STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
ENPOWER, INC., for itself and ) for FLORIDA SEAWATER )
DESALINATION COMPANY )
(not Inc.), )
)
Petitioner, )
)
vs. ) Case No. 99-3398BID
)
TAMPA BAY WATER, a regional ) water supply authority, )
)
Respondent, )
)
and )
)
S & W WATER, LLC, )
)
Intervenor. )
)
RECOMMENDED ORDER
On September 7 through September 14, 1999, a formal administrative hearing was held in this case in Tampa, Florida, before J. Lawrence Johnston, a duly-designated Administrative Law Judge of the Division of Administrative Hearings.
APPEARANCES
For Petitioner: Charles W. Pittman, Esquire
400 North Tampa Street Suite 1040
Tampa, Florida 33602
For Respondent: Richard A. Harrison, Esquire
John W. Wilcox, Esquire
Allen, Dell, Frank & Trinkle, P.A. Post Office Box 2111
Barnett Plaza, Suite 1240
101 East Kennedy Boulevard Tampa, Florida 33601-2111
Donald D. Conn, General Counsel Tampa Bay Water
2535 Landmark Drive
Suite 211
Clearwater, Florida 33761-3950
For Intervenor: John H. Rains, III, Esquire
Annis, Mitchell, Cockey, Edwards & Roehn, P.A.
Post Office Box 3433
One Tampa City Center, Suite 2100 Tampa, Florida 33601
STATEMENT OF THE ISSUES
This is a procurement protest. The ultimate issue is whether the Respondent’s award of the "Agreement for the Construction and Operation of a Seawater Desalination Plant and Water Purchase Agreement" ("WPA") to Intervenor, S & W Water, LLC ("S&W") on July 19, 1999, is contrary to Tampa Bay Water's (TBW’s) governing statutes, its rules or policies, or the proposal specifications, or is clearly erroneous, contrary to competition, arbitrary, or capricious. Additional issues presented for decision are: (1) whether Petitioner has standing to maintain this protest; and (2) whether, by participating in the procurement process, Petitioner has waived or is estopped from claiming irregularities arising out of that process.
PRELIMINARY STATEMENT
In May 1997, TBW, a regional water supply authority, issued a Request for Proposals ("RFP") for the Seawater Desalination Water Supply Developmental Alternative of the Master Water Plan (the "Project"). The seawater desalination facility contemplated by the RFP would be the largest such facility in North America and would have a production capacity more than twice as large as
the only other existing seawater desalination facility in the United States. The RFP contemplated a process that would culminate in a contract to design, build, own, operate, and potentially transfer to TBW, a seawater desalination plant to provide 25 to 35 million gallons per day of potable water to Hillsborough, Pinellas, and Pasco counties and to the cities of Tampa and St. Petersburg for 30 years. At the WPA's "take-or-pay" water price (an average of $2.08 per 1,000 gallons for 30 years), this is a $569,400,000 contract.
After the RFP, the procurement process included interviews, simultaneous negotiations, a Request for Binding Offers (RFBO), and a Request for Best and Final Offers (RFBAFO). Eventually, on March 15, 1999, TBW's Board of Directors ("Board") approved the ranking of the BAFOs and authorized staff to conduct final negotiations with the top-ranked developer, S&W. At this point, Petitioner filed a protest, which TBW dismissed on April 19, 1999. The Final Order Dismissing Formal Protest was appealed to the District Court of Appeal, Second District of Florida.
On July 19, 1999, TBW’s staff, consultants and legal counsel recommended that TBW enter into a contract with S&W. TBW's Board approved the contract, and it was executed by the parties the same day.
Petitioner timely filed its Notice of Protest on July 22, 1999, and timely filed its Formal Written Protest on July 29, 1999. S&W filed a Motion for Leave to Intervene on August 6, 1999. TBW referred the Formal Protest and the pending Motion for Leave to Intervene to the Division of Administrative Hearings
(DOAH) on August 9, 1999. By order dated August 12, 1999, S&W’s Motion for Leave to Intervene was granted, and a final administrative hearing was scheduled for September 7 through September 16, 1999. Petitioner moved to continue on August 13, 1999, but TBW and S&W opposed the continuance, and the motion was denied by order dated August 23, 1999, based on the provisions of Section 120.57(3), Florida Statutes. (All statutory references are to the most recent codification--either Florida Statutes (1997), or Florida Statutes (Supp. 1998).)
On September 1, 1999, TBW and S&W filed a Joint Motion for Summary Recommended Order of Dismissal for Lack of Standing accompanied by a motion to shorten the time for Petitioner's written response. The motion to shorten time was denied, and ruling on the motion to dismiss was deferred. Petitioner filed its written response during the final hearing, and ruling continued to be deferred, effectively denying the motion for a summary disposition and reserving the substantive issues for disposition in the Recommended Order.
The parties filed a Pre-Hearing Stipulation on September 3, 1999.
At the final hearing, Petitioner called Michael Sweet, an employee of Parsons Engineering (which was one member of the Florida Water Partners (FWP) joint venture, another proposer on the Project); Dr. J. Nicholas Ehringer, a professor of biology at Hillsborough Community College; Suzanne Cooper, principal planner for the Tampa Bay Regional Planning Council; James Keppeler, a former employee of Progress Energy, one of the members of the
PEIP joint venture, another proposer on the Project; Cheryl Bradford, Secretary and spokesperson for the Alafia River Basin Stewardship Council and member of other environmental organizations; and Phillip Elovic, an employee of IDE Technology, the other member of the FWP joint venture. Elovic testified via telephone without objection. Petitioner also called Donald E. Lindeman, a registered professional engineer employed by TBW who was also the Project Manager for the desalination project; James Jensen, a professional geologist employed by PB Water; John W. Wilcox, an attorney representing TBW; and Dr. Peter Hofmann, an employee of S&W.
TBW called Maxwell; Lindeman, P.E.; and David MacIntyre, P.E., an employee of PB Water and the principal consultant to TBW on the desalination project.
S&W did not call any witnesses.
Upon stipulation of the parties, the depositions of James Smith, an employee of U.S. Water, and Robert Lutz, an employee of Dupont, were received in evidence as Joint Exhibits 1 and 2. (U.S. Water and Dupont were members of the FSDC joint venture, along with Enpower. Ruling was reserved on Petitioner's objection to S&W Exhibit 47, the deposition of Enpower's President, Dan Smith; the objection is now overruled, and S&W Exhibit 47 is received in evidence.
The following exhibits were received in evidence: Petitioner’s Exhibits 102, 104, 120, 121, 123-128, 131, 136,
141, 158, 162, 163, 165-192, 194-198, 213-222, 224-232, 234, 238,
240-251, and 262; TBW’s Exhibits 1-41, 41A, 42-77, 78A, 78B, 78C,
79-92, 94-128, 130-143, and 148-150; and S&W Exhibits 46 and 47.
After presentation of the evidence, S&W requested a reservation of jurisdiction for determination under Section 120.595(1), Florida Statutes, that Petitioner prosecuted its Formal Protest for an improper purpose.
The Transcript of the final hearing (1325 pages in six volumes) was filed with DOAH on September 27, 1999. Petitioner filed a 41-page proposed Recommended Order and a 41-page Petitioner's Memorandum on October 7, 1999, along with Petitioner's Motion to Accept Filings of that length; TBW and S&W filed a 78-page joint proposed Recommended Order, accompanied by a Joint Motion for Enlargement of Page Limitation for Proposed Recommended Order. Upon consideration, the post-hearing submissions have been accepted and considered.
FINDINGS OF FACT TBW and WCRWSA
Tampa Bay Water (TBW) is a regional water supply authority existing under the authority of Sections 373.1962, 373.1963, and 163.01, Florida Statutes. TBW is not a part of the executive branch of state government. It exists by virtue of an Amended and Restated Interlocal Agreement among Hillsborough County, Pasco County, Pinellas County, the City of Tampa, the City of St. Petersburg, and the City of New Port Richey. The Board of TBW comprises elected officials from each of the six member-governments.
TBW is the exclusive wholesale water supplier for the region and is responsible for meeting the potable water needs of its six member-governments. The member-governments collectively serve approximately 2 million retail customers.
TBW does not furnish water to any person or entity other than its six member-governments and does not sell any water on a retail basis. All potable water produced by TBW’s facilities is for resale on a wholesale basis to the member-governments.
Under the Amended and Restated Interlocal Agreement, TBW has the unequivocal obligation to meet the potable water needs of its six member-governments on a regional basis. The Master Water Supply Contract between TBW and the six member-governments outlines how TBW’s facilities will be connected to the member- governments’ facilities and sets forth provisions for billing and collecting for the sale of water by TBW to the member- governments.
TBW was originally created as the West Coast Regional Water Supply Authority (WCRWSA). WCRWSA was reorganized and restructured pursuant to the Amended and Restated Interlocal Agreement Reorganizing the West Coast Regional Water Supply Authority, dated June 10, 1998. The process of restructuring the former WCRWSA into TBW began in 1995 and culminated on August 31, 1998. See Finding 48, infra.
TBW’s Existing Facilities
TBW’s existing water supply facilities consist of a series of groundwater wellfields located throughout Hillsborough, Pinellas, and Pasco counties. These are: the Cypress Creek
Wellfield; the Cross Bar Ranch Wellfield; the Cypress Bridge Wellfield; the Northwest Hillsborough Wellfield; the Starkey Wellfield; the North Pasco Wellfield; the South Central Hillsborough Wellfield; the Cosme-Odessa Wellfield; the Section
21 Wellfield; the South Pasco Wellfield, the Eldridge-Wilde Wellfield; and the Morris Bridge Wellfield. With the exception of the South Central Hillsborough, Starkey, and North Pasco Wellfields, these facilities are interconnected and are part of the interconnected water production system.
With the exception of the City of Tampa’s Hillsborough River supply, the existing wellfields and the interconnected system supply all of the water to meet the demands of the six member-governments. The existing facilities currently produce approximately 145 to 150 million gallons per day ("mgd"), on average, with higher production during peak demand.
The potential for environmental impacts of TBW’s groundwater pumping have been a matter of substantial concern to and dispute among the member-governments, the District, the Florida Legislature, and the public over the course of several years.
The "Partnership Agreement" with the Southwest Florida Water Management District
The Southwest Florida Water Management District (the "District") is a water management district in the State of Florida created pursuant to Section 373.069(1)(d) and (2)(d), Florida Statutes. The District is the governmental agency charged with the responsibility and authority to review and act
upon water use permit applications, pursuant to Chapter 373, Part II, Florida Statutes, and Chapters 40D-1 and 40D-2, Florida Administrative Code, and to otherwise regulate the consumptive use of water within its jurisdiction. TBW and all of its member- governments are within the geographical and legal jurisdiction of the District.
In April 1998, WCRWSA, its six member-governments, and the District entered into an agreement entitled the "Northern Tampa Bay New Water Supply and Ground Water Withdrawal Reduction Agreement," commonly called the "Partnership Agreement." The negotiation of the Partnership Agreement occurred concurrently with the restructuring of WCRWSA into TBW and the execution of the Master Water Supply Agreement.
The Partnership Agreement has four principal stated objectives: to develop at least 85 mgd annual average of new water supply to meet the needs of the area; to effect a reduction in groundwater pumping from the 11 existing wellfields to no more than 121 mgd annual average as of December 31, 2002, through December 31, 2007, and to no more than 90 mgd annual average as of December 31, 2007, through December 31, 2010, to allow environmental recovery; to end existing litigation between the parties to the agreement and avoid future litigation, including administrative proceedings; and to create a funding mechanism through which TBW can develop new water supply projects.
Pursuant to the Partnership Agreement, the existing water use permits for eleven specified wellfields (all the wellfields in the system except South Central Hillsborough) were
consolidated into a single permit (the "Consolidated Permit") under which WCRWSA (later TBW) became the sole permittee. The expiration date of the Consolidated Permit is December 31, 2010.
Prior to execution of the Partnership Agreement, the existing permits for the 11 wellfields allowed for cumulative withdrawals totaling approximately 192 mgd. Upon execution of the Partnership Agreement, the Consolidated Permit immediately reduced allowed withdrawals to no more than 158 mgd.
The Partnership Agreement required that wellfield pumping from the 11 wellfields be further reduced to no more than
121 mgd by December 31, 2002, and then to no more than 90 mgd by December 31, 2007.
The Partnership Agreement also required WCRWSA (now TBW) to develop at least 38 mgd of new water supply by December 31, 2002, and a total of 85 mgd of new water supply by December 31, 2007. The Partnership Agreement required that the new water supply projects be fully permitted, constructed, in operation, and providing water for regional distribution by the stated deadlines.
The Partnership Agreement required WCRWSA (now TBW) to submit to the District by July 1, 1998, a New Water Plan describing the projects intended to be implemented to meet the requirements of 38 mgd of new water supply by December 31, 2002, and 85 mgd of new water supply by December 31, 2007. The planning and development of the New Water Plan were required to calculate and take into account projected increased demand based on population projections and per capita usage, the 6% reserve
capacity required under the Amended and Restated Interlocal Agreement, and the wellfield pumping reductions and new water supply requirements mandated by the Amended and Restated Interlocal Agreement and the Partnership Agreement.
The Partnership Agreement identified the Seawater Desalination Project as an alternative source of potable water that is eligible for co-funding by the District of up to 90% of the capital cost of the project.
The Seawater Desalination Procurement Process
The Request for Statements of Qualifications
WCRWSA had been discussing the seawater desalination project as a privatized, out-sourced project since early 1996. The seawater desalination project was never contemplated to be procured as a design-build project. It was originally conceived and ultimately procured as a DBOOT (Design-Build-Own-Operate- Transfer) project. There are significant differences between the two procurement methods. The requirement that the designer- builder also own and operate the facility and the option for later transfer of ownership and operation to WCRWSA, expand the relevant considerations well beyond those of a mere design-build procurement, as reflected in the process undertaken in this case.
In February 1997, WCRWSA issued a "Request for Statements of Qualifications ("SOQs") and Project Approach for the Seawater Desalination Water Supply Alternative of the Master Water Plan" (the "RFQ"). At the time the RFQ was issued, WCRWSA had not yet completed the development of the Master Water Plan,
and it was not certain that the desalination project would be part of the new Master Water Plan.
