STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CAMPBELL THERAPY SERVICES, INC., )

)

Petitioner, )

)

vs. ) Case No. 99-2729BID

) SCHOOL BOARD OF BREVARD COUNTY, )

)

Respondent, )

)

and )

)

INTERIM THERAPY SERVICES, )

)

Intervenor. )

)

RECOMMENDED ORDER

An administrative hearing was conducted on July 12, 1999, in Viera, Florida, by Daniel Manry, Administrative Law Judge, Division of Administrative Hearings.

APPEARANCES

For Petitioner: Edward J. Kinberg, Esquire

Edward J. Kinberg, P.A. 2101 South Waverly Place Suite 200E

Melbourne, Florida 32901

For Respondent: Harold Bistline, Esquire

Stromire, Bistline, Miniclier, Miniclier and Griffith

1970 Michigan Avenue, Building E Cocoa, Florida 32922

For Intervenor: Jonathan Sjostram, Esquire

Steel Hector and Davis, LLP

215 South Monroe Street, Suite 601 Tallahassee, Florida 32301

STATEMENT OF THE ISSUE

The issue in this case is whether Respondent should award a contract to Intervenor to provide physical and occupational

therapy services to approximately 1,300 exceptional education students who qualify for such services in 77 public schools in Brevard County, Florida.

PRELIMINARY STATEMENT

On May 11, 1999, the Brevard County School Board (the "Board") selected Intervenor for award of the contract at issue in this proceeding. Petitioner filed its protest on May 24, 1999. No party contested the timeliness of the protest.

By Order dated June 15, 1999, the Board referred the protest to the Division of Administrative Hearings ("DOAH") to conduct an administrative hearing. An administrative hearing was scheduled for July 12, 1999.

At the hearing, the parties submitted 16 joint exhibits for admission in evidence. Petitioner presented the live testimony of two witnesses and submitted ten exhibits for admission in evidence, including the deposition testimony of five witnesses. Respondent did not call any witnesses or submit any separate exhibits for admission in evidence. Intervenor presented the testimony of four witnesses and submitted the deposition testimony of one witness as joint exhibit 16.

The identity of the witnesses and exhibits, and any attendant rulings, are set forth in the two-volume Transcript of the hearing filed on August 3, 1999. Petitioner timely filed its proposed recommended order ("PRO") on August 16, 1999.

Respondent and Intervenor timely filed their joint PRO on August 13, 1999.

FINDINGS OF FACT

1. Intervenor is the incumbent contractor for physical and occupational therapy services provided to Respondent. Intervenor has provided such services to Respondent for approximately six years.

2. On February 24, 1999, Respondent issued its request for proposals ("RFP") for occupational and physical therapy services. The RFP consists of eight unnumbered pages.

3. Ten companies responded to the RFP. However, only the proposals of Petitioner and Intervenor are at issue in this proceeding.

4. A four-member evaluation committee ranked each proposal on the basis of six categories. The six categories were: experience; qualification; recruiting ability; location of office; and responsiveness. The evaluation committee also considered the hourly rate and mileage to be charged by each proposer.

5. The evaluation committee met as a body. Each member of the committee then returned to his or her respective office to complete a scoring sheet.

6. The scoring sheet listed each proposer's name in a column down the left side of the sheet and the six categories for evaluation from left to right across the top of the sheet. A column down the right side of each sheet listed the hourly rate to be charged by the proposer identified in the column down the left side of the sheet.

7. The RFP does not prescribe a scoring formula to be used in completing the scoring sheets. In relevant part, the RFP merely states:

   . . . The Selection Committee shall rank the firms in order of preference and will submit its recommendation to the Superintendent for his consideration. The [Board] will bear responsibility for the selection of the Contractor and will decide which bid [sic] is most appropriate for Brevard schools and their students.

   
   

   The Superintendent will recommend a therapy service provider which will be presented to the . . . Board for approval at a regular or special Board meeting.

   RFP at unnumbered page 8.

8. All four members of the evaluation committee ranked Intervenor's proposal first and Petitioner's proposal second. However, the hourly rate in Petitioner's proposal was the lowest of all proposers, at $34.75, and $4.25 less than the $39 hourly rate quoted in the proposal submitted by Intervenor. The proposal submitted by Intervenor charged mileage in addition to the hourly rate while the hourly rate quoted by Petitioner included mileage.

9. Before May 11, 1999, when the Board selected Intervenor as the proposer, the evaluation committee met. The committee asked Respondent's buyer assigned to the contract if the committee was required to recommend the proposal with the lowest price. The buyer advised the committee that the contract was for professional services and did not require the committee to recommend the lowest-priced proposal.

10. The committee determined that Ms. Eva Lewis, one of its members and the Director of Program Support for Exceptional Student Education in Brevard County, should telephone Intervenor and ask if Intervenor would match Petitioner's price. Ms. Lewis telephoned Mr. Rick McCrary, the manager for Intervenor, and asked if Intervenor would accept the contract price of $34.75. After consultation with his superiors, Mr. McCrary agreed to the straight-rate price of $34.75.

