FLORIDA DEPARTMENT of CORRECTIONS Governor JEB BUSH Secretary An Equal Opportunity Employer JAMES R. MCDONOUGH 2601 Blair Stone Road + Tallahassee, FL 32399-2500 http://www.de.state fl.us September 4, 2007 The Honorable Harry L. Hooper Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida, 32399-3060 Re: Verizon Business Network Service, Inc. v. Department of Corrections/Global-Tel Link Corporation v. State of Florida, Department of Corrections, Case Nos. 072468BID and 07-2469BID Dear Judge Hooper: Pursuant to the Court’s Recommended Order, enclosed is a copy of the Final Order entered by Secretary McDonough on August 31, 2007. Also enclosed are copies of the Exceptions to the Recommended Order filed with the Department’s Agency Clerk by GTL, Verizon, PCS, and the Department. Respectfully, Jescern¥. Maphana— Susan P. Stephens Assistant General Counsel Department of Corrections Enclosures: as noted ce (w/oencl.): W. Robert Vezina, III Robert H. Hosay Allan P, Clark/John Tucker Gary Perko Brian Newman/Cynthia Tunnicliff STATE OF FLORIDA DEPARTMENT OF CORRECTIONS VERIZON BUSINESS NETWORK SERVICES, INC., on behalf of MCI COMMUNICATIONS, INC., d/b/a VERIZON BUSINESS SERVICES, Case No. 07-2468BID DC Case No: Petitioners, vs. DEPARTMENT OF CORRECTIONS, Respondent, and SECURUS TECHNOLOGIES, INC., AND PUBLIC COMMUNICATIONS SERVICES, INC., Intervenors GLOBAL-TEL LINK CORPORATION Case No. 07-2469BID ; DC Case No: Petitioner, vs. DEPARTMENT OF CORRECTIONS, Respondent, and SECURUS TECHNOLOGIES, INC., AND PUBLIC COMMUNICATIONS SERVICES, INC., Intervenors FINAL ORDER é 77) fy ins “* Upon review of the record, the Florida Department of Corrections nerebiensers this Final Order pursuant to sections 120.569 and 120.57, F.S. I. PRELIMINARY STATEMENT This cause is before the Department of Corrections on review of a Recommended Order issued by the assigned Administrative Law Judge, Harry L. Hooper, of the Division of Administrative Hearings (DOAH). On July 10-13, 2007, a formal hearing was conducted in this cause, and on August 13, 2007, the Administrative Law, Judge (ALJ) submitted his recommended order to the Department, a copy of which is attached hereto and incorporated herein by reference as amended by exceptions adopted in this order. Petitioner Verizon Business Network Services, Inc., on behalf of MCI Communications, Inc., d/b/a Verizon Business Services (Verizon) filed exceptions to the recommended order on August 23, 2007. Respondent Department of Corrections (Department) filed exceptions to the recommended order on August 23, 2007. Petitioner Global Tel Link Corporation (GTL) filed exceptions to the recommended order on August 24, 2007.. Intervenor Public Communications Services, Inc. (PCS) filed exceptions on August 24, 2007. The following abbreviations for citations to the record are used herein: T = Transcript of the final hearing; Ex. = Exhibits; RO = Recommended Order. i. RULINGS ON PETITIONER VERIZON’S EXCEPTIONS A. Securus’s non-responsiveness to local call control requirements in ITN Addendum #1 1. The ALJ erroneously equated local call control with redundancy and no competent evidence supports a finding that Securus was responsive to the local call requirement in Addendum #1 to the ITN. Petitioner Verizon takes exception to paragraph 60 of the RO (including subparagraphs 60c, 60d, 60e, 60f, 60g, 60j and 60k) to the extent that it finds that Securus’ proposal was responsive to the requirement in ITN Addendum #1 that call control equipment be located at each major institution (except Gainesville CI). There is evidence in the record to support this finding. In its ITN reply Securus agreed to provide call control at each site as required by the Q&A 67 of the ITN. (Ex. 65, Tab 7; T 865-66, 870). Securus offered both a central and local system. (Ex. 65, T 875-876). Securus’ ITN reply and BAFO demonstrate that if the central system fails, local call control takes over and continues to provide all functionality at the local site. (Ex. 65; T 877, 948). All equipment required to process calls on site in the event of a state-wide or region-wide system failure was offered to be placed at each correctional facility. (T 882, 894). Securus addressed its provision of a premises based component of an overall solution, stating that it will provide premises based hardware as a part of its solution and will provide on-site call processing to continue in the event central call processing stops. (Ex. 65 at 52; T 889). This