie Foster, gave telephonic notice to all bidders that the contract would be awarded to Intercontinental and that other bidders had 72 hours in which to file a protest. At 11:30 a.m. that same day, DOR posted a "bid tabulation sheet" reflecting the unit cost (per square foot) of office space submitted by twelve vendors and recommending that the contract be awarded to Intercontinental. The tabulation sheet indicated also that unless the parties "file(d) a protest within the time prescribed in section 120.53(5), Florida Statutes," they waived their right to a hearing under chapter 120. Nu-West filed its protest on June 3, 1988. By June 6, two other protests had been filed, including that of Plantation. On June 9, 1988 DOR issued its first written advice on the subject to the parties. The advice, which was in the form of a letter from Foster to the president of Intercontinental, read as follows:

         
         

         This letter is to notify you that as of 11:30 A.M., June 6, 1988, the Department has received three (3) letters of Intent to protest the recommended contract submitted for office space in Ft. Lauderdale, Bid No.: 87/88-238.

         Enclosed please find copies of the

         (3) letters submitted. As you are aware, the

         awarding process on this lease is now at a stand still until the protests are resolved.

         The Department's legal counsel will be in touch with you in the very near future.

         Should you wish to contact Mr. Bill Townsend, Director of Technical Assistance, please feel free to do so, he can be reached at (904)

         488-0712.

         
         

      5. A settlement conference was held in Fort Lauderdale on June 17 in an effort to informally resolve the matter. At that time, or shortly thereafter, DOR learned that the proposals of Intercontinental and Nu-West allegedly did not conform to specifications. On June 22, 1988 DOR issued its second notice of intent to award the contract and advised all vendors that the contract was being awarded to Plantation, the third ranked vendor, and that the proposals of Intercontinental and Nu-West were rejected as being nonresponsive. Such notice was in the form of a letter to each bidder advising the name of the successful bidder, giving a short summation of the reason why a particular vendor had been rejected and offering a clear point of entry to a formal hearing. In the case of Intercontinental, DOR advised that Intercontinental's bid was "non- responsive" since it failed "to comply with paragraph D4A, p. 14," it was "not the owner of record of the subject project," and it had not furnished its "authority to offer the facility." As to Nu-West, DOR found its bid "nonresponsive in the requirement of two drive-in stations as set forth in paragraph B14D, p. 14 of the Request for Proposal" because Nu-West had "indicated (it) would provide only one window and a drop box." These letters prompted the filing of formal protests by petitioners.

         
         

   2. Bid Requirements

      
      

      1. Pertinent to this controversy are two items in the RFP which formed the basis for DOR's rejection of petitioners' bids. First, Item B14 sets forth various miscellaneous requirements imposed on the bidder. Paragraph D. of that item provided as follows:

         
         

         The Department requires a drive-through teller facility similar to banking and savings and loan institutions. This may be located within the office or may be connected to the office by a pneumatic tube system (minimum of two stations required)

         (Emphasis added)

         
         

         This item was required because of a recently instituted DOR policy that all district offices have drive-in facilities for taxpayers. As old office buildings are vacated and new ones occupied, DOR requires that the new landlord provide teller facilities. At present, only three district offices in the state (Miami, Tampa and Tallahassee) have teller facilities but DOR plans eventually to install such facilities at all district offices. In this case, DOR envisioned a facility that would be similar to a small banking facility with two work stations that could handle two taxpayers simultaneously. It was necessary that teller facilities be provided since taxpayers often submit money and documentation and pose questions that must be answered by the tellers. As an alternative to two teller stations, DOR considered accepting one teller station and a drop box connected by a pneumatic tube to the main building. However, the use of a drop box without a pneumatic tube was unacceptable since DOR would

         "lose control" over deposits and lack the necessary security for handling taxpayer money. This item was considered to be material by the agency.

