STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FINANCIAL CLEARING HOUSE, INC., )

)

Petitioner, )

)

and )

)

FLORIDA PROPERTY RECOVERY )

CONSULTANTS, INC., )

)

Intervenor, )

)

vs. ) Case No. 97-3150BID

)

OFFICE OF THE COMPTROLLER, )

DEPARTMENT OF BANKING )

AND FINANCE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on September 4 and 5, 1997, in Tallahassee, Florida, before the Division of Administrative Hearings, by its designated Administrative Law Judge, Diane Cleavinger.

APPEARANCES

For Petitioner: Will J. Richardson, Esquire

115 West 4th Street Tallahassee, Florida 32317

For Respondent: H. Richard Bisbee, Esquire

Office of the Comptroller

The Fletcher Building, Suite 526

101 East Gaines Street Tallahassee, Florida 32399-0350

For Intervenor: Stanford Birnholz, pro se

Florida Property Recovery Consultants, Inc. 8090 Atlantic Boulevard, F-79

Jacksonville, Florida 32201

STATEMENT OF THE ISSUE

Whether Petitioner's and Intervenor's protest should be sustained?

PRELIMINARY STATEMENT

Petitioner, Financial Clearing House, Inc. (FCH), filed a formal written protest of Respondent Department of Banking and Finance's, decision to award the contract advertised in Request for Proposals (RFP) Number BF 12/96-97 to State Street Bank and Trust Company (State Street) and National Association of Unclaimed Property Administrators (NAPPCO). The protest alleged that Petitioner should have been awarded a contract under RFP Number BF 12/96-97 and that the Department abused its discretion as follows:

1. The Request for Proposal was evaluated in violation of Section 287.057(15) in that the selection team did not include three employees of the Department of Banking and Finance with experience and knowledge in the program areas and service requirements for which the contractual services were sought.

   
   

2. The selection team did not include members qualified to evaluate the Request for Proposal submitted by FCH.

   
   

3. The selection team acted arbitrarily, capriciously, and subjectively in their evaluation of FCH's RFP using individual evaluation processes and not by any objective standard.

   
   

4. The evaluation process used by the individual members of the selection team was not based on any objective criteria which would be necessary to a fair consideration of FCH's RFP in accordance with the legislative

intent of the competitive bidding statute recited at Section 287.001, Florida Statutes.

Prior to the final hearing, Florida Property Recovery Consultants, Inc., an unsuccessful proposer filed a Motion to Intervene in this proceeding. The Motion for intervention was granted. The Respondent, also, filed a Motion in Limine. After argument the Respondent's Motion in Limine, was denied. The Petitioner also made an ore tenus Motion in Limine at the inception of the hearing. After oral argument, the Petitioner's Motion in Limine was denied. Additionally, the Respondent's Motion for Protective Order and the Petitioner's Motion to Compel were both denied in part and granted in part.

At the hearing the Respondent offered the testimony of Andrew Grosmaire, Peter DeVries, Rick Sweet, Michael Gomez, and Robert Derden and introduced two exhibits into evidence. The Petitioner offered the testimony of Leo Young and

Michael Underwood and introduced 15 exhibits into evidence. In addition, the parties introduced 15 joint exhibits into evidence.

After the hearing, the Petitioner, FCH, and Respondent filed Proposed Recommended Orders on October 3 and October 7, 1997, respectively. Intervenor did not file a Proposed Recommended Order.

FINDINGS OF FACT

1. FCH is a Florida Corporation authorized to do business in the State of Florida. At all times material to this case, Leo Young, Sr., was president of FCH.

2. FCH the bid protester herein, previously was under contract with the Respondent under a 1994-95 RFP. While the business relationship started in a collegial manner, over time disputes arose between FCH and the Respondent involving FCH's performance and course of dealings under the subject contract. The Respondent received several holder complaints about FCH's behavior. The parties attempted to work out these differences in good faith, though near the end of the relationship, communications did "break down" between the two.

3. Despite these differences, there is no evidence that the Department allowed the contracting problems to interfere with the RFP or evaluation process. Nothing in the record suggests that the evaluators improperly, illegally, unfairly, arbitrarily, or discriminatorily exercised their reasonable discretion and judgment in scoring the proposals to the best of their ability based upon the specifications and requirements set forth in the RFP.

4. On April 11, 1997, the Department issued and advertised RFP BF 12/96-97, "Request for proposal for auditing, processing, collecting and delivering of unclaimed property held outside the State of Florida." An offeror's conference, was held on the initial RFP. After the conference a revised RFP was developed and delivered to each potential offeror.

5. The RFP required offerors by May 2, 1997, to file a letter of intent to submit proposals. Petitioner did not submit such a letter with the Department by the May 2 deadline.

6. After May 2, 1997, the Petitioner attempted to submit written questions regarding the subject RFP to the Department.

   These questions were returned to FCH because of FCH's failure at that time to file a letter of intent by the May 2, 1997, deadline.