exception is DENIED. Petitioner objects to the findings in subparagraphs 60c, e and g that there is no requirement for a premise-based system. This subparagraph references testimony of Mr. Dupree regarding the Q&A session and the subsequent review process. This finding is supported by the record. The words ‘premise-based’ do not appear in the specification. (T 743). There was never intent to limit vendors to the type of equipment or system that the Department currently has in place. The objective of the ITN was to provide flexibility to determine the solution for achieving a dictated function. (T 745). The Department was more concerned with the function than the form, and as Mr. Dupree testified, it would be perfectly acceptable if some vendor has invented “some magic box that does everything” and.duplicates the services the Department desired. (T 346). This is the intent expressed in the published answer to question 67 that became a part of the ITN (T 743-745). This exception is DENIED. Petitioner objects to the finding in 60d that control equipment does not equate to premise based... This finding is supported by the record in this case. The ITN afforded vendors the flexibility of innovation, as long as all of the local call control features or functionality was provided at the local site in the event of a statewide or regionwide system failure. (T 346, 381). Securus’ offer complied with that requirement. (T 926-927). Also, see analysis in response to exceptions to 60c, e and g above. This exception is DENIED. Petitioner Verizon takes exception to the finding in 60f, contending that there is an implicit finding that the central system database and call control equipment are equivalent or one and the same. As stated in the response to exceptions to 60c, e and g, there is no requirement for a premise-based system. Securus’ proposal allows for the local site to control calls without connection to the central site. (T 948). Securus’ local call control or premises based solution can function as a stand-alone device at a facility in the event that the centralized part of SCN is unresponsive. (T 894). This exception is DENIED. Petitioner Verizon takes exception to the finding in subparagraph 60j that Securus was responsive to the requirements of the ITN with regard to redundancy, and the conclusion that the time for challenging Securus’ responsiveness passed when no participant challenged the Notice of Intent to Negotiate. There is record evidence to the support the finding addressing redundancy. Securus offered both a central and local system. (Ex. 65, T 875). Securus addressed its provision of a premise-based component of an overall solution, stating that it will provide premise-based hardware as a part of its solution and will provide on-site call processing to continue in the event central call processing stops. (Ex. 65 at 52; T 889). An agency has wide discretion in determining that an ITN reply or BAFO is responsive. See Liberty County v. Baxter’s Asphalt and Concrete, Inc., 421 So. 2d 505, 507 (Fla. 1982). This exception is DENIED. As to the point of entry for challenge issue, this will be more fully addressed in the analysis of Petitioner Verizon’s exception A 2. below. | This exception is DENIED. Petitioner Verizon objects to the finding in subparagraph 60k that Securus’ response was not contrary to governing statutes, rules or policies, or the solicitation specifications. Competent substantial evidence exists in the record to support the finding that Securus was responsive to the call control equipment requirement. Testimony indicates that the intent of the requirement was not that all equipment be premise-based, but to allow vendors to determine the solution for achieving a dictated function, i.e., call control. The Department was satisfied that this intent had been achieved by the proposal of a non-premise-based system. ( Ex. 3; T 742-745). For this reason and for reasons stated in the analysis of the above exceptions, this exception is DENIED. 