STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ACSI, INC., )

)

Petitioner, )

and )

) HEWITT, OLSON & ASSOCIATES, INC., )

)

Intervenor, )

)

vs. ) CASE NO. 95-1466BID

)

DEPARTMENT OF BANKING AND )

FINANCE, )

)

Respondent. )

and )

)

UNIVERSITY OF SOUTH FLORIDA )

acting for and on behalf of the ) Board of Regents, and The )

Institute for Instructional )

Research and Practices, )

)

Intervenors. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on May 22, 1995, at Tallahassee, Florida, before Mary Clark, a duly designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner: W. Douglas Moody, Jr., Esquire

William B. Graham, Esquire Bateman Graham

300 East Park Avenue Tallahassee, Florida 32301

For Respondent: Margaret S. Karniewicz, Esquire

Department of Banking and Finance The Capitol, Suite 1302 Tallahassee, Florida 32399-0350

For Intervenor, Henry W. Lavandera, Esquire University of University of South Florida

South Florida: 4202 East Fowler Avenue, Adm. 250

Tampa, Florida 33620-6250

For Intervenor, Jack Silver, Esquire

Hewitt, Olson 439 Northeast Seventh Avenue

& Associates: Fort Myers, Florida 33301-1207

STATEMENT OF THE ISSUES

The central issue in this proceeding is whether the Department of Banking and Finance's (Agency) action relating to an intended contract award was arbitrary, illegal, fraudulent or dishonest.

Petitioner alleges that the Institute for Instructional Research and Practice of the University of South Florida (Institute) has no statutory authority to perform the contract. The intervenor, Hewitt, Olson & Associates, Inc., joins this allegation. By stipulation at hearing, Petitioner limited its protest, and the issues, to that allegation.

PRELIMINARY STATEMENT

On January 13, 1995, the Department of Banking and Finance issued its request for proposals (RFP) for BF-12/94-95 for the administration of mortgage broker examination services. Three proposals were received: ACSI, Inc., d/b/a The National Assessment Institute (ACSI); Hewitt, Olson & Associates, Inc. (HEWITT, OLSON); and the University of South Florida.

After recommendation by the evaluation committee, the Department posted the results on February 24, 1995, proposing an award to the University of South Florida. Notices of intent to protest were filed by both ACSI and Hewitt, Olson. Hewitt, Olson later withdrew its protest but was granted leave to intervene in this proceeding.

The case was referred to the Division of Administrative Hearings and was set for hearing on April 12, 1995, pursuant to section 120.53(5), Florida Statutes. After two stipulations for continuance, the hearing proceeding as described above. The University of South Florida was granted leave to intervene.

At the hearing Petitioner presented the testimony of Richard Hewitt, III. Petitioner's exhibits #1 and #2, relating to legislative history, were taken under advisement and are now rejected as explained below. Petitioner's exhibits #3-5 were received in evidence. Hewitt, Olson adopted the argument and presentation by Petitioner.

The Department presented no witnesses, but nineteen exhibits were marked and received in evidence as Respondent's exhibits #1-19. The University of South Florida presented the testimony of Richard Barry Streeter, William Treadwell Sims, Carolyn Lavely and Neil Berger. The University's three exhibits were marked and received as University #1-3.

The transcript was filed on June 14, 1995, and the Petitioner and University filed proposed recommended orders on June 26th and June 23rd, respectively. The findings of fact proposed by each are substantially adopted herein, as the material issues in dispute are legal issues.

FINDINGS OF FACT

1. The Department of Banking and Finance is the agency with the statutory responsibility to administer and enforce laws related to mortgage brokerage and

   mortgage lending. It licenses persons eligible to practice in those fields. Eligibility is based, in part, on education and experience as well as on a written test.

   
   

2. While the agency formerly administered the tests, it reached the conclusion that it needed a more extensive test; it needed to know whether items were valid and it needed a study guide for people who intended to take the test. For those reasons, it sought outside expertise in its RFP no. BF-12/94-95.

