STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

OLD TAMPA BAY ENTERPRISES, INC., )

)

Petitioner, )

)

vs. ) Case No. 99-0120BID

) DEPARTMENT OF TRANSPORTATION, )

)

Respondent, )

)

and )

)

GE INDUSTRIAL SYSTEMS, )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case before Carolyn S. Holifield, a duly-designated Administrative Law Judge of the Division of Administrative Hearings, on March 16, 1999, in Tallahassee, Florida.

APPEARANCES

For Petitioner: Brant Hargrove, Esquire

1545 Raymond Diehl Road, Suite 150

Tallahassee, Florida 32301

For Respondent: Brian F. McGrail

Assistant General Counsel Department of Transportation Haydon Burns Building

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399-0450

For Intervenor: Jonathan Sjostrom, Esquire

Steel, Hector & Davis, L.L.P.

215 South Monroe Street, Suite 601 Tallahassee, Florida 32301-1804

STATEMENT OF THE ISSUES

Whether Petitioner, instead of Intervenor, is entitled to the award of RFP-DOT-98-99-4005.

PRELIMINARY STATEMENT

On or about December 3, 1998, Petitioner, Old Tampa Bay Enterprises (OTBE), filed a formal written protest challenging Respondent, Department of Transportation’s (Department), decision to award the contract advertised in RFP-DOT-98-99-4005 to Intervenor, General Electric Industrial Systems (GE). The protest alleged that Petitioner should have been awarded the contract for the project advertised in RFP-DOT-98-99-4005 and that the Department’s decision to award the contract to GE was clearly erroneous and contrary to competition and, otherwise, contrary to the Department’s policies. As a basis for these allegations, Petitioner alleged the following:

1. GE has failed to disclose that the key people that it listed in its proposal are not currently employed by GE as indicated in GE’s proposal. Therefore, the Department awarded points to GE based upon inaccurate and misleading information submitted by GE.

   
   

2. Because of GE’s misrepresentations, its proposal was non-responsive because GE cannot comply with Section 6.0 of the proposal specifications relating to the subletting of contracts at a percentage rate more than 50% of the work involved in the project.

   
   

3. GE improperly received minority participation points in its proposals because there is no work on the project that J.C. Industrial Manufacturing can

   provide on the project. The Department, therefore, should not have awarded points in this category.

   
   

4. Because there is no work that J.C. Industrial Manufacturing can accomplish on the project, GE’s remaining intended DBE percentage must be derived from the use of Advanced Marketing Consultants. There is not enough work for Advanced Marketing Consultants to accomplish on the project at the required market rates for this goal to be met. The points awarded to GE by the Department should not have been so awarded.

   
   

5. GE’s price for the work to be accomplished is 19.8% above the Department’s budget allocation and was not reviewed in accordance with existing policies.

On January 11, 1999, the Department referred this matter to the Division of Administrative Hearings for formal hearing.

Prior to the formal hearing, GE, the successful proposer, filed a Petition to Intervene in this proceeding. An Order was issued granting GE Intervenor status. On February 22, 1999, GE filed a Motion for Summary Recommended Order seeking the partial dismissal of OTBE's Petition. Specifically, Intervenor GE sought to have paragraphs 8C and 8D of the Petition dismissed. Upon consideration, thereof, and for the reasons set forth below, the Motion for Summary Recommended Order is granted.

At hearing, Petitioner, OTBE, presented the testimony of Philip Gravoline, GE's project engineer, and Donald Abernathy, President of OTBE. Respondent, the Department, presented the testimony of Theresa Martin, the Department's contractual

services coordinator, and Terry Cappellini, the Department's manager of contractual services. Intervenor, GE, presented the testimony of Phillip Gravoline, GE's project engineer. The parties introduced 17 joint exhibits, all of which were admitted into evidence. Joint Exhibit 14, a composite exhibit, consisted of the deposition Transcripts of James Wolfe; Robin T. White; Marian Connelly, James Decaro, Roderick West; John Matthews, Thomas Dietz, Paul Veilleux; Frank Tiriro; Donald Abernathy; and Walter Harwell. GE offered and had one exhibit admitted into evidence. The record was left open until March 23, 1999, to receive Joint Exhibit 17, the Disadvantaged Business Enterprises Directory. That exhibit was timely filed.

A Transcript of the proceeding was filed on March 31, 1999.

At the close of the hearing, a deadline was established for filing proposed recommended orders. However, Respondent filed an unopposed motion to extend the time for filing proposed recommended orders. The motion was granted and, thereafter, Petitioner, Respondent, and Intervenor timely filed Proposed Recommended Orders under the extended time frame.

