STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

EARL S. DYESS, JR., )

)

Petitioner, )

)

vs. ) CASE NO. 88-5941RU

) DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, )

)

Respondent. )

)

FINAL ORDER

Pursuant to notice, a formal hearing was scheduled in this case on January 5, 1989, at Tallahassee, Florida, before Veronica E. Donnelly, a duly designated Hearing Officer of the Division of Administrative Hearings. The hearing was held on a stipulated record, previously entered by the parties. Any additional stipulations of fact and law were to be mailed to the Hearing Officer by January 17, 1989. Appearances for the parties at the hearing were as follows:

For Petitioner: Owen L. Luckey, Jr., Esquire

Luckey, Elver & Sloan Post Office Drawer 1820 La Belle, Florida 33935

For Respondent: Anthony DeLuccia, Jr., Esquire

District 8 Legal Counsel Department of Health and Rehabilitative Services Post Office Box 06085 Fort Myers, Florida 33906

On December 1, 1988, the Petitioner, Earl S. Dyess, Jr., (hereinafter Mr. Dyess) filed a petition to challenge the Respondent, Department of Health and Rehabilitative Services' (hereinafter HRS) unwritten rule or policy which defines the term "dry and measurable" as it is used and interpreted by HRS in its bid documents for buildings leased by the agency. The term was used by HRS as a basis for its decision to reject a bid submitted by the Petitioner in response to the Bid Proposal in Lease Number 590:1975.

During the evidentiary portion of these proceedings, the parties stipulated that the entire transcript of record, together with all exhibits from the formal bid protest conducted in October 31, 1988, would be used as the record in this proceeding. The parties were given until January 17, 1989, in which to mail any additional stipulations of fact or law. Recommended Orders were to be mailed on the same date. Although the parties complied with this order, the Respondent's mailings were not physically received by the Division until January 23, 1989.

The record in this proceeding consists of three volumes of transcripts from the October 14, 1988, and October 31, 1988, bid protest proceedings. Seventeen

exhibits were submitted by the Petitioner and one exhibit was submitted by the Respondent. In addition, the deposition of Michael Sedgwick and the stipulation of the parties regarding the Webster Dictionary definitions of the words "dry" and "measurable" were admitted into evidence.

The Respondent's request for official notice of the decisions rendered in The Koger Company vs. DOAH, et al., DOAH Case Nos. 88-3357BID and 88-3385BID (Consolidated), (Final Order dated 9/21/88), was granted, and will be considered in this proceeding.

The Recommended Orders submitted by the parties were received on January 17, and January 23, 1989, respectively. Rulings on the Proposed Findings of Fact are in the Appendix to the Final Order.

In this rule challenge proceeding, the Petitioner seeks a determination that the agency's definition of the term "dry and measurable," as used in bid documents, is an invalid rule or policy. It is alleged that the definition is unwritten, and has not been validly promulgated. Due to the Respondent's failure to promulgate its unwritten rule, it is further alleged that the rule or policy is an invalid exercise of delegated legislative authority under Section 120.52(8), Florida Statutes.

STATEMENT OF THE ISSUES

Whether the agency's definition of the term "dry and measurable" as used in HRS bid documents is an unpromulgated rule which cannot be used as a basis for the agency's decision to reject the Petitioner's response to a bid proposal in Lease Number 590:1975.

Whether the agency's requirement that a building be "dry and measurable" before a bid is accepted is an invalid exercise of delegated legislative authority.

FINDINGS OF FACT

1. In 1988, the Respondent HRS made the determination that it would not exercise its option on leased space owned by the Petitioner, Mr. Dyess, in Clewiston, Florida.

   
   

2. Bid documents were prepared by the agency for its current office space needs. Bid proposals were solicited through newspaper advertisements and personal contact with owners, developers, and realtors within the Clewiston area. HRS included Mr. Dyess in its solicitations. He was sent a bid package which contained all of the bid documents for the bid referred to as Lease Number 590:1975.