   
   

3. The Department received timely responses from Petitioner and the two intervenors in this proceeding.

   
   

4. The cover of the bound proposal from the University of South Florida states that the proposal is submitted by the Institute for Instructional Research and Practice, University of South Florida, College of Education, Carolyn D. Lavely, Ph.D., Director. Within the cover is a copy of memorandum of delegation of authority to execute research contracts and grants, by Betty Castor, President of the University of South Florida. There are also separate submittal letters executed by John C. Kuttas, Senior Contracts and Grants Administrator, Division of Sponsored Research at the University, and by Dr. Lavely and Roslyn Heath, Assistant Director, Division of Sponsored Research at the University. (Respondent's Exhibit #3).

   
   

5. The services described in the proposal are to be performed by the Institute of Instructional Research and Practice at the University of South Florida. The Institute describes its qualifications on pages 32 and 33 of its proposal:

   
   

   The Institute for Instructional Research and Practice (the Institute) was established in 1984 by the Florida Legislature. Originally respon- sible for research, development, and validation

   of instruments for measuring subject area knowledge and teacher effectiveness, the Instituted has developed and validated more than 60 examinations for the state's master teacher and teacher certification programs. Since its inception, the Institute has expanded its range of testing activities beyond assessments of teachers to include assessments of students, school admini- strators, and non educators who require testing

   for professional licensure.

   
   

   The Institute's staff of 35 persons includes statisticians, psychometricians, computer specialists, and editorial and clerical support personnel trained in the provision of products and services directly related to all phases of test

   development, administration, and statistical analysis.

   
   

   Experienced in all aspects of testing, Institute staff have been actively involved in drafting legislation; setting standards; performing task analyses; developing, validating, and pilot testing specifications and examinations; administering examinations; scoring, analyzing, and reporting the

   results of a variety of tests for the State of Florida;

   and conducting related research. Institute personnel manage a large-scale test development operation, conduct research, and document and produce standardized tests. The Institute is now the third largest producer of teacher exams in the United States. (emphasis in original)

   
   

6. The University of South Florida has contracted for similar services with several state agencies including the Department of Insurance, the Department of Education, and the Department of Business and Professional Regulation. The Institute provides the testing services and uses the contracts to further its own research and expertise, to collect and analyze data and to train graduate students in the College of Education.

   
   

7. RFP no. BF-12/94-95 is not a request for research services and is not a request for a research contract. The services under the contract have research and training components. The Institute does research related to item analysis; it accumulates data as a result of administering the exams and it analyzes and researches the data. Dr. Lavely and other Institute staff publish in research journals and make presentations to research associations based on the experience of the Institute in its testing contracts. Graduate students are involved in the training and research aspects. Thus, it is clear that even if the contracting agency is not receiving a direct research "product", the Institute and the University are deriving a research benefit from the services under the contract.

   
   

8. Since its creation by statute in 1984, the Institute's enabling legislation has not been amended. It received an initial appropriation of

   $750,000 from the legislature, and no appropriation since then.

   
   

9. Payments for all contractual services provided by the Institute are routed through the University of South Florida's Division of Sponsored Research. The contract to be awarded from the agency's RFP No. BF-12/94-95 would be considered a "fixed cost contract" by the Institute. Any contracts performed by the Institute are entered into by the University of South Florida through the Division of Sponsored Research.

   
   

   CONCLUSIONS OF LAW

   
   

10. The Division of Administrative Hearings has jurisdiction in this proceeding pursuant to sections 120.53(5) and 120.57(1), Florida Statutes.

    
    

11. In a bid protest proceeding such as this, the sole responsibility of the hearing officer is to ascertain whether the agency acted fraudulently, arbitrarily, illegally or dishonestly. Department of Transportation v. Groves- Watkins Constructors, 530 So.2d 912 (Fla. 1988).