7. On May 9, 1997, the Petitioner filed with the Department a Notice of Intent to protest the RFP specifications.

8. On May 19, 1997, the Department and the Petitioner entered into a stipulation resolving the Petitioner's protest of the RFP specifications. As part of the stipulation, the Department extended the filing date for the Petitioner to file its letter of intent to submit a proposal in consideration for the Petitioner's withdrawing its protest of the bid specifications. As a consequence of the stipulation, Petitioner was permitted to participate in the RFP process and submit a proposal on the RFP.

9. Four proposals were submitted to the Department by FCH, State Street, NAPPCO, and Florida Property Recovery Consultants.

10. The RFP was titled "Request for proposal for auditing, processing, collecting and delivering of unclaimed property held outside the State of Florida." The purpose of the RFP is to hire contractors to locate abandoned property for the state by doing audits of out-of-state companies holding property considered abandoned pursuant to Chapter 717, Florida Statutes.

11. The RFP contained the following provisions relevant to this case.

    1. WRITTEN QUESTIONS AND OFFEROR'S CONFERENCE

       
       

       * * *

       
       

       (b) Offeror's Conference

       
       

       Upon request by a prospective offeror, the Department shall conduct an offeror's conference in accordance with the calendar of events in Room 334 of the Fletcher Building, Tallahassee, Florida at 2:00 P.M. (EST).

       Please send meeting request to

       Andrew Grosmaire, Contract Manager, as listed on the cover of this RFP. The purpose of the conference is to provide additional clarification regarding written questions previously submitted by the prospective offeror. Attendance is not mandatory.

       
       

    2. EVALUATION OF PROPOSALS

       1. Evaluation Information The contract will be awarded to the

          offeror(s), at the sole discretion of the Department whose proposal(s) is determined to be the most advantageous to the Department as formulated by the rating sheet.

          1. Evaluation Process

             
             

             The Department will conduct a comprehensive fair, and impartial evaluation of proposals received in response to this RFP. The process to be followed is described in the following sections and is to be conducted in four phases:

             
             

             Phase I - Evaluation of Mandatory Requirements

             Phase II - Evaluation of Technical Proposals Phase III - Evaluation of Fee Schedule

             Phase IV - Evaluation of Phases I - III

             
             

          2. Evaluation Committee

             
             

             An Evaluation committee will be established to assist the Department in selecting a Provider for services set forth in this RFP.

             The Committee will have a minimum of three members and at least one member external to the Department. The Committee will be responsible for proposals evaluation including reference checks and other verifications. The proposal evaluators may require an on site demonstration of the offeror's ability to provide the services at a level commensurate with the proposal and the Department's needs.

          3. RFP Rating Sheet

          
          

          The RFP rating sheet which lists evaluation criteria and specific indicators of criteria will be used to assess the degree to which the offeror's response meets those criteria as identified in Section 13. These criteria and the specific indicators of the criteria will be weighted so that each response to the RFP can be numerically valued and ranked.

          
          

          Phase I - Evaluation of Mandatory Requirements

          
          

          The purpose of this phase is to determine if each proposal is sufficiently responsive to the RFP to permit a complete evaluation. The Contract Manager will review the proposals for the mandatory requirements. Any proposal failing to meet any of the mandatory requirements of this RFP will be disqualified.

          
          

          Phase II - Technical/Services Proposal References, Resources, Prior Experience, and Procedures

          
          

          Each offeror shall have all of the following minimum qualifications; sufficient experience, sufficient and competent resources to perform the services, and sufficient procedures to enable the provider to perform the services The Committee members will evaluate the RFP to enable the provider to perform the services. The Committee members will evaluate the RFP for content and feedback from references in determining the offeror's past experience/ability in providing the scope of

          services outlined in this contract. A maximum of ninety points (out of a total of

          100 points) can be awarded. Failure to submit the minimum references will disqualify a proposal from further consideration.

          Phase III - Evaluation of Fee Schedules

          
          

          For each proposal received acknowledging the services outlined in this RFP, the corresponding Fee Schedule will be examined. All fee proposals must be expressed solely in the form of a percentage of the dollar amount of the property delivered or value thereof.

          A total maximum value of ten (10) points will be awarded (out of a total of 100 points) to the lowest proposed fee percentage submitted. A provider shall not submit a proposal in excess of 13 percent. All other proposals equal to 13 percent or lower will be awarded points based on the following formula:

          
          

          (Lowest percentage proposal\other proposer's percentage) x 10.

          
          

          Calculation of points awarded to other proposals will use the lowest percentage amount proposed as a constant numerator and the percentage amount of the offeror being scored as the denominator. The result will always be less than one (1.0). The ratio is then multiplied by the maximum number of points given to the fee schedule of the RFP. This formula only includes valid proposals. If the answer to the formula results in a number with decimals, the decimals will be rounded to the nearest whole number when awarding points for Phase III; .5 points will be rounded upward and less than .5 will be rounded downward.

