STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

KNIGHT ENERGY TURNPIKE SERVICES, )

)

Petitioner, )

)

vs. )

) CASE NO. 95-0465BID DEPARTMENT OF TRANSPORTATION, )

)

Respondent, )

and )

)

MARTIN PETROLEUM CORP., and )

MOBIL OIL CORP., )

)

Intervenors. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was conducted in this case on March 9, 1995, at Tallahassee, Florida, before Michael M. Parrish, a Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner, Jack M. Skelding, Jr., Esquire Knight Energy James C. Hauser, Esquire Turnpike Patrick J. Phelan, Jr., Esquire

Services, Inc.: Parker, Skelding, Labasky, Corry,

Eastman & Hauser Post Office Box 669

Tallahassee, Florida 32302 and

Steve Silverman, Esquire

Kluger, Peretz, Kaplan & Berlin, P.A. 1970 Miami Center

201 South Biscayne Boulevard Miami, Florida 33131

For Respondent, Thomas H. Duffy, Esquire Department of Department of Transportation Transportation: 605 Suwannee Street

Tallahassee, Florida 32399-0450

For Intervenor, Mary M. Piccard, Esquire

Martin Petroleum Cummings, Lawrence & Vezina, P.A. Corp.: 1004 DeSoto Park Drive

Post Office Box 589

Tallahassee, Florida 32302-0589

For Intervenor, Carolyn S. Raepple, Esquire Mobil Oil James C. Goodlett, Esquire Corporation: Hopping, Green, Sams & Smith

123 South Calhoun Street Post Office Box 6526 Tallahassee, Florida 32314

STATEMENT OF THE ISSUE

This is a bid protest proceeding in which the Petitioner challenges the Department's notice of intent to award the contract under RFP-DOT-94/95-8006 to the Intervenor Martin Petroleum Corp. Petitioner, who is the fifth-ranked bidder, contends that all four of the higher ranked bidders submitted non- responsive bids, that its own bid was responsive, and that it should be awarded the subject contract.

PRELIMINARY STATEMENT

This case went to hearing on the issues raised in the Petitioner's original Formal Written Protest And Request For Administrative Hearing. 1/ The parties entered into a Prehearing Stipulation which further narrowed some of the factual and legal issues. At the formal hearing on March 9, 1995, the parties offered thirteen joint exhibits, all of which were received in evidence. The Petitioner presented the live testimony of two witnesses and the deposition testimony of five witnesses. 2/ The

Respondent presented further live testimony by one of the witnesses called by the Petitioner. Neither of the Intervenors offered any testimony other than by cross-examination.

At the conclusion of the hearing the parties requested, and were granted, ten days from the filing of the transcript within which to file their respective proposed recommended orders. The transcript was filed with the Hearing Officer on March 15, 1995. Thereafter all parties filed timely proposed recommended orders containing proposed findings of fact and conclusions of law. All proposed findings of fact submitted by all parties are specifically addressed in the appendix to this Recommended Order.

Simultaneous with its proposed recommended order, the Intervenor Martin also filed on March 28, 1995, a Motion For Attorney's Fees, by means of which it seeks an award of attorney's fees pursuant to Section 120.57(1)(b)5, Florida Statutes. Martin also requests an evidentiary hearing on its motion for attorney's fees. By separate order issued the same day as this Recommended Order, the Hearing Officer has retained jurisdiction to conduct any evidentiary hearing which may be necessary and to issue a further order disposing of Martin's motion for attorney's fees.Courier 3/

FINDINGS OF FACT

Findings stipulated to by all parties 4/

1. The Department solicited proposals for renovation and operation of service stations on Florida's Turnpike through RFP- DOT-94/95-8006, which was issued September 21, 1994.

2. The award recipient, known as the Operator, would have to furnish, prior to contracting, a $1,000,000 performance bond for operation of the seven stations on the Turnpike.

   
   

3. No performance bond was required at the time the proposals were due. The RFP required all proposers to submit letters of commitment from surety companies with their proposals, however. The RFP stated:

   
   

   J. FINANCIAL ABILITY

   
   

   To assess the Proposer's financial ability to perform the requirements set forth in this Request for Proposals and the resulting Service Station Lease and Operating Agreement, the Department

   has determined that it will require a Proposal Guaranty, a Performance Bond, and a Letter of Credit.

   * * *

   
   

   Considerations

   
   

   The successful Proposer will be required to provide, prior to execution of a contract, a satisfactory Performance and Payment Bond in the amount of $1,000,000 on the form provided in Section VII of this RFP or other form acceptable to the Department. The bond shall be maintained in effect throughout the life

   of the Contract and shall ensure full compliance with all the terms and conditions of the Contract except construction/ renovation and signage activities. The Performance and Payment Bond

   is not to be mailed with the proposal, but will be required prior to execution of the final Contract. The cost of this bond shall be borne by the Proposer. The Surety on any Performance and Payment Bond shall hold a certificate of authority authorizing it to write surety bonds in the State of Florida and shall be licensed to do business in the State of Florida. The Surety Bond shall be signed by the Surety and Surety's Florida resident agent.

   
   

   Requirements

   
   

   The proposer must provide a letter of commitment from a Surety who meets the surety qualification requirements set forth above. Such letter must state that the Surety will issue on behalf of the Proposer a Performance and Payment Bond in

   the amount of $1,000,000 covering all obligations under the Contract except construction/renovation related activities. The only contingency permitted in the commitment letter is the award of the Contract to the Proposer.