   
   

3. Page five of the document in the bid package known as HRS Facilities Services Form RO3-87, requires prospective bidders in Lease Number 590:1975 to contact Michael J. Sedgwick if they have any questions about the interpretation of the bid specifications. The document is silent on the questions of whether the written or oral representations made by Mr. Sedgwick are binding upon the agency, or whether the prospective bidder may contest the interpretation.

   
   

4. A bidders' conference was held on April 26, 1988. During the conference, Mr. Sedgwick was questioned about the agency's interpretation of the term "dry and capable of being physically measured." Mr. Sedgwick contacted Mr. George Smith, who administers the leasing program for HRS in Tallahassee, and

   obtained the following definition: "Dry and measurable consists of four things: a slab, four corners, a roof, and a valid building permit if construction is in progress.

   
   

5. The definition given by Mr. Smith was verbally communicated to the prospective bidders who attended the conference. This definition was verbally communicated to the Petitioner by Mr. Sedgwick on April 27, 1988. This clarification or interpretation of the bid specification was not reduced to writing and sent to all prospective bidders, as required by HRS Facilities Form RO3-87.

   
   

6. The Petitioner timely submitted a bid in Lease Number 590:1975. This bid was rejected by HRS because the building was not "dry and measurable", as defined by the agency, on the date of the bid opening.

   
   

7. The definition of the term "dry and measurable," as set forth above, has been developed by HRS for use within the agency. It is an unwritten policy which is universally applied by the agency in all of its reviews of bid proposals submitted by bidders for building leases. This unwritten policy has been in effect for seven and one half years.

   
   

8. A definition of the term "dry and measurable" is not set forth in the bid documents. A prospective bidder is encouraged by the bid documents to seek interpretations of definitions within the documents from the project contact person. In this case, the contact person was Mr. Sedgwick.

   
   

9. No other basis was given to Mr. Dyess for the agency's rejection of his bid in Lease Number 590:1975.

   
   

   CONCLUSIONS OF LAW

   
   

10. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding. Section 120.56, Florida Statutes.

    
    

11. The pivotal issue in this rule challenge proceeding is whether the agency's unwritten policy which interprets the term "dry and measurable" amounts to an illicit rule. If the interpretation is not found to be an illicit rule, then the second issue of whether there has been an invalid exercise of delegated legislative authority need not be addressed in this order.

    
    

12. The definition of a "rule", as used in the Administrative Procedure Act, is found in Section 120.52(16), Florida Statutes. Implicit in this definition is the requirement that a rule must be stated in some written manner or form before it can become the subject of a rule challenge proceeding under Section 120.56, Florida Statutes. Michael C. Denholm v. State of Florida, Department of Corrections, 10 FALR 392 (1988).

    
    

13. In Department of Corrections v. McCain Sales of Florida, Inc., 400 So.2d 1301 (Fla. 1st DCA 1981), the court reversed a hearing officer's conclusion that an unwritten policy can amount to an illicit rule. This case involved the Department of Corrections' adoption of a program for the manufacture of metal signs by inmates of the correctional system. Although the adoption of the program was never placed in writing by the agency, the evidence was clear that the Department of Corrections intended to engage in the program. Invitations to bid on the program had been solicited by the agency. Based upon the evidence, the hearing officer concluded that the agency's actions were a

    "statement" of general applicability, implementing, interpreting or prescribing law or policy. Thus, the adoption of the program was a rule which had not been subjected to formal rulemaking processes under Section 120.54, Florida Statutes. The hearing officer invalidated the rule on that basis, as an illicit rule.

    
    

14. In its rejection of the hearing officer's conclusions, the court determined:

    
    

    An agency program reflects its policy, but a program as such is not a statement of policy, and no statute requires all agency programs to be described in Florida Administrative Code.

    
    

15. The court decided that an unwritten policy does not rise to the level of a rule for purposes of a rule challenge proceeding. It was suggested that the appropriate manner in which to handle unwritten agency policy is to place the burden on the agency to support and justify decisions based upon unwritten policy in the record of proceedings during the substantial interest proceeding held pursuant to Section 120.57, Florida Statutes.