2. The Department must reject the ALJ’s recommended conclusion that the time for challenging Securus’ responsiveness was when the Department issued its notice of intent to negotiate. . Petitioner Verizon takes exception to findings 39, 40 and 60j in which the ALJ concluded that the time for challenging Securus’ responsiveness passed when no participant successfully challenged the Notice of Intent to Negotiate. Petitioner contends that, although characterized as findings of fact, they are in actuality conclusions of law. In the case cited by Petitioner Verizon, the agency did not determine responsiveness prior ’ to issuance of the notice of intent to negotiate. Thus, this determination had to be made at a point later in the process. In this case, the Department made a finding of responsiveness at the time of review of the responses to the ITN. (T 718). At a public opening the Bureau of Purchasing and Supply reviewed the ITN replies for the mandatory responsiveness requirement. The Department determined all six proposals to be responsive. (T 718). Since the determinations were made at this time, there was no need to make further findings of responsiveness at a later point in the process. The only technical evaluation required by the ITN specifications and 287.085(3), Florida Statutes, is at the initial stage before the vendors are reduced to those with whom the state intends to negotiate. The notice of intent to negotiate, like the ITN and addendum, contained statutorily required language putting vendors on notice that they must file a notice of intent to protest within 72 hours of the posting of the Notice and that failure to do so would constitute a waiver of their right to a proceeding under Section 120.57(3), Florida Statutes. (Securus Exhibit 4: Notice of Intent to Negotiate). Whether characterized as a finding of fact or conclusion of law, there is record evidence to support this finding and the proceedings upon which the findings were based comply with the essential requirements of law. . Therefore this exception is DENIED. B. Securus’s non-responsiveness to Section 3.8.3 of the RBAFO Petitioner Verizon takes exception to finding 61, including subparagraphs 61k and 611, and 64, including subparagraphs 64¢,, 64d., 64f., 64g., 64h., 641., 64j., and 64k of the RO insofar as the finding that Securus’ proposal was responsive to the requirement in Section 3.8.3 of the RBAFO, which prohibited vendors from charging or passing . through to the customer any additional fees beyond a fixed “to connect” surcharge established by the Department and the per-minute rates proposed by the vendor. These findings are supported by record evidence. Securus reproduced in its BAFO a copy of the entire Scope of Service, Section 3 and included the statement: “Securus has read and will comply” after each separate specification contained in that Section. (Ex. 6). This statement was followed by an additional brief statement or description of the service to be provided. (Ex. 6). This additional verbiage was not required by the RBAFO. (Ex. 5). The Negotiation Team took this as superfluous language, concluding that once Securus had agreed to comply with the minimum terms and conditions that satisfied the RBAFO and ITN requirements. (T 440, 448, 453-454, 547, 318, 326). Section 3.8.3 of the RBAFO stated specifically that “there shall be no additional fees, surcharges, or other types of costs associated with collect or prepaid calls or for establishing prepaid accounts billed to either the Department or families and friends of inmates establishing prepaid accounts.” (Ex. 5). Securus, as with every other provision in Section 3, responded “has read and will comply” to this Section. (Ex. 6). They also acknowledged during their negotiation session, that they would not charge any fees for these services. (Ex. 5). Section 4.1.3 (Value-Added Services) of Securus’ BAFO does mention the possibility of fees; however, any fees noted were subject to the approval of the Department and applied to those value-added services, not the minimum requirements as set forth in the ITN and RBAFO. (Ex. 6, page 19; T 812-814). The evaluators felt this was apparent from reading the BAFO response and did not consider this a point of conflict with the specifications. ( T 481-482, 499-500, 550-551, 440). Therefore, this Exception is DENIED. . C. The ALJ erred in concluding that the Notice of Intent to Award is not contrary to the Department’s statutes or rules and policies, or to the proposed specifications Petitioner Verizon takes exception to the ALJ’s conclusion in paragraph 80 that “actions of the Department were not contrary to the Department’s statutes, or the Department’s rules or policies, or to the proposal specifications.” Petitioner contends that Securus’ ITN and/or BAFO was materially non-responsive to the local call requirements in ITN Addendom #1 and the prohibition against additional fees in ITN Section 3.8.3 