4. The bond requirements were set out in the Lease and Operating Agreement, which stated, in pertinent part:

   
   

   [T]he Operator has provided, prior to execution of this Agreement, a Performance and Payment Bond in the amount of $1,000,000 to the Department which must be maintained in effect throughout

   the life of the Agreement to ensure full comp- liance with all the terms and conditions of the Agreement except construction/renovation

   and signage activities. This bonding requirement may be fulfilled through use of sequential bonds provided (1) the duration of any given bond shall not be less than one year, (2) the bond amount shall be $1,000,000 for any given bond duration, and (3) at least sixty (60) days prior to the expiration of any given bond, the Operator must present the Department a new bond effective upon expiration of the bond then in effect.

   
   

5. Under the RFP the proposals were to be rated in four major categories: management experience and staffing, fuel pricing and services, service station operations, and market development plan. The four scores would than be added and the proposers would be ranked from the highest to the lowest score. The surety commitment letters, among other requirements, were not "scored" items, but were reviewed for compliance with the RFP. Any deemed to be materially deficient would render the proposal nonresponsive and result in its disqualification.

   
   

6. Seven proposals were opened on December 20, 1994. The proposals were evaluated by three employees of the Department who had experience and knowledge in the program area and who were appointed by the District Secretary. Woodrow

   L. Lawson, the Director of Contractual Services for the Department's Turnpike Division, performed the responsiveness review.

   
   

7. Martin's surety commitment letter was from Poe & Brown Insurance of Daytona Beach, Florida, was dated December 9, 1994, was signed by Donald P. Bramlage, Attorney-in-Fact & Resident Agent and stated:

   
   

   North American Specialty Insurance Company has executed the bid bond for the operation, renovation and maintenance of service stations located on Florida's Turnpike. Should the contract be awarded to Martin Petroleum Corporation, North American Specialty stands ready to execute an annual $1 million performance and payment bond for this contract. Should you need any additional information whatsoever, please advise.

   
   

8. Chambliss' surety commitment letter was from Poe & Brown Insurance of Daytona Beach, Florida, was dated December 16, 1994, was signed by Donald P. Bramlage, Attorney-in-Fact & Resident Agent and stated:

   
   

   North American Specialty Insurance Company has executed the bid bond for Operation, Renovation and Maintenance of Service Stations located on Florida's Turnpikes. Should the contract be

   awarded to Joe A. Chambliss, Inc., North American Specialty Insurance Company stands ready to execute an annual $1 million Performance and Payment bond for this contract. Should you need anything additional whatsoever, please advise.

   
   

9. Mobil's surety commitment letter was from Chubb Group of Insurance Companies of New York, New York, was dated November 16, 1994, was signed by Betty Calderon of Federal Insurance Company, as attorney-in-fact, and stated:

   
   

   Please be advised that should Mobil Oil Corp- oration be awarded a contract, we will secure from the Federal Insurance Company a Performance and Payment Bond in the amount of said contract. If you have questions, please feel free to call.

   
   

10. The surety commitment letter submitted by Amoco Oil Company was from Seaboard Surety Company of Chicago, Illinois, was dated December 16, 1994, was signed by Patricia Thurmond, as agent for Seaboard Security Company, and stated:

    
    

    It is our understanding that Amoco is submitting a proposal for the above-referenced project.

    
    

    Please be advised that we currently have Amoco placed with St. Paul/Seaboard for their surety bond needs.

    
    

    Our ability to secure final performance and payment bonds is subject to a favorable review

    of the bond forms and mutually acceptable contract terms. This commitment shall remain in full force and effect for a period of sixty (60) days unless extended in writing by the undersigned.

    
    

11. Knight's surety commitment letter was from ACSTAR Insurance Company of New Britain, Connecticut, was dated December 16, 1994, was signed by William J. Dykas as Attorney-in-fact, and stated:

    
    

    In the event that Knight Energy Turnpike Services, Inc. should be awarded the contract for the operation, renovation and maintenance of seven Florida Turnpike locations, Project No.

    RFP-DOT-94/95-8006, ACSTAR Insurance

    Company as Surety, will furnish a Payment and Performance Bond in the amount of

    $1,000,000.00 for all obligations except construction/renovation and signage.

    
    

12. Woodrow Lawson reviewed the surety commitment letters as part of his responsiveness review of the proposals. He found no defect in the surety commitment letters of Martin, Chambliss, Mobil, Amoco, or Knight.

    
    

13. Martin had the highest-rated proposal, followed by Chambliss, Mobil, Amoco, Knight, and Sunshine Oil Company. A proposal from Orestes Flores was disqualified for being nonresponsive. The Department decided to award the contract to Martin, and posted notice of that decision on January 20, 1995.

    Findings based on evidence at hearing

    
    

14. The Department had two principal purposes for requiring the surety commitment letters: (a) to help ensure that the intended award recipient would be able to acquire a performance and payment bond and thus be able to execute the contract and (b) to help the Department weed out proposers that could not perform, the assumption being that companies with inadequate resources would not be able to secure a commitment.

    
    

15. The criteria listed in the Requirements section on page 28 of Joint Exhibit 2 were the only criteria used by the Department to evaluate compliance with Section IV, Paragraph J.2 of the RFP.

    
    

16. After Lawson had completed his own responsiveness review, he solicited comments from the three evaluators regarding the responsiveness of the proposals. None of the evaluators expressed any concern about the responsiveness of the surety commitment letters submitted by Martin, Chambliss, Mobile or Knight.