FINDINGS OF FACT

1. The Department issued and advertised RFP-DOT-98-99-4005 (RFP) for bridge tending, maintenance and repair service contracts for movable bridges in St. Lucie and Martin counties.

2. Theresa Martin has been the Department's District IV Contractual Services Coordinator for the past four years.

   Ms. Martin is responsible for reviewing all requests for contractual services contracts, and did so in the present case. In preparing RFP’s, including the RFP that is the subject of this proceeding, the Contractual Services Office follows the statutory and rule provisions of Section 287.057, Florida Statutes, and Chapter 60A, Florida Administrative Code, and utilizes the Department's Contractual Services Acquisition Procedures, Procedure Number 357-040-020-D.

3. The RFP specifications were not protested.

   
   

4. Three proposers submitted timely responses to the RFP: General Electric Industrial Services(GE), Old Tampa Bay

   Enterprises (OTBE), and C&S Building Maintenance (C&S). The Department determined that the proposals of all three vendors were responsive. Having determined that the proposals were responsive, the Department reviewed and scored the proposals in accordance with the criteria listed in the RFP.

5. The RFP established five (5) different criteria upon which the Department was to evaluate each proposal. The criteria and the maximum allotted points for each criteria were as follows:

   1. Management Plan . . . . . . . . .35 points

   2. Technical Plan . . . . . . . . .35 points 3. Price . . . . . . . . . .. . . . 25 points

1. Certified Minority Business .. . .5 points

2. Executive Judgment . . . . . . . .5 points

   
   

3. GE received the highest rating among the three proposers for its proposal and OTBE was rated second. Based on

   these ratings, the Department of Transportation posted its intent to award the project to GE.

4. The RFP required submission of separate price and technical proposals. The price proposal included forms for both the proposer’s price and for certification of the proposer’s intention with respect to the use of Disadvantaged Business Enterprises (DBEs). The price proposal and technical proposal were to be submitted to the Department at the same time but in separate sealed envelopes. The price proposal and the technical proposal were then opened separately and scored separately.

5. The technical proposals were properly reviewed and scored by a technical review committee. After the technical proposals were scored, the members of the technical review committee reviewed the price proposals and provided the Department’s contract administrators with their views as to whether the price proposal was acceptable. The technical review committee concluded that GE’s pricing was acceptable, although it exceeded the Department’s estimated budgetary ceiling.

6. The RFP expressly provides: "This is an Indefinite Quantity Contract for which the Department has established an estimated budgetary ceiling amount of $480,000.00. The Contractor shall not exceed the estimated budgetary ceiling amount without an executed Supplemental Agreement. A Supplemental Agreement to increase the estimated budgetary

   ceiling amount may be entered into based upon Department need and availability."

7. The Department did not interpret the "estimated budgetary ceiling" as an absolute cap. Rather, the Department considered the "estimated budgetary ceiling" a budgeting tool that gave the proposers an indication of the Department’s estimation of the dollar amounts necessary and available for the contract. The estimated budgetary ceiling amount is typically based upon the Department's recent expenditures in similar contracts.

8. Given that the budgetary ceiling in the RFP is an estimate, the RFP specifically authorizes the Department to amend or supplement the contract with additional dollars during the course of the project. The budgetary modification process provided by the execution of Supplementary Agreements for indefinite quantity contracts occurs on a regular basis in District IV and is provided for in the Department's governing Contractual Services Procedures.

9. Consistent with the Department's interpretation of the "estimated budgetary ceiling," a price proposal that was higher than the budgetary estimate would not be considered irregular and rejected as non-responsive.

10. OTBE apparently believed that the RFP’s statement of an "estimated budgetary ceiling" created an absolute cap on the amount of permissible bids. Based on its mistaken belief, OTBE

    submitted a price of $479,987.00, three dollars below the Department’s estimated budgetary ceiling amount.

11. Both GE and C&S bid amounts that exceeded the estimated budgetary ceiling with GE’s total price bid being $575,100.00. Although the price proposals of GE and C&S exceeded the estimated budgetary ceiling of $480,000.00, the Department did not consider either of these proposals non-responsive. The Department’s decision in this regard was consistent with its definition and interpretation of estimated budgetary ceiling.