The RFQ clearly indicated that the seawater desalination project was one of a number of alternatives then being considered by WCRWSA. The RFQ stated, under the heading of "Purpose and Scope of Services": "The seawater desalination supply will be evaluated with other developmental alternatives in the [WCRWSA’s] Master Water Plan." [TBW #1 at Section 1.1] This was reiterated in the RFQ under the heading "General Information," which states: "Seawater desalination is one of three developmental alternatives identified in the [WCRWSA’s] Master Water Plan, a 10-year resource development blueprint designed to bring 50 mgd of new supply on line in six years."
The same section of the RFQ referred to "[T]he investigation of
seawater desalination as a source of additional water "
SOQs were submitted by six developers: Enova/SSI ("Enova"); Florida Seawater Desalination Company("FSDC"); Florida Water Partners ("FWP"); National Advanced Technology Exchange ("NATE"); Progress Energy/Ionics ("PEIP"); and Stone and Webster ("S&W").
WCRWSA's consultant, PB Water, prepared a report entitled "Basis for Recommendation Report for the [SOQs]," dated May 13, 1997, in which PB Water determined that all of the developers except NATE met the requirements for pre-qualification on the Project. At its May 19, 1997, meeting, the WCRWSA's Board
considered and approved the recommendation of PB Water and accepted the five pre-qualified developers.
The RFP
On May 27, 1997, WCRWSA issued the Request for Proposals ("RFP") for the Project. Addenda to the RFP were issued on July 15, 1997 (Addendum No. 1); August 19, 1997 (Addendum No. 2); October 3, 1997 (Addendum No. 3); and November 10, 1997 (Addendum No. 4). Responses to the RFP were due no later than December 3, 1997.
At the time the RFP was issued, WCRWSA still had not yet finalized the Master Water Plan. The RFP clearly indicated that the proposed seawater desalination project was to be "evaluated in comparison with other water supply developmental alternatives in the [WCRWSA’s] Master Water Plan." Due to concern that desalination would not ultimately be selected as a part of the Master Water Plan, the RFP provided for an incentive award consisting of a limited reimbursement of certain costs incurred by the developer of the top-ranked proposal in the event the desalination project did not proceed to contract.
The RFP described the scope of the project as follows:
2.2 Detailed Scope of the Project
The scope of the project includes the following:
Financing the project. Selecting the proposed site(s) for the seawater desalination plant(s) and ancillary equipment. Determining the need for environmental permits, conducting the necessary studies and/or mitigation and securing the required environmental permits.
Developing the site(s) and its plant(s) including road and seawater transportation routes and on- and off-loading facilities and other site infrastructure as required.
Determining the availability and securing main electrical power input (for a plant not producing its own power).
Obtaining construction, operation and all other required permits. The AUTHORITY may assist the developer in obtaining some of the permits. The Developer must identify those permits that it will expect the AUTHORITY’S assistance in obtaining.
Designing, supplying, procuring, erecting, and testing the seawater desalination plant(s) and any required power plant(s) and other associated plant equipment to the approval of the AUTHORITY.
Operating and maintaining the seawater desalination plant(s) and any ancillary equipment to a standard acceptable to the AUTHORITY under a build, own and operate contract with the AUTHORITY. The contract may include an option to transfer operation and/or ownership of the plant(s) to the AUTHORITY at a later date. Selling the desalinated water to the AUTHORITY at an
agreed specific price and a specified quality and minimum quantity under a Water Purchase Contract or similar contractual agreement of a specified terms of years.
(TBW Ex. 9 at pp. 5-6, Section 2.2)
The RFP established 22 "selection criteria" to which were ascribed a total of 500 available points. The selection criteria were: site-related issues; environmental issues; utilities; intake water quality; feed water pre-treatment; cleaning; effluent discharge; site development, engineering and works; seawater desalination process; plant optimization; function requirements; mode of operation; plant design lifetime,
including major components and systems; product water turndown capability; plant performance; product water quality; plant operation; aesthetics of the facility; economic feasibility; transfer or disposition of facility at conclusion of contract period; life cycle cost of blended product water in $(US)/1000 gallons(US); and performance schedule. The RFP stated:
The Proposals will be ranked based on the total points each Proposal receives during the evaluation process out of the total available 500 points. The proposal evaluation team reserves the right to ask for clarification or additional information for some requirements in order to make an informed decision.
(TBW Ex. 9 at Section 2.5, as superceded by Addendum 2 (emphasis in original))
The 22 selection criteria were to be used for a limited purpose, as stated in the RFP:
The following criteria for ranking will ensure that the desalination water supply is properly designed and reliable (constructed of the right materials, has sufficient redundancy, storm resistant, etc.), that the facility can and will be maintained for the life cycle (negotiated period) in good operating condition, the quality and quantity of water is deliverable when required, and the supply is economically viable (the Developer will have an adequate return on his investment for delivered water at an agreed unit price acceptable to the Authority).
* * *
The required General Information (Section 3.1) will not receive a point rating but will be evaluated as to whether each item provides the required information in a complete and satisfactory manner. The Authority’s Evaluation Committee shall use the following weighted criteria [i.e., the 22 selection
criteria] to score the completeness and technical merit of the Technical Proposal (Section 3.2) responses. The Evaluation Committee may schedule a meeting(s) with a Developer(s) for the Developer(s) to explain or clarify their Proposal(s). Such meeting(s) will not be used for the Developer(s) to provide new information but will only be used to explain or clarify information provided in the Proposal(s).
The Committee’s evaluation will be presented to the AUTHORITY’s Board of Directors for final action. The Board may interview Developers as provided in Section 3.4. The Board will consider the Committee’s evaluations, interviews, and its determination of how each Proposal best serves the interest of the AUTHORITY and its member-governments in making a final selection and taking final agency action on Proposals received in response to this RFP.
(TBW Ex. 9 at Section 2.5, as superceded by Addendum No. 2)
The RFP also clearly indicated that the evaluation and ranking of the responses would be followed by a period of negotiations, potentially including simultaneous negotiations with more than one developer, and that any contract ultimately awarded would be the result of such negotiations. Section 1.5.10 of the RFP, entitled "Contract Negotiations," stated:
Contract negotiations will be based on the draft Water Supply Agreement provided by Developer . . . and the information in their Proposal. The AUTHORITY reserves the right to conduct simultaneous negotiations with the top rank developers if it is in the best interest of the AUTHORITY." Section 2.4 of the RFP, entitled "General Contract Information," stated that "The nature and term of the contract with the Developer will be negotiated. It is anticipated that a
long-term contract will be negotiated to finance, design, build and operate the seawater desalination supply. The Developer
will sell water to the AUTHORITY at a negotiated price, quality and quantity for a set period.
Section 3.1, subpart (16), of the RFP required each developer to submit a proposed contract with its response and stated: "The final contract conditions, including the delivered water price, will be determined through contract negotiations."
WCRWSA always envisioned that the Project would entail a series of simultaneous negotiations with one or more developers. WCRWSA reasonably believed that simultaneous negotiations with more than one developer would ensure greater competition in the procurement process.
The RFP also provided: "The AUTHORITY reserves the sole and exclusive right to waive any minor irregularities, as determined by the AUTHORITY, in any Proposal, to reject any or all Proposals, and to re-solicit for Proposals, as may be deemed to be in the best interest of the AUTHORITY." (TBW Ex. 9, at p. 3, Section 1.5.5)
The RFP did not prohibit changes to the organization, structure of the organization, responsibilities, etc., from that provided in the SOQs. Rather, Section 3.1 of the RFP required:
Any substantial changes to the organization, structure of the organization, responsibilities, etc. from that provided in the Statement of Qualifications should be highlighted in the Proposal. Unless the changes to the organization, proposed financing, plant processes, etc., from those proposed in the Statement of Qualifications are clearly beneficial to development of an economically viable seawater desalination water supply, the changes may result in disqualification of the Proposal.
Section 3.1 of the RFP required that independently audited financial statements be furnished for all developer team members.
Section 3.2 of the RFP required the developers to submit a "legal land use agreement" for their proposed sites.
Evaluation and Ranking of Proposals
Each of the five pre-qualified developers submitted a response to the RFP. In early March 1998, PB Water issued a two- volume report entitled "Proposal Evaluation and Ranking." (TBW Ex. 15-16) This report preliminarily ranked the proposals based on a 20 mgd facility. As noted by PB Water in the report: "This was the only option to which all the Developers were required to respond, and it was the only option to which they all did respond."
PB Water's ranking was based on the 22 specified evaluation criteria set forth in the RFP. PB Water observed:
Each of the proposals was found to contain some deficiencies and/or lacked sufficient supporting or backup material in one or more area. Clarification meetings, teleconferences and facsimiles were exchanged with each of the Developers to explain or clarify certain items in their Proposals.
Such information exchanges were not intended for the Developer(s) to provide new information but to explain or clarify the information provided in the Proposal(s).
On March 16, 1998, the WCRWSA Board received and reviewed PB Water’s evaluation and ranking of the proposals. PB Water presented its ranking of the proposals and recommended that the top four developers be advanced to the next stage of the
process--Board interviews. The Board eliminated the Enova proposal from any further consideration and approved the ranking of the remaining four developers based on PB Water’s evaluation. The Board also decided to hold a workshop for the developers on the morning of April 20, 1998, immediately prior to the regular Board meeting that day, to give the developers guidelines and a framework for their presentation to the Board.
At the workshop on April 20, 1998, WCRWSA discussed, among other things: how the evaluation criteria would be weighted and used for the final ranking of proposals; what role PB Water would play during the presentations by the developers; and what guidance would be given the developers as to the form and content of their presentations to the Board. The Board discussed that the initial proposal ranking was a "shortlisting" process and that the initial 22 evaluation criteria had served their purpose of identifying quality proposals. PB Water suggested that the final assessment criteria be based on five broader categories: plant siting and design; environmental effects; permitability; product water quality and delivery; and schedule, contract terms, and financial factors.
The Board approved the use of the five broader
categories, based on the original 22 criteria. However, the Board did not want to be bound by point totals in making its final selection of the top proposals. The Board was concerned that, under the point system, a number of relatively insignificant, minor differences between proposals could accumulate to give a false impression that one was better than
the other. The Board wanted the final assessment to focus on the broad categories, compare the proposals on each category, and use letter grades to compare the proposals on each category. It was hoped that, using this method, only distinctions between proposals that were regarded as substantial would be reflected.
Finally, the Board specified that it did not want PB Water to assign an overall comparison of the proposals; the Board reserved to itself the right to make the ultimate comparison at a later time based on relevant policy considerations.
The Board also discussed whether it wanted to consider plant capacity options greater than 20 mgd. Ultimately, it was determined that the developers should present information for plants of between 20 and 35 mgd, based on their original proposals.
Finally, the Board scheduled developer presentations and interviews for May 4, 1998.
After condensing the 22 criteria into five major categories, PB Water produced a cross-reference table that showed how the original 22 criteria were related to the five categories. In assigning a letter grade to the five categories, PB Water utilized the same criteria as used in the first evaluation. The determination of the letter grades was based on the exercise of PB Water’s best professional judgement and the criteria applicable to each of the five categories.
WCRWSA's Board approved its General Counsel’s recommendation at its meeting on May 18, 1998, that Lindeman, the Project Manager, be authorized to negotiate on behalf of the
WCRWSA through simultaneous negotiations, with any resulting contract recommendation to be presented to the Board for consideration and action.
In June 1998, PB Water issued its Final Proposal Assessment of the four remaining proposals. For this report, the
22 evaluation criteria were grouped into the five broader categories.
Based on WCRWSA's interest in construction of a desalination facility with a firm base capacity of up to 35 mgd by the year 2001, PB Water evaluated the base capacity proposals of each developer and certain alternative proposals falling within these capacity and time parameters. The proposals were scored on a relative basis using a scale of "A" to "D" for each of the five evaluation categories. In accordance with the Board’s instructions, the proposals were not "ranked" on an overall basis at this time.
On June 15, 1999, after reviewing the results of the evaluation, WCRWSA eliminated one of PEIP's alternative proposals--one proposed at the former Higgins plant site on Old Tampa Bay.
Commencement of Simultaneous Negotiations and the RFBO
At the Board meeting on July 20, 1998, WCRWSA authorized its staff to conduct simultaneous negotiations with all four developers. The Board directed staff that the negotiations should set up a matrix identifying price components of various plant capacities and should further develop water
quality standards. The intent was to narrow the focus by examining three potential plant capacities and three different sets of product water quality parameters. The Board wanted to obtain as nearly equivalent proposals as possible and then embark on negotiations with all four developers based on these specific proposals.
On July 31, 1998, in order to satisfy the Board’s directives, staff issued a Request for Binding Offers (RFBO) to the four remaining developers. Addendum No. 1 to the RFBO was issued on August 12, 1998. The Binding Offers were required to be submitted by August 28, 1998. Binding Offers were timely submitted by all four developers.
At WCRWSA's meeting on August 31, 1998, WCRWSA was dissolved and the new TBW was formed. TBW considered PB Water and staff's presentation of a "cursory review" of the Binding Offers just received and recommendation to schedule simultaneous negotiations with the four developers which had submitted the Binding Offers. The Board approved a modified schedule that called for a final "go/no-go" decision on the desalination project in November 1998 and selection of a top-ranked developer in January 1999.
Simultaneous negotiations took place with all four developers weekly until the December 1998 Board meeting. The Binding Offers and subsequent negotiations were partially successful in developing more nearly equivalent results. Although TBW was successful in producing a model water purchase agreement, it was not successful in obtaining the insurance and
surety bond or project financing information it desired from the developers.
In examining the insurance and surety bond terms as well as in developing the model water purchase agreement, TBW received input from not only the developers, but also from a variety of consultants and its Technical and Legal Advisory Committees. In addition, TBW reviewed project financing options, including FSDC’s proposed "63-20" financing, taxable and tax- exempt financing, and private activity bonds. TBW also considered accepting a letter of credit in lieu of a cash contribution from the developers but decided that a cash contribution would be required.
