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TALLAHASSEE ASSOCIATES, LTD. vs DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 91-000246BID (1991)

Court: Division of Administrative Hearings, Florida Number: 91-000246BID Visitors: 21
Petitioner: TALLAHASSEE ASSOCIATES, LTD.
Respondent: DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES
Judges: JAMES W. YORK
Agency: Department of Health
Locations: Tallahassee, Florida
Filed: Jan. 09, 1991
Status: Closed
Recommended Order on Thursday, March 21, 1991.

Latest Update: Mar. 21, 1991
Summary: Whether Petitioner has established, by a preponderance of the evidence, that Respondent improperly evaluated the bids submitted in response to an Invitation to Bid (ITB) on Lease No. 590:2251. Whether Petitioner has established, by a preponderance of the evidence, that under the facts and circumstances of this case, Lease No. 590:2251 should be awarded to Petitioner.Re-evaluation of bids, based upon supervisor`s expression of dissatisfaction with apparent successful bidder after first evaluation
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91-0246.PDF

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS


TALLAHASSEE ASSOCIATES, LTD., )

)

Petitioner, )

)

vs. ) CASE NO. 91-0246BID

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent, )

)

and )

) FORT KNOX EXECUTIVE CENTER, )

)

Intervenor. )

)


RECOMMENDED ORDER


Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, James W. York, held a formal hearing in this cause on January 28 and 29, 1991, in Tallahassee, Florida.


APPEARANCES


For Petitioner: Wings S. Benton, Esquire

Post Office Box 5676 Tallahassee, Florida 32314-5676


For Respondent: Peter A. Lewis, Esquire

Assistant General Counsel Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0500


For Intervenor: John S. Miller, Esquire

307 West Park Avenue Post Office Box 10651

Tallahassee, Florida 32302


STATEMENT OF THE ISSUES


  1. Whether Petitioner has established, by a preponderance of the evidence, that Respondent improperly evaluated the bids submitted in response to an Invitation to Bid (ITB) on Lease No. 590:2251.


  2. Whether Petitioner has established, by a preponderance of the evidence, that under the facts and circumstances of this case, Lease No. 590:2251 should be awarded to Petitioner.


PRELIMINARY STATEMENT


The Respondent Department of Health and Rehabilitative Services (HRS) advertised an ITS on a five year lease for office space for the HRS Office of Disability Determinations (ODD) in Tallahassee, Florida. Two bids were submitted. The HRS Evaluation Committee initially recommended that the lease be awarded to Petitioner. In the first evaluation of the bids, the chairperson of the committee did not evaluate or assign points to the bids based upon the evaluation criteria. The chairperson was privy to the evaluation sheets and point totals of the other committee members because the chair tallied the total points awarded each bid by the other members. After the first evaluation, the chairperson discussed the evaluation process with the Director of the ODD. The Director expressed concerns regarding the Evaluation Committee recommendation because the Director perceived some problems regarding the Petitioner's building. At the suggestion of the chairperson, the Director of ODD prepared a memorandum outlining his concerns and the chairperson included the memo as an attachment to the original recommendation. Subsequently, and before the original recommendation was accepted, HRS directed the chairperson to evaluate the bids and to assign points to the bids based upon the evaluation criteria in the ITB. The chairperson then filled out an evaluation criteria sheet on each bid and assigned points to each bid (i.e. voted). When the chairperson conducted a second point tally and included her evaluation, the point totals changed, resulting in a second recommendation to award the bid to the building owned by the Intervenor, Devoe Moore d/b/a Fort Knox Center. HRS accepted the second recommendation and issued a notice of intent to award the lease to the Intervenor.


On December-28, 1990, Petitioner timely filed a formal protest with HRS pursuant to Sections 120.53(5)(b) and (c), Florida Statutes, and 120.57(1), Florida Statutes, alleging,

among other things, that the HRS change in the voting procedure, under the circumstances in which it occurred, was arbitrary, capricious and unlawful.


On January 8, 1991, HRS referred Petitioner's formal protest to the Division of Administrative Hearings. Petitioner and Respondent stipulated to a hearing date.


On Friday, January 25, 1991, at 3:25 p.m. (the afternoon of the last business day before the final hearing), the successful bidder, Devoe L. Moore d/b/a Fort Knox Center filed a Motion to Intervene. Over the Petitioner's objection, the motion was granted at the start of the formal hearing.


At the hearing, Petitioner presented the live testimony of Billy Odom, Lucretia Young, Karen Gunter, Kenneth McLane, Dorea Sowinski (an adverse witness), Mary Goodman (an expert witness), and Paula Smith. Petitioner's exhibits 1 through 19 were received in evidence, which included the deposition testimony of Charles Phillips, Billy Odom, Lucretia Young, Karen Gunter, Kenneth McLane, Dorea Sowinski and Linda Treml, all of whom are HRS employees. Pursuant to agreement of Petitioner and HRS, Charles Phillips did not attend the hearing, and his deposition testimony was admitted into evidence. Petitioner's deposition exhibits 1 through 98 were also admitted. Petitioner and HRS stipulated to the admission into evidence of the depositions of all HRS employees, and such depositions were admitted. HRS presented the testimony of Linda Treml and Dorea Sowinski. HRS exhibit 1 was received in evidence. Intervenor called no witnesses and offered no exhibits.


All parties timely submitted proposed recommended orders.

These proposed recommended orders have been considered and utilized in the preparation of this Recommended Order. Specific rulings on the parties' findings of fact are included in the Appendix to this Recommended Order.


Evidence is cited within this Recommended Order using the following designations: "P Ex." means Petitioner's Exhibit, "R. Ex." means Respondent's exhibit; "T" refers to the transcript of the final hearing; "Dep. Ex." means an exhibit to the deposition. Depositions will be cited by the name of the deponent, followed by "Depo" and, where appropriate, page number(s) of the deposition.