    
    

17. Lawson did conclude that the letter submitted by Amoco was irregular for containing additional contingencies beyond what the RFP permitted, but he considered the irregularity to be minor, and waived it, thus treating Amoco's proposal as responsive.Courier 5/

    
    

18. In the RFP the Department expressly reserved the right to waive minor irregularities in the proposals.

    
    

19. Knight's proposal was prepared and submitted by Mr. Dave Blech, President of Knight Energy Turnpike Services, Inc. Upon receipt of the RFP, Mr. Blech sent the document to his insurance agent and requested that the agent obtain a bond to satisfy the requirements of the RFP. Relevant amendments, including the amended contractual language, were also provided to Knight's insurance agent.

    
    

20. Mr. Blech interpreted the J.2 bond criteria of the RFP to require a surety commitment letter that would cover all obligations of the contract, except construction, renovation, and signage, for the entire eight and a half or nine year period of the contract. This opinion was shared by Knight's insurance agent, and Knight received similar opinions concerning the term and the amount of the bond from other bonding companies which were contacted by Knight during the preparation of its proposal.

    
    

21. The Department's interpretation of the J.2 bond criteria was to the effect that a commitment to a one year period was sufficient. In view of the bond requirements set out in the Lease and Operating Agreement, the Department's interpretation was reasonable, if not required.

    
    

    CONCLUSIONS OF LAW

    
    

22. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding. Sections 120.53 and 120.57(1), Florida Statutes.

    
    

23. The basic legal principles applicable to a case of this nature are summarized in Systems/Software/Solutions v. Department of Transportation, DOAH Case No. 92-0339BID, Recommended Order issued March 12, 1992, where Hearing Officer Kilbride wrote:

    1. The law of Florida has established that a strong deference be accorded an agency's decision in competitive bidding situations:

       [A] public body has wide discretion in soliciting and accepting bids for public improvements and its decision, when based on an honest exercise

       of this discretion, will not be overturned by a court even if it may appear erroneous and even if reasonable persons may disagree.

       Liberty County v. Baxter's Asphalt and Concrete, Inc., 421 So.2d 505, 507 (Fla. 1982).

       
       

    2. In deciding Department of Transportation v. Groves-Watkins Constructors, 530 So.2d 912 (Fla. 1988), the Supreme Court of Florida ruled that the Liberty County decision established the standard by which an agency's decision on compe- titive bids for a public contract should be measured when it further held that the agency's discretion, as stated above, cannot be overturned

       absent a finding of "illegality, fraud, oppression or misconduct." Groves-Watkins, 530 So.2d at 913.

       
       

    3. The Groves-Watkins standard was recently reiterated in Scientific Games, Inc. v. Dittler Brothers, Inc., 586 So.2d 1131 (Fla. 1st DCA 1991). In Scientific Games, Inc., the Court was determining the scope of discovery to be permitted in an administrative proceeding concerning the evaluation of an RFP. The Court concluded that the scope of discovery must be viewed in light of the proper standard of review to be employed by the Hearing Officer in these types of proceedings and stated:

       
       

       The Hearing Officer need not, in effect, second guess the members of the evaluation committee to determine whether he and/or other reasonable and well-informed persons might have reached a con- trary result . . . "[T]he Hearing Officer's sole responsibility is to ascertain whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly." Groves-Watkins, 530 So.2d at 914.

       
       

       Scientific Games, Inc., 586 So.2d at 1131. See also,

       C.J. Courtenay v. Department of Health and Rehabilitative Services, 581 So.2d 621 (Fla. 5th DCA 1991). (It is not the Hearing Officer's function to reweigh award factors and award to protestor).

       
       

       Other summaries citing additional authorities can be found in the recommended orders issued in the following cases: Bozell, Inc., et al. v. Department of Lottery, et al., DOAH Case No. 91-3165BID, Recommended Order issued July 25, 1991; Consultec, Inc. v. Department of Administration, Division of State Employees' Insurance, et al., DOAH Case No. 91-5950BID, Recommended Order issued November 13, 1991; Professional Testing Service, Inc. v. Department of

       Professional Regulation, DOAH Case No. 91-7429BID, Recommended Order issued January 3, 1992; Linder-Funk-Fregley- Oertel Interest v. Department of Corrections and ARC Developmental Companies, Inc., DOAH Case No. 93-0875BID, Recommended Order issued May 5, 1993.

       
       

24. Of particular interest are the following observations by former Hearing Officer Benton in Linder-Funk-Fregley-Oertel Interest, supra:

    
    

    1. In Department of Transportation v. Groves- Watkins Constructors, 530 So.2d 912 (Fla. 1988), the Court held that an agency's free- form decision to reject all bids must stand, in the absence of proof that "the agency acted fraudulently, arbi- trarily, illegally or dishonestly." 530 So.2d 914.

       
       

    2. While it is one thing to defer to an agency's judgment that budgetary constraints, a reordering

       of agency priorities or external economic conditions make it wise for the agency to defer or forego goods or services; see Couch Construction Co. v. Department of Transportation, 361 So.2d 172 (Fla. 1st DCA 1978);

       Willis v. Hathaway 95 Fla. 608, 117 So. 89 (1928); it is another to oust the Division of Administrative Hearings from its traditional role of recommending agency action on the basis of fact, policy and law established in a neutral forum, when the question

       is which of two (or more) competing bidders is entitled to the award. See Capeletti Brothers v. Department of Transportation, 499 So.2d 855 (Fla. 1st DCA 1986); McDonald v. Department of Banking and Finance, 346 So.2d 569 (Fla. 1st DCA 1977).