Continuation of Simultaneous Negotiations, the Master Water Plan, and the RFBAFO
On November 16, 1998, TBW approved a "Master Water Plan" intended to meet the requirements of the Amended and Restated Interlocal Agreement and the requirement of the Partnership Agreement to develop the "New Water Plan." This plan established the projects selected by TBW to meet the requirements of groundwater reduction and new supply development. Based on an update on the status of the simultaneous negotiations and some additional recommendations, the Board adopted the seawater desalination project as a part of the Master Water Plan.
Based on the Master Water Plan, the Board specified an initial plant capacity of 20-25 mgd with an expansion capacity to
35 mgd. It also opted for an owner-controlled, integrated insurance program and tax-exempt private activity bond financing.
To address incomplete information about the Binding Offers, and in an effort to extract the remaining details from the developers, the Board also approved solicitation of "Best and Final Offers" ("BAFOs") limiting the developers to a base offer and one alternative offer.
On December 14, 1998, and December 21, 1998, PB Water, TBW staff and legal counsel presented a further update and recommendations to the Board. The Board directed the preparation of a Request for BAFO ("RFBAFO") to be presented for final approval at its January 1999 meeting.
On January 25, 1999, the Board approved the form of a draft Water Purchase Agreement (WPA) and the RFBAFO and set a February 1999 deadline for submittal of the BAFOs. The Board directed PB Water to provide a relative ranking of the Developers based on their BAFOs, applying the same five evaluative categories as had been utilized previously.
On January 27, 1999, TBW sent the RFBAFO to the Developers. The Developers were instructed to submit any questions or requests for clarification and to attend a clarification meeting. On February 4, 1999, a Clarification Meeting was held with all developers in attendance, and all questions were addressed by TBW staff and consultants.
On February 5, 1999, a memorandum containing the Developers’ questions and the answers provided to them at the meeting was sent to the Developers. In addition, revised instructions and tables were sent out to ensure consistency with the clarifications. A memorandum containing corrections to
scrivener’s errors was sent to the Developers on February 8, 1999.
The RFBAFO served to further narrow the scope of the solicitation and to put into place a mechanism for selection of a developer for final negotiations. TBW made it clear in this final step of the procurement process that, at its sole discretion, it could consider the BAFOs as the basis for further negotiations; TBW was not bound to accept the lowest proposed price and reserved the right to make a selection based on the criteria specified in the RFBAFO.
TBW also specifically reserved the right to reject any and all BAFOs, the right to waive or modify minor irregularities in any BAFOs received; and the right to negotiate separately with any source in any manner that was deemed to be in the best interest of TBW.
The draft WPA that had been developed during the simultaneous negotiations with the Developer teams was attached to the RFBAFO. TBW likewise reserved the right to modify this WPA form during final negotiations with the selected Developer to meet insurance and surety company requirements, project financing requirements, or other requirements as deemed appropriate by TBW. TBW cautioned the Developers that the instructions which accompanied the RFBAFO were intended to provide information and guidance in the preparation of their BAFO and that the draft WPA contained additional requirements for the preparation of the BAFO. The Developers were instructed to identify and disclose any inconsistencies between the instructions and draft WPA which
they perceived and to explain the assumptions they utilized in preparing their proposal in the event they differed from the instructions and draft WPA.
The RFBAFO bound the Developers to all information, including the required General Information and the Technical Proposal, submitted in each original RFP proposal received on December 3, 1997, except as modified by the Binding Offers and clarifications, or as otherwise provided in the RFBAFO. The RFBAFO also required the costs in the Binding Offers to remain binding as the maximum allowable costs in the BAFO except as provided in the RFBAFO.
In order to provide an equivalent basis for the selection of a Developer, any changes or corrections to their previous proposals were limited to those necessary to meet the terms and conditions of the draft WPA and the requirements of the RFBAFO instructions. The evaluation criteria remained the same as for the RFBO.
The RFBAFO specifically provided that the evaluation criteria previously adopted by the TBW Board would remain the same. The Board noted that it had previously directed PB Water to group the evaluation criteria into five broad categories for final evaluation and ranking of the proposals. The RFBAFO went on to point out that the 22 original evaluation criteria had been consolidated into the same five assessment categories: environmental effects; permittability; product water quality and delivery; schedule; and water purchase agreement terms and
financial factors (including present value analysis and impact on rate stability).
The BAFOs
BAFOs were timely submitted by all four developers. Although each BAFO contained some incomplete information which did not fully conform to the RFBAFO, TBW accepted all of them for evaluation purposes as though they were complete and noted the flaws for the Board’s consideration.
S&W's BAFO prices were significantly lower than the other BAFOs. See Findings 76, infra. The cover letter to S&W's proposal contained an overall guarantee of its BAFO prices. PB Water treated the letter as part of the BAFO and construed the entirety of the cost and pricing as guaranteed. PB Water gave S&W an "A" in the category "water purchase agreement terms and financial factors."
In its BAFO, S&W modified its intake and discharge. By proposing to take its feed water from the cooling water of Tampa Electric Company's (TECO's) Big Bend power plant before its discharge to the power plant discharge canal, S&W would avoid entrainment, impingement and mortality of additional marine organisms in its water intake system. Similarly, by discharging the concentrate discharge from the desalination plant to the power plant cooling water prior to its discharge to the power plant discharge canal, environmental impacts from the concentrate discharge would be minimized, and disturbance of the discharge canal would be avoided. This change in S&W’s intake and
discharge system resulted in a higher grade than FSDC in both environmental and permittability categories.
The proposed location of FSDC’s intake and discharge structures in the discharge canal of the Anclote Power Station produces greater environmental impact on entrainment, impingement, and mortality of marine organisms because of the introduction of such organisms through the cooling water bypass utilized by the power plant. It also requires disturbance of the bottom of the canal to construct the discharge line and diffuser. The S&W design does not result in similar impacts, and it was PB Water's opinion that S&W's BAFO would be more readily permittable.
TBW also determined through studies performed by its consultants that locating the plant at TECO's Big Bend power plant would not cause significant environmental impact.
Based on primarily on S&W's redesign, PB Water gave S&W "A" in "plant siting and design," "environmental effects," and "permittability."
PB Water presented its evaluation of the BAFOs by way of a written report dated March 1, 1999, and an oral presentation of its evaluation to the Board on March 15, 1999. PB Water ranked the Developers: 1. S&W; 2. FWP; 3. PEIP; 4. FSDC. The S&W BAFO received an "A" grade in each rating category.
At the March 15, 1999, Board Meeting, the Board approved the recommended ranking and instructed staff to commence negotiations with the top-ranked Developer, S&W, for the purpose of developing a final WPA based on S&W's BAFO. In the same
process, the Board selected water quality option 2 as the system design standard.
After the March 15, 1999, ranking and decision to negotiate with S&W, Petitioner filed a protest, which TBW dismissed on April 19, 1999. The Final Order Dismissing Formal Protest was appealed to the District Court of Appeal, Second District of Florida.
At the July 19, 1999, Board Meeting, staff presented and recommended approval of a WPA negotiated with S&W over the course of the three preceding months. After deliberation, the Board approved the WPA, and it was executed by the TBW and S&W Water that same day.
Petitioner timely filed its Notice of Protest on July 22, 1999, and timely filed its Formal Written Protest on July 29, 1999. Neither PEIP nor FWP protested. TBW and S&W
defended against Petitioner's protest and challenged Petitioner's standing.
Claim Of Unrealistic, "Low-ball" Proposal
Petitioner claims that S&W's BAFO water price is an unrealistic, unattainable, "low-ball" proposal.
All BAFOs proposed using essentially the same reverse osmosis process. Yet, without question, S&W's BAFO water price is palpably lower than the prices of the other water developers. It also is significantly lower than any existing price for seawater desalination in the world. The low cost is a primary reason why S&W's BAFO received an "A" on the category "water purchase agreement terms and financial factors."
The first-year average for the BAFOs submitted by FSDC, FWP, and PEIP was $2.05; these three Developers are all within $.06 or 3 percent of the average. S&W's BAFO price was $.34 or 16.6 percent below this average. The 30-year average for FSDC, FWP, and PEIP was $2.42. The largest variation among these three Developers from the average was FWP at 6 percent below the average. S&W's price of $2.08 was 14 percent below the average, more than 8 percent below the next low bid of FWP at $2.27.
All Developers spent substantial amounts of money, time, and effort over more than two years to refine their prices. Yet, S&W reduced its 30-year price by $.80 (2.88 - 2.08 = .80) between its Binding Offer and BAFO. This is a 27.8 percent decrease.
S&W's reduction from its Binding Offer to its BAFO occurred primarily in Operations and Maintenance (O&M), which is approximately 60 percent of the costs (see PX 244). Table 3-G from S&W's Binding Offer 20 mgd showed total "Other Escalated Charges" ranging from $4,500,000 in year one to $10,604,545 in year 30. S&W's BAFO shows a combined "Chemical Cost Escalated Charges" and "Other Escalated Charges" for a 25 percent larger plant (25 mgd) ranging from $2,950,863 in year one to $7,714,866 in year 30.
S&W's O&M in its BAFO price was from 66 percent to 73 percent of the O&M in its Binding Offer price, even though the plant size has increased by 5 mgd, or by 25 percent.
FWP also reduced its prices substantially from the Binding Offer to the BAFO, but its Binding Offer prices were quite high due to FWP's proposed efficacy insurance program. The reduction in FWP's BAFO brought its prices in line with FSDC and
PEIP. By comparison, S&W's Binding Offer prices fit into a narrow range that included the FSDC and PEIP prices.
Knowledgeable witnesses questioned the S&W prices. Dan Smith, President of Enpower, whose background is in the commercial and pricing side of infrastructure projects and in the RFP process, gave his opinion that S&W would not be able to perform under the WPA at its BAFO prices. Sweet and Elovic of FWP and Keppeler of PEIP, all of whom have considerable technical expertise, testified essentially that their developer teams would not enter into a WPA at S&W's BAFO water prices. Keppeler testified that PEIP was "astonished at the low pricing that was offered by [S&W]."
The other Developers expressed their reservations about the S&W prices soon after the BAFOs were received. PEIP wrote the TBW Board on March 11, 1999: "There remains skepticism regarding the validity of the delivered water prices and the extent to which they are guaranteed." FSDC wrote several letters complaining about S&W's prices not being guaranteed.
After ranking S&W's BAFO best and deciding to enter into negotiations with S&W, TBW's efforts were directed towards testing the validity of S&W's BAFO, maintaining the benefit of S&W's low price, and structuring the WPA so as to eliminate the financial risks to TBW of S&W's possible failure to perform in accordance with the WPA.
R.W. Beck was hired by TBW to serve as an independent reviewer to evaluate the financial feasibility of the WPA. The Beck Report of July 14, 1999, raised and addressed questions about the ability of S&W to produce water of the quality required at the
price proposed. Beck noted that S&W's BAFO "is designed for product recovery of 60 percent. A 60 percent recovery is at the upper end of recovery for a seawater system." Beck also noted that costs "are near or at the low end of the reported range for reverse osmosis seawater desalination plants," and "certain details remain to be resolved." But Beck also noted that S&W was responsible under the contract. For instance, R.W. Beck reported:
The cartridge filter life of six months may be optimistic. A more conservative design would allow for at least a quarterly replacement schedule. . . . While the estimated useful lives of certain assets are optimistic, not yet proven or contingent on maintenance practices, pursuant to the provisions of the Water Purchase Agreement the Water Developer is responsible for their replacement. (p. 12).
Beck questioned the reasonableness of membrane and energy costs, which are major operational cost components:
With the exception of membrane and energy costs, the plant annual operating and maintenance expenses appear reasonable including the staffing levels. (p. 13).
Beck noted that membrane costs are low: [P]er unit membrane costs are low. . . .
membrane costs on Table 8 of the Proposal are less than our estimated costs for the first twenty-five years of the Water Purchase Agreement. . . . It appears the Water Developer has assumed in Table 8 an average membrane life greater than five years or alternatively lower membrane costs than $400 per membrane in current dollars. (p. 13).
Beck found the pump and motor efficiencies to be "at the high end of reported pump and motor efficiencies."
Overall, Beck said:
In general, the cost of both capital and operations included in the Proposal by the Water Developer are at the low end of the reported range for seawater desalination plants utilizing similar equipment. (p. 13).
* * *
The projected capital and operating costs of the Proposal are near or at the low end of the reported range for RO seawater desalination plants with which we are familiar. (p. 17).
While S&W's O&M projections are low, FWP's O&M costs are only slightly more than S&W's O&M costs. On the other hand, FWP's construction costs are considerably more than S&W's construction costs, which may suggest that FWP allocated some cost items to construction that S&W allocated to O&M. FSDC's and PEIP's construction costs and O&M costs are comparable.
TBW required that S&W's guaranteed BAFO costs and prices be maintained throughout the final negotiations with S&W. The ultimate pricing mechanism contained in the final WPA produces a final wholesale product water price which does not exceed S&W’s BAFO. At the same time, the WPA which was entered into by TBW and S&W on July 19, 1999, contains all the material terms proposed in S&W’s BAFO.
Petitioner contends that S&W has negotiated a $.15 price increase in the first year and a $.22 increase in average price over 30 years per 1,000 gallons to meet the water quality Option 2 bromide standard of 0.15 mg/l contained in the RFBAFO. These amounts are not insignificant. The dollar increase over the 30 years of the WPA would total over $60 million. But there is a
reasonable explanation why TBW acceded to this price increase in negotiations.
During its review, Beck raised a question about the ability of the S&W system to achieve the reduction of bromides in the product water to meet the .15 mg/l level at the point of interconnection of the desalination plant pipeline to the TBW system.
The RFBAFO instructed the Developers to include, as part of their BAFO, pricing information for two water quality options, options 1 and 2, which were reflected in Table 9 attached to the RFBAFO. The Developers were also instructed to review all applicable Federal and State of Florida drinking water standards (as of January 27, 1999) and a Camp, Dresser & McKee Exhibit D to the TBW Master Water Supply Contract dated May 18, 1998. The Exhibit D standards for water quality Option 1 and Option 2 were summarized in Table 9 of the Request. Exhibit D reflected both adopted standards and other water quality constituents which were then (and still are) under study by TBW’s consultant, Camp, Dresser & McKee. Bromides are one of the constituents under study by TBW. Exhibit D provided that its bromide standard established a suggested range for "conceptual design and cost estimating purposes"; it indicated that a final range or unit would be developed as the result of a further study.