FINDINGS OF FACT

Background


  1. HRS advertised an Invitation to Bid (ITB) on Lease Number 590:2251 on September 24, 1990 and October 1, 1990. The ITB was for approximately 37,888 square feet of existing office space for the HRS Office of Disability Determinations (ODD). The lease is for a term of five years, commencing on April 1, 1991.


  2. The ODD is presently, and was at the time of the bid submittal, housed in Petitioner's facility, the City Centre Building (City Centre) at 227 North Bronough Street, Tallahassee, Florida. The current agreement between HRS and the Petitioner involves two separate leases due to expire on March 31, 1991. The ODD has been housed in City Centre for approximately four and one-half years.


  3. HRS is combining the space now under two leases into one lease. Lease NO. 590:2251 is to house three program offices for the ODD: Central Area I, Central Area III, and the Tallahassee area.


  4. Prior to the bid being advertised, Charles Phillips, Director of the ODD, did not want to exercise the option to renew the HRS leases for space in City Centre.


    The Evaluation Committee


  5. HRS formed an Evaluation Committee to evaluate bids received in response to the ITB. Members of the committee were Bill Odom, Lucretia Young, Karen Gunter, and Dorea Sowinski. Ms. Sowinski served as the chairperson of the committee. All members of the Evaluation Committee were aware of concerns Mr.

    Phillips had with the City Centre prior to beginning the process evaluating the bids at issue in this case.


  6. Bill Odom, Lucretia Young and Karen Gunter are ODD area program administrators for the Tallahassee Area, Central Area I, and Central Area III, respectively. Dorea Sowinski is the Operations Management Consultant for the ODD and, as such, she handles purchasing and leasing for ODD.


  7. HRS held a pre-bid conference on October 5, 1990. Before the pre-bid conference, Linda Treml, the bid officer, and Dorea Sowinski discussed who would be on the Evaluation Committee. At the pre-bid conference, Ms. Treml identified the

    members of the Evaluation Committee. Voting was not discussed at the pre-bid conference.


    The ITB


  8. After the pre-bid conference, Linda Treml and Dorea Sowinski made changes to the ITB and issued the ITB to prospective bidders.


  9. The HRS manual on procurement of leased space, HRSM 70- 1, lists bid evaluation criteria that can be used. The evaluation criteria which can be used includes relocation costs. Relocation costs were not included among the criteria in the ITB.


  10. The failure to include relocation costs in the criteria for the evaluations of this bid in no way prejudiced the interests of the Intervenor. Any competitive advantage which may have been conferred as a result of this omission benefits the Intervenor.


    The Bid Opening


  11. HRS received two bids in response to the ITB. The Petitioner's bid offered space in City Centre. The only other bid was from Intervenor (Devoe Moore). Devoe Moore's bid offered space at the Fort Knox Center, 2729 Fort Knox Road, Tallahassee, Florida.


  12. The bids were opened on November 2, 1990. Petitioner's bid offered space at a lower rental rate for each of the five years of the lease term. Petitioner's bid was the low bid. Both bids were responsive.


  13. The bid officer, Linda Treml, was not present at the bid opening due to a family emergency. In Ms. Treml's absence, her supervisor, Ken McLane, conducted the bid opening. Mr. McLane does not normally attend bid openings.


    Instructions to the Evaluation Committee


  14. Before the Evaluation Committee met to evaluate the bids, Mr. McLane gave the committee instructions. Mr. McLane specifically instructed the Evaluation Committee that the chairperson would not evaluate the bids and would not vote.

  15. Ms. Sowinski questioned Mr. McLane regarding his instruction that the chairperson not vote at the time his instructions were given. Ms. Sowinski objected to not voting on the basis that, as committee chairperson on prior evaluation committees, she had always voted. In reply to Ms. Sowinski's questions, Mr. McLane indicated that in case of a tie in the number of points awarded each bidder, the chairperson would be the deciding vote.


  16. At the final hearing in this case, Mr. McLane testified that this was the only time he had instructed an evaluation committee chairperson not to evaluate bids and that the instructions he gave this Evaluation Committee in this regard were a mistake on his part. Mr. McLane testified that he was aware of no authority on which he based his decision that the chairperson would not participate in the evaluation.


  17. The other three members of the Evaluation Committee understood throughout the process that Ms. Sowinski

    would not vote unless there was a tie. The Original Bid Evaluations

  18. On November 15, 1990, three members of the Evaluation Committee filled out an evaluation sheet on each of the bids, assigning certain points to each of the evaluation criteria. As part of the evaluation process, the three members of the committee who had been instructed to evaluate the bids did so secretly and without consultation with other committee members regarding points assigned.


  19. The three voting members gave their evaluations to Ms. Sowinski, the committee chairperson. Ms. Sowinski saw the points that all the other Evaluation Committee members assigned to the various criteria for each building reflected in the bids. On November 15, 1990, Ms. Sowinski totalled the points assigned on each evaluation sheet and announced that the City Centre Building had received the most points. When the evaluation sheets of each of the three committee members who voted on November 15, 1990 were tallied, City Centre had 252 points and the Devoe Moore property (Fort Knox Center) had 245.6 points. More points meant a better bid. The Evaluation Committee was never reconvened.


  1. No testimony in the final hearing in this case indicates that any irregularity which may have occurred during the evaluation of the bids and assignment of points by Odom,

    Young, and Gunter had any material affect on the outcome or resulted in any prejudice to HRS or the Intervenor.1


    The Phillips Memorandum


  2. Dorea Sowinski advised Charles Phillips, Director of ODD, of the result of the three member committee evaluation. Ms. Sowinski also showed Mr. Phillips a draft of her memorandum which stated that the Evaluation Committee recommended that the lease be awarded to the City Centre Building.