          Phase IV - Evaluation of Phases I - III The Contract Manager will combine those

          points assigned by each committee member and

          average all scores to determine the offeror submitting the highest rated proposal. A minimum averaged score of 80 points must be obtained by the offeror. If the minimum score is not obtained, the offeror will be disqualified.

          
          

    3. SUBMISSION OF PROPOSALS

       
       

       Prospective offerors shall submit two clearly identified separate sealed packages

       (proposals) which will be opened and evaluated in two stages.

       PACKAGE #1 - Technical and Proposed Services

       
       

       This separate package marked

       "RFP BF 12/96-97, Technical and Proposed Services" shall contain one original and five copies of all responses to this RFP as identified in Section 13 below, other than the "Fee Schedule."

       
       

       PACKAGE #2 - Fee Schedule

       
       

       This separate package, identified as the

       "RFP BF 12/96-97, Fee Schedule" shall contain one original and five copies and which shall include the offeror's proposed bid for all services set forth in the RFP including any additional services over and above the minimum set forth by the Department in this RFP. The proposed cost shall be expressed as a percentage of the dollar amount of the property delivered or value thereof. Failure to submit the bid cost data in a separate package shall result in a disqualification of the offeror.

       
       

       Sealed proposals must be received by the Florida Department of Banking and Finance, Purchasing Office, Room 252-D, Fletcher Building, Tallahassee, Florida 32399-0350, on or before the date and time indicated in the section entitled "Calendar of Events." All proposals must be plainly marked on the outside of the package to indicate date and time of proposal opening and RFP number.

       Proposals shall be prepared simply and economically. The Department is not liable for any cost incurred by an offeror in responding to this RFP.

       
       

    4. DOCUMENTS REQUIRED IN SUBMITTING PROPOSAL

The documents required in submitting the technical and services proposal package are identified below. These items identified are the minimum requirements acceptable by the Department. Any proposal which does not meet these requirements will not be considered. offeror must follow the proposed format outlined below. This will produce uniform

formatting of proposals which ensures fairness in rating by the Evaluation Committee members in locating information quickly when questions arise. Each heading of the outline must be addressed and in proper order. The proposal should provide a complete and detailed description of the offeror's ability to meet the requirements of this RFP.

1. Signed State of Florida Request for Proposal, Contractual Services, Form PUR 7033 (An original form is required.)

   
   

2. The offeror must designate, in writing, the official spokesperson of their organization authorized to sign all applicable documents required in this RFP.

   
   

3. The offeror shall designate the location of its office within the USA to be used during the duration of this contract.

   
   

4. An offeror must provide evidence that the organization is a legal entity. Incorporated providers must provide as an attachment to the proposal either a copy of the corporation's most current annual report on file with the appropriate state agency, or, if incorporated during the past 12 months, a copy of the corporation's articles of incorporation and charter number assigned by the appropriate state agency. Businesses which are not incorporated must provide as an attachment to the proposal a copy of their business or occupational license. Partnerships shall submit documentation of compliance with the applicable provisions of Chapter 620, Florida Statutes.

   
   

5. The proposal must include a notarized and sworn statement indicating that the offeror will comply with all of the terms and conditions stated in the RFP.

   
   

6. The proposal must include a notarized and sworn statement indicating that the offeror has not had any prior involvement with this RFP.

7. This contract is subject to Chapter 112, Florida Statutes, regarding conflict of interest. The proposal must include a notarized and sworn statement indicating the offeror does not have a conflict of interest described in this RFP or Chapter 112, Florida Statutes. The offeror must disclose the name of any State employee who owns, directly or indirectly, an interest of ten percent or more in the offeror's firm or any of its subsidiaries. No Department staff shall have any interest or receive any compensation, directly or indirectly, in the offerors firm or any of its subsidiaries. This shall be an ongoing requirement and failure to comply will subject the contract to cancellation.

   
   

8. The offeror shall provide the following for its designated custodian as described in this RFP; name, address, contact person, telephone number, proof of licensure by applicable governmental agencies, and the account number where the funds will be deposited.

   
   

9. The offeror shall provide a sample of the indemnification agreement to be used between the Department and the holder.

   
   

10. The offeror shall provide a sample of the monthly work report detailing the number of examinations being performed for the Department and the status of each examination.

    
    

11. The offeror shall provide a proposal on training the Department's staff and examiners in the field of abandoned property in the first year of this contract as described in this RFP.

    
    

12. The offeror shall provide a proposal on hosting a holder seminar for the Department before April 1, 1998, as described in this RFP with details such as location, date, and time, duration, topics, guest speakers, etc.