Exhibit D standards are water delivery standards measured at TBW’s delivery point to the member-governments. However, for uniformity in comparing the BAFOs, the RFBAFO provided that the product water quality concentration levels were to be determined at the point of delivery prior to mixing by TBW with waters from other sources. The RFBAFO designated the Developers’ delivery points of interconnection with the TBW system as the Keller Water Treatment Plant for FSDC and PEIP and the proposed TBW regional water treatment plant site for FWP and S&W.
Product water bromide levels are not normally considered in the design of desalination plants. In order to reach a conclusion about the actual ability of a desalination system to achieve this level of bromide reduction, it is first necessary to know the level of bromides in the source water. The sampling and analysis of the source water has not yet been completed.
The level of chlorides in the product water from the desalination plant was the primary concern to TBW and its member- governments. The efficiency in removing chlorides was the center of the Board's discussion of the developers’ proposed designs. Chloride removal efficiency was the primary basis for all of the developers’ designs. However, the removal efficiency of chlorides and bromides is essentially the same.
When Beck raised the issue, PB Water conducted an investigation of membrane efficiencies and determined that none of the developers could achieve a bromide level of .15 mg/l at the water quality Option 2 chloride level of 100 mg/l. PB Water determined that, to achieve a bromide concentration level of .15 mg/l, all of the developers’ systems would have to be redesigned to the equivalent treatment to meet the Option 1 chloride level of .05 mg/l. PB Water determined that redesign would result in a commensurate Option 1 price because design and price are inextricably linked.
The TBW Board was informed of the bromide issue and was presented with a proposed solution that paralleled the Exhibit D study process which was already underway. Under the proposal, which the Board adopted, the WPA would establish a Pilot Program to test water quality after blending S&W's product water with TBW's system water. At the conclusion of the S&W study and a study by Black & Veatch, the Board would have an opportunity to determine whether S&W’s system can achieve the Option 2 bromide level at the point of interconnection. If not, the Board would have the option of either waiving that requirement and permitting the standard to be met at the point of delivery to the member- governments (as contemplated in Exhibit D) or establishing an entirely new bromide standard which differs from the Exhibit D suggested .15 mg/l level. Alternatively, the Board could retain
the Exhibit D .15 mg/l standard and agree to pay S&W its water quality Option 1 price.
S&W's Option 1 price was $1.86 for year one and an average of $2.30 per 1,000 gallons for 30 years. While higher than its Option 2 price, S&W's Option 1 price not only was lower than the competition's higher Option 1 prices, it also was lower than all of their Option 2 first-year prices and lower than all of the 30-year life-cycle average prices except FWP's. (FWP's 30-year life-cycle average price was $2.27 per 1,000 gallons; Petitioner's was $2.45, and PEIP's was $2.53.)
Petitioner also contends that S&W has negotiated a $.06 water price increase the first year and $.10 average over 30 years per 1,000 gallons to remove "financing contingencies." (The dollar increase over the 30 years of the WPA would total over $27 million.) But the evidence was that TBW and S&W negotiated this increase as an option for the purpose of further decreasing financing contingency risks to TBW below levels contemplated in the RFBAFO. In other words, if TBW exercises the option, financing contingencies contemplated by the RFBAFO will be reduced in return for the additional negotiated cost to TBW.
It seems clear that S&W priced its BAFO low to beat the competition. To accomplish this, it appears that S&W's BAFO "pushed the envelope" of commercially proven standards for construction and operational costs and performance. But inducing the Developers to commit to a low water price was a primary purpose
of the procurement process. Petitioner's complaint would have some validity only if it could be proven that S&W lowered its prices to unreasonably low levels for the purpose of "getting to the table" and then negotiated them back up to levels closer to its competitors' BAFO prices. The evidence was clear that did not happen.
Claim Concerning Bromide Standard
Petitioner also claims that S&W's BAFO was non- responsive and should be disqualified for not meeting the bromide standard. But this is nothing more than another iteration of the claim that S&W's prices were "low-balled," as allegedly demonstrated in part by the potential price increase to meet the Option 2 bromide standard. As explained in Findings 91-96, supra, TBW and all of the developers overlooked the bromide standard as being of less concern than the chloride standard, and none of the BAFOs would meet the bromide standard using the process proposed to meet Option 2 water quality standards.
FSDC and FWP testified that they would meet the Option
2 bromide level at their Option 2 prices. Elovic testified that FWP would establish a model, check the bromide level, and make whatever adjustments were necessary to achieve the 0.15 ppm bromide level. He testified that the guaranteed prices would not be affected by any "small" cost increase required to meet the Option
2 bromide standard. But PB Water determined that the other developers actually would have to redesign their proposed
processes so as to meet Option 1 standards in order to meet the Option 2 bromide standard. In essence, the current claims of Petitioner and FWP amount to "second-look" pricing since they did not actually contemplate the needs for achieving Option 2 bromide standard at the point of interconnection to the TBW system until after the award, contract, and protest. It was not until after they lost the business to S&W that they essentially offered to meet Option 1 water quality standards at their Option 2 prices.
Claim About Guaranteed Prices
Petitioner claims that S&W's BAFO lacks guaranteed pricing for various reasons, but this is nothing more than yet another iteration of the "low-balling," "bromide standard," and "financing contingency" claims. As previously found, S&W's prices were guaranteed, and TBW got the benefit of those guarantees in the negotiated WPA.
Petitioner contends that TBW's reading of the cover letter to S&W's BAFO to guarantee its prices would be "inconsistent with the terms and conditions in the BAFO itself, which provides that the Binding Offer contains the maximum prices." Actually, S&W's BAFO seemed to merely affirm compliance with the part of the RFBAFO cautioning the developers that BAFO prices could not be higher than their Binding Offer prices. While this may have been confusing, it was not inconsistent for S&W to also offer to guarantee BAFO prices that were lower than its Binding Offer prices. Lower BAFO prices certainly were not prohibited by the
RFBAFO, and it was reasonable for TBW to give effect to the price guarantee contained in the cover letter.
Claim That WPA Is Indefinite And Makes "Adjustments" Contrary To The RFBAFO
Petitioner claims that the WPA is indefinite, allows for negotiation of substantive and material terms, and allows for pass- through charges contrary to the RFBAFO. In part, this is nothing more than yet another iteration of the "low-balling," "bromide standard," and "financing contingency" claims. Petitioner also contends that the WPA is inappropriately indefinite in other respects.
The WPA provides that if S&W does not get sufficient influent (feed) water at no cost, TBW is required to pay a standby compensation rate of $1.14 per 1,000 gallons or reimburse S&W for all costs incurred in obtaining sufficient influent water. As of the execution of the WPA, there was no firm commitment by TECO to supply feed water. However, there is no expectation of a problem obtaining such an agreement from TECO. The standby compensation provision was intended to address the contingency of TECO's ceasing operations towards the end of the 30-year life-cycle of the desalination plant, or during either of the two optional 30-year extensions of the WPA.
Under the WPA, TBW and S&W are to "mutually develop influent water specifications." Influent water specifications are a major factor in operating costs, and it is conceivable that S&W will attempt to negotiate influent water specifications in a narrow
range that would make it less expensive for S&W to operate the plant. Petitioner raises the specter that, if such specifications are negotiated, and if influent water does not meet the negotiated specifications, S&W might be in a position to invoke the standby compensation/cost reimbursement provision of the WPA.
As found, the WPA establishes a Pilot Program to test water quality after blending S&W's product water with TBW's system water as part of TBW's way of addressing the bromide standard issue. The WPA provides that TBW will reimburse S&W for Pilot Program costs in excess of $50,000. Petitioner points out that no such Pilot Program and cost reimbursement agreement was included in the RFBAFO. But that is because the bromide standard problem was not discovered until later. See Finding 91, supra. Petitioner raises the specter that the cost reimbursement provision exposes TBW to the risk of having to reimburse costs in "an unknown amount." There is was no evidence from which it could be determined that Pilot Program costs would exceed $50,000 or, if so, by how much.
Petitioner contends that the O&M Term Sheet, Exhibit 4.2.1B to the WPA, provides that it can be revised "upon the final terms and conditions negotiated by S&W and an O&M contractor to be selected to operate the plant." Petitioner points out that it had "a guaranteed O&M contract price in place through U.S. Water" and would not have required term sheets subject to revisions.
Petitioner raises the specter that "[t]his will have a direct bearing upon the delivered cost of water."
Actually, the WPA's O&M Term Sheet simply provides that it can be "revised to, and the [WPA] shall, assure consistency with and reflect the terms of the [WPA] as such terms relate to the [O&M] Work Scope." While perhaps circular, this provision does not create a loophole for negotiation of an O&M contract inconsistent with the WPA or RFBAFO.
There was nothing in the RFBAFO requiring developers to have a O&M contract in place at the time of the BAFOs; to the contrary, it was contemplated that such a contract could be negotiated after the WPA on terms consistent with the WPA and the RFBAFO.
Petitioner complains that the "Term Sheet on construction performance bond does not indicate costs, which are being passed through to TBW, and there is no mention of the
$4,500,000 that was required to be included in the BAFOs for construction performance and security." Petitioner seems to contend that this exposes TBW to costs not contemplated in the RFBAFO: "The reasonable cost associated with financing or subsequent refinancing of Project Debt will be a pass-through to [TBW] and will include Water Developer's financing-related transaction costs." An adjustment for a change in interest rates (that were required to be assumed in the BAFO) was the only adjustment contemplated by the RFBAFO.
Petitioner did not make it clear how failure to insert the amount of the construction performance bond on the form included as Exhibit 18.2.1.2A to the WPA would expose TBW to the possibility of an adjustment in addition to the interest adjustment allowed under the BAFO.
As for the $4,500,000, the evidence was clear that the RFBAFO required all developers to include this in their BAFO as the presumed cost of the required Controlled Integrated Insurance Program. Later, TBW determined that the actual cost for the required insurance program probably would be less, perhaps more like $3.2 million. WPA Exhibit 18.3.1 actually includes an estimated premium of $3.2 million for the required Controlled Integrated Insurance Program, but TBW still is considering whether to allow S&W to provide the required insurance program at a reduced cost or to require S&W to provide an enhanced insurance program for
$4.5 million or some other higher cost to S&W in excess of $3.2 million.
Petitioner contends that WPA Section 8.1.2.0 [sic] [actually 8.1.2.1] reduces S&W's risk without a corresponding decrease in water cost by providing:
If the Facility is unable to meet the Acceptance Standards based on the Design Capacity . . . the Design Capacity shall be adjusted to the level at which the facility can meet the Acceptance Standards.
What Petitioner omitted was the language "after using all available insurance proceeds and the available proceeds of the EPC Construction Performance and Payment Bond."
Petitioner neglected to mention that TBW negotiated additional security at S&W's expense not even required by the BAFO. WPA Exhibit 4.4.2 is a term sheet for the provision of "Development Period Security" backed by letter(s) of credit. The amount of the required letter(s) of credit is scheduled to vary from an initial amount of $1.5 million to $9.5 million 5 days prior to the permitting deadline in the WPA. Under this security provision, TBW can draw against the letter(s) of credit as its remedy under WPA Section 11.2 (failure to cure defaults) for any failure to perform obligations under WPA Section 4.2.1 (certain permitting and completion deadlines.)
Claim About Unfair, Anticompetitive Practices
Petitioner claims that TBW "improperly corrupted and negated the [RFBO] process by thereafter imposing new requirements and by requesting [BAFOs]." In part, Petitioner simply complains about the nature of the procurement process used by WCRWSA and TBW. Petitioner refers to the process as an "auction," noting that some Board members cautioned against the process devolving into an "auction."
Actually, as already found, the process was not an auction. It included: the use of an RFP process to solicit quality seawater desalination DBOOT proposals, prior to any final
decision to proceed with seawater desalination, for subsequent contract negotiation, with reservation of the right to abort the RFP process and negotiate with one or more proposers, or with any source; the use of the RFBO to begin the process of simultaneous negotiation with four proposers by soliciting more comparable Binding Offers having the features TBW wanted at that point; a final "go" decision on desalination and a choice of plant capacity; the use of the RFBAFO to conclude the process by soliciting even more comparable BAFOs having more of the features TBW wanted at that point, to wring out an even better deal for TBW, and to proceed with the development of a WPA; and, ultimately, sequential, exclusive final contract negotiations with the highest-ranked BAFOs, which succeeded on the first try with
S&W. The evidence is clear that the WCRWSA and TBW Boards chose the procurement process employed.
Petitioner also complains that it offered the best response to the RFP (assuming its incomplete and deficient Appendix J surface-water intake option were considered and given the same scores as PEIP's more complete Anclote proposals) and contends that its Binding Offer also should have been scored highest (at least on price, if TBW had decided to score and rank Binding Offers.) Petitioner now faults TBW for not halting the process at those stages. But, as previously found, Petitioner did not protest the procurement process until the last step in the process--the ranking
of BAFOs and decision to initiate sequential, exclusive final contract negotiations with the highest-ranked BAFOs.
Petitioner also complains that combining the 22 weighted RFP criteria into the five broader categories for the rest of the procurement process eliminated all objectivity. Although Petitioner's counsel was able to extract an admission from one TBW witness that the change made the process subjective, other witnesses maintained that the subsequent reviews were objective in nature even though there was room for the exercise of professional judgments and for Board policy considerations.
Petitioner also complains that rankings for "permittability" and "environmental effects" for Big Bend and Anclote proposals changed between final assessment of the responses to the RFP in June 1998 and ranking of the BAFOs in March 1999. Petitioner characterizes the reasons for the changes as being "obscure." But the evidence was clear that the rankings changed primarily due to the redesign of S&W's proposal. See Findings 65- 66, supra.
Petitioner also complains that the "permittability" and "environmental effects" of S&W's Big Bend site were not studied enough to justify S&W's ranking in those categories. Virtually all marine life on the West Coast of Florida depends upon Tampa Bay at some point in its life cycle, and many small organisms cannot survive changes in salinity and are killed as they move through the water and encounter such changes. But TBW determined through
studies performed by their consultants that locating the plant at TECO's Big Bend Power Station on Tampa Bay would not cause significant environmental impact.