11. On May 11, 1999, Ms. Lewis presented the recommendation of the evaluation committee to the Board. The Board asked

    Ms. Lewis if Intervenor's price was the lowest price. Ms. Lewis disclosed that the evaluation committee preferred the proposal submitted by Intervenor, asked Intervenor to lower its price to meet that of Petitioner, and that Intervenor agreed to do so.

    The Board voted unanimously to select Intervenor as the proposer to be awarded the contract.

12. The parties directed most of their efforts in this proceeding to the issues of whether competitive bidding requirements apply to the proposed agency action and whether the scoring formula used to rank the proposers complied with those requirements. Petitioner asserts that the selection of Intervenor by the Board violates the competitive bidding provisions in Section 120.57(3), Florida Statutes (1997). (All chapter and section references are to Florida Statutes (1997) unless otherwise stated). Intervenor and Respondent contend that

    Section 120.57(1), rather than Section 120.57(3), controls the Board's selection of Intervenor for the contract.

13. Although the document used by Respondent to obtain proposals from vendors describes itself as an RFP and describes the responses as either proposals or bids, Respondent and Intervenor suggest that the document is not an RFP but merely a "solicitation." Respondent and Intervenor further argue:

    . . . that the . . . Board . . . did not attempt to comply with the requirements for competitive procurement under Section 120.57(3) or Chapter 287. . . . And . . . that the . . . Board was never required to comply with those statutes.

    
    

    . . . these are contracts for professional, educational and health services, contracts uniquely and specifically exempted from [the] competitive bid procurement process.

    Transcript ("TR") at 40.

14. It is not necessary to reach the issue of whether Section 120.57(1) or the competitive procurement provisions in Section 120.57(3) and Chapter 287 control Respondent's selection of Intervenor as the proposer to be awarded the contract. In either event, the proposed agency action is contrary to the specifications in the RFP.

15. Assuming arguendo that Section 120.57(3) and Chapter

    287 do not apply to the contract at issue in this proceeding, Respondent failed to comply with RFP specifications. As Intervenor and Respondent point out in their joint PRO, Section

    F.8. of the RFP states:

    The . . . Board . . . and the selected proposer will negotiate a contract as to terms and conditions for submission to the

    . . . Board for consideration and approval. In the event an agreement cannot be reached with the selected proposer in a timely manner, then the . . . Board reserves the right to select an alternative proposer. (emphasis supplied)

    Intervenor and Respondent are also correct that the phrase "negotiate a contract as to terms and conditions" includes terms and conditions such as the contract price.

16. Contrary to the provisions of Section F.8., the Board did not first select a proposer at its meeting on May 11, 1999, and then negotiate a contract price with the selected proposer. Rather, the evaluation committee negotiated a contract price with Intervenor before May 11, 1999, and the Board then selected Intervenor as the successful proposer.

17. The evaluation committee is not the Board and does not have authority to act on behalf of the Board. As the RFP states, the evaluation committee has authority only to:

    . . . rank the firms in order of preference and . . . submit its recommendation to the Superintendent for his consideration. The [Board] will bear responsibility for the selection of the Contractor and will decide which bid [sic] is most appropriate for Brevard schools and their students.

    
    

    The Superintendent will recommend a therapy service provider which will be presented to the . . . Board for approval at a regular or special Board meeting.

    RFP at unnumbered page 8.

    The last sentence in Section F.8. makes clear that the right to select a proposer is the sole province of the Board and not the evaluation committee.

18. Even if one were to ignore the legal distinctions between the evaluation committee and the Board and the authority of each, the RFP specifications fail to provide adequate notice to potential proposers of the true purpose for the RFP. As Respondent and Intervenor state in their joint PRO:

    . . . the . . . Board used the proposals it received to test the market for physical and occupational therapy services in Brevard County. The . . . Board then used the information it developed from the proposals as negotiating leverage to obtain a price concession from its incumbent contractor.

    The . . . Board's negotiation tactics permitted it to secure the superior vendor at the price of an inferior vendor.

    PRO at 33.

19. The RFP fails to disclose that Respondent intended to use potential proposers to obtain negotiating leverage with the incumbent contractor. The failure of the RFP to disclose its purpose violates fundamental principles of due process, adequate notice, and fairness to potential proposers. It creates a gap between what agency staff knew of the Respondent's intent for the RFP and what potential proposers could know from reading the specifications in the RFP.

20. The failure of the RFP to disclose its true purpose suggests that its authors recognized the chilling effect such a disclosure would have had on the response of potential proposers.

    The lack of responses from potential proposers, in turn, would have frustrated Respondent's intent to "secure the superior vendor at the price of an inferior vendor."

21. Assuming arguendo that Section 120.57(3) controls the contract award at issue in this proceeding, Respondent's proposed agency action violates relevant provisions in Section 120.57(3)(f). In relevant part, Section 120.57(3)(f) provides:

    In a competitive procurement contest, 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, or arbitrary, or capricious. . . . (emphasis supplied)

22. As previously found, the proposed award of the contract to Intervenor is contrary to the RFP specifications, including specifications for the evaluation and selection process described in paragraphs 7 and 17, supra. The proposed agency action is clearly erroneous within the meaning of Section 120.57(3)(f). It violates fundamental notions of due process, adequate notice, and a level playing field for all proposers. All of the proposers who were induced by the terms of the RFP to expend the time, energy, and expense required to prepare and submit proposals were entitled to rely in good faith on the specifications in the RFP and to require Respondent to adhere to its own specifications.