  3. After consulting HRS staff in facilities services, Ms. Sowinski suggested that Charles Phillips write a memo. Mr. Phillips wrote a memorandum to Ms. Sowinski dated November 16, 1990. This memo expressed Mr. Phillips' thoughts and comments regarding the City Centre Building and expressed his wishes that the memo be included in the recommendation. Details of the substance of Mr. Phillips' memo are further discussed (infra).


    The Submission of the Original Recommendation


  4. Ms. Sowinski wrote a memorandum dated November 19, 1990, to Ken McLane, recommending that the bid be awarded to Petitioner and that the ODD offices of HRS remain in the City Centre Building. Ms. Sowinski attached Mr. Phillips' November 16, 1990 memorandum and the evaluation sheets of the three other members of the Evaluation Committee to her memo. This accomplished the forwarding of the Evaluation Committee recommendation.


    The Change in Evaluation Procedure


  5. Ms. Treml returned to work on November 19, 1990, and reviewed the bid package for the lease at issue. Ms. Treml testified that she noted that only three members of the committee evaluated the bids and called Dorea Sowinski. Ms. Sowinski informed Ms. Treml that Mr. McLane had instructed her not to vote. Ms. Treml then set up a meeting with Mr. McLane. It was Ms. Treml's view that not allowing the chairperson of the Evaluation Committee to vote contradicted the HRS lease manual.


  6. Ms. Treml's view regarding the contradiction stems from her reading of HRS Manual 70-1 on page 5-18, which states:


    When all committee members have individually evaluated each proposal the entire evaluation committee will meet to review the

    individual evaluations and jointly develop a committee recommendation of the lowest and best bid based on the overall scores.


  7. The provision of HRS Manual 70-1 in question does not contain the word "vote" (although under the evaluation procedure in this case, the application of evaluation criteria and assignment of points amounts to a "vote"). The provision does not mention chairperson or the role of such a person.


  8. A specific finding is made that the material aspects of this provision of HRS Manual 70-1 which are important to resolving the disputed facts in this case are that committee members independently evaluate prior to the meeting of the entire committee and prior to the development of a committee recommendation.


  9. During her meeting with Mr. McLane, Ms. Treml expressed concern to Mr. McLane that evaluation committee chairpersons consistently voted and that she needed the evaluations of all committee members in order to complete the process. During this meeting, Mr. McLane and Ms. Treml decided to send the evaluations back and to request that Ms. Sowinski conduct an evaluation.


    The Second Evaluation


  10. On November 27, 1990, Dorea Sowinski filled out an evaluation sheet like the ones the other members of the Evaluation Committee filled out on November 15, 1990. Ms. Sowinski filled out her evaluation sheet after having seen how many points each previous evaluator had assigned to each bidder for each of the criteria.


  11. Ms. Sowinski testified that she left the evaluations of the other committee members at her office while she conducted her evaluations at her home. She testified that she had not looked at the other evaluations since the date she tallied them and that she did not remember what the totals those evaluations were. Ms. Sowinski also testified that she did not know the difference between the points already assigned and did not know what it would take to shift the vote from City Centre to Fort Knox.


  12. To the extent that the testimony regarding Ms. Sowinski's recollection of the original bid evaluations is offered to establish Ms. Sowinski's independence in conducting

    this evaluation, the testimony is not convincing. Careful consideration of the facts and circumstances established in this case results in a specific finding that Ms. Sowinski's evaluation of the bids was not independent.


  13. Ms. Sowinski prepared an evaluation total cover sheet for the original three evaluations when she forwarded the evaluation favoring City Centre. She testified that she no longer has the evaluation sheet from the first (three person) evaluation and believes she "put it in the recycle bin." The evaluations cover sheet which Ms. Sowinski recycled contained a specific listing of the points given each criteria based on the evaluations of the other three committee members.


  14. At the time she prepared her evaluation sheet, Ms. Sowinski was aware of the November 16th Phillips' memo and was aware that Mr. Phillips did not want to stay in City Centre.


  15. In substance, the Phillips memorandum expresses his concerns regarding the high crime rate and problems with transients in the area of the City Centre Building. In addition, the memo outlines problems with the past history of building management at City Centre and states that, since "the owners of the City Centre have filed Chapter 11 bankruptcy," Mr. Phillips does not believe there will be an improvement in maintenance. The memo also mentions Mr. Phillips' concerns regarding structural problems with the building and its parking garage.


  16. Ms. Sowinski's evaluation of the City Centre Building is the only evaluation in this case which mentions "Chapter 11 bankruptcy."


  17. The evaluation sheet that Ms. Sowinski filled out changed the total points for each building to 327 for City Centre and 329.8 points for Fort Knox.


  18. A memorandum from Dorea Sowinski to Linda Treml dated November 30, 1990, recommended the Fort Knox property for the lease award.


  19. Ms. Sowinski did not reconvene the Evaluation Committee to consider anything further regarding the bids before issuing the November 30, 1990 memorandum with the recommendation reversing the prior recommendation submitted on November 19, 1990.

  20. On December 13, 1990, Ken McLane signed letters for Linda Treml to both bidders advising that HRS intended to award Lease No. 590:2251 to Devoe Moore for the Fort Knox property.


  21. In consideration of all the facts and circumstances in this case, the actions of HRS in changing the original bid evaluations by instructing Ms. Sowinski to conduct an after the fact evaluation amounts to a failure to adhere to the evaluation criteria that it created thereby undermining the integrity of the bid process. The actions of HRS in this regard were arbitrary and capricious.