In a report prepared for TBW dated April 30, 1998, the consultant advised that the cumulative impacts of a 20 mgd desalination plant at Big Bend and other water withdrawals by TBW would produce "4% increase in salinity in September in lower Hillsborough Bay and a 6% increase in salinity in September in upper Hillsborough Bay, averaged over the respective Bay segments." Petitioner offered testimony from Dr. Nick Ehringer regarding potential impacts to Tampa Bay from salinity increases of that magnitude. But Dr. Ehringer did not review the available data or TBW's consultants reports, and he performed no scientific study upon which his opinion could be based. Instead, Dr. Ehringer relied on information he read in the newspaper and additional data he received from Dan Smith of Enpower. Dr. Ehringer utilized an out-of-date assumption regarding withdrawals of surface water from the Bay because he failed to consider that TBW had abandoned the Tampa Resource Recovery Project. In fact, in commenting on a report prepared by one of TBW’s consultants which he had never reviewed prior to the final hearing, Dr. Ehringer offered an opinion that expressly ignored the conclusion reached in the report. Dr. Ehringer’s conclusions are not supported by any reliable scientific study, and his opinions as to the
probable impacts of S&W's proposed desalination project at Big Bend are not persuasive.
One study done for TBW was entitled "Impact Analysis Of the Anclote Desalination Water Supply Project," dated March 15, 1999. The Tampa Bay Regional Planning Council recommended a similar study for Big Bend, but no such study was done. TBW believed it had enough information to compare the proposals for "permittability" and "environmental effects."
Petitioner also complains that they were unfairly prejudiced by TBW's decision to require all BAFOs to include
$4,500,000 for a Controlled Integrated Insurance Program. Petitioner contends that no such program was necessary for its proposal because of the financial strength of its proposed Engineering, Procurement, and Construction (EPC) contractor, Raytheon. But it was not unreasonable for TBW to attempt to minimize its risks and place all BAFOs on a level playing field, even if it may have worked to the disadvantage of one or more developers. Besides, Petitioner did not prove that the Controlled Integrated Insurance Program served no purpose in the case of Petitioner's BAFO. In addition, Petitioner's agreement with Raytheon expired on December 31, 1998, and was not extended in writing. By the time of Petitioner's BAFO, Petitioner only had "order-of-magnitude estimates" from Raytheon that were "in no way to be considered a firm price."
Finally, Petitioner complained that TBW's evaluation of the proposals failed to consider that it allegedly would cost an additional $50 million of capital expenditures to construct water transmission pipelines and related facilities to transport water from the Big Bend to Pinellas County, where there will be water supply deficits from the reduction of groundwater supplies in Pasco County and Northwest Hillsborough County.
The evidence is clear that TBW decided from the outset to eliminate water transmission costs beyond the connection with TBW's water transmission system from consideration in this procurement process. It also is clear from the evidence that Petitioner accepted this decision and fully participated in the procurement process without protest until approximately March 15, 1999, when S&W's BAFO was ranked first, and TBW decided to begin sequential, exclusive final contract negotiations with the highest-ranked BAFOs, starting with S&W.
When Petitioner raised questions regarding the difference in water transmission costs within TBW's system, TBW had its system engineer, Black & Veatch, study the issue. Black & Veatch determined that it actually would cost TBW approximately
$2.7 million more in capital costs to add desalinated water to the system from the Big Bend site as compared to the Anclote site. The rest of the additional capital costs alleged and assumed by Petitioner would be required for either site. Adding the difference in capital costs to the difference in power costs,
it will cost TBW an additional 4.38 cents per 1,000 gallons to add desalinated water to the system from the Big Bend site as compared to the Anclote site.
Claim About Disqualifying PEIP
Petitioner devoted considerable time and effort to attempting to establish that PEIP should have been disqualified for not being responsive to the RFP. Petitioner claims that PEIP should have been disqualified because it: (1) submitted more than one proposal, contrary to RFP Section 1.5.4; (2) did not submit 30- year life-cycle pricing; (3) did not submit an adequate pro forma; and (4) purchased or obtained "exclusive options on multiple sites
. . . that result[ed] in excluding other potential Developers from obtaining a suitable site for the development of a seawater desalination plant(s)," in violation of RFP Section 3.2(1).
Petitioner also claims that TBW improperly allowed PEIP to provide additional 30-year life-cycle pricing information and an adequate pro forma after the RFP submission deadline.
As found, no RFP was selected; the procurement process went forward from the RFP responses ultimately to ranking of BAFOs and sequential negotiation with highest-ranked BAFOs, starting with S&W. Petitioner did not prove that the process was required to end at the RFP responses.
While PEIP clearly submitted more that one proposal in response to the RFP, in violation of RFP Section 1.5.4, so did Petitioner. Petitioner included in Appendix J a deficient and
incomplete surface water intake proposal, which it contended should have been considered and credited during the evaluation process.
PEIP did not submit 30-year life-cycle pricing or an adequate pro forma in its RFP. However, as to the 30-year pricing, the only information needed by PB Water to calculate 30-year pricing was the escalation factors assumed by PEIP. In the RFBO and RFBAFO, all developers were required to assume the same escalation factors.
The Anclote site proposed by PEIP belonged to Florida Power Corporation (FPC); FPC operated a power plant there. FPC and PEIP partner, Progress Energy, both were owned by Florida Progress Corporation. WCRWSA knew the relationship between PEIP and the owner of the Anclote site proposed by PEIP, but it was not proven that WCRWSA knew PEIP had an exclusive option to use the site (in the form of a long-term lease and joint use agreement.)
Even if WCRWSA knew of the long-term lease and joint use agreement, the evidence was clear that Petitioner, FWP, and S&W all had suitable sites for their RFP responses. Petitioner offered a site on which it had an own exclusive option at the Anclote Road Industrial Park near the FPC Anclote plant. There was no evidence that any developer was prevented from obtaining a suitable site. Under the terms of RFP Section 3.2(1), PEIP did not have "exclusive options on multiple sites . . . that result[ed] in excluding other potential Developers from obtaining a suitable site for the development of a seawater desalination plant(s)."
After the responses to the RFP, in August or September 1998, FPC offered Petitioner non-exclusive access to the Anclote site, along with PEIP. Thereafter, in evaluating Petitioner's proposals (Binding Offer and BAFO), PB Water assumed that, if TBW decided to contract with Petitioner, Petitioner would be able to use the FPC Anclote site; in that respect, Petitioner was no longer prejudiced by PEIP's long-term lease and joint use agreement with FPC.
PB Water did note, in evaluating Petitioner's BAFO, that the option Petitioner originally had for the Anclote Road Industrial Park site had expired January 2, 1999, prior to the RFBAFO. But Petitioner was not eliminated from the process as a result; PB Water and TBW continued to assume that Petitioner would be able to use the FPC Anclote site if TBW decided to contract with Petitioner. In addition, the evidence was that Petitioner still could get access to the Anclote Road Industrial Park site after expiration of the option agreement and also could get access to a third site, if necessary. There also was evidence that PB Water visited all three sites in January 1998 as part of its initial evaluation of RFP responses.
WCRWSA's decision to allow both PEIP and Petitioner continue to participate in the procurement process after their respective responses to the RFP did not prove that the process was so "flawed, unfair, and corrupt" that the results must be overturned.
Claim of Discrimination Against Petitioner
Under this heading, Petitioner essentially reiterates some of its claims regarding PEIP's multiple responses to the RFP and multiple exclusive options. Most of those claims were addressed in the preceding section. Under this heading, Petitioner adds the allegation that, in a memorandum dated December 19, 1998, PB Water commented: "It appears that FSDC violated the very RFP requirement that Enpower is invoking against PEIP [i.e., RFP Section 3.2(1)]". The comment was erroneous since Petitioner did not have an option for "multiple sites"; it only had the one option on the Anclote Road Industrial Park site. Petitioner cites this error as additional evidence of bias against Petitioner. But it is found that PB Water's comment was in the nature of an afterthought added to detailed responses to Petitioner's charges of 19 irregularities in the procurement process and a December 10, 1998, letter from counsel for Enpower, Inc., to TBW's general counsel incorporating those charges and accusing PB Water of conflict of interest and bias in favor of PEIP. See Findings 147-151, infra. It was not proved that either PB Water or TBW staff acted on any improper bias against Petitioner or in favor of any other proposer, or on any other improper motivation.
Petitioner also reiterates complaints about using five broad categories instead of 22 and adding insurance and bonding requirements to the RFBAFO. These complaints already have been addressed. See Findings 120 and 125, supra.
Petitioner also contends under this heading that Petitioner's BAFO was given a "D" in plant siting and design "based primarily on the lack of a binding option to lease or purchase and to a lesser extent on failure to provide a 23.3 mgd design." To the contrary, the evidence was clear that the primary reason Petitioner got a "D" was its inadequate plant design. Petitioner did no design work for the required 23.3 mgd plant.
By the time of the RFBAFO, Petitioner's lead Developers, Dupont and U.S. Water, had decided not to invest any more money or personnel in the procurement process, and Enpower had to get their agreement to allow Enpower be the lead Developer for purposes of preparing Petitioner's BAFO. See Findings 161-164, infra. Since Enpower had no money or personnel except for its President, Dan Smith, it was forced to "size-up" its 20 mgd plant design to 23.3 mgd without any further design work. The resulting proposal had fundamental design and engineering flaws. It did not contain the complete technical information necessary to show the modifications to its previous proposals which would produce the "optimized" 23.3 mgd plant. In addition, the very low head loss stated for the transmission main from the desalination plant to the point of interconnection with TBW’s system could not be justified using generally acceptable engineering principles. These flaws called into question the entire proposal, as well as the commitment of former lead Developers, Dupont and U.S. Water.
Petitioner also charges that its BAFO was evaluated unfairly in the area of "Schedule, Agreement, and Financial Factors," where it also got a "D." This charge is based on the premise that the reason for the "D" was that Petitioner "did not indicate 'the specific parties contributing cash and the amount contributed by each party.'" Meanwhile, the charge continues, S&W got an "A" when S&W proposed in its BAFO that a project finance company named Poseidon Resources (Poseidon), would invest 90 percent of the 10 percent cash contribution required by the RFBAFO.
The RFBAFO specifically required the Developers to affirm that 10 percent of the capital cost would be invested in cash and to specify which team member would invest what. The evidence was clear that Petitioner's BAFO did not comply with that requirement. The evidence is equally clear that S&W's BAFO complied.
In addition, there was another reason why Petitioner got a "D" in "Schedule, Agreement, and Financial Factors."
Petitioner's BAFO omitted cost tables for a taxable financing option--something specifically requested in the BAFO. Petitioner claims that this deficiency was "inconsequential" since tax-free financing ultimately was selected, but this was not known at the time. Petitioner cites FWP's "B" in this category as proof that the omission was "inconsequential," but it was not proven that FWP's omission of cost tables for taxable financing was not the difference between an "A" and a "B" for FWP.
Complaint About Poseidon
As mentioned, S&W's BAFO stated that Poseidon would contribute 90% of the 10% cash contribution required by the RFBAFO. Petitioner claims that this should have disqualified S&W's BAFO because: (1) Poseidon was not included in S&W's initial SOQ; (2) Poseidon was only mentioned in S&W's as having "expressed an interest in being a significant equity investor"; and (3) S&W's response to the RFP only identified two projects in which Poseidon had been involved, although not as the developer, neither of which was a desalination plant. (One, however, involved the long-term lease, construction, and operation of a wastewater treatment plant in Cranston, Rhode Island, which TBW's consultants considered to be very comparable to TBW's Project.) Meanwhile, the RFP required the submission of "[i]ndependently audited financial accounts . . . for the three most recent audited years for all Developer team members."
TBW's witnesses explained TBW's position that Poseidon's addition to the S&W team strengthened the team and was not of concern since the rest of the team remained intact. TBW was more concerned about substitutions or deletions from a developer team that could weaken the team. In addition, unlike Petitioner, S&W's BAFO made no change in its lead Developer; Stone & Webster remained the lead Developer throughout the negotiations and ultimately executed the WPA on behalf of S&W Water, LLC.
Claim of Conflict of Interest
The final claim maintained by Petitioner in its proposed Recommended Order is that PB Water had a conflict of interest due to its association with Ionics, a PEIP partner. Assuming such a conflict, Petitioner does not specify the proposed remedy in view of PEIP's third-place finish in PB Water's ranking of the BAFOs. Presumably, this allegation is supposed to add to the other reasons why Petitioner says the entire procurement process should be invalidated.
As to the substance of the claim, the evidence was that, after entering into its consulting contract with WCRWSA, PB Water entered into a separate consulting contract with Hafiz Karamath Engineering Services (HKES), which was proposing to develop a desalination facility for the government of Trinidad. PB Water's contract with HKES expressly precluded PB Water from taking any position that would create a conflict of interest with its then existing clients, which included WCRWSA.
One of PB Water's tasks under the HKES contract was to advise HKES as to potential contractors. One potential contractor was Ionics. PB Water did not recommend Ionics over other prospective contractors but may have advised HKES from the public record as to the status of the WCRWSA procurement process.
PB Water thought it had an understanding with HKES that HKES would not hire any contractors without notice to PB Water. But, unbeknownst to PB Water, HKES entered into a
contract with Ionics to play an important role in the Trinidad project.
When PB Water learned of the potential conflict with Ionics in November 1998, it terminated its contract with HKES and advised TBW. At about the same time, the St. Petersburg Times ran a story on the potential conflict, and Petitioner and others complained to TBW. TBW conducted an investigation and determined that the HKES contract did not cause any bias or prejudice for or against any developer in the TBW project. It is found that the TBW investigation was a fair inquiry which was reasonably calculated to, and did, arrive at the truth underlying the issue and a proper disposition.
Petitioner's Standing
Petitioner's response to the RFP (the "Proposal") was submitted under a cover letter dated December 3, 1997, signed by Dean Bedford, P.E., on the letterhead of Dupont Fabrics & Separations/Permasep Products. It included a notarized statement of Mr. Bedford’s authority, also on Dupont Permasep letterhead, signed by William R. Spencer, Director - Fabrics & Separations.
