STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

POSITIVE IMAGES ALTERNATIVE ) ENRICHMENT GROUP, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 97-1715BID

) PUTNAM COUNTY SCHOOL BOARD ) and DEVELYN M. SMITH, )

)

Respondents. )

)

RECOMMENDED ORDER

Pursuant to notice, this matter was heard before the Division of Administrative Hearings by its assigned Administrative Law Judge, Donald R. Alexander, on April 29, 1997, in Palatka, Florida.

APPEARANCES

For Petitioner: Lawrence Hutcherson

Post Office Box 2186 Palatka, Florida 32178

For Respondent: Joe H. Pickens, Esquire (School Board) 222 North Third Street

Palatka, Florida 32177-3710

For Respondent: Develyn M. Smith, pro se (Smith) 1116 Bellamy Road

Melrose, Florida 32666

STATEMENT OF THE ISSUE

The issue is whether the School Board’s action in awarding the contract for the sale of declared surplus to Develyn M. Smith was clearly erroneous, contrary to competition, arbitrary, or

capricious.

PRELIMINARY STATEMENT

This matter began on November 25, 1996, when respondent, Putnam County School Board, advised petitioner, Positive Images Alternative Enrichment Group, Inc., that it had been awarded a contract to purchase certain surplus property owned by the School Board. When petitioner failed to provide a binder on the property, or execute a contract for sale or purchase by January 13, 1997, the School Board rescinded its earlier action and awarded the contract to respondent, Develyn M. Smith, the only other bidder. On January 24, 1997, petitioner requested a formal hearing under Section 120.57(3), Florida Statutes, to contest the proposed action. The matter was referred by petitioner to the Division of Administrative Hearings on April 8, 1997, with a request that an Administrative Law Judge be assigned to conduct a formal hearing.

By Notice of Hearing dated April 11, 1997, a final hearing was scheduled on April 29, 1997, in Palatka, Florida. At final hearing, petitioner was represented by Lawrence Hutcherson, a member of its board of directors, who presented testimony on its behalf. Also, it offered petitioner’s exhibits 1-11. All exhibits were received in evidence. Respondent School Board presented the testimony of Joe H. Pickens, its general counsel. Also, it offered respondent’s exhibits 1-3. All exhibits were received in evidence. Respondent Smith testified on her own

behalf. Her prepared statement has been received as Smith exhibit 1.

There is no transcript of hearing. The parties waived their right to file proposed findings of fact and conclusions of law.

FINDINGS OF FACT

Based upon all of the evidence, the following findings of fact are determined:

1. On October 17 and 24, 1996, respondent, Putnam County School Board (Board), published a notice in the Palatka Daily News soliciting bids on a five-acre parcel of surplus property in Putnam Hall, a small rural community in northwestern Putnam County. The notice provided that “(s)ealed bids should be submitted . . . by 1:00 p.m. on November 4, 1996,” and that the bids would be opened at 1:30 p.m. the same day.

2. In response to that notice, petitioner, Positive Images Alternative Enrichment Group, Inc. (petitioner or PIAEG), and respondent, Develyn M. Smith (Smith), submitted offers of

   $10,000.00 and $3,500.00, respectively. On November 25, 1996, the Board awarded the contract to PIAEG, the highest bidder. When PIAEG failed to provide a binder and sign a contract for sale and purchase by the Board’s January 13, 1997 meeting, the Board rescinded its earlier action and awarded the contract to Smith, the next highest bidder. On January 24, 1997, petitioner filed its written protest of the Board’s action. The facts underpinning the Board’s action are set forth below.

3. On November 4, 1996, the two bids were opened by assistant superintendent Anthony C. Thompson. On November 6, 1996, Thompson submitted a memorandum to the Board in which he recommended that PIAEG’s bid be accepted. This recommendation was formally approved by the Board at a meeting held on November 25, 1996. Whether notice of this intended award was posted is not of record.

4. On November 25, 1996, or the Monday before Thanksgiving, the Board’s general counsel, Joe Pickens, telephoned PIAEG’s representative, Lawrence Hutcherson, and advised him that, as the successful bidder, PIAEG must give the Board a $1,000.00 binder and execute a contract to purchase the property. He was further told that after doing so, the Board would commence title work on the land. Hutcherson asked if he could delay providing a binder and signing the contract until after the holidays, or until the week of December 2. Pickens orally agreed to this request.

5. Pickens heard nothing from Hutcherson until he received a copy of a letter to the Board’s superintendent dated December 23, 1996, in which PIAEG’s secretary, Jonathan Williams, asked that “any action on said property (be) withheld until our meeting with the Rural Development Agency in Ocala January 7, 1997.” The letter added that the “request is made to allow our organization to seek resources for the planned community facility.” The delay was sought after PIAEG learned of possible federal grant moneys available through the State, and decided to use that source of

   money for financing the acquisition rather than relying upon its own funds.

6. Hutcherson made no inquiry with the superintendent or Pickens to determine if the extension of time had been granted. Rather, he just assumed that his request would be approved since he was unaware of any time constraints on purchasing the property. By the same token, neither Pickens nor the superintendent responded to the letter. Pickens, however, discussed the matter with a Board representative, and the two agreed an extension of time would be satisfactory since the next Board meeting was not until January 13, 1997, or after PIAEG’s meeting on January 7. While Pickens expected Hutcherson to contact him before the next meeting, he did not convey this advice to Hutcherson.

7. At the January 7 meeting in Ocala, PIAEG learned that until rules were adopted by the Department of Community Affairs, no grant applications could even be considered. At that time, Hutcherson was led to believe that such rules would not be adopted before May 1997. At hearing, he stated that this time had subsequently been extended, and he is now unsure when the rules will be adopted.