         
         

      2. Secondly, Item D.4.A. provided that:

         
         

         4.A. Each proposal shall be signed by the owner(s) , corporate officers, or legal representative(s). The corporate, trade, or partnership title must be either stamped or typewritten beside the actual signature(s). If the Bid Submittal is signed by an Agent, written evidence from the owner of record of his/her authority must accompany the proposal. If the Bid Submittal is offered by anyone other than the owner or owner's agent, proof of the bidder's authority to offer the facility; i.e., copy of bidder's Option to Purchase, must accompany the proposal. This option must be valid through the validity date established for bids. If a corporation foreign to the State of Florida is the owner of record, written evidence of authority to conduct business in Florida must accompany the Bid Submittal. (Emphasis added)

         
         

         The purpose of this item was to give DOR proof that the bidder was authorized to act for the property owner, or, if the bidder was not an agent, to give DOR written assurance that the bidder had an option to purchase, leasehold interest or some other form of interest in the subject property. This was because DOR could not be expected to sign a lease if it was unsure whether it would have the legal right to occupy the property. DOR considered this item to be a material item within the specifications.

         
         

      3. The first page of the RFP contained the following admonition to bidders:

         
         

         It is the bidder's responsibility to be familiar with all aspects of the bid package outlined below and attached hereto.

         
         

         Finally, page 14 of the RFP contained the following certification to be executed by the bidder when the bid was filed:

         
         

         I hereby certify as owner, officer, or authorized agent, that I have read the request for proposal package and all its attachments and acknowledge my understanding of and agreement to abide by all requirements and conditions contained therein.

         
         

   3. Intercontinental's Bid

      
      

      1. Intercontinental was not the owner of the property that was offered to DOR in Intercontinental's bid submission. This was confirmed at hearing by Intercontinental's leasing agent, Nestor Mendoza. According to Mendoza, the property was owned by a partnership using the name "441 South Partnership" but was leased to Intercontinental prior to the bid being submitted.

      2. Intercontinental filed its bid in Tallahassee on May 2, 1988. The certification on page 14 of Intercontinental's submission was signed in the following manner:

         
         

         Intercontinental Properties, Inc. Bidder's Name (typewritten)

         
         

         59-1508950

         Bidder's F.E.I.D. or S.S. Number

         
         

         (Illegible)

         Authorized Signature (manual)(Seal)

         
         

         Caroline Weiss

         Authorized Signature (typewritten)

         
         

         President

         Title (typewritten)

         
         

         Notwithstanding the requirement in item D.4.A., there was no documentation attached to Intercontinental's proposal reflecting that Intercontinental had authorization from the true owner to submit a bid or that it had a legal interest in the property. Therefore, DOR assumed that Intercontinental was the legal owner of the property. According to Mendoza, he carried documentation to Tallahassee on May 2 confirming Intercontinental's interest in the property but did not attach it to the proposal because he was under the impression that such documentation was necessary only if Intercontinental was "acting as an agent." Even though this "impression" was contrary to the requirements of the specifications, Mendoza maintained that he understood all RFP requirements.

         
         

      3. Mendoza was elated after receiving a telephone call on June 1, 1988 from Foster, who advised that Intercontinental had received the award. He was told also that, unless protests were filed within 72 hours, the firm would win the contract. In giving its preliminary intent to award the bid to Intercontinental, DOR overrode its committee's contrary recommendation.

         
         

      4. After a closer examination of Intercontinental's submission was made, DOR learned that, while Caroline Weiss, Intercontinental's president, had executed the bid submission, Intercontinental was not the legal owner of the property that was described in the proposal. DOR noted also that there was no documentation attached to the proposal, as required by item D.4.A. At a settlement conference held on June 17, 1988 Intercontinental maintained it had a leasehold interest in the property but declined, for whatever reason, to give DOR representatives any proof of this assertion. Because of this, DOR concluded properly that Intercontinental's bid was nonresponsive.

         
         

      5. During final hearing, Mendoza pointed out that, prior to the bid being submitted, DOR representatives had never questioned him concerning who was the true owner of the property and that he never made representations that Intercontinental owned the property. Intercontinental twice attempted to offer into evidence at hearing what purported to be a copy of a lease agreement in which Intercontinental had leased the property in question from another party. However, the document was never properly authenticated. Even if it had been authenticated, it was too late for Intercontinental to modify its bid submission since the documentation was required with Intercontinental's original submission filed on May 2, 1988.