To execute the Project, Petitioner proposed to form a Florida limited liability company (LLC) named Florida Seawater Desalination Corporation (FSDC), made up of Dupont Permasep Products, U.S. Water, and Enpower. This represented a change from the composition of FSDC set forth in the SOQ, in which Enpower was merely a consultant, not a participant in the
developer team, and in which U.S. Water had originally been named the lead developer. Specifically, the Proposal stated that:
FSDC will be owned jointly by Dupont Permasep Products, US Water and Enpower. A formal agreement will be signed prior to entering into negotiations with the Authority. This agreement will clearly describe the participation levels for all companies.
Dupont Permasep Products will act as the lead developer and majority participant in FSDC.
All involved companies reserve the right to sell down part of their interest in FSDC to local participating companies or others that the participants deem would be beneficial to developing the project. However, this will not be in amounts that would materially change the structure of FSDC and Dupont Permasep Products will always maintain the position of majority shareholder.
(TBW #11 at pp. 10-11)
Under the Proposal, design-build services for the project were to be provided by Raytheon Engineers, as the design- build contractor to FSDC.
A Memorandum of Understanding ("MOU") dated November 26, 1997, among the FSDC members was included as
Appendix A to the Proposal. The parties to the MOU were Dupont,
U.S. Water, and Enpower. The MOU reflected the parties' agreement "to establish a limited partnership, a limited liability company or other business entity (the "Company") to respond to the RFP." The parties agreed that they would unanimously determine the form of organization of the entity to be formed. The MOU provided: "The Company will be owned by the Parties in the percentage interests to be agreed upon in the
future; provided, however, that U.S. Water and Dupont will together own a majority interest in the Company, and the ownership interest of each of U.S. Water and Dupont will exceed the ownership interest of Enpower." But, as a practical matter, Enpower had no interest in owning or operating the facility and intended TBW to rely on the strength of Dupont and U.S. Water as the developers who would carry out the project.
As to the Company (that is, the entity to be formed later) the MOU provided: "Enpower will not participate in the day-to-day management or control of the Company. Dupont shall be responsible for the day-to-day management of the Company; provided, however, that certain 'Major Decisions,' to be defined in the organizational documents of the Company, will require the consent of U.S. Water."
As to the Proposal to be submitted by FSDC in response to the RFP, the MOU provided: "Dupont shall coordinate submission of the response to the RFP and any modifications thereto. However, all parties must agree on all parts of the initial response to the RFP and all modifications thereto prior to submission, as well as all terms and conditions of the Contract prior to execution."
The MOU also provided: "In the event any of the parties elects, in its sole discretion, to terminate all development activities associated with the Project and so advises the other parties in writing, said electing parties' [sic] interest in the Company shall revert to the remaining parties on
a pro-rata basis of their pre-election ownership interest in the Company."
Through the Binding Offers, Dupont continued in the role of lead developer. Dupont and U.S. Water served as the exclusive negotiators for FSDC. Enpower did not even attend any of the negotiations with TBW. Enpower served the limited role of "site location" consultant and was not to participate in day-to- day management of the company. Indeed, Dupont informed TBW in writing that communications with FSDC were to be limited to the Dupont and U.S. Water representatives.
In a January 28, 1999, Memorandum from Dupont to U.S. Water and Enpower, Dupont terminated "all development activities" associated with the TBW project. This change removed FSDC's designated lead developer from any further development activity.
On February 15, 1999, Dupont, U.S. Water, and Enpower entered into a new MOU, which superceded their MOU dated November 26, 1997. On that same date, they also entered into a "Supplemental Contract." Both the new MOU and the Supplemental Contract altered the rights and obligations of the FSDC team members. While the new MOU was provided to TBW as part of Petitioner BAFO, the Supplemental Contract was not revealed to
TBW until a redacted copy was filed with their Notice of Protest. A complete copy was not produced until Petitioner was ordered to produce the complete document during discovery in this proceeding.
The new MOU indicated that Enpower was to become the registered agent and contact person for FSDC instead of Dupont.
The MOU did not contain any reference to the Supplemental Contract or indicate that a fundamental change in the team structure had occurred by virtue of the Supplemental Contract. However, the Supplemental Contract substantially diminished Dupont's role from lead developer to mere membrane supplier for the project. Further, although it gave Dupont the right to sell membranes to FSDC, it clearly stated that Dupont had no obligation to do so. It also altered the basic structure of the FSDC team by deleting the requirement that Dupont and U.S. Water own a combined majority interest in the company and a greater interest than Enpower. In addition, it added a provision that permitted Dupont to sell its interest in FSDC to Enpower for a fixed price after establishment of the company.
Other documents exchanged between Enpower, Dupont, and
U.S. Water also appeared to indicate an intent of the FSDC team members that upon execution of the Supplemental Contract, neither Dupont nor U.S. Water would retain any obligation with respect to the project.
Enpower found it necessary to structure and word the new MOU, Supplemental Contract, and other documents as described in order to persuade Dupont and U.S. Water not to abandon the procurement entirely but rather to at least agree to proceed with the project if the team's BAFO eventually was chosen by TBW for exclusive final contract negotiations. Enpower was reminding Dupont and U.S. Water and emphasizing that, under the terms of the procurement process, such an agreement would not bind them to anything at that time since all obligations would be subject to
final contract negotiations. Nonetheless, these developments with the FSDC team gave TBW reasonable and valid concerns as to the continued commitment of Dupont and U.S. Water to the project.
Enpower attempted to argue that the term "lead Developer" had no significance, that it simply meant the development group, and that there was no written requirement for designation of one member as the lead Developer. But the term "lead Developer" appears in the RFQ and is repeated in the RFP. This designation carried importance to TBW because it represented who on the developer team stood behind the proposal and would be responsible for the development of the project, ensuring that the terms and conditions of the project were met.
By the time of the final hearing, all of the Dupont personnel involved in the development activities had left Dupont.
On July 18, 1997, Dupont and Enpower entered into an open-ended Agreement for Consulting Services which provided, among other things, an arrangement for compensation to Enpower that was contingent on Dupont's obtaining a contract for a seawater desalination plant and the closing of construction financing. Enpower asserted that TBW was aware of Enpower's contingent fee arrangement, and that its existence prompted the provisions in the RFP, RFBO, and RFBAFO prohibiting contingent fees in the RFP.
During a discovery deposition, Enpower President, Dan Smith, appeared to attempt to mislead counsel for TBW and Intervenor by testifying that the Agreement for Consulting Services did not apply to the TBW procurement. Later in the
proceeding, Enpower contended that the Agreement for Consulting Services was supplanted by the November 1997 MOU by way of a verbal understanding between Dupont and Enpower. Actually, it actually applied to the TBW procurement and remained fully enforceable through submission of Binding Offers. Indeed, in August 1998, Enpower claimed entitlement to the success fee in correspondence to Dupont. On January 28, 1999, Dupont and Enpower entered into an "Adjustment Agreement," dated which expressly addressed the Agreement for Consulting Services and waived Enpower's entitlement to the success fee.
The January 27, 1999, MOU also provided: "Should Enpower file a bid protest your firms would have nothing to do with it. . . . Protest would be filed and funded by Enpower. . . .
The protest would represent that if Tampa Bay Water selected Florida Seawater Desalination proposal, then the Florida Seawater Desalination team would be willing to enter into good faith contract negotiations."
The Supplement Contract also provided: "Enpower will not file a bid protest or other legal proceeding on behalf of the Company" before providing twenty-four hours' notice. Such notice was provided. It further provided that, after such notice: "Enpower, at its sole expense, shall have the right to file a bid protest on behalf of the Company, provided, however, that the other Parties may decide not to participate in the bid protest." Dupont and U.S. Water decided not to participate. It then provided: "If any Party decides to not participate in a bid protest, it shall, subject to provisions of the MOU and this Supplemental Contract,
continue to participate in the Project in accordance with the last bid submitted to Tampa Bay Water to which such party agreed in writing, should Tampa Bay Water later decide to select the Company for final Contract negotiations. Enpower will coordinate the B&FO which must be agreed to by all parties."
CONCLUSIONS OF LAW
Standing
Enpower filed the Formal Protest in this case "for itself and for [FSDC]." It is undisputed that FSDC is a joint venture under Florida law. See Kislak v. Kreedian, 95 So. 2d 510, 514 (Fla. 1957); Tidewater Construction Co. v. Monroe County, 107 Fla. 648, 146 So. 209 (1933); McKissick v. Bilger,
480 So. 2d 211 (Fla. 1st DCA 1985); Greiner v. General Electric Credit Corp., 215 So. 2d 61 (Fla. 4th DCA 1968). As one member of the FSDC joint venture, Enpower is not itself entitled to either an award of the contract or a re-proposal.
The case law is clear that standing to protest agency decisions concerning a contract award under Section 120.57(3), Florida Statutes, is limited to bidders and proposers except in "exceptional circumstances." See Brasfield & Gorrie General Contractor, Inc., v. Ajax Construction Company, Inc., of Tallahassee, 627 So. 2d 1200 (Fla. 1st DCA 1993)(non-bidder construction company would have had no standing to protest award and likewise had no standing to seek injunction of bidding process); Ft. Howard v. Dept. of Management Services, 624 So. 2d 783, 785 (Fla. 1st DCA 1993)(bidder's supplier had no standing to protest award to another bidder with a different supplier);
Westinghouse Elec. v. Jacksonville Transp. Authority, 491 So. 2d 1238, 1241 (Fla. 1st DCA 1986)(submission of ruse, instead of good faith proposal, did not confer standing.)
In this case, Enpower itself made no proposal; the proposals were made by the joint venture, FSDC. While the Ft. Howard and Westinghouse decisions contained dicta that there can be "exceptional circumstances" conferring standing on a non- bidder to protest a bid award, neither defined the "exceptional circumstances," finding only that they were not present in those cases. It is concluded that this case does not present the kind of "exceptional circumstances" that would confer standing on a non-bidder or non-proposer under Florida law. Contrast Florida Overland Express, L.P. v. Dept. of Transp., 1998 WL 870182 (Fla. Div. Admin. Hrgs.)(adopted in Final Order entered August 24, 1998). Enpower has no standing to prosecute this protest "for itself."
On the other hand, there does not appear to be any
reason why Enpower cannot protest "for [FSDC]." As Respondent and Intervenor point out in their proposed Recommended Order, the Revised Uniform Partnership Act provides: "A partnership may sue or be sued in the name of the partnership." Section 620.8307(1), Florida Statutes. That seems to be what Petitioner has tried to do (although it would have been clearer and would have eliminated the issue if FSDC had been named as Petitioner). The evidence is clear that Dupont and U.S. Water authorized Enpower to file the protest on behalf of FSDC even though they opted not to participate in the protest.
Although Section 620.8307(1), Florida Statutes, has not been construed by a court, it appears to provide an alternative to the common law that all partners are indispensable parties to suits by or against a partnership. Cf. C.F.I. Antilles, N.V. v. Intal Corp., 506 So. 2d 38 (Fla. 3d DCA 1987); DeToro v. Dervan Investments Limited Corp., 483 So. 2d 717 (Fla. 4th DCA 1985); Waterfront Developers, Inc. v. City of Miami Beach, 467 So. 2d 733 (Fla. 3d DCA 1985); Deal Farms, Inc. v. Farm & Ranch Supply, Inc., 382 So. 2d 888 (Fla. 1st DCA 1980); Aronovitz v. Stein Properties, 322 So. 2d 74 (Fla. 3d DCA 1975). See also Brasfield & Gorrie, supra.
The common law recognized certain exceptions to this rule of joinder. One of these exceptions was to prevent an absent partner’s claim from being barred by statute of limitations. See Farish v. Bankers Multiple Lines Insurance Co.,
425 So. 2d 12 (Fla. 4th DCA 1982); DeToro v. Dervan Investments Limited Corp., supra. In the case of this bid protest, applying the common law to require Dupont and U.S. Water to be named as co-petitioners with Enpower would have the effect of barring the bid protest by limitations since Section 120.57(3), Florida Statutes, requires protesters to file a "notice of protest in writing within 72 hours after the posting of the bid tabulation
or after receipt of the notice of the agency decision or intended decision and shall file a formal written protest within 10 days after filing the notice of protest." It is concluded that this case would fit the common law exception and allow the protest to proceed on behalf of the joint venture, FSDC.
Under Section 120.57(3)(b), Florida Statutes, FSDC has standing if it is "adversely affected" by TBW's procurement decisions. As pointed out by Respondent and Intervenor, the courts have observed that the fourth lowest out of twelve bidders "probably" has standing as being "adversely affected" but have questioned whether the seventh lowest out of seven bidders would have standing. Compare Capeletti Brothers, Inc. v. State Department of General Services, 432 So. 2d 1359 (Fla. 1st DCA 1983), with Brasfield & Gorrie, supra, at 1203, fn.1.
As pointed out by Respondent and Intervenor, to have the highest-ranked BAFO, FSDC would have to eliminate not only the BAFO of the selected developer (S&W), but also the other Big Bend BAFO (second-ranked FWP) and the other Anclote BAFO (third- ranked PEIP). And although the Formal Protest raised a number of issues and alleges a variety of "irregularities" with respect to the PEIP and S&W BAFO's (as well as their Binding Offers), Petitioner has not alleged or proved any deficiency or "irregularity" in the FWP proposals. But the Formal Protest alleges not only that S&W and PEIP should be disqualified but also that TBW should not be allowed to select from the remaining BAFOs but should be required to employ the services of an independent consultant (i.e., not PB Water) to choose between Petitioner's and FWP's Binding Offers. It is concluded that Petitioner has standing to prosecute its Formal Protest to attempt to achieve these results.
Respondent and Intervenor also contend that Petitioner
has no standing because its various proposals were non-responsive
in material respects. It is concluded that none of these allegations destroy Petitioner's standing to prosecute its Formal Protest.
One reason alleged for Petitioner's disqualification is that Petitioner's site option agreement between U.S. Water and the Anclote River Industrial Park, expired on January 2, 1999, and that Petitioner did not present any evidence that the site option agreement had been renewed or extended beyond that date, or that it had any other site "legally available" to it for use in connection with this Project. But evidence was that PB Water assumed that Petitioner would have been able to use the FPC Anclote Plant site if awarded the contract. There also was evidence that Petitioner still could get access to the Anclote Road Industrial Park site and that a third site was available to Petitioner, if necessary. See Finding 136, supra.
