vs. ) CASE NO. 88-5325BID
Intervenor. )
A hearing was held in this case in Tampa, Florida on November 23, 1988, before Arnold H. Pollock, Hearing Officer. The issue for consideration was whether lease NO. 590:1853 should be awarded to Alderwood B Partners, Limited or to another bidder, as urged by Petitioner herein.
Petitioner: Mark A. Brown, Esquire
Carlton, Fields, Ward, Emmanuel Smith, Cutler & Kent, P.A.
Trenam, Simmons, Remker, Scharf, Barkin, Frye & O'Neill, P.A.
On October 20, 1988, Northern Life Insurance Company (Northern), owner of Bay Plaza I, protested the Department of Health and Rehabilitative Services' (Department) award of a lease for office space to Alderwood B Partners, Limited (Alderwood), which was announced on October 10, 1988. The protest was forwarded, on October 28, 1988, to the Division of Administrative Hearings for appointment of a Hearing Officer. On November 3, 1988, the undersigned entered
a Notice of Hearing setting the case for November 9, 1988, but on November 9, entered an Amended Notice of Hearing moving the hearing back to November 23, 1988 at which time it was held as scheduled.
Prior to the hearing, on November 14, 1988, Northern moved to amend its Petition and the motion was granted at the hearing. Two days before final hearing, on November 21, 1988, Alderwood petitioned to Intervene which was objected to by Northern as, being untimely. The petition to intervene was, nonetheless, granted over Northern's objection at the hearing with the stipulation that Alderwood took the case as it found it. In fact, though not precluded from doing do, Alderwood presented no testimony and offered no exhibits, limiting its participation solely to cross-examination of Northern's witnesses.
At the hearing, Northern presented the testimony of Burrwood Yost, Michael Akridge, Robert Greg, Eugene Jacobson, Cris Coine, and Russell Perry, and introduced Petitioner's Exhibits 1 through 4 and 6 through 22. Petitioner's Exhibit 5 for identification was offered but was rejected. The Department presented the testimony of Mr. Akridge, Ruth Chipman, and Patricia Collins, but offered no exhibits. As was previously stated, Alderwood presented no evidence.
Subsequent to the hearing, a transcript was filed and thereafter, counsel for Petitioner and the Department submitted Proposed Findings of Fact which have been ruled upon in the Appendix to this Recommended Order. Alderwood submitted a post hearing memorandum which does not contain proposed findings of fact but is more a commentary on the evidence.
In May, 1987, the Department contracted with B.P. Associates, then owner of the Bay Plaza facility, to lease space at that facility located in Brandon, Florida. A part of the bid conditions required extensive physical renovations of the facility which were being supervised by Coldwell Banker, a real estate brokerage and management firm serving as property manager and construction supervisor. Construction was begun in December, 1987.
Mr. Burrwood Yost was hired by the Department as its Facilities Services Manager for the Tampa Region in March, 1988. Mr. Yost soon became dissatisfied with the work being accomplished under Coldwell Banker's supervision and the company's responsiveness to maintenance problems arising at the facility, which the Department had asked to be corrected.
As a result of this dissatisfaction with Coldwell Banker's demonstrated inability to properly perform, Mr. Yost recommended that the bid award to B.P. Associates be withdrawn and that the procurement be relet. On June 17, 1988, the bid award to B.P. Associates was withdrawn.
On June 1, 1988, however, shortly before the withdrawal of the prior award, ownership of Bay Plaza was transferred to Northern which immediately substituted a new property manager and construction supervisor for Coldwell Banker. The new management firm was Grubb and Ellis, which took over on September 1, 1988.
New bids were solicited by invitation to bid on July 15, 1988 which called for approximately 27,122 square feet of leased space to be available by April 1, 1989. The bid invitation clearly stated that "all bids will be evaluated based on the award factors enumerated in the bid submittal form."
This form outlined the bid procedure, listing award factors to be considered and specifying the precise amount of weight each factor would be given. Past performance was not listed as a basis for evaluation on the bid invitation form and Mr. Yost admits that past performance was not to be considered as a factor.
Five bids were received of which three were deemed responsive. These were Bidder C, Northern; Bidder D, Turner Development Corporation; and Bidder E, Alderwood B. Northern's bid was the lowest of the three responsive bids by more than $2.00 per square foot over the life of the lease. Alderwood was the second lowest.