   4. Nu-West's Bid

      
      

      1. Nu-West first learned of DOR's interest in new office space in February, 1988. After obtaining an RFP, Philip Saia, Nu-West's director of marketing and leasing, telephoned DOR's assistant director of administration to get clarification on several items in the specifications. Saia was told by Cooper to attend a prebid conference on April 4, 1988 in Fort Lauderdale. Also, he was told to telephone John Driggers, the author of the RFP and a district employee. Saia telephoned Driggers and was advised that all questions would be answered at the conference on April 4. Early on the morning of April 4, Saia met with Driggers and Bernard Fox, DOR district administrator, to discuss the item relating to the drive-through tellers and to show them Nu-West's facility. Saia's concern was that, due to space limitations and the cost of a pneumatic tube system, Nu-West would be priced "out of the ballpark" and would be unable to submit a bid. The three discussed other alternatives but reached no agreement. Driggers denied telling Saia that his proposal would comply with specifications but conceded he "probably led them to believe" that Saia's proposal would be "acceptable." Fox's principal concern was whether sufficient security could be provided for an unattached drop box. He voiced this concern to Saia.

         
         

      2. At the prebid conference later that day, another vendor queried the two DOR representatives (Driggers and Fox) about the drive-through teller requirement. Saia asked no questions. However, Saia contended that, in response to the other vendor's question, DOR representatives were "vague" and left the matter "very open." The actual dialogue between the vendor and Driggers is reflected in the transcript of the meeting received in evidence as DOR exhibit 1. According to the transcript the following exchange on the subject took place:

         
         

         (by unidentified vendor) On the drive through facility you asked about the pneumatic . . . you have a requirement for pneumatic tubes.

         
         

         1. (by John Driggers) Okay. On the drive through facility what we are trying to reflect there is we would prefer a facility for security purposes that would be contiguous with the office so that it would not be located away from the office. We would entertain a remote type facility that was connected with the office by pneumatic tubes or something that would be feasible.

            We don't necessarily kick out the possibility that we might use a facility that would not be contiguous to the office itself. However, we would look at that very carefully to make sure that it did meet requirements and that we could feel that it would be a secure place to use for the employees and for the . . .

            We do accept cash in these offices. What I'm trying to do is to give you some options there because there is no telling what kind of facility that you could come up with that would be acceptable. (Emphasis added)

            Driggers also advised vendors that if they had any further questions, they should be addressed to Fox.

            
            

      3. Saia concluded that, given the space limitations in Nu-West's building and the need for a local government site approval plan, the most cost-effective way to meet the requirement was to have one drive-through teller "adjacent to the building" and a drop-box in a separate location not contiguous to or connected with the main building. The use of a drop box was based on Saia's impression that DOR wanted the capability of receiving customer deposits after regular business hours and that a "facility" was not necessarily a teller window. He reasoned that this was comparable to the type of facilities used by banks and would be "a good solution to the problem."

         
         

      4. To reinforce his idea, Saia met with Fox a second time on April 19, 1988 and showed Fox his proposed plans. According to Saia, Fox told him the plans were "very acceptable." However, Fox's recollection of the conversation was different, and he remembered making no such commitment that the plans were acceptable. Instead, Fox told Saia that a drop-box with one window was better than only one window but that his overall concern was with security. In any event, Saia relied on this meeting to formalize the drop box plan in his bid submission. He went so far as to submit the plans to the City of Lauderdale Lakes for site review approval.

         
         

      5. Nu-West's submission was timely received by DOR. On page 8 of 14 of the RFP, Nu-West responded to the drive-through teller requirement with the following statement:

         
         

         Drive through teller window and one outside drop box will be provided in the manner shown on the enclosed site plan, subject to final approval by the City of Lauderdale Lakes, which has been applied for. (Preliminary approval has been obtained).

         
         

         The attached site plan is depicted on Joint Exhibit 3A and reflects a single drive-through teller facility. The drop box did not have a pneumatic tube system connecting the box to the main facility. This constituted a material deviation from the specifications. It is noted that of the fifteen vendors filing proposals, only Nu-West failed to provide for two drive-through tellers.