    
    

13. The offeror must either supply at least three (3) references showing the offeror has previously conducted abandoned/unclaimed

    property examinations pursuant to Chapter 717, Florida Statutes, or to any other state's abandoned/unclaimed property law or must demonstrate the ability to perform the services specified herein.

    
    

14. The offeror shall provide a listing of the states, the contact person and their telephone where the offeror has a valid contract to perform similar services as described in this RFP. If there are no current contracts, please indicate.

    
    

15. The offeror must include a list of organizations of which the offeror is a member that would promote compliance with Chapter 717, Florida Statutes and abandoned property laws throughout the United States. An example of organizations would include various stock transfer associations, corporate secretary chapters, UPHLC, NAUPA, etc. If there are no current memberships, please indicate.

    
    

16. The offeror shall provide a written summary of the experience of the organization in examining holders for unclaimed property.

    
    

17. The offeror must include a chart of the organization, indicating how its staff will fit into the total organization, and how each member of the staff will relate to one another.

    
    

18. The offeror must include a resume/vita for each principal of the business who will perform professional services for the RFP.

    
    

19. The offeror shall describe its experience in interpreting various state laws and case law relating to the unclaimed property including a resume/vita and a written summary of their counsel's legal experience in dealing with unclaimed property and/or Chapter 717, Florida Statutes.

    
    

20. The offeror shall detail the procedure to be used in processing records from a holder once the records are received from the holder. The procedure shall include a

    process to ensure records are processed in a timely fashion.

    
    

21. The offeror shall provide a written summary of the examination process to be used in examining for unclaimed property.

    
    

22. The offeror shall provide an examination manual to be used in examining holders detailing the process of examining for unclaimed property.

23. The offeror shall provide the procedures which will allow the Department to direct, coordinate, and participate in the examination of holders of unclaimed property holders as outlined in this RFP.

    
    

24. The offeror shall describe its database and the ability to maintain a compatible database with the Department's database.

    
    

25. The offeror must describe the security procedures to be implemented to ensure all personnel working in the examination process will maintain the security and confidentiality of examinations at all times.

    
    

26. Within forty-five days of the execution of the contract, the Provider shall acquire a fidelity bond, financial guaranty bond, fidelity insurance, or other financial guaranty providing protection to the Department against theft, loss, or other illegal diversion of funds from an entity duly licensed in the State of Florida in the amount of $100,000 in a form acceptable to the Department.

    
    

27. The offeror shall submit a separate package clearly identified as "Fee Schedule" and marked on the outside with the RFP number and opening date as described in the section entitled "Calendar of Events." The Fee Schedule shall be submitted in terms expressed as a percentage of the dollar amount of property delivered or value thereof. (emphasis supplied)

1. As indicated, the RFP also contained an evaluation sheet for use by each evaluator, which categorized the areas of review and the point scoring applicable to each.

2. Andrew Grosmaire, Financial Examiner Analyst Supervisor for the Abandoned Property section, was the contract manager for the Division. In that capacity, he was responsible for the principal drafting of the RFP for handling the logistics of the

   evaluation process and for completing the Phase I review of the proposals. Additionally, he had been the contract manager over FCH's current contract with the Department.

3. In the past, Mr. Grosmaire had had numerous conflicts with FCH over some of FCH's practices. In fact Mr. Grosmaier considered some of FCH's practices to be unethical. The opinions held by Mr. Grosmaier are debatable depending on one's philosophy on how aggressive a business should be in auditing an entity. Additionally, Mr. Grosmaier believed FCH had submitted a false statement requesting payment for work it had performed. The issue was eventually forwarded by the Division for criminal investigation by the Department. In short, the relationship between Mr. Grosmaier and FCH was highly strained and was generally known throughout the Division. However, the evidence did not show that the low opinions of Mr. Grosmaire had any impact on the Department's RFP process.

4. Mr. Grosmaire conducted the threshold determination of whether the proposals contained the minimum documentation required by the RFP and necessary to pass on to the evaluation stage. To that end, Mr. Grosmaire determined FCH and the other offerors met the RFP's threshold requirements.

5. Mr. DeVries is the Bureau Chief for the Abandoned Property section. He was responsible for putting together the evaluation committee according to the terms of the RFP and the requirements of Florida Statues. Mr. DeVries decided to populate

   the evaluation committee with individuals outside the abandoned property section in order to diminish any bias arguments he anticipated would be raised as a result of prior disputes with FCH. Additionally, he wished to capitalize on certified public accounting and auditing experience held by individuals outside the abandoned property section. The intent was for the evaluators to be able to determine whether the offerors' proposals — in particular their manuals and methodology — met American Auditing Institute standards. Additionally, the Comptroller wished to have persons outside the agency participate in RFP evaluations. Therefore, at least one of the members of the evaluation committee would not be an employee of the Department.