       
       

    3. The First District has nevertheless extended the narrow Groves-Watkins standard of review to situations where an administrative agency elects to choose among competing bidders, and let the contract. E.g. Procacci v. State Department of Health and Rehabilitative Services, 603 So.2d 1299 (Fla. 1st DCA 1992); Moore v. Department of Health and Rehabilitative Services, 596 So.2d 759 (Fla. 1st DCA 1992); Scientific Games v. Dittler Bros., Inc., 586 So.2d 1128 (Fla. 1st DCA 1991).

    * * *

    
    

    1. A request for proposals sets out specifications which proposals filed in response must meet in substance in order for the proposer to qualify as a competitor for the contract to be let. The request for proposals is the standard against which proposals are measured to determine whether they are eligible for consideration. Here the request for proposals also prescribed certain procedures for evaluation of the proposals. Specifications in invitations to bid, like "[w]ords in [almost] an[y] instrument should be given their natural or most

       commonly understood meaning." Tropabest Foods, Inc.

       v. State Department of General Services, 493 So.2d

       50, 51-2 (Fla. 1st DCA 1986). The same is true regarding requests for proposals.

       
       

    2. "Although a bid containing a material variance is unacceptable . . . not every deviation from the invitation is material." Robinson Electrical Co. v.

    Dade County, 417 So.2d 1032, 1034 (Fla. 3d DCA 1982);

    Tropabest Foods, Inc. v. State Department of General Services, 493 So.2d 50, 52 (Fla. 1st DCA 1986); Glatstein v. Miami, 399 So.2d 1055 (Fla. 3rd DCA) rev. den. 407 So.2d 1102 (Fla. 1981). Unless the variance from specifications frustrates governmental requirements, it "is only material if it gives the bidder a substantial advantage over the other bidders and thereby restricts or stifles competition." Tropabest Foods, Inc. v. State Department of General Services, 493 So.2d 50, 52 (Fla. 1st DCA 1986); Harry Pepper & Associates, Inc. v. City of Cape Coral, 352 So.2d 1190, 1193 (Fla. 2d DCA 1977). The same

    principle applies to proposals at variance with specifications in requests for proposals. System Development Corp. v. Department of Health and Rehabilitative Services, 423 So.2d 433 (Fla. 1st DCA 1982).

    
    

25. There is no evidence in the record of this case suggesting that the Department acted fraudulently, illegally, or dishonestly. The disposition of this case turns on whether the Department's proposal to award the subject contract to the Intervenor Martin Petroleum Corp. was arbitrary and capricious. For the reasons explained below, the Department's proposed action in that regard was not arbitrary and capricious. 6/

    
    

26. The Department's conclusion that Martin's proposal was responsive to the requirements of the RFP was reasonable under the circumstances of this proceeding, especially when the nature of Martin's surety letter is considered in light of the purpose for which the requirement for such a letter was included in the RFP. Martin's surety letter complies with the letter of the RFP requirements, as well as with the spirit of those requirements.Courier 7/ In this regard it is significant to note that the Department would assume no greater risk by accepting the Martin or Chambliss proposals in which the surety committed for an annual bond than it would have assumed had the surety committed for the full term of the contract. The Lease and Operating Agreement requires the Operator to maintain a $1,000,000 bond for the life of the contract and enforces this provision by holding the Operator in default, and holding the Operator's bond subject to action by the Department, if a replacement bond is not secured within sixty days of the expiration of any current bond. Accordingly, the initial period of the initial bond is irrelevant to the Department, so long as that initial term is for at least one year. Inasmuch as the Department's action was reasonable under the circumstances, there is no basis upon which to conclude that it was arbitrary or capricious.

RECOMMENDATION

On the basis of all of the foregoing, it is RECOMMENDED that the Department of Transportation issue a Final Order in this case

concluding that the bid submitted by the Intervenor Martin Petroleum Corp. was responsive in all material regards and dismissing the Petitioner's Formal Protest.

DONE AND ENTERED this 10th day of April 1995 in Tallahassee, Leon County, Florida.

MICHAEL M. PARRISH

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 10th day of April, 1995.

ENDNOTES

1/ The Petitioner also filed an Amended Written Protest And Request For Administrative Hearing. The amended protest was stricken prior to hearing, primarily because it attempted to raise new issues.

2/ Mr. Blech and Mr. Lawson testified in person at the March 9, 1995, hearing. Mr. Lawson's deposition testimony was also received. The testimony of Mr.

Bramlage, Ms. Calderon, Mr. Dykas, and Mr. Shoop was also presented by deposition. The Respondent and both of the Intervenors objected to the deposition testimony of the four last-mentioned witnesses on the grounds of relevance. At hearing the Hearing Officer was uncertain as to the relevance of those four depositions (see page 69 of the transcript) and overruled the relevance objections to the subject depositions. Upon further consideration since the formal hearing, the Hearing Officer has concluded that the subject matters addressed by the depositions of Mr. Bramlage, Ms. Calderon, Mr. Dykas, and Mr. Shoop are irrelevant to the disposition of this case.

3/ While it would be preferable, and perhaps more procedurally neat, to dispose of all issues in this proceeding at one time, disposition of the issues raised by the motion for attorney's fees will, of necessity, require the passage of sufficient time to more precisely frame the issues and to schedule and conduct any evidentiary hearing that may be required. In order to avoid any unnecessary delay in the disposition of the central issue in this proceeding, the better course appears to be to issue this Recommended Order as soon as possible and dispose of the issues raised by the motion at the earliest practicable date thereafter.