         
         

      6. A week or so after Nu-West's bid was submitted, the DOR evaluation committee visited Nu-West's office site. The team stayed on the premises for two hours. Saia recalled that even though the team discussed the proposed single drive-in teller facility idea and was shown its proposed location, he heard no objections. In its written evaluation report of Nu- West's bid dated May 17, the committee made no mention of any deficiency in the drive-through teller proposal and described Nu- West's proposed site as "a class operation." Nu-West was also given a grade of 87 and unanimously recommended for award of the contract.

         
         

      7. On June 2 Saia was advised by telephone that Intercontinental had been awarded the bid. Thereafter, Nu-West timely filed its protest. At the settlement conference held on June 17, Saia was not told his bid had been rejected because it was nonresponsive. He did not learn this until he received a telephone call a few days later from DOR's acting executive director. This was followed by DOR's letter of June 22 advising that Plantation had been awarded the bid and that Nu-West's bid had been rejected on the ground the

         proposal did not provide for two drive-through tellers. When this final decision was made by DOR, neither Cooper or Alexander were aware of any representations that might have been made to Saia by Fox or Driggers.

         
         

      8. Nu-West is willing to modify its proposal to provide a second drive- through teller. According to Saia, it can be accomplished with a $72,000 allowance Nu-West set aside to cover any deficiencies incurred during renovation. However, these modifications should have been filed with the original bid package in order to conform to specifications.

         
         

   5. Plantation's Bid

   
   

   1. Plantation was ranked number three numerically by the evaluation committee but, after the disqualification of Intercontinental and Nu-West, it had the highest numerical score and was considered the lowest and most responsive bid. Although Nu-West's proposed location in Plantation was questioned by another vendor as being in an inaccessible area of the county, DOR representatives concluded the office site was satisfactory. All material specifications were met by this bidder. 2/ Using a present value of lease payments, Plantation's bid was $1.23 per square feet cheaper than Nu-West's bid proposal but was slightly higher than Intercontinental's proposal.

      
      

      CONCLUSIONS OF LAW

      
      

   2. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes (1987).

      
      

   3. The agency's motion to supplement record is granted and exhibits A and B are hereby received in evidence.

      
      

   4. Preliminarily, a brief discussion is necessary concerning the protest of The Urban Group, Inc. Upon motion of all counsel, the protest was dismissed at hearing. The Urban Group was ranked seventh numerically by the evaluation committee but, in its protest, it did not allege that the proposals of bidders one through six were nonresponsive. Such an allegation was necessary in order demonstrate standing. Failing this, its protest was properly dismissed. See, e.g., Preston Carroll Co. v. Fla. Keys Aqueduct Authority, 400 So.2d 524 (Fla. 3rd DCA 1981); Kirkland, Standing in Bid Protests, 62 FLA. B.J. 41 (1988).

      
      

   5. As the parties challenging the agency's decision to reject their bids and award the contract to another vendor, Intercontinental and Nu-West carry the burden of demonstrating that the agency's action was arbitrary and capricious or was otherwise improper. Cf. Capeletti Bros., Inc. v. State, Department of General Services, 432 So.2d 1359, 1363-64 (Fla. 1st DCA 1983) (no error in requiring challenging party to bear burden of proving agency action incorrect). As in any conventional regulatory proceeding, they must do so by the preponderance of evidence.

      
      

   6. In its protest, Intercontinental alleged that both procedural and substantive errors occurred in the bidding process thereby rendering the agency's action arbitrary and capricious. Intercontinental contended first that the procedural requirements of Subsection 120.53(5), Florida Statutes (1987), were not followed and secondly, from a substantive standpoint, that its bid was the lowest priced bid. In its protest dated July 1, 1988, Nu-West contended that the bid specifications concerning the drive-through teller facilities were not "clear" and that its proposal satisfied the RFP requirements. Also, it

      pointed out that DOR representatives labeled its proposal as "acceptable," and that it now stands willing, if necessary, to modify its plans to meet the agency's requirements.