6. Up to the time of posting the award, The evaluation team utilized by the Department relative to the RFP consisted of the following individuals:

   1. Rick Sweet, a Financial Examiner with the Abandoned Property section of the Department of Banking and Finance.

      
      

   2. Bob Dearden, a Financial Administrator with the Department of Banking and Finance, Division of Accounting and Auditing, with a background in auditing.

      
      

   3. Richard Law, a certified public accountant and a member of the accounting firm, Law, Redd, Crona, and Munroe located at 2727 Apalachee Parkway, Tallahassee, Florida 32301.

      
      

7. Peter DeVries appointed Mr. Sweet, a non-CPA, abandoned property financial analyst, to the evaluation committee.

8. Mr. DeVries also contacted William Monroe, Division Director for the Comptroller's Division of Accounting and Auditing, and requested that Mr. Monroe appoint an individual from his section to evaluate the proposals. Mr. Monroe chose Mr. Dearden to serve on the evaluation committee.

9. Mr. Grosmaire contacted the Florida Institute of Certified Public Accountants in order to obtain the name of a non-departmental, CPA qualified to serve on the evaluation committee. The Florida Institute referred Mr. Law to the Division and he was placed on the evaluation committee.

10. All of the initial committee members had sufficient knowledge of auditing procedures and were qualified to evaluate this RFP.

11. Mr. Grosmaire provided the evaluators with copies of the submitted proposals, the revised RFP, and the evaluation sheets for their use in scoring. Mr. Grosmaire informed the evaluators that in performing their evaluations they were to only consider the RFP and the documents submitted by the offerors. No other instructions were given to the initial committee members.

12. The evaluators kept the materials provided for approximately one week and performed their respective evaluations. During that time no other significant contact relative to this proceeding occurred between the evaluation committee members and Mr. Grosmaire. There is simply no evidence

    that Mr. Grosmaire improperly attempted to adversely influence the independent evaluations of the various evaluators.

13. As indicated, each evaluator individually reviewed the RFP, the scoring criteria, and scored each proposal against the RFP requirements. Each evaluator placed their scoring numbers on their respective rating sheets.

14. Mr. Sweet, a financial examiner with the Abandoned Property section, as noted, evaluated the proposals, Mr. Sweet has had training in both abandoned property and in auditing. In performing his evaluations, he exercised his best discretion and judgment in arriving at his scores. In sum, his explanations for scoring as he did were reasonable. Mr. Sweet had previous experience in evaluating similar RFP's in that he was on the evaluation team for the previous year's RFP concerning the same subject matter. Neither Mr. Young or FCH objected to Mr. Sweet's involvement as an evaluator on the previous RFP.

15. Additionally, Mr. Sweet, in performing his evaluation, telephoned a reference, an employee of the State of Maine, listed by FCH. He wrote her responses regarding FCH down on a reference check sheet. The reference noted to Mr. Sweet that they "were contacted by nearly every holder contacted by FCH with complaints." In terms of what strengths the reference would recommend as to FCH, the reference responded "none."

16. Mr. Dearden, a financial administrator for the Department of Banking and Finance, Division of Accounting and

    Auditing, also served as an evaluator of the proposals. Prior to and during his activity as an evaluator, Mr. Dearden had no prior contact or involvement with any of the offerors, including FCH. In addition, he had little contact with either Mr. Grosmaire or Mr. DeVries and was not influenced by anyone in the agency relative to the manner in which he scored the various proposals. Mr. Dearden had also previously been an evaluator on an abandoned property RFP dealing with the collection of in-state property.

    Mr. Dearden utilized his best efforts to review each RFP, the evaluation standards, and score each proposal on its terms. The explanations for his scoring were reasonable. While Mr. Dearden had limited prior experience in abandoned property, his experience in auditing as well as his review of the RFP requirements and previous experience as an abandoned property evaluator allowed him to adequately evaluate the proposals.

17. According to the RFP specifications, a minimum average score of 80 was required in order for an offeror to be awarded a contract.

18. Based upon the averaged scoring, State Street and NAPPCO scored over 80 points; FCH and Florida Property Recovery Consultants scored under 80 points. In particular,

    State Street's overall scores were 89, 88, and 90; NAPPCO's scores were 87, 81, and 86. FCH's scores were 66, 71, and 60 and those of Florida Property Recovery Consultants, Inc., were 42, 57, and 49.

19. Based on these scores, the Department posted the award sheet, indicating the award of a contract to State Street and NAPPCO. The proposal tabulation and notice of award was posted on June 18, 1997.

20. On June 20, 1997, FCH filed a Notice of Intent to Protest with the Department. The notice was timely filed within

    72 hours of posting the bid/proposal tabulation.

    
    

21. On June 30, 1997, FCH filed a formal written protest of the RFP. The formal protest was timely filed within 10 days of the filing of the Notice of Intent to Protest.

