STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ATLANTIC INVESTMENT OF BROWARD, )

)

Petitioner, )

)

vs. ) Case No. 00-0224BID

) DEPARTMENT OF TRANSPORTATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on February 20, 2000, by video telephone conference in Tallahassee and Fort Lauderdale, Florida, before the Division of Administrative Hearings, by its designated Administrative Law Judge, Diane Cleavinger.

APPEARANCES

For Petitioner: Randall L. Leshin, Esquire

Law Offices of Randall L. Leshin 1921 East Atlantic Boulevard Pompano Beach, Florida 33060

For Respondent: Brian A. Crumbaker, Esquire

Brian F. McGrail, Esquire Department of Transportation 605 Suwannee Street

Haydon Burns Building, Mail Station 58 Tallahassee, Florida 32399-0458

STATEMENT OF THE ISSUE

Whether the Department of Transportation's intended action to reject all quotes and re-advertise Lease No. 550:0318 was illegal, arbitrary, fraudulent, or dishonest.

PRELIMINARY STATEMENT

By written correspondence, issued on November 8, 1999, the Department of Transportation (Department) informed Atlantic Investment of Broward (Atlantic Investment) via Sheldon M. Schermer, Real Estate Agent for Atlantic Investment, of the Department's intent to reject all quotes and re-advertise for Lease No. 550:0318. The basis for the decision was the Department's failure to obtain three documented quotes and a modification of the lease specifications.

On November 9, 1999, Atlantic Investment timely filed a Notice of Protest followed by Petitioner's Formal Protest and bond on November 19, 1999. Atlantic Investment asserted the Department's decision to reject all bids was arbitrary and in violation of the legislative intent of competitive bidding. As such, Atlantic Investment requested award of Lease No. 550:0318. The matter was referred to the Division of Administrative Hearings for assignment of an Administrative Law Judge to conduct the final hearing.

A formal administrative hearing was held in Tallahassee, Florida, on February 10, 2000, before the Honorable Diane

Cleavinger, a duly-appointed Administrative Law Judge. Petitioner appeared via video teleconference from Fort Lauderdale, Florida.

Petitioner presented the testimony of two witnesses: Edgar

1. Elie, Managing Partner of Atlantic Investment; and Sheldon M. Schermer, Real Estate Agent. The Department presented the testimony of three witnesses: Sharon Day, Contract Administrator, Tolls Office of the Department; Donald Wilkins, Administrative Service Director, Tolls Office of the Department; and Randall C. Baker, General Service Manager at the Bureau of Real Property Management, Department of Management Services.

   FINDINGS OF FACT

   
   

   1. In October of 1999, the Department advertised for office space for use as the Toll Data Center - Audit Section, Office of Toll Operations (Toll Office) located in Broward County. The lease was clearly advertised as a negotiated lease. It was not advertised as a competitive bid lease.

   2. Under the negotiated lease process before letting any lease, the Department must submit to the Department of Management Services (DMS) a Request for Space Need (RSN) and Letter of Agency Staffing (LAS). From DMS the Department receives the authority to directly negotiate a lease for space under 5,000 square feet with prospective lessors. 1/

   3. Consistent with procedure, the Department received approval of the RSN on October 18, 1999.

   4. Pursuant to statute, DMS has strongly suggested that prior to selection of the apparent successful lessor, the Department should obtain a minimum of three documented quotes for a lease that has not been competitively bid. The Department has consistently followed that suggestion in negotiated leases.

   5. Under special circumstances, where it is clear it is improbable that three quotes cannot be obtained, the Department may waive its requirement that three documented quotes be received. However, the agency must certify to DMS that attempts to receive the required number of documented quotes were unsuccessful and/or special circumstances exist to negotiate the lease with less than three quotes. In this case, no special circumstances exist.

   6. In an effort to obtain more than the minimum three documented quotes, the Department opted to advertise for lease space on the Internet.

   7. The Internet is utilized by the DMS, among other state agencies, to disseminate information provided in the RSN to the private sector. Additionally, the Internet site may also be used by the private sector to provide notice of space they have available for review by the agency seeking space.

   8. A total of three submittal packages were distributed for Lease No. 550:0318. Despite the Department's advertisement over the Internet, only two requests for quote submittal packages were received.

   9. Of the three quote submittal packages distributed, the Department received only one documented quote in response to the advertisement for the Toll Office.

   10. Atlantic Investment submitted a Quote Submittal Form to the Department in late October for office space in North Fort Lauderdale.

   11. Atlantic Investment became aware of the Department's advertisement for lease space from Sheldon M. Schermer, employed by Atlantic Investment as its real estate agent. Mr. Schermer learned of the Department's need for lease space from an advertisement placed on the Internet.

   12. On November 8, 1999, the Department informed Atlantic Investment via Sheldon M. Schermer, Real Estate Agent for Atlantic Investment, of the Department's intent to reject all quotes and re-advertise for Lease No. 550:0318. This decision was not arbitrary, capricious, fraudulent, or dishonest and well within the Department's discretion and procedures for negotiated leases. The basis for the decision was the Department's modification of the lease specifications pursuant to a recommendation by DMS to modify the lease space terms to

       hopefully generate more interest and more quotes. In a competitive negotiation, DMS was aware of agencies who modified leases and advertised as many as five times before three documented quotes were received.