  22. The actions of HRS in allowing the original bid recommendation to be reversed based upon the tainted evaluations conducted by Ms. Sowinski amounts to a discriminatory standard of review of the bids. The action of HRS in this regard was also arbitrary and capricious.


    The Testimony of Petitioner's Expert


  23. At the final hearing in this case, Petitioner offered the testimony of Mary Goodman, Chief of the Bureau of Property Management of the Florida Department of General Services (DGS). DGS is responsible for promulgating rules for evaluating bids for leases such as the one at issue in this proceeding. Section 255.249(2)(b), Florida Statutes (1990 Supp.).


  24. Ms. Goodman has been the Bureau Chief of the DGS Bureau of Property for over nineteen years and has been involved in State property management for over thirty years. Ms. Goodman is the only witness in this proceeding offered as qualified to provide opinions regarding State procurement of leased space and the appropriate procedures to be followed in such procurement. Based upon her qualifications, Ms. Goodman was accepted as an expert witness and her testimony is relied upon as helpful in making findings of fact 44 through 62 in this Recommended Order.


  25. When evaluating bids in the public procurement process, agencies should form an evaluation committee, and members of that committee should evaluate proposals received independently.


  26. The term "individually," as used in the HRS Manual 70-

    1 at pages 5-18, is synonymous with "independently."


  27. In the public procurement process, the requirement that evaluations of bids be performed independently means that

    the committee chair or a bid officer instructs the committee as to their responsibilities and provides the committee with evaluation criteria and with instructions as to assignment of points. Each committee member then assigns points as set forth in the criteria without consulting with other members. In this manner each committee member obtains the total points assigned each responsive bid.


  28. Ms. Goodman knows of nothing that would authorize the chairperson or any member of an evaluation committee to fill out an evaluation form after seeing the evaluation forms filled out by other members. To do so would not amount to an "independent evaluation" and would violate State policy because the requirement of independence would not be met.


  29. Ms. Goodman is aware of no policy manual, rule, or statute that would prohibit the chairperson of an evaluation committee from acting as bid officer and refraining from voting when other members vote.


  30. Typically in the public procurement process, an evaluation committee consists of three members with a committee chair as a nonvoter and guider.


  31. If three members of an evaluation committee make an evaluation, and a fourth member is asked to also make an evaluation, if the fourth member has previously had access to the other three evaluations and knows what such evaluations contain, the fourth member cannot make an independent, unbiased and unprejudiced evaluation.


  32. The results of an evaluation committee's voting is called a recommendation because of the organizational structure within a department. In most state agencies, there is an oversight person who looks at the committee recommendation to determine that the committee did in fact make an independent evaluation and that the recommendation complies with applicable statutes and rules. Even though a reviewing authority may override the committee recommendation, such authority must stay within the bid criteria.


  33. Once instructions have been given to an evaluation committee and action has been taken pursuant to such instructions, a change or rescission of previous instructions should be based on just cause; reasons that are not arbitrary, capricious, prejudiced or biased.

  34. Based upon the assumption that "the chairperson has always voted," no sufficient good reason or justification exists to warrant a change in instructions to allow a committee chairperson to vote after the committee has been instructed that the chair would not vote, and the committee has done its job and forwarded its recommendation based upon the prior instructions.


  35. The purpose in providing in the rules that an evaluation committee be formed to evaluate bids is to make evaluations impartial, unbiased, and to provide integrity in the process of public procurement of leased space. Normally, the evaluation committee recommendation is followed by the agency head.


  36. Under the facts proved in this proceeding, the change in instructions previously given the Evaluation Committee occurred after the committee had completed its evaluation and submitted its recommendation based on the prior instructions. The rescission of the prior instruction on voting by the chairperson resulted in the fourth committee member evaluating the bids and scoring_ criteria points after that member had reviewed the other evaluations, tallied the original evaluations points and prepared the original recommendation. The resulting second and different recommendation changed the results of the process such that the low bidder, originally awarded the most points by the committee, lost the bid recommendation because the scoring change resulted in a different point total. The procedure thus applied in this case was arbitrary and capricious.


  37. In the bid evaluation process in this case, relocation costs, the financial condition of the bidders, and structural engineering analysis were not included in the criteria for evaluating responsive bids.


  38. None of the evaluation criteria in the ITB for this bid pertain to or encompass past performance by a bidder. Typically, State agencies do not include past performance in bid evaluation criteria and, if such criteria was included, the ITB should require every bidder to provide documentation of past performance in any leased space offered and some criteria should be established by which the submission could be evaluated.2


  39. None of the evaluation criteria in the ITB for this bid would allow an evaluation committee to consider Chapter 11 status in a bankruptcy proceeding.

  40. The State of Florida has had a number of leases where lessors have gone into bankruptcy, mortgage foreclosures and some instances where Savings and Loans have taken over and then gone defunct. The State has leased from receivers, including receivers in-bankruptcy.


  41. Absent a specific statement in the ITB that no bid would be received or considered from a property owner involved in reorganization proceedings, the agency should not take such matters into consideration in evaluating bids.


  42. Structural condition of the building may be considered under "physical characteristics" in the evaluation criteria but where, as in this case, the lease agreement requires any facility being offered to be kept in compliance with all existing building codes, it should be assumed that all bids declared responsive meet that requirement.


  43. Under the evaluation criteria established by HRS in this case, it is not permissible to consider the area of town the building is in as long as the building is within geographic boundaries established in the ITB.