23. The proposed agency action is also contrary to competition within the meaning of Section 120.57(3)(f). The economic incentive to respond to an RFP would likely diminish over time if the proposed agency action were to persist. Potential proposers would eventually recognize the RFP process as a device intended to reduce the contract price of the incumbent provider rather than as a bona fide business opportunity for potential proposers to gain new market share. Such an economic environment would not likely induce potential proposers to incur the time and expense necessary to prepare and submit proposals. The pool of potential proposers would shrink, and Respondent would lose negotiating leverage with the incumbent vendor. The likely result would be an erosion of negotiating leverage and an accretion in costs.

    CONCLUSIONS OF LAW

24. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter. Section 120.57(1).

25. The burden of proof is on Petitioner. Florida Department of Transportation vs. J.W.C. Company, Inc., 396 So. 2d 778 (Fla. 1st DCA 1981); Balino vs. Department of Health and Rehabilitative Services, 348 So. 2d 349 (Fla. 1st DCA 1977). See also, Section 120.57(3)(f). Petitioner satisfied its burden of proof.

26. For reasons previously stated in the Findings of Fact and incorporated here by this reference, Respondent's proposed

    award of the contract to Intervenor is contrary to the RFP specifications, is clearly erroneous, and is contrary to competition. Respondent and Intervenor attempt in their joint PRO to justify the means used by Respondent by the ends achieved. In relevant part, Respondent and Intervenor argue:

    In effect, the . . . Board used the proposals it received to test the market for physical and occupational therapy services in Brevard County. The . . . Board then used the information it developed from the proposals as negotiating leverage to obtain a price concession from its incumbent contractor.

    The . . . Board's negotiation tactics permitted it to secure the superior vendor at the price of an inferior vendor.

    PRO at 33.

27. The foregoing argument rests on a faulty premise that equates the evaluation committee with the Board and ignores the legal distinctions specified in the RFP. The evidence shows that the evaluation committee, rather than the Board, took the actions described in the preceding paragraph.

28. The argument also rests on the faulty premise that Chapter 120 is concerned solely with the results of administrative action. Chapter 120 is not the "Administrative Results Act." It is the "Administrative Procedure Act." Desired results must be achieved by fair procedures.

29. While the result of the proposed agency action may be desirable to Respondent, Chapter 120 requires Respondent to achieve the desired result by fair procedures. If Respondent merely intended to use potential proposers to obtain negotiating

    leverage with the incumbent contractor, Respondent should have disclosed its intent to potential proposers. Potential proposers other than the incumbent contractor then could have made an informed choice of whether they wished to incur the time and expense required to participate in a process that offered a potential economic benefit to them that was tenuous at best.

30. The failure of Respondent to disclose the true economic purpose of the RFP tacitly acknowledges the chilling effect such a disclosure would have had on the response of potential proposers. The lack of responses from potential proposers, in turn, would have had a negative impact on the ability of the Board to "secure the superior vendor at the price of an inferior vendor."

31. The RFP creates a gap between what potential proposers could know from reading the specifications in the RFP and what Respondent knew of its true intent for the RFP. One of the principal purposes of Chapter 120 is to:

. . . close the gap between what the agency and its staff know about the agency's law and policy and what an outsider can know.

Cf. Straughn v. O'Riordan, 338 So. 2d 832, 834 n. 3 (Fla. 1976); Department of Highway Safety and Motor Vehicles v. Schluter, 705 So. 2d 81, 84 (Fla. 1st DCA 1997), reh'g denied; McDonald v.

Department of Banking and Finance, 346 So. 2d 569, 580 (Fla. 1st DCA 1977) (for cases addressing unwritten rules as a means of creating a gap between what the agency knows and what, in this case, potential proposers can know).

RECOMMENDATION

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

RECOMMENDED that the Department enter a Final Order finding that the selection of Intervenor for the contract award is contrary to the RFP specifications and contrary to competition.

DONE AND ENTERED this 3rd day of September, 1999, in Tallahassee, Leon County, Florida.

DANIEL MANRY

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 3rd day of September, 1999.

COPIES FURNISHED:

Dr. David Sawyer, Superintendent Brevard County School Board

2700 Judge Fran Jamieson Way Viera, Florida 32940-6699

Harold Bistline, Esquire Stromire, Bistline, Miniclier,

Miniclier and Griffith

1970 Michigan Avenue, Building E Cocoa, Florida 32922

Jonathan Sjostram, Esquire Steel Hector and Davis, LLP

215 South Monroe Street, Suite 601 Tallahassee, Florida 32301

Edward J. Kinberg, Esquire Edward J. Kinberg, P.A.

2101 South Waverly Place Suite 200E

Melbourne, Florida 32901

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: 99-002729BID

Orders for Case No: 99-002729BID