8. Hutcherson did not report this information to Pickens before the January 13 Board meeting because he says he needed several weeks to prepare an appropriate report. Also, until the afternoon of January 10, he was unaware of the meeting. Finally,

   he had received no response to his letter of December 23 requesting a delay, and he reasonably assumed that no action would be taken until after he filed his report.

9. After receiving no advice, oral or written, from Hutcherson regarding PIAEG’s January 7 meeting in Ocala, Pickens recommended to the Board at its January 13 meeting that it rescind its earlier award of the contract to PIAEG and that Smith’s bid be accepted. The Board approved this recommendation. The Board acknowledges that it did not post notice of this intended action.

10. On January 17, 1997, and without knowledge that its award had been rescinded, PIAEG’s secretary sent a letter to the Board’s superintendent asking that a further extension be granted. The letter explained that PIAEG planned “to have a pre- application (for grant moneys) ready within the next 45 days.” Shortly thereafter, Hutcherson learned of the Board’s action, and PIAEG filed its protest on January 24, 1997. After settlement negotiations failed, this proceeding was begun.

11. Except for the notice pertaining to the date on which sealed bids had to be filed, there were no other specifications governing this bid solicitation. Thus, there was no written requirement that a binder had to be filed by a date certain, or that the successful bidder had a specified period of time in which to close on the property or risk loss of the contract.

12. When PIAEG filed its sealed bid, it erroneously used

    the name “Positive Images Alternative Group, Inc.” instead of its correct name. After its bid was submitted, PIAEG sent a letter to the Board’s general counsel and superintendent on December 23, 1996, using its correct name. The Board has represented that this change was immaterial, did not affect the outcome of the case, and would not be a disqualifying factor.

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction over the subject matter and the parties hereto pursuant to Section 120.57(3), Florida Statutes.

14. Section 120.57(3), Florida Statutes, controls this proceeding. Paragraph (3)(f) provides in relevant part as follows:

    (f) In a competitive-procurement protest, no submissions made after the bid or proposal opening shall be considered. Unless otherwise provided by statute, the burden of proof shall rest upon the party protesting the proposed agency action. In a competitive-procurement protest, other than a rejection of all bids, the administrative law judge shall conduct a de novo proceeding to determine whether the agency’s proposed action is contrary to the agency’s governing statutes, the agency’s rules or policies, or the bid or proposal specifications. The standard of proof for such proceedings shall be whether the proposed agency action was clearly erroneous, contrary to competition, arbitrary, or capricious.

15. Under the foregoing statute, the undersigned is first obliged to determine, in a de novo setting, whether the Board’s action is contrary to governing statutes, rules, policies or bid specifications. Within that factual framework, it must then be

    determined if the Board’s action is clearly erroneous, contrary to competition, arbitrary, or capricious. In this somewhat unusual case, there are no bid specifications, and except for the rules discussed in the following paragraph, the parties cited no statutes, rules or policies which address the Board’s bidding process.

16. At hearing, petitioner offered into evidence two Attorney General Opinions which interpreted former Rule 6A- 2.28(1), Florida Administrative Code. The rule, which was subsequently renumbered as rule 6A-2.028(1), authorized school boards to dispose of surplus property valued at less than

    $25,000.00 by “(p)ublic or private sale,” without having to use the competitive procurement process. On October 30, 1994, however, the rule was repealed by the State Board of Education, and thus it has no application here. Petitioner also offered a copy of local Board rule 9.07, last amended in 1989, a part of which tracks former rule 6A-2.028(1). Since the relevant part of the Board rule relies upon the repealed rule as its source of authority, it is assumed it likewise has no application.

17. The evidence shows that there are no bid specifications or other written guidelines governing this bid solicitation other than a requirement that sealed bids be filed by a certain date. More specifically, there was no requirement that the successful bidder consummate the transaction by a date certain, nor was any formal notice of such a condition given to PIAEG or Smith. By

    rescinding the award of the contract on the ground petitioner had not made arrangements to buy the property by January 13, 1997, the Board acted arbitrarily, and thus violated section 120.57(3). Given this circumstance, the Board should rescind its action taken on January 13, 1997, and award the contract to petitioner.

18. To avoid further confusion on the part of the bidders, it would be reasonable, and indeed prudent, for the Board to impose, in writing, a time limitation for PIAEG to consummate the transaction, given the uncertainty in its efforts to obtain grant funding. With written guidelines or specifications in place, the Board could then award the contract to Smith in the event PIAEG fails to perform in a timely and reasonable manner.

19. Finally, at hearing Smith contended, among other things, that PIAEG changed the name in its bid proposal after the bid had been submitted. While this allegation is technically correct, the evidence shows that the change was not material, and it did not give petitioner an unfair competitive advantage over Smith.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is

RECOMMENDED that the Putnam County School Board enter a final order rescinding its action taken on January 13, 1997, and awarding the contract to petitioner.

DONE AND ENTERED this 8th day of May, 1997, in Tallahassee, Florida.

DONALD R. ALEXANDER

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 8th day of May, 1997.

COPIES FURNISHED:

Geri Melosh, Superintendent Putnam County School Board

200 South Seventh Street Palatka, Florida 32177

Lawrence Hutcherson Post Office Box 2186

Palatka, Florida 32178-2186

Joe H. Pickens, Esquire

222 North Third Street Palatka, Florida 32177-3710

Develyn M. Smith 1116 Bellamy Road

Melrose, Florida 32666

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions to this Recommended Order within fifteen days. Any exceptions to this Recommended Order should be filed with the Putnam County School Board.

Docket for Case No: 97-001715BID

Orders for Case No: 97-001715BID