Another reason alleged for Petitioner's disqualification is that Petitioner participated in and then concealed from TBW a contingent fee agreement that was expressly prohibited by the terms of the RFQ, the RFP, and the other procurement documents. But the evidence did not establish a violation of the procurement requirements. Section 1.5.6 of the RFP required each developer to represent that: "[T]he Developer has not paid or agreed to pay any person, company, corporation, individual, or firm other than a bona fide employee working solely for the Developer, any fee, commission, percentage, gift, or any other consideration, contingent upon or resulting from the award of or the making of this Agreement." The same requirement
appeared in the earlier RFQ and later in both the RFBO and the RFBAFO. Petitioner represented compliance with these provisions.
The Agreement for Consulting Services between Enpower and Dupont provided for the payment to Enpower of a "development fee" of between $250,000 and $500,000, contingent upon Dupont being awarded a contract for a desalination project. It was not an agreement by the Developer, FSDC. It pre-existed the formation of the development team for this Project.
If construed to be an agreement by Petitioner, The Agreement for Consulting Services was in favor of Enpower, which was a member of the development team at least as of the time of Petitioner's response to the RFP. It is concluded that, as a member of the development team, Enpower would come within the meaning of the "bona fide employee working solely for the Developer" exception. Alternatively, the Agreement for Consulting Services between Enpower and Dupont, as members of the development team, could be viewed as part of the agreement among team members as their respective financial contributions and obligations to the team.
If there were any violation, it was a violation of the RFQ, which preceded Enpower's becoming part of the development team. It is concluded that such a temporary violation should not disqualify Petitioner as it was cured by the time of the response to the RFP. Similarly, as a result of the Adjustment Agreement waiving Enpower's right to a "success fee," there was no violation as to the RFBAFO.
Burden and Standard of Proof
In Florida, there is no common law requiring public agencies to let contracts through competitive procurement. In the absence of some specific statutory or constitutional requirement, a public agency has no obligation to establish a bidding procedure and may contract in any manner that is not arbitrary or capricious. Brown v. City of St. Petersburg, 153 So. 140 (Fla. 1933); Eggart v. Westmark, 45 So. 2d 505 (Fla. 1950); Volume Services Division of Interstate United Corp. v. Canteen Corp., 369 So. 2d 391 (Fla. 2d DCA 1979); William A. Berbusse, Jr., Inc. v. North Broward Hospital District, 117
So. 2d 550 (Fla. 2d DCA 1960); Ops. Att’y Gen. 98-04, 96-28, 96-
16, 93-83, 93-28, 90-44 and 84-29.
Section 120.57(3)(f), Florida Statutes, provides in pertinent part:
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.
Petitioner contends that TBW violated the first sentence of Section 120.57(3)(f) with respect to PEIP's response to the RFP. But to the extent that there were any such violations (i.e., with respect to life-cycle cost and pro forma information), they were cured when the procurement process proceeded to the next successive stages--simultaneous negotiations with all four developers, the RFBO, and the RFBAFO-- and S&W was selected for exclusive final contract negotiations. They were also waived. See Conclusion 210, infra.
Governing Statutes
TBW is a regional water supply authority governed by Sections 373.1962 and 373.1963, Florida Statutes. Section 373.1962(3) authorizes TBW "to develop, construct, operate, maintain, or contract for alternative sources of potable water, including desalinated water," and provides further that "such alternative potable water sources . . . may also be privately developed, constructed, owned, operated and maintained "
This statute, however, does not specify or require any particular procedure for the procurement of a desalinated water supply.
Neither Section 373.1962 nor Section 373.1963, contains any provision for competitive procurement by a regional water supply authority.
There is no other general procurement statute that applies to this Project. Petitioner contends that Section 287.057, Florida Statutes, governing the procurement of
"commodities" by state agencies, applies to this procurement. But Section 287.057 only applies to state agencies.
Section 287.012(1), Florida Statutes, defines an "agency" for purposes of Section 287.057 as "any of the various state officers, departments, boards, commissions, divisions, bureaus, and councils and any other unit of organization, however designated, of the executive branch of state government." TBW is a regional water supply authority created and existing pursuant to Sections 373.1962 and 373.1963, Florida Statutes, and is an independent special district pursuant to Section 189.403(3), Florida Statutes. It is not assigned to the executive branch of state government by Chapter 20, Florida Statutes, or any other statute. The Attorney General has consistently opined that a special district such as TBW is not an "agency" within the meaning of Section 287.012(1). See Op. Att’y Gen. 93-28 (Ocean Highway and Port Authority); Op. Att’y Gen. 83-20 (Florida State Fair Authority); Op. Att'y Gen. 078-39 (St. Augustine Airport Authority); Op. Att’y Gen. 078-19 (Broward County Housing Authority); Op. Att’y Gen. 075-56 (Sarasota-Manatee Airport Authority); Op. Att’y Gen. 074-7 (Captiva Erosion Prevention District)("special districts and other separate entities are not considered to be agencies of the state" for purposes of Chapter 287). In the absence of any judicial authority, the opinions of the Attorney General are persuasive. It is concluded that TBW is
not "a unit of organization of the executive branch of state government" for purposes of Section 287.057.
Even if TBW were an "agency" within the meaning of Section 287.012(1), it is not procuring a "commodity" for purposes of Chapter 287. The definition of "commodity" in Section 287.012(4), Florida Statutes, expressly provides that "commodities purchased for resale are excluded from this definition." The facts are clear that TBW operates exclusively as a wholesale supplier of potable water to its member- governments, and any desalinated water purchased pursuant to the WPA is purchased solely for purposes of resale, at wholesale, to the member-governments under the terms of the Master Water Supply Contract. For these reasons, it is concluded that Section 287.057, Florida Statutes, does not apply to this Project.
TBW's Rules
Petitioner contends that Florida Administrative Code Rule 49B-3.004 applies to the Project. But Rule 49B-3.004 is TBW’s administrative provision for the award of design-build contracts, as defined in Subsection (1)(c) of the rule. The WPA is not a "design-build" contract, as defined in the rule; it is a DBOOT contract. Rule 49B-3.004 does not apply.
Even if Rule 49B-3.004 applied, its pertinent provisions, found in section (3) are simply:
Tampa Bay Water staff shall solicit competitive design-build contract proposals or bids from those firms the Board has determined to be the most qualified for the public
construction project under consideration. The evaluation of the proposals or bids submitted by those firms shall be based on evaluation criteria and procedures established prior to the solicitation of competitive proposals.
Tampa Bay Water staff shall evaluate the proposals or bids in consultation with the employed or retained design criteria professional.
The award of the design-build contract shall be based upon the evaluation criteria established by Tampa Bay Water for the public construction project under consideration. The General Manager or Tampa Bay Water staff shall recommend to the Board a design-build bid or proposal for the award of a design-build contract.
Essentially, the rule would require TBW to follow the evaluation criteria of the RFP, RFBO, and RFBAFO.
Proposal Specifications
It is well-settled that an agency may not accept a bid or proposal that is materially at variance with the specifications set forth in an RFP. See Air Support Services International, Inc. v. Metropolitan Dade County, 614 So. 2d 583 (Fla. 3d DCA 1993). It is equally well-settled that not every deviation from the bid or proposal specifications is material. A deviation is only material if it gives a proposer a substantial advantage over the other proposers and thereby restricts or stifles competition. Tropabest Foods, Inc. v. Department of General Services, 493 So. 2d 50 (Fla. 1st DCA 1986). If a deviation does not provide a proposer with such a palpable competitive advantage, it constitutes a minor irregularity that should be waived by the agency. See Intercontinental Properties,
Inc. v. Department of Health and Rehabilitative Services, 606 So. 2d 380 (Fla. 3d DCA 1992)("There is a very strong public interest in favor of saving tax dollars in awarding public contracts. There is no public interest, much less a substantial public interest, in disqualifying low bidders for technical deficiencies in form, where the low bidder did not derive any unfair competitive advantage by reason of the technical omission.")
By its express terms, the RFP clearly contemplated a process of simultaneous negotiations as the means of selecting the developer for the Project. TBW commenced those simultaneous negotiations with all four developers after the initial proposals had been evaluated. It utilized the RFBO and the subsequent RFBAFO as mechanisms to narrow and focus the negotiations with the developers. As it made policy decisions on certain aspects of the desalination project (by ultimately opting in November 1998 for a 25 mgd plant, for example), TBW was able to provide the developers with more specific requirements, and it did so. Even if there were minor errors made during this lengthy procurement process, it has not been demonstrated that any error was made that impaired either the fairness of the process or the correctness of TBW’s ultimate decision. See Recommended Order, Gibbons and Company, Inc. v. State of Florida, State Board of Regents, (DOAH Case No. 99-0697BID, entered September 17, 1999, at pp. 169-170).
Moreover, the process must be considered and evaluated in the context of TBW's organizational restructuring (which at times caused the Board to delay making an ultimate decision) and the development of its Master Water Plan, a lengthy process that did not culminate until November 1998. TBW could not have made a final selection of a desalination developer prior to that time, because until November 1998 it had not even decided whether its Master Water Plan was going to include any desalination facility. All of the developers undertook their participation in this procurement mindful of the risk that it could be for naught if desalination were not ultimately selected as a part of the Master Water Plan. The RFP contemplated this, and even provided for an incentive award to the top-ranked developer in the event this occurred. TBW's negotiations with all four developers up to and beyond the time that it actually decided to adopt the desalination project was not contrary to the RFP.
It is concluded that this procurement process, considered in its entirety, was not contrary to the specifications of the RFP, the RFBO, or the RFBAFO.
Statutory "Standards" of Proof
A decision is "clearly erroneous" when it is unsupported by substantial evidence, or contrary to the clear weight of the evidence, or induced by an erroneous view of the law. See Assessment Systems, Inc. v. Department of Business and Professional Regulation, 1998 WL 866224 (Fla. Div. Admin. Hrgs.)
(pertinent part adopted in in Final Order entered August 17, 1998).
An act is "contrary to competition" when it offends or subverts the fundamental policies underlying competitive procurement. Id. Those policies, generally, are: to protect the public against collusive contracts; to secure fair competition on equal terms for all bidders or proposers; to remove not only collusion, but the temptation for collusion and the opportunity for private gain at public expense; to close all avenues to favoritism and fraud in whatever form; to secure the best value for the public at the lowest possible expense; and to afford an equal advantage to all persons desiring to do business with the government. Wester v. Belote, 103 Fla. 976, 138 So. 721 (1931).
An "arbitrary" decision is one not supported by facts or logic. See Board of Clinical Laboratory Personnel v. Florida Association of Blood Banks, 721 So. 2d 317 (Fla. 1st DCA 1998); Board of Trustees, Internal Improvement Trust Fund v. Levy, 656 So. 2d 1359 (Fla. 1st DCA 1995); Dravo Basic Materials Co. v. State Department of Transportation, 602 So. 2d 632 (Fla. 2d DCA 1992); Agrico Chemical Co. v. State Department of Environmental Regulation, 365 So. 2d 759 (Fla. 1st DCA 1978), cert. denied sub nom., Askew v. Agrico Chemical Co., 376 So. 2d 74 (Fla. 1979).
A "capricious" action is one that is taken without thought or reason, or irrationally. Id.
The inquiry to be made in determining whether an agency has acted arbitrarily or capriciously is "whether the agency: (1) has considered all relevant factors; (2) has given actual, good faith consideration to those factors; and (3) has used reason rather than whim to progress from consideration of those factors to its final decision." Adam Smith Enterprises, Inc. v. State Department of Environmental Regulation, 553 So. 2d 1260, 1273 (Fla. 1st DCA 1989); Santa Fe Technologies, Inc. v. Department of Transportation, 1998 WL 930111 (Fla. Div. Admin. Hrgs.)(adopted in Final Order entered January 5, 1999).
If an administrative decision is justifiable under any analysis that a reasonable person would use to reach a decision of similar importance, then it is neither arbitrary nor capricious. Dravo Basic Materials Co. v. State Department of Transportation, 602 So. 2d 632, 635 n.3 (Fla. 2d DCA 1992).
As long as TBW acted in a manner that is not arbitrary, capricious, fraudulent or dishonest, it had wide discretion in the solicitation and acceptance of competitive proposals. See Department of Transportation v. Groves-Watkins Constructors, 530 So. 2d 912 (Fla. 1988); Liberty County v. Baxter's Asphalt and Concrete, Inc., 421 So. 2d 505 (Fla. 1982).
TBW relied in this procurement process on the expertise and professional judgment of its staff, consultant engineers, system engineer, financial consultants, insurance consultants, other consultants, and legal counsel. As reflected
in the Findings, it has not been demonstrated that any of these persons involved in this procurement process, and upon whom TBW relied in its decisionmaking, did anything other than render advice based upon his or her best professional judgment.
It has not been demonstrated that the decisions made in the course of the procurement process were decisions not supported by fact or logic, or decisions taken irrationally or without thought or reason. To the contrary, TBW throughout this procurement process considered all relevant factors, gave actual, good faith consideration to those factors, and used reason (as opposed to whim) to progress from consideration of those factors to a decision.
Not only did TBW not act in a manner contrary to competition, it went out of its way to ensure that its decisions, at each step in the procurement process, enhanced and furthered competition. When the staff and consultants recommended reducing the field from four to two developers after the evaluation of the RFP responses, TBW’s Board elected to retain all four developers in the competition. All four developers were permitted to correct irregularities in their proposals, and the Board directed that the evaluations should not turn on minor or technical distinctions, but only on significant differences in the proposals. As the Board refined its goals and identified its specific needs through the RFBO and the RFBAFO, it maintained all four developers in the process. Although staff recommended that
fewer than all four developers be advanced to the simultaneous negotiations, the Board again elected to include all four developers. Such conduct is not contrary to competition. See Gibbons and Company, supra, at p. 163):
Had it been Dr. Healy's desire to narrow the field of proposers . . . he had the opportunity to do so. This, however, was not his desire. Rather, he wanted to have as many proposers to choose from as possible.
Instead of eliminating from further consideration the proposers . . . who had submitted technical proposals with irregularities, he allowed these proposers to remedy these irregularities, which they all did, and have their technical proposals evaluated ")
The extent to which this procurement process enhanced rather than frustrated competition is borne out by the ultimate price of desalinated water realized by TBW. Free and fair competition is generally expected to produce a lower price for the agency, not a higher price. Had the this process frustrated or stifled competition in any way, it is unlikely that TBW would have been able to secure a binding contract to purchase desalinated water at such a low price.