Each of the bids was evaluated by a bid evaluation committee consisting of seven representatives from the various Department program offices that were to occupy the leased space. The chairman of the committee, Ms. Chipman, was placed thereon at the request of Mr. Yost, and was actually a supernumerary since the committee a originally constituted by Mr. Akridge, the Department's Facilities Services Manager Assistant in Tampa, was made up of only six members. A 100 point bid evaluation scale, which was included in the bid package furnished to each bidder, was to be utilized by the committee to evaluate each bid. Prior to beginning their evaluation duties, the committee members were walked through each proposed site, and in the briefing given by Department authorities, specifically advised that prior performance was not a criteria and should not be considered.
When the committee members' evaluations were computed, Northern's bid for Bay Plaza received a score of 83.5. Alderwood's bid for its property was given a score of 87.9. Each evaluator rated Alderwood highest and the evaluation committee concluded that, consistent with the overall criteria which called for the lease to be awarded to the lowest and best bid that met program needs, Alderwood's bid was lowest and best. Consequently, the committee recommended that Alderwood receive the award even though Northern's bid for Bay Plaza was lowest in terms of total dollars involved.
The bids were evaluated based on three major evaluation criteria. These were Fiscal Costs, Location, and Facility. The Fiscal Cost element was further broken down into three subcategories; rental rates, renewal rates, and moving costs. Northern received 25 points of the 25 available for rental rates because it offered the lowest rental rate. When reduced to present value, Northern's bid for the entire term of the lease was more than $600,000.00 below the next lowest bid and for the first nine years of the lease alone, was
$336,799.00 lower. Alderwood was awarded 21.5 points for its rental rate submission.
In the area of renewal rates, Northern was awarded 7 of 7 possible points and Alderwood was awarded 2. These awards were not computed by the committee or assigned by them. Instead, the scores were computed on the basis of a present value analysis accomplished in Tallahassee and were entered on the score sheet by Mr. Akridge, the Department's local supervisor for this procurement.
Considering the moving costs, however, Alderwood outscored Northern by
3 to 2.7 points. This difference was attributed to an additional moving cost for the Bay Plaza site as opposed to the one move cost if the Alderwood site were chosen. To have the rehabilitation work done at Bay Plaza would have required a move to another location while the work was being done and another move back when it was finished. In the Alderwood case, the Department would move only once.
The "Location" criteria also had three subcategories for consideration. They were, general area, in which both bidders received the maximum 10 points; public transportation at 5 points, and environmental factors at 15 points. In the area of public transportation, Alderwood received the full
5 points with Northern receiving 1.1. Department personnel considered the fact that bus service was available through the site at Alderwood, the stop being within wheelchair and walking distance of the building, as being more significant and of higher value than the proposed bus service envisioned in 1989 for Northern's facility which, at the time of the bidding, was not served by a bus. Bus company officials stated an intention to provide bus service to the area in the future.
The environmental factors subcategory related to the physical characteristics of the building and the surrounding area and the effect of these factors on the "efficient and economical conduct of Department operations." In this subcategory, Alderwood received a higher score than did Northern's building because the committee was of the opinion the Alderwood facility would be more energy efficient. Current Department occupants of Northern's facility at Bay Plaza contended that because of the large expanses of glass, there would be more heat generated in the building in the afternoon. No official energy efficiency assessment was done of either building because both occupied less than 20,000 square feet. Consequently, the committee analysis here was based on the experience of some committee members and was neither scientific nor professional. The committee was also concerned with the potential for theft because of the large amounts of glass and was of the opinion that the Bay Plaza layout was "confusing." Neither of these judgements carry much weight, however.
Another environmental factor considered by the committee concerned the parking availability at each facility. The committee was of the opinion that the layout at Northern's facility was not good. It was long and extended.
Staff also was concerned that the several access doors to the Northern facility could cause clients to become confused. More important, however, was their concern that due to the several entrances to the building, it would be difficult to control entry. Alderwood's facility, on the other hand, provided a central entrance for each building and it was felt this would allow tighter security control for the safety of the building occupants. The committee was also impressed by the fact that Alderwood's facility provided a play area for clients' children, and felt that Alderwood's landscaping was more appealing.
The rating of Alderwood's handicap access as high, is important.
Turning to the third major bid criterion, Facility, Northern's facility was awarded 16.3 points of a possible 20 for layout/utilization while Alderwood's was awarded 18.7 points. For the subcategory, single building, Northern's facility received 6.7 points out a possible 10 and Alderwood's facility was awarded 8.1. As for the final subcategory, street level, both facilities were awarded 5 points.