12. To determine the number of points each proposal would be awarded in the price category, the Department applied the mathematical formula that was specified in the RFP. According to the RFP:

    THE PRICE USED IN AWARDING POINTS WILL BE THE GRAND TOTAL SHOWN ON PRICE PROPOSAL FROM "C." ALL RESPONSIVE PRICE PROPOSALS WILL BE SCORED IN RELATION TO THE LOWEST PRICE PROPOSAL USING THE FOLLOWING FORMULA:

    
    

    (Low proposal/subject proposal x 25 points = awarded price points)

    
    

13. The points awarded for the price proposal after applying the aforementioned mathematical formula were applied to the price proposal and then added to the particular proposer’s technical proposal point total. Pursuant to the formula specified in the RFP, the low price proposal received 25 points and the other proposals received a proportionate share of 25 points equal to the ratio of the low price to the proposer’s price.

14. The Department reviewed and scored the prices bid by GE, OTBE, and C&S using the price formula established in the RFP. OTBE, with the low bid a price of $479,100.00, was awarded 25 points in the price category. The RFP formula was also applied to GE’s price bid of $575,100.00; as a result thereof, GE was awarded 20.87 points in the price category. OTBE received the benefit of its low bid by receiving the maximum points in the price category.

15. There was no minority business enterprises or DBE goal set for this RFP. However, pursuant to Section 287.057(6)(c), Florida Statutes, the Department provided a point preference for proposers that certified that they would subcontract at least 3 percent to 10 percent of the contract value to certified DBEs. The RFP provided that:

    The Department will add up to 5 points to the scores of firms (non-CDBE) utilizing Certified DBE’s as subcontractors for services or commodities as follows:

    
    

    10% and above of total project dollars - 5 points, 3% - 9.9% of total project dollars -

    2 points

    
    

    Complete and attach the DBE Preference Points Certification Form (Form "D") in the Price Proposal if CDBE preference points are to be considered.

    
    

16. The DBE Preference Certification Form was included as part of the RFP package and was required to be submitted as part of each proposer's price package. Furthermore, the face of the form also required each proposer to declare if it intended to

    subcontract part of the work to DBEs and specified the scoring for certification of an intent to use DBEs. The DBE Preference Certification Form also advised vendors that a proposer who certified an intent to subcontract at least 10 percent of the contract was awarded 5 points; that a proposer who certified an intent to subcontract more than 3 percent, but less than 10 percent, was awarded 2 points; and that a proposer who did not commit to an intention to subcontract to DBEs would receive no additional points in this category.

17. The purpose of utilizing the DBE Preference Form Certification is for the Department to provide an incentive for contractors to utilize DBEs on Department projects and to bind the proposer to the commitment that is certified on DBE Preference Certification Form. However, when the Department utilizes the form, it is a discretionary election of the proposer to take advantage of utilizing a DBE and receive the additional points.

18. OTBE’s DBE Preference Certification Form stated that OTBE did not intend to use DBEs. Thus, OTBE did not receive any points in the certified business criteria.

19. GE stated on its DBE Preference Certification Form that it intended to subcontract at least 10 percent of the contract to DBEs. Based on GE's certification of an intention to use DBEs for 10 percent of the contract work, in accordance with the provision of the RFP, the Department awarded GE 5 points.

20. On the DBE Preference Certification Form, there was a place for the proposer to list the DBEs it proposed to use and to indicate the type of work and/or commodities that the DBEs would provide. On its DBE Preference Certification Form, GE listed the two DBE entities that it intended to use on the project: Advanced Marketing Consultants and J.C. Industrial Manufacturing Corp. (JC Machines). With regard to the type of work that could be subcontracted to these DBEs, GE indicated on its DBE

    Preference Certification Form that Advanced Marketing Consultants could provide payroll services and that JC Machines could perform mechanical repairs.

21. The Department’s District IV Contracting Office reviewed GE’s price proposal, including GE’s DBE Preference Certification Form. As part of that process, the District IV contract administrator checked with the Department’s Central Office in Tallahassee, Florida, and confirmed that the DBE’s listed in GE’s proposal were certified DBEs.

22. There is sufficient work available under the contract specifications for GE to meet its DBE commitment using the DBEs that GE listed in its proposal. Moreover, the DBEs listed by GE are capable of performing much of the work required in the RFP’s Scope of Services.

23. The RFP required that each proposal include the names of qualified personnel that are able to perform the job duties and responsibilities outlined in the RFP specifications and that

    the proposer intended to use if it were awarded the contract. In this case, all three proposers, GE, OTBE, and C&S, submitted the same three key personnel for the bridge superintendent, bridge electrician, and bridge mechanic positions. At the time the proposals were submitted, the key personnel included in those proposals were all working in the positions for which they were listed. Apparently, these individuals had agreed to continue in their positions regardless of which proposer was awarded the contract.