Among the many allegations made by Petitioner in this case were claims that various individuals manipulated the procurement process to the point of corruption. In the same vein, Petitioner alleged that TBW's principal consultant, PB Water, was improperly motivated by some conflict of interest arising out of a contractual relationship it had for a desalination project in Trinidad. These are serious allegations that call into question the integrity of not only the procurement
process, but of staff personnel of TBW and PB Water. Any determination that these individuals engaged in such intentional wrongdoing must be based on "hard facts," not mere "suspicion or innuendo." See Gibbons and Company, supra; CACI, Inc.-Federal v. United States, 719 F.2d 1567, 1581 (Fed. Cir. 1983)(court will not ascribe evil motives to agency staff in handling of bids without a hard factual basis). Suffice to say, as reflected in the Findings, that Petitioner's proof on these claims was lacking. See Finding 138, supra.
Waiver and Estoppel
The evidence reflects that Petitioner fully participated in all steps of this procurement process, including the RFBO and RFBAFO. It participated in the clarification meetings that were held and in the simultaneous negotiations that were conducted through December 1998. Through March 15, 1999, Petitioner filed no challenge to the RFBO or RFBAFO, and it is concluded that Petitioner has waived its right to attack those aspects of the process. Section 120.57(3)(b), Florida Statutes. See also Optiplan, Inc. v. School Board of Broward County, 710 So. 2d 569 (Fla. 4th DCA 1998)(constitutional challenge to RFP specifications waived by failure to timely file formal protest); Capeletti Brothers, Inc. v. Department of Transportation, 499
So. 2d 855 (Fla. 1st DCA 1987)(failure to file a timely protest is waiver of right to contest plans and specifications); Foodservice, Inc. v. School Board of Hillsborough County, 1998 WL 930094 (Fla. Div. Admin. Hrgs.)(Final Order unavailable); Advantage Services of South Florida, Inc. v. Department of
Management Services, 1996 WL 1060082 (Fla. Div. Admin. Hrgs.)(Final Order unavailable); Great Atlantic Boiler Services, Inc. v. Department of Corrections, 1992 WL 881152 (Fla. Div.
Admin. Hrgs.)(adopted in Final Order entered March 16, 1992); Winchester Properties v. Department of Transportation, 1990 WL 749626 (Fla. Div. Admin. Hrgs.)(adopted in Final Order entered March 2, 1990)(challenge to weighting of evaluation criteria waived by failure to timely file a written protest).
Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that TBW enter a Final Order denying Petitioner's Formal Protest.
Jurisdiction is reserved for consideration of S&W's request for a determination of improper purpose under Section 120.595(1), Florida Statutes, if such request is made by motion within 10 days from the issuance of this Recommended Order.
DONE AND ENTERED this 25th day of October, 1999, in Tallahassee, Leon County, Florida.
J. LAWRENCE JOHNSTON 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 25th day of October, 1999.
COPIES FURNISHED:
Charles W. Pittman, Esquire
400 North Tampa Street Suite 1040
Tampa, Florida 33602
Richard A. Harrison, Esquire John W. Wilcox, Esquire
Allen, Dell, Frank & Trinkle, P.A. Post Office Box 2111
Barnett Plaza, Suite 1240
101 E. Kennedy Boulevard Tampa, Florida 33601-2111
Donald D. Conn, General Counsel Tampa Bay Water
2535 Landmark Drive
Suite 211
Clearwater, Florida 33761-3950
John H. Rains, III, Esquire
Annis, Mitchell, Cockey, Edwards & Roehn, P.A.
Post Office Box 3433
One Tampa City Center, Suite 2100 Tampa, Florida 33601
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.
Issue Date | Proceedings |
---|---|
Jun. 17, 2004 | Final Order filed. |
Oct. 25, 1999 | Recommended Order sent out. CASE CLOSED. Hearing held September 7 through 14, 1999. |
Oct. 07, 1999 | Petitioner`s Motion to Accept Filings filed. |
Oct. 07, 1999 | Petitioner`s Memorandum ; Recommended Order; Disk filed. |
Oct. 07, 1999 | Petitioner`s Errata Sheet (filed via facsimile). |
Oct. 07, 1999 | (R. Harrison) Recommended Order (for Judge Signature); Disk filed. |
Oct. 07, 1999 | Joint Motion of Tampa Bay Water and S&W Water, LLC, for Enlargement of Page Limitation for Proposed Recommended Order; Notice of Filing Joint Proposed Recommended Order of Tampa Water and S&W Water, LLC filed. |
Sep. 30, 1999 | Letter to A. Cole from R, Harrisohn Re: Exhibits filed. |
Sep. 29, 1999 | Letter to JLJ from C. Pittman Re: Post-hearing submissions (filed via facsimile). |
Sep. 27, 1999 | Petitioner`s Exhibit List; Transcripts (Volumes I, II, III, IV, V, VI, 2 condensed Volumes, tagged); Exhibits (3 Boxes, tagged) filed. |
Sep. 17, 1999 | Letter to JLJ from J. Rains Re: Exhibits (filed via facsimile). |
Sep. 13, 1999 | CASE STATUS: Hearing Held. |
Sep. 08, 1999 | Petitioner`s Response to Motion on Standing (filed w/judge at hearing) filed. |
Sep. 07, 1999 | CASE STATUS: Hearing Partially Held, continued to 9/13/99; 9:00am; Tampa) |
Sep. 07, 1999 | (R. Harrison) Notice of Filing Deposition Transcripts; Exhibits filed. |
Sep. 07, 1999 | Deposition of James Milton Smith ; Deposition of Robert A. Lutz ; Deposition of Daniel L. Smith (2 Volumes/tagged) filed. |
Sep. 07, 1999 | Honey Rand`s Motion to Quash Subpoena Ad Testificandum (filed via facsimile). |
Sep. 07, 1999 | Hillsborough County`s Motion in Limine as to Testimony of Ted Grable (filed via facsimile). |
Sep. 07, 1999 | Hillsborough County`s Motion for Protective Order and to Quash Subpoenas (filed via facsimile). |
Sep. 03, 1999 | Letter to JLJ from A. Goldstein Re: Ionics does not currently intend to intervene (filed via facsimile). |
Sep. 03, 1999 | (R. Harrison) Notice of Hearing (9/7/99; 9:00 a.m.); Tampa Bay Water`s Motion for Protective Order and to Quash Subpoenas; Tampa Bay Water`s Motion in Limine (filed via facsimile). |
Sep. 03, 1999 | Pre-Hearing Stipulation (filed via facsimile). |
Sep. 03, 1999 | Petitioner`s Notice to Produce to Tampa Bay Water (filed via facsimile). |
Sep. 03, 1999 | Tampa Bay Water`s Notice of Intent to Submit Written Testimony (filed via facsimile). |
Sep. 03, 1999 | Intervenor`s Response to Petitioner`s First set of Interrogatories (filed via facsimile). |
Sep. 03, 1999 | Notice of Service of Intervenor`s Answers to Petitioner`s First Set of Interrogatories (filed via facsimile). |
Sep. 03, 1999 | Petitioner`s Notice to Produce to Tampa Bay Water (filed via facsimile). |
Sep. 02, 1999 | Joint Motion of Tampa Bay Water and S&W Water, LLC, for Summary Recommended Order of Dismissal for Lack of Standing filed. |
Sep. 02, 1999 | (J. Clark) Motion for Extension of Time to Respond to Petitioner`s First Set of Interrogatories (filed via facsimile). |
Sep. 02, 1999 | Order on Pending Motions sent out. (TBW`s Motion to shorten time for Petitioner to respond to Motion for summary recommended Order of dismissal is denied) |
Sep. 02, 1999 | Petitioner`s Notice to Produce to Tampa Bay Water (filed via facsimile). |
Sep. 01, 1999 | Petitioner`s Supplement to Motion for Protective Order (filed via facsimile). |
Sep. 01, 1999 | Intervenor, S&W Water, LLC`s Response to Petitioner Motion to Compel (filed via facsimile). |
Sep. 01, 1999 | (R. Harrison) Notice of Telephonic Hearing; Tampa Bay Water`s Motion to Shorten Time for Petitioner to Respond to Motion for Summary Recommended Order of Dismissal (filed via facsimile). 9/1/99) |
Sep. 01, 1999 | Intervenor, S&W Water, LLC`s, Response to Petitioner`s First Request for Production; Notice of Telephonic Hearing (9/1/99; 2:00 p.m.) (filed via facsimile). |
Sep. 01, 1999 | Petitioner`s Motion to Compel Discovery From Intervenor (filed via facsimile). |
Sep. 01, 1999 | (R. Harrison) Notice of Telephonic Hearing; Joint Motion to Compel Testimony and Production of Documents and Motion for Expedited Telephonic Hearing (filed via facsimile). |
Aug. 31, 1999 | Intervenor, S&W Water, LLC`s, Response to Petitioner`s First Request for Production (filed via facsimile). |
Aug. 30, 1999 | (Petitioner) Notice of Taking Corporate Deposition of S&W Water, LLC Pursuant to Rule 1.310 (b)(6), Florida Rules of Civil Procedure filed. |
Aug. 30, 1999 | Petitioner`s First Request for Production of Documents to S&W Water, LLC; Petitioner`s First Request for Production of Documents to Tampa Bay Water filed. |
Aug. 30, 1999 | (Petitioner) Notice of Cancellation of Depositions Scheduled 8/31/99 and 9/1/99; Notice of Taking Depositions filed. |
Aug. 30, 1999 | Order Changing Venue sent out. (venue is changed to Wilkes Reporting Service) |
Aug. 26, 1999 | (C. Pittman) Notice of Taking Depositions filed. |
Aug. 26, 1999 | (D. Conn) Unopposed Motion to Change Location of Final Hearing (filed via facsimile). |
Aug. 25, 1999 | (Petitioner) Amended Notice of Taking Corporate Deposition Duces Tecum of Tampa Bay Water Pursuant to Rule 1.310(b)(6), Florida Rules of Civil Procedure.; Notice to Tampa Bay Water to Produce at Corporate Deposition Duces Tecum filed. |
Aug. 23, 1999 | Order Denying Continuance sent out. |
Aug. 20, 1999 | Tampa Bay Water`s Motion for Expedited in Camera Inspection and to Compel Immediate Production of FSDC`s "Supplemental Contract" (filed via facsimile). |
Aug. 19, 1999 | Order sent out. (Petitioner`s Motion for Protective Order granted) |
Aug. 19, 1999 | Florida Seawater Desalination Company Supplemental Contract w/cover letter (filed via facsimile). |
Aug. 19, 1999 | (R. Harrison) Amended Notice of Taking Deposition [amended to change dates and times of deposition only]; Subpoena Duces Tecum (filed via facsimile). |
Aug. 18, 1999 | (R. Harrison) Notice of Taking Depositions (filed via facsimile). |
Aug. 18, 1999 | (C. Pittman) Petitioner`s Motion for Protective Order (filed via facsimile). |
Aug. 18, 1999 | (J. Rains) Notice of Service of Intervenor`s First Set of Interrogatories to Petitioner filed. |
Aug. 18, 1999 | Intervenor`s First Request for Production of Documents to Petitioner (filed via facsimile). |
Aug. 18, 1999 | (C. Pittman) Remainder of Pages (Petitioner`s Motion for Protective Order) (filed via facsimile). |
Aug. 16, 1999 | Letter to JLJ from C. Pittman Re: Paragraph 2 of Petitioner`s Motion for Continuance (filed via facsimile). |
Aug. 16, 1999 | Tampa Bay Water`s Response in Opposition to Petitioner`s Motion for Continuance (filed via facsimile). |
Aug. 16, 1999 | (Respondent) Notice of Taking Deposition; Subpoena Duces Tecum (R. Harrison) (filed via facsimile). |
Aug. 13, 1999 | Petitioner`s Motion for Continuance (filed via facsimile). |
Aug. 13, 1999 | Tampa Bay Water`s Notice of Serving First Interrogatories to Petitioner (filed via facsimile). |
Aug. 12, 1999 | Order Granting Leave to Intervene sent out. (S & W Water) |
Aug. 12, 1999 | Notice of Hearing sent out. (hearing set for September 7 through 10 and 13 through 17, 1999; 9:00 a.m.; Clearwater, FL) |
Aug. 12, 1999 | Order of Pre-hearing Instructions sent out. |
Aug. 11, 1999 | (Richard Harrison) Amended Notice of Appearance (to include certificate of service) filed. |
Aug. 11, 1999 | (R. Harrison) Notice of Appearance (filed via facsimile). |
Aug. 10, 1999 | (S & W Water, LLC) Motion for Leave to Intervene filed. |
Aug. 10, 1999 | Index to Appendix to Formal Protest to Board Action of July 19, 1999 and to Request for Proposal Process (w/att`s.) filed. |
Aug. 10, 1999 | FSDC`s Formal Protest to Board Action of July 19, 1999 and to the Request for Proposal Process filed. |
Aug. 10, 1999 | Agency Referral Letter; Notice of Referral of Formal Protest; Letters of Bid Approval to Parties (3); Notice of Protest filed. |
Issue Date | Document | Summary |
---|---|---|
Nov. 15, 1999 | Agency Final Order | |
Oct. 25, 1999 | Recommended Order | Water Supply Authority procurement for Design-Build-Own-Operate-Transfer desalination plant. Chapter 287 does not apply. Procurement met standards of 120.57(3)(f); not arbitrary, capricious, contrary to competition, or clearly erroneous. |
DAVID W.R. BROWN vs DEPARTMENT OF ENVIRONMENTAL PROTECTION, 99-003398BID (1999)
STEVE TOLER, JR. vs WEST COAST REGIONAL WATER SUPPLY AUTHORITY, 99-003398BID (1999)
ELSBERRY BROTHERS, INC. vs. SOUTHWEST FLORIDA REGIONAL PLANNING COUNCIL, 99-003398BID (1999)
PALM COAST UTILITY CORPORATION vs. PUBLIC SERVICE COMMISSION, 99-003398BID (1999)