As for layout/utilization, one committee member, Chipman, awarded Alderwood more points because it provided a separate entrance for each program, because it provided covered walkways for weather protection, and because there was less of a "maze" effect in that facility due to its square configuration. This last factor was of concern to other committee members who rejected the idea of clients having to walk through offices to get to the different programs. The wider hallways and better access for handicapped, as was stated previously, were also considered positive factors for Alderwood.
Neither facility offered the single building which was a desired characteristic, Mr. Akridge, however, advised the committee in his preparatory briefing that since neither bidder offered a single building facility, the committee could award points on the layout of the multi-unit facility based on the relationship of the individual components to each other. At least two committee members, Chipman and Collins, rated Alderwood's facility better and awarded more points because they felt the layout of that facility allowed a more advantageous grouping of programs within the units. There is substantial evidence, however, that the information furnished the committee was neither complete nor in all cases accurate.
Once the committee completed its evaluation, Mr. Akridge tabulated the scores and prepared a "request for bid award" letter dated September 21, 1988 for transmittal to Department officials in Tallahassee. The letter was prepared to report the committee recommendation for the award to Alderwood and to explain why the recommendation was made to award to that bidder as opposed to the low bidder. Review of this letter clearly reflects that Mr. Akridge and the committee were concerned with past performance at the Bay Plaza facility.
When Mr. George Smith, a senior management analyst for the Department in Tallahassee received Mr. Akridge's letter, recognizing the possible appearance of consideration of an improper factor, he requested that Mr. Akridge seek and provide more justification for the committee's findings. While Mr. Smith contends he did this because of his concern over costs, the fact remains that Akridge's letter of September 21 did mention past performance which was an invalid consideration. Mr. Smith asked Mr. Akridge to prepare another memo giving additional information about such things as bus service, the difference in rental rates, the building layouts and locations and those factors which the users of the proposed facility, those individuals who were on the committee from the using organization, felt were important to them in the effective accomplishment of their jobs. Mr. Smith clearly indicated he recognized that past performance is not a valid point for consideration and that it would play no part in his analysis of the bids preparatory to making final recommendation for award.
In response to Mr. Smith's direction, Mr. Akridge prepared another memorandum dated September 30, 1988. Though by far the greatest portion of this memo is a detailed comparison of the two facilities and the concerns of the committee regarding them, the first paragraph, (1 A) refers to the failure of the former leasing agent to obtain state fire marshal approval and a reference to concern that in light of the fact that Northern is an absentee owner, there might well be a return to slow response times experienced under the prior management contract.
Though Mr. Smith recognized that the September 30 memorandum again made reference to prior performance, experienced as he was in the procurement of facilities, he also recognized that "that was not a part of the evaluation criteria" and "basically, just disregarded that." Thereafter, the award was made to Alderwood.
Petitioner contends that whether consciously or unconsciously, past performance of Northern's predecessor in ownership influenced the evaluation and bid review process thereby placing Northern at a competitive disadvantage to Alderwood. There is evidence in the record to indicate this conclusion, may be justified. Mr. Yost, the Facilities Services Manager, admits that he was dissatisfied with the performance of the prior management of the Bay Plaza facility and it was because of this dissatisfaction that the decision was made
to recommend withdrawal of the prior award and a new bid invitation. Though he claims he deliberately kept himself out of the re-bid process, the evidence indicates that he oversaw it from the beginning and was present and/or involved in almost every part of it. The invitation to bid utilized his name; he attended the pre-bid conference and injected himself into the process by answering questions of bidders; he personally reviewed each bid upon receipt with Mr. Akridge; and, though he turned the committee selection over to Mr.
Akridge, specifically requested that a nominee of his own choosing, Ms. Chipman, be appointed. Ms. Chipman, to whom Mr. Yost had previously spoken regarding his dissatisfaction with the prior Bay Plaza operation, was appointed as the seventh member of a committee originally scheduled to have only six members and served as the chairperson thereof. It is also significant to note that while the committee was in session evaluating the bids, Mr. Yost came into the committee room and met with the members while the deliberation process was going on. This creates a definite appearance of impropriety.
After the protest was filed by Northern's agent, on November 8, 1988, Mr. Akridge, on behalf of the Department, met with members of the evaluation committee and representatives of Alderwood. During this meeting, the Department representatives explained to Alderwood how they wanted the layout of the facility to be accomplished and directed the architect who was present to prepare preliminary design plans. This appears to have been in contravention of provisions of a Department rule, (10-13.011(2)(a), F.A.C) which calls for the contract award process to be stopped until the protest is resolved.