    The Sowinski Evaluation of the City Centre Building


  44. Ms. Sowinski attached a typed sheet to the evaluation sheet which she filled out for her evaluation of City Centre. This attachment explains her evaluation and assignment of points. The written instructions to the Evaluation Committee require such an explanation of points in two areas of Item 2 in the evaluation criteria, both relating to the location of the space bid. (Pet. Composite Dep. Ex. 20)


  45. The Evaluation Criteria score sheet was used by all committee members including Ms. Sowinski. The portions of the score sheet at issue in this proceeding are under item 2(a) and (c).


  46. Item 2(a) calls for an evaluation of "The effect of environmental factors, including the physical characteristics of the building and the area surrounding it, on operations planned for the requested space." Ms. Sowinski deducted six of a possible twelve points under item 2(a). Ms. Sowinski indicates in her explanation under Item 2(a) that she deducted points for building location for the following reasons:

    1. City Centre is located in one of the highest rated crime areas of Tallahassee. (Ms. Sowinski also outlines problems with harassment by transients, car burglary and vandalism in and around the building.)


    2. The past performance of building management. (Problems listed include poor response to tenant needs in the past.)


  47. As part of her Item 2(a) explanation, Ms. Sowinski also states that the building owners are in "Chapter 11 bankruptcy" and that she questions the owners' financial resources to maintain the building. Ms. Sowinski testified that she did not deduct points for this; however, on the basis of the evaluation sheet there is no way to make an objective distinction in this regard.


  48. Ms. Sowinski attaches an engineering report from April 1990 to her explanation. This report addresses structural problems. As part of her Item 2(a) explanation, Ms. Sowinski also notes such problems are being corrected.


  49. Item 2(c) on the Evaluation Criteria score sheets calls for an evaluation of the "Character of adjacent properties compatible with office use." Ms. Sowinski deducted four out of eight possible points under Item 2(c). In her explanation of points deducted under Item 2(c), Ms. Sowinski states that the deductions are based on the fact that the bus station is located across the street, there is a Salvation Army housing unit nearby and that these factors contribute to the transient problems in the area.


  50. The written instructions to the Evaluation Committee note that scoring pursuant to Item 2, "Location," is subjective. Therefore, evaluators are instructed to provide an explanation less than the maximum points are given for each weighting factor in that category.


  51. In assigning evaluation criteria points under Item 2(a), the evaluator's consideration of "physical characteristics of the building and area surrounding it" is limited to factors which have an effect on the operations planned for the requested space.


  52. If an evaluator assigned less than the maximum available points under Item 2(a) to a building based upon "crime

    rate" and/or "problems with transients" in the area of the building, then the evaluator, pursuant to the written instructions, must explain how such factors have or would have a negative effect on the operation of the ODD. Ms. Sowinski's explanation under Item 2 (a) fails to provide sufficient information in this regard to reasonably justify the deduction of six out of a possible twelve points that were available to City Centre in this category. Under the facts and circumstances of this case, such action was unreasonable.3


  53. Pursuant to the wording of Item 2(c), evaluators are limited to considerations of how the "character of adjacent properties" might not be "compatible with office use" when assigning less than the maximum points allowable in this category.


  54. If an evaluator assigned less than the maximum available points under Item 2(c) to a building based upon such factors as the proximity of a bus station and/or a "Salvation Army housing unit," then, based upon the written instructions given, the evaluator must explain how such factors are incompatible with office use. Ms. Sowinski's explanation, which states that the bus station and housing units "account for a large portion of the transient population, which is a direct cause for many of the problems in the area" does not sufficiently explain how the character of these adjacent properties are so incompatible with ODD "office use" as to warrant the deduction of four out of a possible eight points that were available to City Centre. Under the facts and circumstances of this case, such action was unreasonable.


  55. Ms. Sowinski's evaluation of the City Centre bid was not reasonably based on the evaluation criteria HRS established. Therefore, even if Ms. Sowinski's evaluation of these bids was not tainted, her evaluation of the City Centre bid was materially improper.


    De novo Application of Evaluation Criteria to These Bids


  56. Item 1 (Associated Fiscal Costs) is, as noted in the written instructions to the Evaluation Committee, objectively based upon present value methodology computations. All bid evaluations in the record are consistent. In each evaluation, City Centre, the low bidder, receives the maximum of 40 points and Fort Knox receives 36.2. Points awarded pursuant to Item 1 on the Evaluation Sheet are not at issue. Therefore, in a de

    novo evaluation, City Centre is awarded 40 points and Fort Knox receives 36.2 points under Item 1.


  57. The Evaluation Criteria Score Sheet lists Item 3(a) as "Facility, Susceptibility of the design of the space offered to efficient layout and good utilization, which will be determined by evaluation committee." As noted in the written instructions to the committee, this item is subjective and an explanation of the assignment of fewer than allowed points is required. Item 3(a) is not at issue, and the maximum 13 points are awarded each building for the purpose of the de novo evaluation. The remainder of Item 3 is not in issue and is objective. All evaluations in the record award 6 points to City Centre and 8 points to Fort Knox. In the de novo evaluations, the same approach is taken.


  58. The application criteria in dispute in this case are those listed on the Evaluation Criteria Score Sheets under Item 2, Location, specifically 2(a) "The effect of environmental factors, including the physical characteristics of the building and the area surrounding it, on operations planned for the requested space" and 2(c) "Character of adjacent properties compatible with office use."


  59. Based upon the facts proved in this case, an independent review of the evaluation criteria and other appropriate exhibits, both the City Centre and Fort Knox buildings should receive the maximum allowed points in Items 2(a) and 2 (c). Therefore, each building is awarded twelve points in Item 2(a) and eight points in Item 2(c).


  60. The application of a de novo evaluation of the bids in this case, as described above, results in total scores of 87 for City Centre and 85.2 for Fort Knox.