22. Subsequent to the posting of the intent to award and the filing of this bid protest, the Department learned that Florida Statutes required that at least three employees of the Department who "have experience and knowledge in the program areas and service requirements for which contractual services are sought" serve on the evaluation committee. Section 287.057(15), Florida Statutes. The initial committee only had two such employees on the evaluation committee. In order to correct this oversight, Mr. Devries requested that Mr. Monroe, Division Director of Accounting and Auditing, appoint another employee to the evaluation committee. Mr. Monroe appointed Michael Gomez, a state employee, to the committee to additionally evaluate the proposals.

23. Mr. Gomez has an extensive background in auditing and accounting and was qualified to evaluate the proposals. In fact,

    the evidence showed that all the committee members were familiar with the program and auditing requirements of the abandoned property section. He had no prior dealings or communications with FCH or any other bidder prior to the time of his evaluation of the proposals.

24. Mr. Gomez received the evaluation materials from Mr. Grosmaire. Mr. Grosmaire also instructed Mr. Gomez as he had the other three committee members. Mr. Gomez reviewed the RFP and the proposals and submitted his scores on June 9, 1997. Mr. Gomez scored the proposals as follows: Florida Property Recovery Consultants, Inc.: 59; State Street Bank: 98; FCH: 76; and NAAPCO: 94. Mr. Gomez, in performing his evaluations, exercised his best discretion and judgment and felt comfortable evaluating the RFP auditing proposal based upon his auditing background.

    His explanations for the scores he gave were reasonable and did not change the original rankings of the initial committee.

25. The evidence did not demonstrate that the Department's belated compliance with the statute caused any prejudice to the offerors or undermined the goals of the RFP process. Moreover, the evidence did not demonstrate that the department acted arbitrarily, capriciously or in bad faith in either its process, evaluation or intended award of the contract outlined in this RFP. Therefore, the protest should be dismissed.

    CONCLUSIONS OF LAW

26. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding. Section 120.57(1)and (3), Florida Statutes (Supp. 1996).

27. As formulated by the Florida courts, the standard to be applied in reviewing a prospective award of a contract under a bid or RFP recognizes the agency's discretion in making procurement decisions:

    A public body has wide discretion in soliciting and accepting bids for public improvements and its decisions, when based on an honest exercise of this discretion, will not be overturned by a court even if reasonable persons may disagree.

    
    

    Baxter's Asphalt and Concrete, Inc. v. Department of Transp.,

    
    

    475 So. 2d 1284, 1287 (Fla. 1st Dist. Ct. App. 1985) (citing Liberty County v. Baxter's Asphalt and Concrete, Inc., 421 So. 2d 505, 507 (Fla. 1982)); Accord Overstreet Paving v. State,

    608 So. 2d 851, 852-53 (Fla. 2d Dist. Ct. App. 1992).

28. In the context of this proceeding, the review by the Division of Administrative Hearings is de novo. Section 120.57(3), Florida Statutes (Supp. 1996). As such, the determination to be made is "whether the agency's proposed action is contrary to the agency's governing statutes, the agency's rules or policies, or the bid or RFP specifications." Section 120.57(3)(f), Florida Statutes. Furthermore, "the hearing officer sits in a review capacity, and must determine whether the bid review criteria set forth in Baxter's Asphalt have been satisfied." Intercontinental Properties, Inc. v. State, Dept. of Health and Rehabilitative Services, 606 So. 2d 380 (Fla. 3d DCA 1992).

29. For the Petitioners to prevail, they must prove by a preponderance of the evidence that the Department's actions as alleged in the protest were contrary to its governing statutes, its rules or policies, or were shown to be clearly erroneous, contrary to competition, arbitrary, or capricious. Section 120.57(h), Florida Statutes (Supp. 1996).

30. As established by case law, an arbitrary decision is one not supported by facts or logic, or one that is despotic. To act capriciously is to act without thought or reason or to act irrationally. Agrico Chemical Co. v. State, et. al., 365 So. 2d 759 (Fla. 1st DCA 1978).

31. In determining whether the Department's actions are clearly erroneous, the appearance of error and the fact that

    reasonable persons may disagree with the actions do not constitute clear error. Capeletti Bros., Inc. v. State, Dept. of Transp., 432 So. 2d 1359 (Fla. 1st DCA 1983).

32. Section 120.57(3)(f), Florida Statutes, (Supp. 1996) sets forth the statutory standards paraphrased above applicable to this case:

    (f) In a competitive-procurement protest, no submissions made after the bid or proposal opening amending or supplementing the bid or proposal shall be considered. Unless otherwise provided by statute, the burden of proof shall rest with 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 governing 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. . . .