    
    

12. The focus here is on the qualifications of the intended contractor.

    If that entity is not qualified, argues the Petitioner, the action of the agency is illegal.

    
    

13. Determination of the issue involves a process of statutory construction. In cases under Chapter 120, Florida Statutes, statutory construction is routinely and necessarily a function of a hearing officer. See, for example, cases arising under sections 120.54 and 120.56 involving the determination of whether a proposed or existing rule of an agency is an invalid exercise of delegated legislative authority. The case, Perry v. City of Fort

    Lauderdale, 387 So.2d 518 (Fla. 4th DCA 1980), cited by the University of South Florida for the proposition that only courts may interpret statutes, involved a declaratory judgment under Chapter 86 and does not apply here.

    
    

14. Section 240.227(12), Florida Statutes, provides:

    
    

    240.227 University presidents; powers and duties. The president is the chief administrative officer of the university and is responsible for the operation and administration of the university. Each university president shall:

    * * *

    (12) Approve and execute contracts for goods,

    for equipment, for services, including educational services, for leases for real property, and for construction to be rendered to or by the university, provided such contracts are made pursuant to the provisions of chapter 287, as applicable, are for the implementation of approved programs of the university, and do not require expenditures in excess of $500,000. Goods and equipment may be acquired by installment or lease-purchase contract.

    Such contracts may provide for the payment of interest on the unpaid portion of the purchase price.

    
    

    Section 240.241, Florida Statutes, provides, in pertinent part:

    
    

    240.241 Divisions of sponsored research at state universities.--

    1. Each university, with the approval of the Department of Education, is authorized to create, as it deems advisable, divisions of sponsored research which will serve the function of administration and promotion of the programs of research, including sponsored training programs, of the university at which they are located.

    2. The university shall set such policies to regulate the activities of the divisions of sponsored research as it may consider necessary to effectuate

       the purposes of this act and to administer the research programs in a manner which assures efficiency and effectiveness, producing the maximum benefit for the educational programs and maximum service to the state

       . . .

    3. A division of sponsored research created under the provisions of this act shall be under the supervision of the president of that university, who is authorized to appoint a director; to employ full- time and part-time staff, research personnel, and professional services; to employ on a part-time basis personnel of the university; and to employ temporary employees whose salaries are paid entirely from the permanent sponsored research development fund or from that fund in combination with other nonstate sources,

       with such position being exempt from the requirements of the Florida Statutes relating to salaries, except that no such appointment shall be made for a total period of longer than 1 year.

    4. The president of the university where a division of sponsored research is created, or his designee, is authorized to negotiate, enter into, and execute research contracts; to solicit and accept research grants and donations; and to fix and collect fees, other payments, and donations that may accrue by

    reason thereof. The president or his designee may negotiate, enter into, and execute contracts on a cost-reimbursement basis and may provide temporary financing of such costs prior to reimbursement from

    moneys on deposit in the sponsored research development fund, except as may be prohibited elsewhere by law.

    * * *

    
    

15. The Institute for Instructional Research and Practice was created in 1984 pursuant to section 231.65, Florida Statutes, which provides, in pertinent part:

    
    

    1. Institute for Instructional Research and Practice and Student Educational Evaluation and Performance.--

       1. The Board of Regents is authorized and directed to establish an Institute for Instructional Research and Practice and Student Educational Evaluation and Performance. There shall be institute directors to direct the activities of

          the institute. The directors may be located at different universities in the state, and each director shall be appointed by the president of

          the university at which one or more of the functions of the institute are located. Each director shall be responsible for the following functions and related activities:

          1. The director responsible for assembling and conducting research to validate subject area knowledge for instructional personnel shall accomplish the activities specified in paragraph (3)(a).

          2. The director responsible for teacher effectiveness and practice research shall accomplish the activities specified in paragraphs (3)(b)-(d).

          3. The director responsible for student educational evaluation and performance shall accomplish the activities specified in paragraphs (3)(e)-(i).