  61. No party in this case, to and including the final hearing has contended that the votes of Mr. Odom, Ms. Young or Ms. Gunter were affected by any irregularity or argued that these evaluations should be discarded or ignored. None of the parties make such a contention in their proposed recommended orders and made no proposed findings of fact in this regard.4


  62. Petitioner has proved, by a preponderance of the evidence, that the original recommendation, based upon the evaluation by Mr. Odom, Ms. Young and Ms. Gunter was in material compliance with the ITB as well as applicable statutes and rules. Petitioner is therefore entitled to the award of Lease

    NO. 590:2251 as provided in the original Evaluation Committee Recommendation.


  63. A de novo evaluation of the bids in this case proves, by a preponderance of the evidence, that Petitioner submitted the lowest and best bid. Petitioner is entitled to the award of Lease No. 590:2251 as provided in the original Evaluation Committee order.

    CONCLUSIONS OF LAW


    1. Jurisdiction


  64. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties. Section 120.53(5), Florida Statutes.


    1. Burden of Proof


  65. Petitioner has the burden of proof in this case to prove the allegations in its petition by a preponderance of competent evidence. Department of Transportation v. J.W.C. Company, Inc., 396 So. 2d 778 (Fla. 1st DCA 1981).


    1. Groves-Watkins Standard of Review


  66. HRS and the Intervenor argue that the appropriate standard of review to be applied by the Hearing Officer in this case is that announced by the Florida Supreme Court in Department of Transportation v. Groves-Watkins Constructors, 530 So. 2d 912

    (Fla. 1988).


  67. In Groves-Watkins the court held, under the facts present in that case:


    Thus, although the APA provides the procedural mechanism for challenging an agency's decision to award of reject all bids, the scope of inquiry is limited to whether the purpose of competitive bidding has been subverted. In short the hearing officer's sole responsibility is to ascertain whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly.


  68. Assuming arguendo that the narrow Groves-Watkins review is applicable in this case, the Petitioner has proved, by a preponderance of competent evidence, that HRS acted arbitrarily and capriciously in failing to adopt the original recommendation of the Evaluation Committee and in instructing the committee chair to conduct an after the fact and non- independent evaluation which resulted in a second, different recommendation.

  69. As HRS points out in its argument, the system of competitive bidding was designed to protect against collusion, favoritism, and fraud in the award of public contracts. Liberty County v. Baxter's Asphalt Concrete, Inc., 421 So. 2d 505 (Fla. 1982). The Liberty County court went on to point out that a public agency has wide discretion in the competitive bidding process and that, based upon an honest exercise of discretion, its decision should not be overturned even if the decision is erroneous and even if a reasonable person might disagree. 421 So. 2d at 507.


  70. HRS contends that the evidence in this case at best supports the conclusion that the agency made a mistake. HRS and the Intervenor argue that the original instruction to the chairperson of the Evaluation Committee not to evaluate the bids was a mistake. To support this argument, HRS cites two separate provisions in the HRS manual HRSM 70-1. In one part of the manual it is stated that one member (of the committee) will be appointed as chairperson. In another portion of the manual it is stated that determination of the best bid is obtained when all committee members have individually evaluated each bid proposal. It would follow, according to HRS, that the chairperson must evaluate the bid before a determination of the best bid can occur.


  71. The problem in this argument is that HRS apparently places no emphasis on the requirement that the bids be evaluated individually, in other words, independently. The argument of HRS and the Intervenor on this point is not persuasive. Even assuming that this argument is persuasive, the unreasonable and arbitrary aspects of the HRS action in this case do not stem from the mistake but from the arbitrary and capricious action taken in an attempt to rectify the perceived error. Petitioner correctly points out that nothing in HRSM 70-1 purports to authorize a change in voting procedure after the Evaluation Committee has forwarded its recommendation.


  72. Under the facts and circumstances of this case, at the time HRS decided that the chairperson should have voted, that person had already been privy to the deliberations of the committee, had seen all the other evaluations, and had tallied the points on the individual evaluation score sheets. Therefore, any future evaluation of these bids by this chairperson could not be independent. The actions of the agency, in instructing the chair to conduct an after the fact "individual" evaluation was simply not supported by logic.

  73. Added to the problems already noted with this "after the fact" evaluation are the facts that the committee chair had met with her division director, Mr. Phillips, and discussed his problems with the evaluations. Ms. Sowinski reviewed the Phillips memo outlining his concerns with City Centre. In her subsequent evaluation, Ms. Sowinski echoes most of the division director's concerns, in some instances verbatim.


  74. A fair application of the Liberty County holding, that an agency action should not be overturned simply because "reasonable persons may disagree," applied to the facts in this case, suggests that under the law of public procurement, state agencies are not required to conduct perfect bid evaluations, only fair ones. In this case, the second bid evaluation was unfair. The flawed method of bid evaluation engaged in by the agency gives the strong appearance of favoritism. If the second recommendation for the award of this bid is allowed to stand on the facts in this case, the purpose of competitive bidding will be subverted. The competent substantial evidence in this proceeding proves that the reliance of HRS and the Intervenor on Groves-Watkins and Liberty County to support the actions of the agency is misplaced.


  75. None of this discussion is to suggest that, as the ODD division director, Mr. Phillips should not have had input into the competitive bidding process in this case. The proper time for Mr. Phillips' input in this case would have been in the preparation of the ITB, but the timing and the degree of input apparent here was not appropriate in the middle of the otherwise independent evaluation process. Based upon the totality of information known to HRS at the time the second evaluation was ordered, the agency action was clearly not supported by the facts. An arbitrary act is one that is not supported by facts or logic. Agrico Chemical Company v. Department of Environmental Regulation, 365 So. 2d 759, at 763. (Fla. 1st DCA 1979) Therefore, the HRS actions in this case are arbitrary and cannot be sustained even under a limited standard of review.