4/ The findings of fact contained in paragraphs 1 through 13 of the Findings of Fact portion of this Recommended Order are all taken verbatim from the parties' Prehearing Stipulation filed on March 9, 1995.

5/ In view of the disposition of other issues in this proceeding, the question of whether the waiver of the Amoco irregularities was appropriate is moot.

6/ In view of the conclusion that it was not arbitrary or capricious for the Department to conclude that Martin's proposal was responsive, it is not necessary to address at length the responsiveness of the other proposals. It is, however, noted that if it were material to the disposition of this case to determine the responsiveness of the Amoco proposal, the Department's determination that the defects in that proposal were "minor irregularities" might well be found to be arbitrary and capricious.

7/ The language of the RFP describing the surety letter requirements is not a model of precision and clarity and it would behoove the Department to consider improved language in future RFP's. Nevertheless, none of the bidders challenged the validity of that portion of the RFP specifications and none of the bidders took advantage of the pre-proposal opportunity to ask the Department in writing to clarify the meaning of that portion of the RFP specifications. (The inquiry by Knight asked if one portion of the requirements could be changed; not what those requirements meant.) Further, the manner in which the Department interpreted and applied that portion of the RFP requirements did not give any unfair advantage to any bidder.

APPENDIX

The following are my specific rulings on all proposed findings of fact submitted by all parties.

Findings proposed by Petitioner Knight Energy

Paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, and 14: The vast majority of the findings proposed in these paragraphs consist of historical procedural details, descriptions of positions taken by the parties, and descriptions of interlocutory rulings by the Hearing Officer, none of which constitute findings based on the evidence received at the formal hearing. These details have been omitted from the findings of fact. To the extent necessary for context, some of these details have been included in the Preliminary Statement.

Paragraphs 15, 16, 17, 18, 19, 20, 21, and 22: Accepted in substance.

Paragraphs 23 and 24: Rejected as irrelevant or as subordinate and unnecessary details.

Paragraphs 25 and 26: Accepted in substance.

Paragraph 27: Accepted that Mr. Lawson found Martin's surety letter to be responsive. The rest of this paragraph is rejected as argumentative.

Paragraph 28: Rejected as subordinate and unnecessary details and as, in any event, an inference that is not fully warranted by the evidence.

Paragraphs 29 and 30: Rejected as argumentative or as unnecessary statements of the obvious.

Paragraphs 31, 32, and 33: Rejected as irrelevant. Paragraph 34: Rejected as irrelevant and as argumentative.

Paragraph 35: Rejected as constituting argument or conclusions of law, rather than proposed findings of fact.

Paragraphs 36 and 37: Accepted in substance with some unnecessary details omitted.

Paragraph 38: Rejected as argumentative or as unnecessary statements of the obvious.

Paragraph 39: Rejected as constituting argument or conclusions of law, rather than proposed findings of fact.

Paragraph 40: Accepted.

Paragraph 41: First and third sentences accepted. Second sentence rejected as irrelevant or as subordinate and unnecessary details.

Paragraphs 42, 43, and 44: Rejected as argument or as unnecessary statements of the obvious.

Paragraph 45: Rejected as constituting argument or conclusions of law, rather than proposed findings of fact.

Paragraph 47: First two sentences rejected as subordinate and unnecessary details. Last sentence rejected as irrelevant.

Paragraph 48: Rejected as argument or as unnecessary reiteration of the contents of the Amoco surety letter.

Paragraph 49: Rejected as argument or as unnecessary reiteration of RFP language.

Paragraph 50: Rejected as argumentative or as unnecessary summary of testimony at hearing.

Paragraph 51: First two lines rejected as argument or as unnecessary details. The remainder of this paragraph is accepted in substance.

Paragraph 52: First and last sentences rejected as constituting argument or conclusions of law, rather than proposed findings of fact.

Paragraph 53: First two lines rejected as constituting argument or conclusions of law, rather than proposed findings of fact. Last two lines rejected as argumentative or as unnecessary reiteration of the obvious.

Paragraph 54: Rejected as constituting argument or conclusions of law, rather than proposed findings of fact.

Paragraphs 55, 56, 57, and 58: Accepted in substance.

Paragraph 59: Rejected as subordinate and unnecessary details and as, in any event, not fully supported by the persuasive evidence.

Paragraphs 60 and 61: Rejected as unnecessary reiteration of what Knight's surety letter said.

Paragraphs 62 and 63: Accepted in substance.

Paragraph 64: Accepted in substance with argumentative and editorial comments deleted.

Paragraph 65: Rejected as constituting argument or conclusions of law, rather than proposed findings of fact.

Findings proposed by DOT

Paragraphs 1, 2, 3, 4, 5, 6, 7, 8, and 9: Accepted in substance.

Paragraphs 10, 11, 12, and 13: Rejected as subordinate and unnecessary details.

Paragraphs 14, 15, 16, 17, 18, 19, 20, and 21: Accepted in substance.

Paragraphs 22, 23, 24, 25, 26, and 27: Rejected as irrelevant or as subordinate and unnecessary details.

Paragraphs 28, 29, 30, 31, 32, 33, and 34: Accepted in substance.

Paragraphs 35, 36, and 37: Rejected as argument or as unnecessary commentary about what was not in the RFP.

Paragraphs 38 and 39: Accepted in substance.