24. The RFP did not require that the personnel listed in a proposal be current employees of the proposer. Rather, the Department expected that these individuals would be employed by the proposer after the vendor was awarded the contract.

25. The RFP specifies the percentage of work that the successful proposer may sublet under the contract. Section 6.0 of the RFP's Scope of Services (Section 6) provides in relevant part:

    The Contractor shall not sublet, transfer, assign or otherwise dispose of the contract or any portion thereof, or his right, title or interest therein without written approval of the Maintenance Engineer otherwise and in accordance with this agreement. Contractor shall not sublet more than fifty percent (50%) or [sic] a non set-a-side project.

26. Based on the above-quoted provision, the successful proposer, as the prime contractor, can subcontract no more than

    50 percent of the value of the contract.

27. Notwithstanding the RFP’s limitation on the percentage of work that may be subcontracted, the RFP did not require proposers to state what percentage of the contract work they intend to subcontract. Moreover, the RFP did not require the vendors to submit proposed subcontracts nor did the RFP specify required terms for subcontracts. Therefore, at the time the RFP’s were evaluated, the Department did not and could not determine precisely what portion of the contract a proposer intended to subcontract or to whom work would be subcontracted.

28. The Department interprets Section 6 to be a contract performance issue. The reason is that the percentage of the work that is subcontracted by the prime contractor after execution of the agreement is monitored by the Department during the performance of the contract. Such monitoring is accomplished by the Department’s requiring that all requests to subcontract portions of the contract be approved by the Department's project engineer.

29. GE or any other successful proposer is obligated to comply with all the requirements and specifications of the RFP and contract. Failure of a successful proposer to comply with these requirements is a contract performance issue and not an issue that the Department is required or able to address at the proposal review and selection phase.

30. In the instant case, the Department intended to award the contract to the responsive and responsible offerer whose

    proposal it determined to be the most advantageous to the State taking into consideration price and other criteria.

31. GE was the apparent highest ranked, responsive, and responsible proposer or offerer with a total score of 87.20, including 20 points in the price category and 5 points for certifying its intent to use DBEs. OTBE was the second ranked proposer with 82.67, including 25 points for the price category; OTBE properly received no points for the DBE Preference Certification.

    CONCLUSIONS OF LAW

    
    

32. The Division of Administrative Hearings has jurisdiction over the parties to and the subject matter of this proceeding pursuant to Chapter 120, Florida Statutes (1997).

33. In the instant case, the Department issued its RFP under the authority of Chapter 287, Florida Statutes.

34. Procurement protests, such as the one in this proceeding, are governed by Section 120.57(3), Florida Statutes, which provides, in pertinent part:

    (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 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. In any bid-protest proceeding contesting an intended agency rejection of all bids, the standard of review by an administrative law judge shall be whether the agency’s intended action is illegal, arbitrary, dishonest or fraudulent.

35. Based on the above-quoted provision, the review of the Division of Administrative Hearings is de novo and the scope of the inquiry is limited to whether the agency’s proposed action is contrary to the agency’s governing statutes, the agency’s rules or policies, or proposal specifications. The standard of proof is whether the proposed agency action was clearly erroneous, contrary to competition, arbitrary, or capricious.

36. To prevail in this proceeding, OTBE must prove by a preponderance of the evidence that the agency’s alleged actions were contrary to the governing statutes, Department rules or policies, or proposal specifications and that such actions were shown to be clearly erroneous, contrary to competition, arbitrary, or capricious. Section 120.57(3), Florida Statutes.

37. OTBE challenged the Department’s decision to award the contract advertised in RFP-DOT-98-99-4005. OTBE alleged in its protest that the Department’s intended decision to award the subject project to GE is clearly erroneous, contrary to competition, and contrary to the Department’s policies.

38. The allegations in OTBE’s written protest can be summarized as follows: (1) GE failed to disclose that the key

    personnel listed in its proposal were not employed by GE and, as a result of this misrepresentation, GE would have to subcontract out more than 50 percent of the work under the contract in violation of Section 6 of the RFP specifications; (2) GE was improperly awarded points for DBE participation because there was no work that the DBEs listed in its proposal could perform; and

    (3) GE’s bid price exceeded the Department’s estimated budgetary ceiling.

39. OTBE has failed to meet its burden of proof.

    
    

40. OTBE failed to present any competent, substantial evidence that the RFP specifications, governing statutes, and Department rules or policies required that key personnel listed in a proposal be employed by the proposer at the time the proposal is submitted rather than at or near the time the contract is executed. Moreover, OTBE failed to demonstrate that such a practice is contrary to statutes or to the Department’s rules or policies, or that it is contrary to the dictates of fair and open competition.