   13. Moreover, the evidence showed that the Broward County commercial real estate market could easily generate three quotes for the space required by the Toll Office.

       CONCLUSIONS OF LAW

       
       

   14. The Division of Administrative Hearings has jurisdiction over this subject matter and the parties to this action pursuant to Sections 120.569 and 120.57(3), Florida Statutes.

   15. Atlantic Investment has the burden of proof to establish entitlement to an award of the lease. Florida Dep't of Transportation v. J.W.C. Co., Inc., 396 So. 2d 778 (Fla. 1st

       DCA 1981).

       
       

   16. "Bid" protest proceedings, such as the case at bar, are governed by Section 120.57(3)(a)-(f), Florida Statutes. The scope of review is whether the purpose of the competitive bid or negotiation process has been subverted. The sole responsibility of the Administrative Law Judge in a rejection of all quotes case is to ascertain whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly. Dep't of Transportation

       v. Groves-Watkins Constructors, 530 So. 2d 912, 914 (Fla. 1988).

       
       

       See also Section 120.57(3)(f), Florida Statutes.

       
       

   17. Agency action has been held to be arbitrary where it is not supported by facts or logic or is despotic. Agrico Chemical Company v. Dep't of Environmental Regulation, 565 So.

       2d 759, 763 (Fla. 1st DCA 1989). However, upon review, an agency's action need only show a rudimentary rationality to be supportable. Adam Smith Enterprises, Inc. v. Dep't of

       Environmental Regulation, 553 So. 2d 1260, 1263 (Fla. 1st DCA 1989).

   18. Section 255.249(2), Florida Statutes, requires the Department to establish procedures for the securing of at least three documented quotes for a lease that is not required to be competitively bid.

   19. Procedures established pursuant to Section 255.249(2), Florida Statutes, by DMS for the lease of space less than 5,000 square feet are provided in Chapter 2 of DMS's Real Property Leasing Manual (1996). As set forth in the manual, new leases for space less than 5,000 square feet may be obtained through direct negotiation with prospective lessors. Quotations must be secured from at least three different sources. The three documented quotations must then be submitted by the Department to DMS along with the completed lease agreement to be reviewed and accepted prior to the execution and award of the lease.

   20. Consistent with procedures established in DMS's Real Property Leasing Manual regarding the lease of space less than 5,000 square feet, the Department's manual titled Processing Leases for Real Property, DOT Topic No. 375-040-900-e, requires that a minimum of three documented quotes be obtained for a lease not competitively bid, to negotiate a lease for space in the private sector.

   21. In this case, only one quote was submitted. There were no special circumstances to justify the Department waiving its three quote requirement. Atlantic Investment failed to demonstrate by competent, substantial evidence that the Department acted fraudulently, arbitrarily, illegally, or dishonestly in rejecting Atlantic Investment's quote for Lease No. 550:0318.

   22. On the contrary, the Department's decision was consistent with the applicable statutes, rules, policies, and procedures. Kohno Corporation, U.S.A. v. Dep't of Transportation, DOAH Case No. 92-2731BID (June 16, 1992) (Department's action in rejecting all quotes where the Department failed to receive three responsive quotes not fraudulent, arbitrary, illegal, or dishonest).

   23. Atlantic Investment failed to allege any facts in support of a finding by the Administrative Law Judge that the Department's decision to reject all offers was fraudulent,

arbitrary, illegal, or dishonest. Testimony at final hearing was rife with conjecture. The basic premise underlying Atlantic Investment's argument was that the lease at issue was actually competitively bid and where only one bid is received "the Department is, in essence, stuck with that response." The position was not supported by either fact or law. The protest should be dismissed.

RECOMMENDATION

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

is

RECOMMENDED:

That a final order be entered dismissing the Petitioner's

protest.

DONE AND ENTERED this 14th day of April, 2000, in Tallahassee, Leon County, Florida.

DIANE CLEAVINGER

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 14th day of April, 2000.

ENDNOTE

1/ During the 1999 Legislative Session, the legislature changed the threshold amount of space requiring competitive bidding from 3,000 to 5,000 square feet. The Department of Management Services Real Property Leasing Manual (1996) has yet to be amended to reflect the change in the statute. However, the leasing manual was interpreted to include the statutory changes.

COPIES FURNISHED:

Randall L. Leshin, Esquire

Law Offices of Randall L. Leshin 1921 East Atlantic Boulevard Pompano Beach, Florida 33060

Brian A. Crumbaker, Esquire Brian F. McGrail, Esquire Department of Transportation 605 Suwannee Street

Haydon Burns Building, Mail Station 58 Tallahassee, Florida 32399-0458

Thomas F. Barry, Secretary Attention: James C. Myers, Clerk Department of Transportation

605 Suwannee Street

Haydon Burns Building, Mail Station 58 Tallahassee, Florida 32399-0458

Pamela Leslie, General Counsel Department of Transportation 605 Suwannee Street

Haydon Burns Building, Mail Station 58 Tallahassee, Florida 32399-0458

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

10 days from the date of this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the Final Order in this case.

Docket for Case No: 00-000224BID

Orders for Case No: 00-000224BID