The evaluation criteria, found on page 16 of 17 of the Bid Submittal Form at subparagraph 1A, states that rental rates for the basic term of the lease, evaluated testing a present value methodology at a discount rate of 8.31 percent, would constitute 25 percent of the total evaluation criteria. This requirement was not appropriately applied in this case. The points included on each committee member's evaluation form for this category do not correlate to the present value rates furnished by the Department. Whereas Alderwood's bid was 21 percent higher than Northern's when reduced to present value, Alderwood received 86 percent of the rental rate points given Northern instead of 79 percent of Northern's points as it should have received. As a result, Northern did not receive the appropriate weight for its rental rates points as compared to it's competitor, Alderwood.
In addition to the above, there are several examples indicating that points given by the committee were awarded based on inaccurate assumptions, unreliable information, or speculation. These include a failure to recognize that the windows at Bay Plaza are tinted; an inaccurate belief by one committee member that Alderwood's buildings are closer together than Northern's; a failure to properly apportion points by a committee member in the area of public transportation on the mistaken belief that Northern's facility would not have bus service; a mistaken belief that hallways at the Northern facility could not be widened when, in fact, Northern had agreed to renovate the entire facility including the hallways to whatever design the Department requested, (in this regard, Mr. Akridge properly advised the committee it should assume for the purpose of evaluation, that Northern would widen the Hallways if requested) ; the possible improper award of points for moving costs when no information on actual costs was available; a failure by the committee to recognize that major construction planned for in front of the Alderwood facility would hinder what the committee considered that building's better access; a failure to recognize that bid specifications required a security system be installed in any facility leased which would minimize if not eliminate the theft risk; and a lack of
information regarding crime rates, police patrols, night lighting, and the nearness of police facilities to the buildings in question.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter in this case. Section 120.57(1), Florida Statutes.
Section 255.25(3)(a), Florida statutes, provides:
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. The Division of Facilities Management shall have the authority to approve a lease for 2,000 square feet or more that covers more than one fiscal year ... if such lease is, in the judgement of the Division, in the best interests of the state....
The burden of proof is upon the unsuccessful bidder which seeks to establish that it is entitled to the award, Florida Department of Transportation
v. J.W.C. Co., Inc., 396 So.2d 778 (Fla 1st DCA 1981). Since Northern was the low bidder in this procurement, it had the burden to establish that the Department's intended award of this lease to Alderwood resulted from illegality, fraud, oppression, or misconduct and was not the result of a fair, full and honest exercise of the Department's discretion, Liberty County v. Baxter's Asphalt and Concrete, Inc., 421 So.2d 505 (Fla 1982).
An agency has wide discretion in soliciting and accepting bids and a decision based on an honest exercise of its discretion may not be overturned even if reasonable persons disagree with the outcome, C.H. Barco Contracting Company v. State, Department of Transportation, 483 So.2d 796 (Fla 1st DCA 1986); Liberty County, supra.
However, the agency issuing the invitation must evaluate bids received solely on the criteria stated on the invitation to bid and prospective bidders are entitled to rely upon the completeness of the terms stated therein, Aurora Pump, Division of General Signal Company v. Gould Pumps, Inc., 424 So.2d 70 (Fla 1st DCA 1982).
While an agency has wide discretion in evaluating bids and awarding contracts, it may not act arbitrarily or capriciously, nor can it subvert the competitive bidding process through any element of bias, fraud, favoritism, illegality or dishonesty. Department of Transportation v. Groves Watkins Constructors, 530 So.2d 912 (Fla 1988). The state's competitive bidding statutes are designed and intended to preclude favoritism and bias in its various forms and to afford an equal advantage and opportunity to all desiring to do business with public authorities, Webster v. Belote, 103 Fla 976, 138 So 721 (1931); Robinson's, Inc. v. Short, 146 So.2d 108 (Fla 1st DCA 1962). In short, the integrity of the bidding process must not be tainted by any element of bias or prejudice of agency personnel, Solar Energy Control, Inc. v. HRS, 377
So.2d 746 (Fla 1st DCA 1979); International Medical Centers V. HRS, 417 So.2d 734 (Fla 1st DCA 1982).