    
    

16. In Greg Hill v. State of Florida, Department of Natural Resources, 7 FALR 5236 (1985), it was noted, at pages 5241-5242:

Mere "unwritten policy" cannot amount to an illicit rule. Department of Corrections v. McCain Sales of Florida, Inc., 400 So.2d 1301 (Fla. 1st DCA 1981) ("a program as such is not a statement of policy" at 1302). A rule is a statement "of general applicability applied and ... intended to be applied

with the force of a rule of law." State, Department of Administration v. Stevens, 344 So.2d 290,296 (Fla. 1st DCA 1977); McDonald

v. Department of Banking and Finance, 346 So.2d 569, 580-581 (Fla. 1st DCA 1977). ***A policy implicit in agency action does not ipso facto amount to an administrative rule, even when it has been consistently applied. Home Health Professional Services, Inc. v. Department of Health and Rehabilitative Services, 463 So.2d 345 (Fla. 1st DCA 1985).

Based upon the foregoing, it is determined that the Department of Health and Rehabilitative Services' unwritten policy in which it interprets the term "dry and measurable" is not a rule and therefore, is not an appropriate subject for a rule challenge proceeding, pursuant to Section 120.56, Florida Statutes. Accordingly, it is ORDERED:

That the petition to challenge the Department of Health and Rehabilitative Services' unwritten rule or policy which defines the term "dry and measurable" be dismissed.

DONE AND ORDERED this 22nd day of February, 1989, at Tallahassee, Florida.

VERONICA E. DONNELLY, Hearing Officer Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 22nd day of February, 1989.

APPENDIX TO FINAL ORDER IN CASE NO. 88-5941RU

Petitioner's proposed findings of fact are addressed as follows:

1. Accepted. See HO# 2.

2. Accepted. See HO# 6.

3. Accepted. See HO# 6.

4. Accepted. See HO# 6.

5. Accepted.

6. Accepted.

7. Accept that Mr. Sedgwick assisted in the bid preparation. See HO# 2.

8. Accepted. See HO# 4.

9. Rejected. Irrelevant.

10. Accepted.

11. Accepted.

12. Accepted. See HO# 7.

13. Accepted.

14. Accepted.

15. Rejected. The Respondent did not prove at hearing that the agency relied on any other case law or rules for its interpretation of the term "dry and measurable." The testimony revealed that the agency relied upon its own in house interpretation of the rule as set forth in HO# 7.

16. Accepted.

17. Rejected. Irrelevant for this proceeding.

18. Rejected. Irrelevant for this proceeding.

19. Rejected. Irrelevant for this proceeding.

20. Accepted. See HO# 7.

21. Accepted.

22. Rejected.

23. Accepted.

24. Rejected. Conclusionary.

Respondent's proposed findings of fact are addressed as follows:

1. Accepted. See HO# 2.

2. Accepted.

3. Accepted.

4. Accepted.

5. Accepted. See HO#2.

6. Rejected. Irrelevant to these proceedings.

7. Rejected. Irrelevant to these proceedings.

8. Rejected. Contrary to the presentation made by HRS during the evidentiary portion of these proceedings. See HO# 4-9.

COPIES FURNISHED:

Owen Luckey, Jr., Esquire Luckey, Elver & Sloan Post Office Drawer 1820 La Belle, Florida 33935

Anthony DeLuccia, Jr., Esquire District 8 Legal Counsel Department of Health and

Rehabilitative Services Post Office Box 06085 Fort Myers, Florida 33906

Sam Power, Clerk Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Gregory L. Coler, Secretary Department of Health and Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Liz Cloud, Chief

Bureau of Administrative Code Room 1802, The Capitol Tallahassee, Florida 32399-0250

Carroll Webb, Executive Director Administrative Procedures Committee Room 120, Holland Building Tallahassee, Florida 32399-1300

NOTICE OF RIGHT TO JUDICIAL REVIEW

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 FEES PRESCRIBED BY LAW, WITH THE DISTRICT COURT OF APPEAL, FIRST DISTRICT, OR WITH THE DISTRICT 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.

Docket for Case No: 88-005941RU

Orders for Case No: 88-005941RU