      
      

   7. By post-hearing motion, Intercontinental has moved for a "final determination in favor of Intercontinental Properties" contending for the first time that Plantation lacks standing because it failed to timely file its protest of the preliminary award of the contract to Intercontinental on June 1. The record reflects that Plantation filed its protest of the June 1 intended award on June 6, or within the 72 hour timeframe after excluding Saturday and Sunday. As such, it had standing to participate in this cause. Therefore, the motion is denied.

      
      

   8. In its protest, Intercontinental questioned whether DOR followed the procedural requirements of Subsection 120.53(5), Florida Statutes (1987), during the initial phase of this proceeding. More specifically, it contended that DOR erred by not sending out written notice of its intended award on June 1 as required by Subsection 120.53(5)(a)1., Florida Statutes (1987). The statute in question provides in pertinent part:

      
      

      1. The agency shall provide notice of its decision or intended decision concerning a bid solicitation or a contract award as follows:

         1. For a bid solicitation, notice of a decision or intended decision shall be given by United States mail or by hand delivery.

         2. For any other agency decision, notice of a decision or intended decision shall be

         given either by costing the bid tabulation at the location where the bids were opened or by certified United States mail, return receipt requested. The notice required by this paragraph shall contain the following statement: "Failure to file a protest within the time prescribed in s. 120.53(5), Florida Statutes, shall constitute a waiver of proceedings under chapter 120, Florida Statutes."

      2. Any person who is affected adversely by the agency decision or intended decision shall file with the agency a notice of protest in writing within 72 hours after the posting of the bid tabulation or after receipt of the notice of the agency decision or intended decision and shall file a formal written protest within 10 days after the date he filed the notice of protest. Failure to file a notice of protest or failure to file a formal written protest shall constitute a waiver of proceedings under chapter 120. The formal written protest shall state with particularity the facts and law upon which the protest is based.

      3. Upon receipt of the formal written protest which has been timely filed, the agency shall stop the bid solicitation

      process or the contract award process until the subject of the protest is resolved by final agency action, unless the agency head sets forth in writing particular facts and circumstances which require the continuance of the bid solicitation process or the contract award process without delay in order to avoid an immediate and serious danger to the public health, safety, or welfare. (Emphasis added)

      * * *

      
      

      Since the matter in issue did not concern a "bid solicitation" under an invitation to bid, but involved a contract to lease office space pursuant to an RFP, the agency was not required to give notice of its intended decision by mail but needed only to post a tabulation sheet as required by subparagraph (a)2. of the statute. The evidence shows that DOR posted its bid tabulation on June 1 at its Tallahassee office thereby complying with the terms of the statute.

      Moreover, DOR gave telephonic notice to each bidder the same day so that protests could be timely filed. Thus, contrary to Intercontinental's assertion, DOR followed the procedural requirements of the law in its initial handling of the matter.

      
      

   9. Although Intercontinental and Nu-West did not challenge the subsequent procedural steps taken by DOR, a discussion of that phase of the bid process is nonetheless appropriate. Once DOR posted its bid tabulation on June 1, 1988, and received a bid protest on June 3, the process was "frozen" until the "subject of the protest (was) resolved." Subsection 120.53(5)(c), F.S. The question then arises whether this restrictive language means that the agency could not announce its intention to award a contract to another vendor, as it did, until the first protest was resolved. At first blush, dicta in the recent decision of Caber Systems, Inc. v. Department of General Services, et al., 13 FLW 1658 (Fla. 1st DCA, July 13, 1988), would seem to support this proposition. In Caber Systems, the agency gave notice of its intended award and received a timely protest. After a settlement conference was held, the agency determined that the invitation to bid (ITB) was ambiguous and substantially flawed and issued a second notice of intent, this time to reject all bids and to initiate a new ITB. The unsuccessful vendor challenged the agency's right to reject all bids once a protest had been filed given the restrictive language in subsection 120.53(5)(c). In approving the agency's action, the court held:

      
      

      The pertinent language in section 120.53(5)(c) provides that "the agency shall stop the bid solicitation process or the contract award process until the subject of the protest is resolved by final agency action." We construe this language, as does the Department, to mean that the Department could not continue the bidding process leading toward the award of any contract to other bidders until a bidder's protest had been resolved, but not that the Department was also precluded from immediately ejecting all bids and initiating a new ITB upon discovery of valid grounds for doing so. Id. at 1663. (Emphasis added)