Findings proposed by Intervenor Martin

Paragraphs 1, 2, 3, and 4: Accepted in substance.

Paragraph 5: Rejected as irrelevant or as subordinate and unnecessary details.

Paragraphs 6, 7, 8, 9, 10, 11, 12, and 13: Accepted in substance.

Paragraphs 14, 15, 16, 17, and 18: Rejected as irrelevant or as subordinate and unnecessary details.

Paragraph 19: Accepted that the RFP provided for waiver of minor irregularities. The remainder of this paragraph is rejected as irrelevant or as subordinate and unnecessary details.

Findings proposed by Intervenor Mobil

Paragraphs 1, 2, 3, 4, 5, 6, and 7: These paragraphs described issues in dispute and are not proposed findings of fact.

Paragraphs 8, 9, and 10: Accepted in substance.

Paragraph 11: Rejected as unnecessary reiteration of quoted portions of RFP in the stipulated facts.

Paragraph 12: Rejected as argument or as unnecessary commentary about what was not in the RFP.

Paragraphs 13 and 14: It is accepted that Mr. Lawson concluded that Mobil's surety commitment letter was responsive. The remainder of these two paragraphs is rejected as subordinate and unnecessary details.

Paragraph 15: Rejected as constituting argument or conclusions of law, rather than proposed findings of fact.

Paragraph 16: Rejected as irrelevant.

Paragraphs 17 and 18: The proposed findings of other parties that are incorporated by reference are specifically addressed in other portions of this appendix.

COPIES FURNISHED:

James C. Hauser, Esquire Patrick J. Phelan, Jr., Esquire

Parker, Skelding, Labasky, Corry, Eastman & Hauser

Post Office Box 669 Tallahassee, Florida 32302

Steve Silverman, Esquire

Kluger, Peretz, Kaplan & Berlin, P.A. 1970 Miami Center

201 South Biscayne Boulevard Miami, Florida 33131

Thomas H. Duffy, Esquire Department of Transportation 605 Suwannee Street

Tallahassee, Florida 32399-0450

Mary M. Piccard, Esquire Cummings, Lawrence & Vezina, P.A. 1004 DeSoto Park Drive

Post Office Box 589 Tallahassee, Florida 32302-0589

Carolyn S. Raepple, Esquire James C. Goodlett, Esquire Hopping, Green, Sams & Smith

123 South Calhoun Street Post Office Box 6526 Tallahassee, Florida 32314

Ben G. Watts, Secretary Department of Transportation Haydon Burns Building

ATTN: Diedre Grubbs, M.S. 58 605 Suwannee Street

Tallahassee, Florida 32399-0450

Thornton J. Williams, General Counsel Department of Transportation

562 Haydon Burns Building 605 Suwannee Street

Tallahassee, Florida 32399-0450

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this recommended order. All agencies allow each party at least ten days in which to submit written exceptions. Some agencies allow a larger period within which to submit written exceptions. You should contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this recommended order. Any exceptions to this recommended order should be filed with the agency that will issue the final order in this case.

================================================================= ORDER ON MOTION FOR ATTORNEY'S FEES

=================================================================

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

KNIGHT ENERGY TURNPIKE SERVICES, )

)

Petitioner, )

)

vs. ) CASE NO. 95-0465BID

) DEPARTMENT OF TRANSPORTATION, )

)

Respondent, )

and )

) MARTIN PETROLEUM CORP., and ) MOBIL OIL CORP., )

)

Intervenors. )

)

ORDER ON MOTION FOR ATTORNEY'S FEES

On March 28, 1995, the Intervenor Martin Petroleum Corp. filed a Motion For Attorney's Fees, by means of which it seeks an award of attorney's fees against

the Petitioner, Knight Energy Turnpike Services, pursuant to Section 120.57(1)(b)5, Florida Statutes. The motion includes a request for an evidentiary hearing on the issues raised by the motion. As of the time of issuance of this order Knight has not filed a response to the motion. 1/ In view of the nature of the motion it is virtually certain that Knight will oppose it.

By means of a separate Recommended Order issued this same day, the Hearing Officer has addressed all issues in this proceeding other than those raised by Martin's motion for attorney's fees. By means of this order, the Hearing Officer is reserving jurisdiction to resolve the issues raised by Martin's motion and is attempting to expedite the disposition of those issues.

Accordingly, it is ORDERED:

1. That the Hearing Officer hereby reserves such jurisdiction over this proceeding as may be necessary to dispose of the issues raised by Martin's Motion For Attorney's Fees filed on March 28, 1995.

   
   

2. That a prehearing conference will be conducted at the DeSoto Building, 1230 Apalachee Parkway, Tallahassee, Florida, on Monday, April 24, 1995, beginning at 3:00 p.m., or as soon thereafter as counsel may be heard, for the purpose of identifying with specificity the disputed issues that require an evidentiary hearing on Martin's motion, selecting a hearing date, and discussing any other matters that may expedite or facilitate the disposition of the issues raised by the motion.

   
   

3. That counsel for Martin shall prepare and serve on counsel for Knight written statements containing the following information: (a) a concise statement of all facts upon which Martin bases its claim to entitlement of an award of attorney's fees, (b) a statement of the total amount Martin claims to be entitled to by way of attorney's fees, and (c) a summary or explanation of the manner in which Martin calculated the amount it is claiming as attorney's fees. Such written statements shall be served by some method that results in actual delivery to counsel for Knight by no later than noon on Tuesday, April 18, 1995.