  76. Petitioner and Respondent stipulate that the original evaluation of the bids by the three members of the Evaluation Committee is not a matter of disputed fact. Intervenor takes the case based upon the prehearing stipulations of the Petitioner and Respondent. In addition, Intervenor has not argued that the original evaluation and recommendation were materially flawed. Under the limited standard of review as announced by the court in Groves-Watkins, Petitioner has proved

    by a preponderance of the evidence that the City Centre bid should be awarded the lease in this case.


    1. De novo Review


  77. The facts of this case are clearly distinguishable from those in Groves-Watkins. In this case the issues involve the agency's evaluation of competitive responses to an ITB. In Groves-Watkins the facts involved the decision of the Florida Department of Transportation (DOT) to reject all bids on a highway construction project because the bids exceed the pre-bid estimate. The court noted that DOT was granted statutory discretion to award the bid to the lowest responsive bidder or to reject all bids. 530 So.2d at 914. The Groves-Watkins court adopted the majority view that, where an agency is authorized to reject all bids and does so, judicial intervention should be limited to cases where the purpose or effect of the agency action is to defeat the integrity of competitive bidding. In this case the agency does not contend that it has legislative authority or discretion to act in the manner that it did.


  78. The narrow standard of review adopted by the court in Groves-Watkins does not apply here. In this case the Hearing Officer should sit on behalf of, and in the place of, the agency head and should examine the evaluation process de novo. Capelletti Brothers, Inc. v. Department of General Services, 423 So. 2d 1359 (Fla. 1st DCA 1983), Couch Construction Company v. Department of Transportation, 361 So. 2d 172 (Fla. 1st DCA 1978). The undersigned has conducted a de novo review of the facts and has independently reviewed the relevant and material aspects of the evaluation of the bids in this case.


  79. Based upon a review of the relevant testimony and the exhibits on the record in this case, the undersigned concludes that there is insufficient evidence to support the deduction of available evaluation points in Items 2(a) and 2(c) of the Evaluation Criteria Score Sheet for either the City Centre or Fort Knox Building.


  80. Any suggestion that crime and/or "problems with transients" in the area of either building can, under no circumstances, be considered in the evaluation of these bids is rejected. The written instructions to the Evaluation Committee do, however, require that the deduction of any possible points in these subjective categories be explained by the evaluator. (Pet. Dep. Ex. 20) A fair reading of the evaluation criteria as established on the score sheet requires that the locations of

    the buildings offered in the bid be evaluated on factors that relate directly to the operations to be conducted in the buildings.


  81. There is no suggestion on the record in this proceeding that crime and/or "transient problems" have affected the ODD operations or are likely to do so in the future. There is no suggestion, for instance, that any ODD staff member assigned to City Centre has been reluctant or refused to perform any task at any time due to fear of crime or the presence of transient population in the area. To the contrary, two of the members of the Evaluation Committee are assigned to work at City Centre and neither deducted points based on the location of that building. Neither Ms. Young nor Ms. Gunter noted crime or transient problems in their evaluation of City Centre. In addition, the record reflects that prior to the time bids were submitted, City Centre had instituted security measures in the building and there is no suggestion that such measures have not been effective. (Pet. Composite Ex. 17, Sowinski evaluation.)


  82. The ITB does not encompass "past building management problems" as a criterion for evaluating the bids in this case and, even if it did, the record reflects that the City Centre management is currently responsive to the needs of tenants. (Pet. Composite Ex. 17, Sowinski evaluation.)


  83. The City Centre Building is assigned the maximum allowable points in the location category of the Evaluation Criteria Score Sheet. Based upon the record, there is no basis to deduct points for City Centre under Item 3(a) on the score sheet and the building is awarded a weight of 13 points in that category. The record reflects that City Centre space includes three units of contiguous space in one building with three floors and that the facility has inside access. On this basis, City Centre should be allotted six points under Item 3(b)(2) per the evaluation criteria.


  84. The record does not reflect a basis to deduct points for location of the Fort Knox Building. Therefore, the Fort Knox Building is given the maximum allowable points for location. The record reflects no basis to deduct criteria points from Fort Knox based on design of the facility. Since the record reflects that the Fort Knox Building provides three units of contiguous space in one building on two floors and provides inside access, under Item 3(b)(1) on the evaluation sheet, the building is allowed eight points in that category.

  85. The result of the de novo evaluation of the buildings based upon the relevant evaluation criteria at issue in this case results in a score of 87 for City Centre and 85.2 for Fort Rnox. Based upon this evaluation, the bid should be awarded to Petitioner.


RECOMMENDATION


Having considered the foregoing Findings of Fact, Conclusions of Law, and the evidence of record, it is


RECOMMENDED:


That Respondent HRS enter a Final Order awarding Lease No.

590:2251 to Petitioner. It is further RECOMMENDED that Respondent return the cash bond posted by Petitioner pursuant to Section 255.25(3)(c), Florida Statutes.


DONE and ORDERED this 21st day of March, 1991, in Tallahassee, Florida.


JAMES W. YORK, Hearing Officer Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675


FILED with the Clerk of the Division of Administrative Hearings this 21st day of March, 1991.


ENDNOTES


1/ In the prehearing stipulation, Respondent takes the position that no committee member considered factors outside the evaluation criteria. (Prehearing stipulation, p. 2, paragraph (2).) Based upon the prehearing stipulation, the validity of the original three person evaluation is not included as a factual issue to be litigated. (Prehearing stipulation, pp. 9-10, paragraphs 1-4.) Any evidentiary ruling by the undersigned at the final hearing notwithstanding, the validity of the original three member evaluation of the bids is not at issue in this proceeding.