41. OTBE failed to demonstrate by competent, substantial evidence that GE’s proposal indicated that it would be unable to comply with Section 6 of the RFP specifications. OTBE failed to introduce any evidence to demonstrate the terms of any arrangement GE entered into with any subcontractor in anticipation of the award of the contract. With no evidence of any agreement, it is impossible to conclude that GE intends to

    enter into an agreement to sublet more than 50 percent of the project.

42. Moreover, the Department interpreted Section 6 of the RFP specifications to create a performance issue, not a responsiveness issue. As such, the Department’s view is that a contractor’s compliance with Section 6 of the RFP specifications is judged by the contractor’s performance, not by the contractor’s proposal.

43. The Department’s determination that the terms and conditions of subcontracts are to be considered in contract performance, rather than in proposal evaluation, is not clearly erroneous, contrary to competition, arbitrary or capricious, and was not shown to violate statute, Department rules or policies or the proposal specifications.

44. OTBE failed to establish by competent, substantial evidence that GE improperly received 5 points for the DBE Preference Certification Form due to the fact that it could not meet its 10 percent DBE commitment. Although OTBE alleged that JC Machines could not perform 10 percent of the total value of the project, there was no evidence to support this assertion. To the contrary, the evidence showed that there was a substantial amount of work that JC Machines could perform under the Scope of Services of the RFP.

45. Furthermore, the Department does not deem the DBE Preference Certification Form to be a responsiveness issue for

    RFP evaluation purposes, but considers it to be an election a proposer may make. If a proposer does elect to certify its intent to utilize DBE, it is during the course of the contract performance that the Department monitors and enforces the percentage of work subcontracted to the DBEs.

46. OTBE failed to prove that the Department’s acceptance of GE’s price was clearly erroneous, arbitrary, contrary to competition or inconsistent with statutes, Department rules or policies, or proposal specifications. Here, OTBE did not present any competent, substantial evidence that GE’s price proposal was not responsive to the RFP specifications or that it was not reviewed in conformance with the Department’s policies and procedures.

47. The Department’s interpretation of the RFP specifications concerning the estimated budgetary ceiling amount is that it is an estimate based on previous similar contracts and is not intended as an absolute price cap. The Department’s interpretation is supported by the specification’s instructions as to what must happen if the ceiling is exceeded.

48. The Department’s interpretation of the specifications is entirely reasonable and, in any event, entitled to great deference. "[T]he agency’s interpretation need not be the sole possible interpretation or even the most desirable one; it need only be within the range of possible interpretations." Orange

    Park Kennel Club, Inc. v. Department of Business and Professional Regulation, 644 So. 2d 574, 576 (Fla. 1st DCA 1994).

49. The Department correctly followed the statutes, Department rules and policies, and RFP specifications in determining that GE submitted the highest ranked, responsive, and responsible proposal. The Department's decision to award the contract to GE was based on fact and reason and supported by competent, substantial evidence and an honest exercise of discretion.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that the Department of Transportation enter a final order awarding the contract to GE Industrial Systems and dismissing Petitioner’s challenge to the award of RFP-DOT-98-99- 4005.

DONE AND ENTERED this 22nd day of June, 1999, in Tallahassee, Leon County, Florida.

CAROLYN S. HOLIFIELD

Administrative Law Judge

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(850) 488-9675 SUNCOM 278-9675

Fax Filing (850) 921-6847 www.doah.state.fl.us

Filed with the Clerk of the Division of Administrative Hearings this 22nd day of June, 1999.

COPIES FURNISHED:

Thomas F. Barry, Secretary

ATTN: James C. Myers, Clerk of the Agency Proceedings Department of Transportation

Haydon Burns Building

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399-0450

Pamela Leslie, General Counsel Department of Transportation Haydon Burns Building

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399-0450

Brian F. McGrail Assistant General Counsel

Department of Transportation Haydon Burns Building

605 Suwannee Street, Mail Station 58

Tallahassee, Florida 32399-0450

Brant Hargrove, Esquire

1545 Raymond Diehl Road, Suite 150

Tallahassee, Florida 32301

Jonathan Sjostrom, Esquire Steel, Hector & Davis, L.L.P.

215 South Monroe Street, Suite 601 Tallahassee, Florida 32301-1804

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.

Docket for Case No: 99-000120BID

Orders for Case No: 99-000120BID