33. Regarding the evaluation stage itself, Section 287.057(15), Florida Statues, (Supp. 1996) states:

    (15) For requests for proposals, a selection team of at least three employees who have experience and knowledge in the program areas and service requirements for which contractual services are sought shall be appointed by the agency head to aid in the selection of contractors for contracts of more than the threshold amount provided in

    S. 287.017 for CATEGORY FOUR.

34. The Petitioner, in the instant case, has asserted that the Department violated this latter provision in two respects which will be dealt with separately hereafter.

35. The first aspect concerns the number of state employees on the evaluation panel. A legal principal applicable to cases such as this one is the "harmless error" doctrine.

36. The "harmless error" rule has been applied numerous times in administrative cases not dissimilar to the instant one. The analysis is first, whether a material error in procedure occurred and, if so, was there any unfairness or harm to the party challenging the error? Injured Workers Association of Florida v. Department of Labor and Unemployment Security,

    630 So. 2d 1189 (Fla. 1st DCA 1994). An error is harmful where there is a reasonable probability that a different result would have been reached but for the error committed. Chrysler v.

    Department of Professional Regulation, 627 So. 2d 31 (Fla. 1st DCA 1993). As noted by the Florida Supreme Court in Carter v. Department of Business and Professional Regulation, 633 So. 2d 3, 6 (Fla. 1994):

    Moreover, courts have consistently applied the harmless error rule when reviewing agency action resulting from a procedure error. See Peoples Bank of Indian River County v.

    Department of Banking and Finance, 395 So. 2d

    521 (Fla. 1981) (section 120.68(8) harmless error rule applied to agency's improper consideration of data outside the record in deciding whether statutory criteria necessary for banking license had been met); Polk v. School Board of Polk County, 373 So. 2d 960, 962 (Fla. 2d DCA 1979) (applying section

    120.68(8) to agency's failure to prepare economic impact statement prior to adoption of rule in accordance with section 120.54(2); School Board of Broward County v. Gramith, 375 So. 2d 340-41, (Fla. 1st DCA 1979)

    (applying section 120.68(8) before invalidating agency action on grounds that it violated provision of chapter 120). Section 120.68(8) also has been applied to review noncompliance with procedures prescribed by Chapter 455. Carrow v. Department of Professional Regulation, 453 So. 2d 842 (Fla. 1st DCA 1984) (agency's failure to inform doctor of nature of complaint against him pursuant to 455.225(1) was subject to harmless error rule); Beckum v. Department of Professional Regulation, 427 So. 2d 276 (Fla. 1st DCA 1983) (probable cause panel's failure to record its proceedings as required by section 455.203(7) was subject to review pursuant to section 120.68(8)).

    The harmless error doctrine was most recently applied in the Department's favor by the Division of Administrative Hearings in the context of a contract award bid dispute, similar to this case. See McGladrey and Pullen, LLP, and Garcia and Ortiz, P.A. v. State of Florida, Department of Banking and Finance,

    Case No. 97-1714BID (Recommended Order entered May 30, 1997).

    
    

37. In the instant case, the Department utilized two state employees on the initial evaluation panel instead of the three state employees required in Section 287.057(15), Florida Statutes. However, while the act of adding a committee member after the proposals have been opened is not the best procedure and requires the strictest scrutiny, the Petitioner in this case has completely failed to demonstrate how this oversight caused harm, prejudice or unfair advantage to it, the other bidders or

    the RFP process sufficient to consider it material. The bid specifications themselves informed the Petitioner and the other offerors that such a three member panel of the type constituted in this case could be formed and no party challenged those specifications. There has been no evidence introduced by Petitioner that but for this arrangement a different result would have ensued. In point of fact, the remarkable similarity in scoring range of the various proposals between the evaluators — all of whom had no relevant dealings with any of the offerors or each other — leads to the conclusion that a different result would have occurred. This lack of proof on the Petitioner's part and its failure to protest the bid specifications responsible for creating the panel requires the undersigned to conclude that the failure to include an additional state employee on the panel constitutes harmless error.

38. The second aspect Petitioner claims is that the evaluators lacked experience and knowledge in the program areas covered by the RFP. The greater weight of the evidence demonstrates that this RFP was essentially one for auditing services, and through such auditing services hopefully abandoned property would be recovered for the State. The Department, exercising its discretion, chose one individual specifically from the Abandoned Property section (Mr. Sweet) as well as two individuals who had backgrounds in auditing and accounting

    (Mr. Dearden, Mr. Law initially and later, Mr. Gomez). There is

    no evidence by Petitioner that any of the individuals were uncomfortable in performing such evaluations. In fact, the evidence shows that all of the persons had previous experience evaluating RFPs, with Mr. Sweet and Mr. Dearden having done so in the abandoned property area. Clearly this experience gives these employees knowledge in the program area of abandoned property.

    Moreover, in light of Petitioner's claims of agency bias, particularly within the Abandoned Property section, the agency formulated in its reasonable discretion what it believed was the best possible evaluation panel under the circumstances. An evaluator's past experience which is not necessarily specific to the limited contractual area for which services are sought but whose experience is in agency "services selection" in general has been found sufficient for purposes of statutory compliance.