             The research functions of the institute are to be implemented with the involvement of experts in evaluation and measurement.

       2. The major purposes of the institute are

    to effect increases in student performance through the improved knowledge and performance of teachers and the instructional leadership of school

    administrators; to provide a knowledge base for evaluating and improving the programs of education and training in teacher education institutions; to gather data and information and conduct research designed to discover new and improved means of measuring student outcomes; to determine methods of student evaluation which are more accurate than those methods in present use; and to advance the state of the art in student testing and evaluation of student performance and to build a capability within the state for meeting the many measurement

    challenges which confront educators and policymakers.

    * * *

    
    

    All of the remaining text of section 231.65, Florida Statutes, relates to implementation of the major purposes of the Institute described above. The major, but not exclusive, function of the Institute relates to teacher performance, subject area evaluation, and student performance evaluation.

    
    

16. The language of section 231.65, Florida Statutes, is clear and unambiguous, and resort to the legislative history provided by Petitioner in Exhibits #1 and 2 is unnecessary and inappropriate. Mayo Clinic Jacksonville v. Department of Professional Regulation, Board of Medicine, 625 So.2d 918 (Fla. 1st DCA 1993).

    
    

17. The proposed contract with the University of South Florida is within the scope of the authority of the University and its Division of Sponsored Research. The University and the Division have chosen the Institute, with its existing staff and expertise, to perform the services under the contract.

    
    

18. The record in this proceeding and the underlying statutes do not support a conclusion that the contractor is legally unqualified. The agency's action in awarding the contract is not illegal.

RECOMMENDATION

Based on the foregoing, it is hereby, RECOMMENDED that the Department of Banking and Finance enter its final order awarding the contract in RFP BF-12/94-

95 to the University of South Florida.

DONE AND ENTERED this 28th day of July, 1995, in Tallahassee, Leon County, Florida.

MARY W. CLARK, 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 28th day of July, 1995.

COPIES FURNISHED:

W. Douglas Moody, Jr., Esquire William B. Graham, Esquire

300 East Park Avenue Tallahassee, Florida 32301

Henry W. Lavandera, Esquire University of South Florida

ADM -250 4202 East Fowler Avenue

Tampa, Florida 33620-6250

Jack Silver, Esquire

439 Northeast Seventh Avenue Fort Myers, Florida 33301-1207

Margaret S. Karniewicz, Esquire Department of Banking and Finance Suite 1302, The Capitol Tallahassee, Florida 32399-0350

Honorable Robert F. Milligan Comptroller, State of Florida The Capitol, Plaza Level Tallahassee, Florida 32399-0350

Harry Hooper, General Counsel Department of Banking and Finance Room 1302, The Capitol Tallahassee, Florida 32399-0350

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.

================================================================= AGENCY FINAL ORDER

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

STATE OF FLORIDA DEPARTMENT OF BANKING AND FINANCE

DIVISION OF FINANCE

IN RE:

MORTGAGE BROKER EXAMINATION, DBF No. 3814-F-3/95 RFP BF-12/94-95, (DOAH No. 95-1466BID)

Respondent.

/

FINAL ORDER NOT AWARDING BIDS

The State of Florida Department of Banking and Finance, Division of Finance (hereinafter Department), hereby Final Order Not Awarding Bids regarding the Mortgage Broker Examination, RFP BF-12/94-95, and as grounds therefore states:

FINDINGS OF FACT

(1)(a) The Department solicited bids on the above-stated matter on January 13, 1995. The Department received bids from the University of South Florida (hereinafter university), Hewitt, Olson & Associates, Inc. (hereinafter Hewitt) and ACSI, INC., d/b/a/ The National Assessment Institute (hereinafter NAI). On February 24, 1995, the Department posted its intent to award the contract to the University. After an administrative hearing, the Hearing Officer entered a Recommended Order recommending that the contract be awarded to the University.