   
   

4. That counsel for Knight shall prepare a written statement of its position on the following matters: (a) a concise statement of any disputes it may have with any of the facts relied upon by Martin, (b) a statement that it agrees or disagrees that the amount claimed by Martin is a reasonable amount, and (c) if Knight contends that the amount claimed by Martin is unreasonable, a concise statement of each reason upon which Knight bases that contention. Such statement of position shall be served by some method that results in actual delivery to counsel for Martin by no later than 5:00 p.m. on Friday, April 21, 1995.

   DONE AND ORDERED this 10th day of April 1995 in Tallahassee, Leon County, Florida.

   
   

   
   

   MICHAEL M. PARRISH, 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 10th day of April, 1995.

   
   

   ENDNOTE

   
   

   1/ The period within which Knight may file its response does not expire until 5:00 p.m. on the day on which this order is being issued.

   
   

   COPIES FURNISHED:

   
   

   James C. Hauser, Esquire Patrick J. Phelan, Jr., Esquire

   Parker, Skelding, Labasky, Corry, Eastman & Hauser

   Post Office Box 669 Tallahassee, Florida 32302

   
   

   Steve Silverman, Esquire

   Kluger, Peretz, Kaplan & Berlin, P.A. 1970 Miami Center

   201 South Biscayne Boulevard Miami, Florida 33131

   
   

   Thomas H. Duffy, Esquire Department of Transportation 605 Suwannee Street

   Tallahassee, Florida 32399-0450

   
   

   Mary M. Piccard, Esquire Cummings, Lawrence & Vezina, P.A. 1004 DeSoto Park Drive

   Post Office Box 589

   Tallahassee, Florida 32302-0589

   
   

   Carolyn S. Raepple, Esquire James C. Goodlett, Esquire Hopping, Green, Sams & Smith

   123 South Calhoun Street Post Office Box 6526 Tallahassee, Florida 32314

   Ben G. Watts, Secretary Department of Transportation Haydon Burns Building

   ATTN: Diedre Grubbs, M.S. 58 605 Suwannee Street

   Tallahassee, Florida 32399-0450

   
   

   Thornton J. Williams, General Counsel Department of Transportation

   562 Haydon Burns Building 605 Suwannee Street

   Tallahassee, Florida 32399-0450

   
   

   ================================================================= FINAL ORDER ON MOTION FOR ATTORNEY'S FEES

   =================================================================

   
   

   STATE OF FLORIDA

   DIVISION OF ADMINISTRATIVE HEARINGS

   
   

   KNIGHT ENERGY TURNPIKE SERVICES, )

   )

   Petitioner, )

   )

   vs. ) CASE NO. 95-0465BID

   ) DEPARTMENT OF TRANSPORTATION, )

   )

   Respondent, )

   and )

   )

   MARTIN PETROLEUM CORP., and )

   MOBIL OIL CORP., )

   )

   Intervenors. )

   )

   
   

   FINAL ORDER ON MOTION FOR ATTORNEY'S FEES

   
   

   On March 28, 1995, the Intervenor Martin Petroleum Corp. filed a Motion For Attorney's Fees, by means of which it seeks an award of attorney's fees against the Petitioner, Knight Energy Turnpike Services, pursuant to Section 120.57(1)(b)5, Florida Statutes. The motion includes a request for an evidentiary hearing on the issues raised by the motion. The primary grounds for the motion are set forth in paragraphs 2 and 3 of the motion, which read:

   
   

   1. The protest filed by Knight Energy Turnpike Services ("Knight") was frivolous and brought for an improper purpose. By

      protesting the award of the contract to Martin, Knight accomplished not only a stay of the award, but an extension of Knight's existing

      contracts on three of the turnpike service stations.

   2. As Knight recognized, the sole issue in

this proceeding was whether FDOT acted arbitrarily, illegally, capriciously or fraudulently when it determined that the commitment letters submitted

by all the proposers were responsive to the requirements to the RFP. That standard has been in effect for many years and is not the subject of reasonable debate. Knight's allegations of

fraud, illegality, arbitrariness or capriciousness were strictly conclusory and Knight did not present one scintilla of evidence on which even an inference of impropriety could be drawn. Knight's petition also alleged in conclusory fashion that Martin and the other higher ranked proposers contained material misrepresentations. Yet, Knight never identified any misrepresentation in the proposals. In short, the petition itself was frivolous on its face and Knight presented nothing to cure the deficiency.

The statute under which fees are sought reads as follows:

All pleadings, motions, or other papers filed in the proceeding must be signed by a party, the party's attorney, or the party's qualified representative. The signature of a party, a party's attorney, or a party's qualified representative constitutes a certificate that

he has read the pleading, motion, or other paper

and that, to the best of his knowledge, information, and belief formed after reasonable inquiry, it is not interposed for any improper purposes, such as

to harass or to cause unnecessary delay or for frivolous purpose or needless increase in the cost of litigation. If a pleading, motion, or other paper is signed in violation of these requirements, the hearing officer, upon motion or his own initiative, shall impose upon the person who signed it, a represented party, or both, an appropriate sanction, which may include an order to pay the other party or parties the amount of reasonable expenses incurred because of the filing of the pleading, motion, or other paper, including a reasonable attorney's fee.