    See The Wackenhut Corporation v. DOT, Case No. 94-3160BID (Recommended Order issued January 31, 1995). Technical expertise as opposed to knowledge in the program area has also not been a critical factor when the selection of the evaluation team is a matter particularly within the agency's discretion. Capitol Group Health Services of Florida, Inc. d/b/a Capital Health Plan, v. Department of Administration, Case No. 87-5387 (Recommended Order issued March 9, 1988). Therefore, for purposes of this RFP, the experience and background of the individuals chosen as evaluators sufficiently met the statute's requirements.

39. Another issue necessary for resolution is the Petitioner's contention of agency bias in the evaluation process. On that issue, there is simply no competent, substantial evidence in the record which supports this allegation. In point of fact, in light of the Department's previous contractual dealings with FCH, it did everything reasonably possible to eliminate or reduce any elements of potential bias.

40. Lastly, Petitioner challenges the evaluations as being completed in an arbitrary and capricious fashion. However, the majority of the evaluators testified at the hearing and gave reasonable explanations of how they performed their task. The evidence did not demonstrate that the committee members acted without "support of facts or logic, or despotically," or "without thought or reason" sufficient to constitute arbitrary and capricious behavior. Agrico Chemical Co., supra. "Unexplained aberrations are an insufficient basis upon which to conclude that a bidding process is arbitrary." Optiplan, Inc. v. The School Board of Broward County, Case No. 95-4560BID, (Recommended Order issued December 22, 1995). In fact, the evidence reveals that the committee members individually deliberated and applied to the best of their discretion and judgment the RFP specifications (which were not objected to by FCH) to the proposals they reviewed and scored those proposals accordingly. Therefore, the Petitioner has failed to meet its burden of proof.

41. In conclusion, Petitioner (and Intervenor) have failed to meet their burden of proof pursuant to 120.57(3)(f), Florida Statutes (Supp. 1996), as to issues raised in their respective protests. Therefore the protests should be dismissed.

RECOMMENDATION

Based upon the findings of fact and conclusions of law, it

is

RECOMMENDED:

That the Office of the Comptroller, Department of Banking

and Finance, enter a Final Order awarding contracts to State Street and NAPPCO and denying Petitioner's and Intervenor's request for relief and dismiss their protests.

DONE AND ENTERED this 25th day of November, 1997, in Tallahassee, Leon County, Florida.

DIANE CLEAVINGER

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 25th day of November, 1997.

COPIES FURNISHED:

Will J. Richardson, Esquire Richardson Law Offices, P.A. Post Office Box 12669 Tallahassee, Florida 32317-2669

H. Richard Bisbee, Esquire Office of the Comptroller

101 East Gaines Street, Suite 526 Tallahassee, Florida 32399-0350

Stanford P. Birnholz, President Florida Property Recovery

Consultants, Inc.

8090 Atlantic Boulevard, F-79 Jacksonville, Florida 32201

Harry Hooper, Esquire

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

Robert F. Milligan, Comptroller Department of Banking and Finance The Capitol, Plaza Level Tallahassee, Florida 32399-0350

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within 10 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.

STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

FINANCIAL CLEARING HOUSE, INC., )

)

Petitioner, )

)

vs. ) Case No. 97-3150BID

)

DEPARTMENT OF BANKING AND ) FINANCE, DIVISION OF FINANCE )

)

Respondent. )

)

CORRECTED ORDER

This cause came on for consideration of the Respondent's Motion for Corrected Order filed with the Division of Administrative Hearings on December 1, 1997. Having reviewed the file and being otherwise advised in the premises, it is

ORDERED:

1. The motion is GRANTED.

   
   

2. Paragraph 48 should be corrected as follows:

In point of fact, the remarkable similarity in scoring range of the various proposals between the evaluators — all of whom had no relevant dealings with any of the offerors or each other — leads to the conclusion that no different result would have occurred.

DONE AND ENTERED this 8th day of December, 1997, in Tallahassee, Leon County, Florida.

DIANE CLEAVINGER

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 December, 1997.

COPIES FURNISHED:

H. Richard Bisbee, Esquire Office of the Comptroller

The Fletcher Building, Suite 526

101 East Gaines Street Tallahassee, Florida 32399-0350

Will J. Richardson, Esquire Post Office Box 12669

Tallahassee, Florida 32317-2669

Stanford P. Birnholz, President

Florida Property Recovery Consultants, Inc. 8090 Atlantic Boulevard, F-79

Jacksonville, Florida 32201

Harry Hooper, Esquire

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

Robert F. Milligan, Comptroller Department of Banking and Finance The Capitol, Plaza Level Tallahassee, Florida 32399-0350

Docket for Case No: 97-003150BID

Orders for Case No: 97-003150BID