2/ In her evaluation of the bids in this case, Ms. Sowinski evaluated the past management performance in both the City Centre and Fort Knox buildings. She based her evaluation of the Fort Knox Building on interviews with HRS Child Abuse Registry staff currently housed in Fort Knox.


3/ An obvious example as to how this could occur would be an instance where staff might be reluctant or refuse to perform necessary work before or after business hours due to well founded fear.


4/ A review of the evaluations by Mr. Odom, Ms. Young and Ms. Gunter indicates that a strict application of the criteria as applied de novo in this Recommended Order would not change the original recommendation. After such evaluation, City Centre remains the lowest bid by application of present value methodology and best in terms of total points assigned.


APPENDIX


Petitioner's Proposed Findings of Fact


1-8. Petitioner's proposed findings of fact 1-8 are accepted in material part in the Recommended Order.

  1. Petitioner's proposed finding of fact 9 is adopted and incorporated to the extent not subordinate or unnecessary.

  2. Petitioner's proposed finding of fact 10 is subordinate and not necessary to the conclusions reached.

11-22. Petitioner's proposed findings of fact 11-22 are adopted in material part in the Recommended Order.

  1. Petitioner's proposed finding of fact 23 is subordinate and not necessary to the conclusion reached.

  2. Petitioner's proposed finding of fact 24 is adopted in material part in the Recommended Order.

  3. Petitioner's proposed finding of fact 25 is accepted but is subordinate and not necessary to the conclusions reached.

26-27. Petitioner's proposed findings of fact 26 and 27 are adopted in material part in the Recommended Order.

28-29. Petitioner's proposed findings of fact 28 and 29 are subordinate and not necessary to the conclusions reached.

30-38. Petitioner's proposed findings of fact 30-38 are adopted in material part in the Recommended Order.

  1. Petitioner's proposed finding of fact 39 is subordinate and not necessary to the conclusions reached.

  2. Petitioner's proposed finding of fact 40 is subordinate and not necessary to the conclusions reached.

  3. Petitioner's proposed finding of fact 41 is adopted in material part in the Recommended Order.

  4. Petitioner's proposed finding of fact 42 is subordinate and not necessary to the conclusions reached.

43-44. Petitioner's proposed findings of fact 43 and 44 are adopted to the extent necessary and to the extent not subordinate to the conclusions reached.

45-55. Petitioner's proposed findings of fact 45-55are adopted in material part in the Recommended Order.

56-57. Petitioner's proposed findings of fact 56 and 57 are subordinate, cumulative and not necessary to the conclusions reached.

58-72. Petitioner's proposed findings of fact 58-72 are adopted in material part in the Recommended Order.

73. Petitioner's proposed finding of fact 73 is cumulative and subordinate to the conclusions reached.

74-81. Petitioner's proposed findings of fact 74-81 are adopted in material part in the Recommended Order.

83-86. Petitioner's proposed findings of fact 83-86 are adopted in material part in the Recommended Order.

87-97. Petitioner's proposed findings of fact 87-97 are subordinate, cumulative and not necessary to the conclusions reached.

98-106. Petitioner's proposed findings of fact 98-106 are subordinate to the conclusions reached. The issue contemplated in these proposed findings of fact is addressed in finding of fact 21 and footnote 1 in the Recommended Order.


Respondent's Proposed Findings of Fact


1-12. Respondent's proposed findings of fact 1-12 are adopted in material part in the Recommended Order.

  1. Respondent's proposed finding of fact 13 is adopted in part in the Recommended Order. The last three sentences in proposed finding of fact 12 are adopted in material part in the Recommended Order.

  2. To the extent proposed finding of fact 14 relates to the Evaluation Committee's knowledge of Mr. Phillips' feelings regarding City Centre, it is adopted in

    material

    part in the Recommended Order. The remainder of proposed finding of fact 14 is rejected as argument discussed in

    the Conclusions of Law in the Recommended Order.

  3. Respondent's proposed finding of fact 15 is not supported

    by the evidence and is rejected.

  4. Respondent did not propose a finding of fact 16.

17-19. Respondent's proposed findings of fact 17-49 are adopted in the Recommended Order.

Intervenor's Proposed Findings of Pact


1. Intervenor's proposed finding of fact 1 is adopted in the Recommended Order.

2-3. Intervenor's proposed findings of fact 2 and 3 are adopted

in material part in the Recommended Order.

  1. Intervenor's proposed finding of fact 4 is adopted in material part in the Recommended Order. The last sentence of proposed finding of fact 4 is conclusory and is rejected.

  2. Intervenor's proposed finding of fact 5 is adopted in the Recommended Order insofar as it reflects Ms. Sowinski's testimony.

  3. Intervenor's proposed finding of fact 6 is accepted but is

    subordinate and not necessary to the conclusions reached.

  4. Intervenor's proposed finding of fact 7 is accepted but is

not material and is subordinate to the conclusions reached.


COPIES FURNISHED:


Wings S. Benton, Esquire Post Office Box 5676 Tallahassee, FL 32314-5676


Peter A. Lewis, Esquire Assistant General Counsel Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, FL 32399-0500


John S. Miller, Esquire

307 West Park Avenue Post Office Box 10651 Tallahassee, FL 32302


Sam Power, Agency Clerk Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0500


Docket for Case No: 91-000246BID
Issue Date Proceedings
Mar. 21, 1991 Recommended Order (hearing held , 2013). CASE CLOSED.

Orders for Case No: 91-000246BID
Issue Date Document Summary
Mar. 21, 1991 Recommended Order Re-evaluation of bids, based upon supervisor`s expression of dissatisfaction with apparent successful bidder after first evaluation, is arbitrary.
Source:  Florida - Division of Administrative Hearings

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