The Florida Appellate courts have not had many occasions to write about the meaning or application of Section 120.57(1)(b)5, Florida Statutes. The two most significant cases on that subject appear to be Mercedes Lighting and Electrical Supply, Inc. v. State, Department of General Services, 560 So.2d 272 (Fla. 1st DCA 1990), and Department of Health and Rehabilitative Services v. S. G., 613 So.2d 1380 (Fla. 1st DCA 1993). From Mercedes we learn that, although Section 120.57(1)(b)5, Florida Statutes, is in many ways similar to Rule 11 of the Federal Rules of Civil Procedure, the court finds that there are also significant differences between the state statute and the federal rule. In this regard, the Mercedes court stated, at pages 277-78:

Turning to a comparison of rule 11 and section 120.57(1)(b)5., it is immediately apparent that there is at least one significant difference between the two. The signature requirement under rule 11 is directed at three substantive prongs: the factual basis of the paper, the legal basis of the paper, and its legitimate purpose.

Schwarzer, 104 F.R.D. at 186. Under the statute, the signature certifies only that the paper is not interposed for an improper purpose. But, unlike the rule, section 120.57(1)(b)5. includes "frivolous purpose" as an example of "improper purpose." The question arises whether the Legislature intended, by the inclusion of the phrase "frivolous purpose," to incorporate into the proscriptions of section 120.57(1)(b)5. the

other two prongs of rule 11, viz., that the signa- ture certifies the belief (1) that the paper is well grounded in fact, and (2) is warranted by existing law or a good faith argument for the extension, modification, or reversal of existing law. We conclude after much study that section 120.57(1)(b)5. was enacted to reach the filing

of papers for an "improper purpose," and that the other two prongs of rule 11, which could have very simply been inserted by the Legislature, were intentionally omitted. We will resist the temp- tation to judicially insert these two prongs into the statute.

[2] Having thus determined the elements of the statutory prohibition, it then becomes necessary

to determine the scope of the legislative proscrip- tion against filing papers for an improper purpose, which includes filing for a frivolous purpose.

Turning again to the widely quoted article of William Schwarzer on what is comprehended by the improper purpose prong of rule 11, we are advised that in considering this prong, courts should not delve into an attorney's or party's subjective intent or into a good faith-bad faith analysis.

Instead, if a reasonably clear legal justification can be shown for the filing of the paper in question, improper purpose cannot be found and sanctions are inappropriate. As an example, Schwarzer notes that improper purpose may be manifested by excessive persistence in pursuing a claim or defense in the face of repeated adverse rulings, or by obdurate resistance out of proportion to the amounts or

issues at stake. Schwarzer, 104 F.R.D. 195 through

197. [Emphasis added.]

And further down on page 278 the Mercedes court also notes

. . . that a frivolous purpose, within the meaning of section 120.57(1)(b)5. should be one which is

of little significance or importance in the context of the goal of administrative proceedings.

The interpretations given to the subject statute in the Mercedes decision were, in all material parts, reaffirmed and applied in the S. G. case.

Application of the subject statutory language, as interpreted in Mercedes and S. G., leads to the conclusion that the requested sanctions must be denied because, viewed objectively, there was arguably a reasonably clear legal justification for the filing of the original petition in this case. Knight Energy's challenge to the proposed bid award was, at best, a long-shot proposition; not unlike the long-shot proposition from which the Mercedes decision arose. Nevertheless, at the time the petition was filed there was some possibility, however slim, that Knight Energy might prevail and either win the bid or convince the agency to rebid the project. This quality of the petition is not diminished by the fact that Knight Energy received an incidental economic benefit from the delay that is inescapably associated with litigation. Such being the case, "a reasonably clear legal justification can be shown for the filing of the paper in question" and, in such circumstances, "improper purpose cannot be found and sanctions are inappropriate." Mercedes, at 278.

With regard to the request for an evidentiary hearing on the issues raised by the motion for attorney's fees, it is noted that the conclusions reached in this order are based on the documents that comprise the record of the underlying proceeding. There is no factual dispute about the content of those documents and, therefore, no need for an evidentiary hearing.

For all of the foregoing reasons, it is ORDERED:

That the Motion For Attorney's Fees is hereby DENIED and all relief requested in the motion is hereby DENIED.

DONE AND ORDERED this 24th day of May 1995 in Tallahassee, Florida.

MICHAEL M. PARRISH

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 24th day of May 1995.

COPIES FURNISHED:

James C. Hauser, Esquire Patrick J. Phelan, Jr., Esquire

Parker, Skelding, Labasky, Corry, Eastman & Hauser

Post Office Box 669 Tallahassee, Florida 32302

Steve Silverman, Esquire

Kluger, Peretz, Kaplan & Berlin, P.A. 1970 Miami Center

201 South Biscayne Boulevard Miami, Florida 33131

Thomas H. Duffy, Esquire Department of Transportation 605 Suwannee Street

Tallahassee, Florida 32399-0450

Mary M. Piccard, Esquire Cummings, Lawrence & Vezina, P.A. 1004 DeSoto Park Drive

Post Office Box 589 Tallahassee, Florida 32302-0589

Carolyn S. Raepple, Esquire James C. Goodlett, Esquire Hopping, Green, Sams & Smith

123 South Calhoun Street Post Office Box 6526 Tallahassee, Florida 32314

Ben G. Watts, Secretary Department of Transportation Haydon Burns Building

ATTN: Diedre Grubbs, M.S. 58 605 Suwannee Street

Tallahassee, Florida 32399-0450

Thornton J. Williams, General Counsel Department of Transportation

562 Haydon Burns Building 605 Suwannee Street

Tallahassee, Florida 32399-0450

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: 95-000465BID

Orders for Case No: 95-000465BID