The Department urges that Petitioner has failed to meet its burden of proving by a preponderance of the evidence that the Department acted fraudulently, arbitrarily, illegally or dishonestly. The proof, however, does not support the Department's position.
The evidence clearly indicates that Mr. Yost, the Area Facilities Services Manager, who had widely indicated his displeasure with the existing Bay Plaza facility and the management thereof by the former facility manager, did not maintain his distance from the new bid process. He unequivocally indicated his opposition to Coldwell Banker, the prior property manager, and had expressed his concern with the fact that Northern would be an absentee landlord. Reasonable as his concerns may be, there is substantial risk they may have had some effect on his subordinates, both Mr. Akridge and the members of the evaluation committee.
Though not clearly prohibited from doing so by either statute or rule, Mr. Yost caused an individual of his own selection to be appointed as chairperson of the evaluation committee. This individual, who testified at the hearing, expressed strong opinions as to the relative merits of the facilities. Yost also visited the committee during its deliberations. There is no evidence that at that time Mr. Yost applied any direct pressure on the committee members by word or deed. However, his presence in the evaluation room at the time the evaluation was going on may have had some impact on the committee members and was an indiscreet act which casts doubt on the fairness of the evaluation process.
Further, there is substantial evidence from the testimony of the two committee members who appeared at the hearing and from the evaluation sheets introduced into evidence, that the committee was not given all accurate information regarding the two facilities; that certain information given them was inaccurate; and that to a degree, they suffered from some misconceptions regarding the attributes of the two facilities. It is clear, in addition, that in the assignment of points for rental rates, which was supposed to constitute
25 percent of the total rating, Petitioner did not receive the appropriate advantage it was due for its low bid. As a result, Alderwood received more points that it should have, to Northern's disadvantage.
Finally, it is also clear that when Mr. Akridge forwarded the bid evaluation results to Tallahassee he included in his recommendation an invalid basis for award to Alderwood, that is, the dissatisfaction with Bay Plaza's prior management's prior performance. This was recognized by Mr. Smith who sent the matter back to the local office for resubmittal with additional appropriate information. Nonetheless, Mr. Akridge, in his subsequent response, again raised the improper argument of prior performance which, it is clear, was disregarded by Mr. Smith who decided on the award to Alderwood. However, the information upon which he relied was flawed and incomplete. Admittedly, it is impossible to determine from the evidence of record that if properly conducted, the process would have resulted in an award to Northern. However, while the proof does not support the conclusion that the Department acted fraudulently or dishonestly, it does demonstrate a bias that adversely tainted the bid process.
RECOMMENDATION
Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore:
RECOMMENDED that the intent to award lease no. 590:1853 to, Alderwood B. Partners, Limited, be withdrawn; that a new evaluation committee be appointed to review the bids submitted by the responsive bidders; that this committee be properly briefed as to the requirements of their task and the appropriate standards to be applied thereto; and that the Department thereafter issue an award to the lowest and best bidder as determined by this evaluation committee.
RECOMMENDED this is 15th day of March, 1989 at Tallahassee, Florida.
ARNOLD H. POLLOCK
Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalpachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 15th day of March, 1989.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-5325BID
The following constitutes my specific rulings pursuant to Section 120.59(2), Florida statutes, on all of the Proposed Findings of Fact submitted by the parties to this case.
BY PETITIONER;
Accepted and incorporated herein.
Accepted and incorporated herein.
First sentence accepted and incorporated herein. Balance accepted.
Accepted and incorporated herein.
Accepted and incorporated herein.
Accepted and incorporated herein.
Accepted and incorporated herein.
Accepted and incorporated herein.
Accepted.
Accepted.
Accepted and incorporated herein.
Accepted and incorporated herein.
Accepted and incorporated herein.
Accepted and incorporated herein.
Accepted but more in the form of argument than
as Finding of Fact. The paragraph is redundant to other evidence already considered.
Accepted and incorporated herein.
Accepted and incorporated herein.
Accepted and incorporated herein.
Accepted and as to substance, incorporated herein.
Mark A. Brown, Esquire
Carlton, Fields, Ward, Emmanuel, Smith, Cutler & Kent, P.A.
Barkin, Frye & O'Neill, P.A. Post Office Box 1102
Jack D. Farley, Esquire
Gregory L. Coler, Secretary Department of Health and
Rehabilitative Services 1323 Winewood Blvd.
John Miller, Esquire DHRS General Counsel 1323 Winewood Blvd.
Rehabilitative Services 1323 Winewood Blvd.