      Under the foregoing rationale, it is clear that an agency could not execute a contract with a new vendor once a protest was filed. However, the statutory mechanism in subsection 120.53(5) provides for a settlement conference to be held after a bid dispute arises. During this phase of the process, further information regarding the vendor submissions may come to light as well as previously unforeseen problems with the RFP. If valid concerns are brought to the agency's attention, it can withdraw its intended award and reject all bids, as Caber Systems suggests, and refer the matter to DOAH to allow interested parties to contest that decision. In this case, DOR took a different tact and, after discovering new information at the settlement conference, disqualified the first two bidders (including the one to whom the contract was first awarded) and expressed its intent to award the contract to another vendor. The agency then issued a second notice of intended agency action, received protests and sent the matter to DOAH. While the issuance of a second notice of intended action is not contemplated under subsection 120.53(5) and may have been an error in procedure, it has not been shown to be material or, if so, one that impaired the fairness of the proceeding. Indeed, even though this procedure differs from that sanctioned in Caber Systems, it achieves the same laudable goals of efficiency and the resolution of all aspects of the bid dispute in one formal hearing.

      This is because "once (DOR) had decided to (disqualify bidders one and two and award the contract to number three) for the reason specified, to first await the outcome of a hearing on the (intended award to bidder one) would be a complete waste of time and taxpayer's money." Id. at 1663. As a practical matter, the end result is the same because all interested parties were afforded the right to contest the agency's decision, DOR's intentions were well known, and information was presented in a de novo setting concerning the issue of whether Intercontinental and Nu-West submitted responsive bids, and if not, whether the contract should be awarded to the next lowest bidder. Since a contract will not be awarded in this proceeding until "the subject of the protest is resolved," it is concluded that the procedural mandates of subsection 120.53(5) have been substantially satisfied.

      
      

   10. Having reached the above conclusion, several judicially established principles applicable to the substantive issue of whether the agency was arbitrary or capricious bear repeating. First, "the (undersigned's) sole responsibility is to ascertain whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly." Department of Transportation v. Groves-Watkins Constructors, 13 FLW 462, 463 (Fla. Sup.Ct., August 18, 1988). At the same time, it is recognized that the agency is accorded broad discretion in soliciting and accepting bids. Groves-Watkins, supra. Next, where a party contends a bid specification is unclear or vague, it must file its protest to the RFP within seventy-two hours after receipt of the RFP; a failure to timely do so constitutes a waiver of this claim. Capeletti Brothers, Inc. v. Department of Transportation, 499 So.2d 855, 857 (Fla. 1st DCA 1986). Finally, a bidder may not modify its bid documents or proposal after the bids have been opened, except to cure minor irregularities. See, e.g., Harry Pepper and Associates, Inc. v. The City of Cafe Coral, 352 So.2d 1190, 1192 (Fla. 2nd DCA 1977); City of Opa-Locka v. Trustees of Plumbing Industries Promotion Fund, 113

       So.2d 29, 32 (Fla. 3rd DCA 1966). These principles will be applied to the facts herein to determine whether the agency acted arbitrarily or capriciously.

       
       

   11. As to Intercontinental's bid, the evidence reflects that Intercontinental failed to comply with a material specification and thus filed a nonresponsive bid. More specifically, it failed to submit proof of ownership or Interest in the property as required by item D.4A. Since the item was a material requirement under the contract, and could not be waived, Intercontinental could not modify its bid documents after the bids were opened

       on May 2 in an effort to conform with specifications. Harry Pepper, supra. Therefore, DOR's decision to reject Intercontinental's bid was not arbitrary or capricious.