NAI, on August 7 and 10, 1995, filed various exceptions to the Hearing Officer's Recommended Order.

(b) On September 21, 1995, the Department issued a Notice of Intent Not to Award Bids. To date, no petition for hearing has been filed.

CONCLUSIONS

(2)(a) As no petition for hearing has been filed, the right to a hearing has been waived. See Fla. Admin. Code R. 28-5.111.

(b) The Department has substantial doubt as to the correctness of the conclusions of the Hearing Officer as expressed in the Recommended Order but declines to rule for the reasons set forth herein.

(3)(a) None of the parties to this proceeding have alleged that this agency has acted impermissibly in the bid review process. It is apparent, however, that the process can be improved. In a typical bid proceeding, agency employees draft the bid request, review the bids, and make an initial determination regarding which bid is the lowest responsible bid. If a protest is filed which fails to allege disputed issues of material fact, an employee of this Department may be assigned to act as hearing officer. After the hearing is conducted, the agency head or the designee of the agency head then renders a determination on

the bid protest. Accordingly, in the absence of any disputed issues of material fact, the bid process can be conducted solely by personnel of this agency. Such a procedure can hardly command the confidence of the public which rightly deserves an open government and adequate assurances that the bidding process is effectuated without bias or favoritism of any kind.

1. In cases where there are disputed issues of material fact, the Hearing Officer of the Division of Administrative Hearings is limited to deciding whether the agency acted fraudulently, illegally, arbitrarily, or dishonestly. Accordingly, even in instances where a person independent from the agency reviews the bid process, such person's input is limited. Therefore, it seems apparent that more should be done to give the public and persons who wish to do business with the State of Florida confidence that tax dollars are being spent in the most appropriate manner. Based upon the foregoing, efforts must be made to improve the process so that the citizens of the state can be assured that there is adequate oversight in the bid process.

   
   

2. There is the additional concern that ways must be found to increase the involvement of the mortgage brokerage industry in the testing process. The present process proposes that the state, or an agent of the state, develop the test, administer the test, score the test, and post the results of the test with little or no participation from the mortgage brokerage industry. While there is a legitimate function for state government in the testing process, efforts should be made to include the mortgage brokerage industry in the process.

   
   

3. It seems apparent that implementing the above-stated principles will require the input of both the private and public sector and may also necessitate the implementation of statutory amendments. Based upon the foregoing, it is in the best interest of the state not to award the contract to any person at this time pending review of the bid process especially in view of the fact that the Department is able to administer the test on at least a temporary basis while this matter is resolved.

FINAL ORDER

IT IS THEREFORE determined and ordered that:

1. The proposed award of the contract to the University is canceled.

   
   

2. The Department shall administer the Mortgage Broker Test on its own without entering into a contract pursuant to RFP BF- 12/94-95.

DONE and ORDERED in Tallahassee, Leon County, Florida this 17th day of October, 1995.

ROBERT F. MILLIGAN, As Comptroller of the State of Florida an

Head of the Department of Banking and Finance

NOTICE OF RIGHT TO JUDICIAL REVIEW

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.

CERTIFICATE OF SERVICE

The undersigned certified that true and correct copies of the foregoing Order and Notice of Rights were duly sent by U.S. Certified Mail to the attached list this 17th day of October, 1995.

PAUL C. STADLER, JR.

Assistant General Counsel Office of the Comptroller The Capitol, Suite 1302

Tallahassee, Florida 32399-0350

(904) 488-9896

Service List

W. Douglas Moody, Jr. Bateman Graham, P.A.

300 East Park Ave. Tallahassee, Florida 32301

Henry W. Lavandera University of South Florida

4202 East Fowler Ave., ADM 250

Tampa, Florida 33620-6250

Jack Silver

439 Northeast Seventh Ave.

Fort Meyers, Florida 33301-1207

Docket for Case No: 95-001466BID

Orders for Case No: 95-001466BID