       
       

   12. In the case of Nu-West, it is noted first that the vendor did not object to the specification in question within seventy-two hours after it received the RFP and thus cannot complain now that the specification was unclear or vague. Capeletti, supra. Secondly, and while not specifically pled, Nu- West cannot invoke the doctrine of estoppel and argue that the representations of Driggers and Fox to Nu-West estop DOR from awarding the contract to another vendor. To begin with, Nu-West has not shown that exceptional or special circumstances apply to this case, a necessary element for the doctrine of estoppel to be used against the state. See, e.g., Kuge v. State, Division of Administration, Div. of Ret., 449 So.2d 389 (Fla. 3rd DCA 1984). Further, under no circumstances may the state be estoppel by the unauthorized acts or representations of its officers. Greenhut Construction Co. v. Henry A. Knott, Inc., 247 So.2d 517, 524 (Fla. 1st DCA 1977). Accepted in their most favorable light to Nu-West, the statements of DOR employees Driggers and Fox indicated merely that a facility with less than two tellers might be acceptable if a pneumatic tube was used, but anything short of this would pose security problems for DOR. In addition, these representations were at odds with the manner in which DOR's Tallahassee office interpreted the specification and the clear language in the specification itself. Thus, the statements of Driggers and Fox cannot be said to constitute such an affirmative and positive representation of fact as to justify reliance thereon by Nu-West in determining how to structure its bid response. This is particularly true since the other fourteen bids conformed with the specification. This being so, it is concluded that estoppel will not lie.

       
       

   13. In view of the above conclusions, Nu-West is faced with the simple question of whether it submitted a responsive bid. Since its proposal did not conform with item B.14.D., DOR properly rejected its proposal as being nonresponsive. This action was not arbitrary or capricious. Finally, like Intercontinental, Nu-West cannot now modify its bid documents to meet the requirements of the specification. Harry Pepper, supra. Therefore, Nu-West's protest must be denied.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that a Final Order be entered awarding Lease Bid No. 730-0083

to 241 East 76th Street Company d/b/a Fountains of Plantation.

DONE AND ORDERED this 5th day of October, 1988, in Tallahassee, Leon County, Florida.

DONALD R. ALEXANDER

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904)488-9675

Filed with the Clerk of the Division of Administrative Hearings 5th

day of October, 1988.

ENDNOTES

1/ The delay in issuing this Recommended Order is attributable to the transcript of hearing not being filed until more than seven weeks after the final hearing.

2/ Although Fountains failed to put the address of the leasable premises on page 1 of its application, the address was included on other documents attached to the application and the omission was considered minor.

3/ The Urban Group's principal argument in opposition to the motions was that the agency did not advise it that such an allegation was required in order to demonstrate standing. However, an agency is required only to offer a party a clear point of entry to an administrative hearing and need not give advice as to how a vendor must draft its pleadings.

APPENDIX

Petitioner Nu-West:

Plantation:*

1. Covered in finding of fact 1.

2. Covered in findings of fact 2 and 3.

3. Covered in finding of fact 4.

4. Covered in findings of fact 4 and 5. 5-6. Covered in finding of fact 12.

1. Covered in findings of fact 6, 14, 18 and 22.

2. Covered in findings of fact 14-18.

3. Covered in finding of fact 22.

4. Covered in findings of fact 2 and 5.

5. Covered in finding of fact 5. 12-14. Covered in background.

15. Rejected as being a conclusion of law.

*Plantation submitted unnumbered paragraphs of proposed findings. They are ruled upon in sequential order.

COPIES FURNISHED:

Clifford A. Kornfield, Esquire 701 Southwest 27th Avenue Miami, Florida 33135

Michael W. Ford, Esquire Suite 4500

200 South Biscayne Boulevard Southeast Financial Center Miami, Florida 33131-2387

Gene T. Sellers, Esquire

C. Lynne Chapman, Esquire Post Office Box 6668

Tallahassee, Florida 32399-6668

Charles L. Curtis, Esquire 1177 Southeast Third Avenue Fort Lauderdale, Florida 33316

Mr. Alan Kitchman

The Urban Group, Inc.

2701 West Oakland Park Boulevard Suite 421

Fort Lauderdale, Florida 33311

Katie D. Tucker Executive Director

102 Carlton Building Tallahassee, Florida 32399-0100

William D. Townsend, Esquire General Counsel

104 Carlton Building Tallahassee, Florida 32399-0100

Docket for Case No: 88-003422BID

Orders for Case No: 88-003422BID