and, therefore, should not have been evaluated by the Negotiation Team or otherwise considered for final contract award For reasons set forth in analysis of Petitioner Verizon’s exceptions A. and B., this exception is DENIED. Ill. RULINGS ON PETITIONER GTL’s EXCEPTIONS cee SS SS — —eeeaeeoeoeaaeem™»d A. Securus’ Non-Responsiveness 1. The requirement to allow use of credit cards for prepaid accounts with no fees. a. Exceptions to the findings of fact GTL takes exception to the ALJ’s overall finding im Paragraph 64 that Securus’ BAFO with regard to fees is responsive to the requirement that the vendor allow users to establish and fund prepaid accounts through the use of credit cards without additional fees. There is record evidence to support this finding. Securus’ ITN reply and BAFO indicated that they would comply with the No Fees for Credit Card Payments Requirement and not charge any fees. (Ex 165 at 192; Ex. 6 at 68; T 808). The Value- Added section of the RBAFO required vendors to offer features above and beyond the minimum requirements at no cost to the Department. (Ex. 5 at 22; T 812), Securus’ BAFO offered certain features at a cost, but only with the Department’s consent. (Ex. 6 at 19; T 814). That response does not modify Securus’ responses to ITN and RBAFO sections 3.8.3. This exception is DENIED. Petitioner GTL takes exception to subparagraph 64f that with respect to payment via credit cards, Securus agreed not to charge the fees associated with establishing and funding prepaid accounts with credit cards to the users. Securus indicated that it would comply with section 3 and took no express reservation. (Ex. 6 at 68; T 811). This exception is DENIED. Petitioner GTL takes exception to subparagraph 64g in that it finds that the payment options, including payment through credit card, ser forth in Section 4.1.3 would be any faster that the payment via credit card set forth in Section 3.8.5 of Securus’ BAKO. The Recommended Order merely stated that Securus, under the heading Friends and Family Assistance, offered friends and family the opportunity to speed the prepayment process through payment of a convenience fee. No finding was made as to whether it actually was faster. This exception is DENIED. Petitioner GTL takes exception to the ALJ’s findings in subparagraphs 64h and 64j which held that because the Department was unlikely to allow Securus to charge a convenience fee, the Securus BAFO was therefore responsive on the additional fee issue. Securus indicated that it would comply with section 3 and took no express . reservation. (Ex. 6 at 68; T 811). This exception is DENIED. Petitioner GTL takes exception to the ALJ 's finding of fact in subparagraph 641 that Securus’ response to the ITN provides that Securus will allow for establishing and funding prepaid accounts via credit card without any additional fees. For reasons set forth in analysis of Petitioner GTL’s exceptions 1. and 2. above, this exception is DENIED, 10 GTL takes exception to the ALJ’s finding of fact in subparagraph 64] that “because any convenience charge benefiting Securus is contingent on the Department’s approval, the Securus BAFO with regard to fees is responsive and does not affect the competitive nature of the process. For reasons set forth in the analysis of GIL’s exception 1. above, this exception is DENIED. b. Exceptions to the conclusions of Law GTL takes exception to the ALJ’s conclusion of law in paragraph 80 that the actions of the Department were not contrary to the Department’s statutes, or the Department’s rules or policies, or to the proposed specifications to the extent that the ALJ concluded that the Department did not act arbitrarily, capriciously, or in a manner contrary to competition by not rejecting Securus’ BAF 0 as non-responsive and/or as a qualified proposal because Securus failed to unequivocally agree to allow users to establish and fund prepaid accounts with credit cards without paying any additional fees as required by Sections 3.8.3 and 3.8.5 of the RBAFO. Petitioner GTL also takes exception to paragraph 80 to the extent that the ALJ concluded as a matter of law that Securus’ narrative response in which it failed to specifically forego passing along additional fees to consumers for prepaid calls could be ignored by the Department when Securus checked the box above its narrative response that it would comply with the requirement. Securus agreed to be bound by all minimum requirements of the ITN and RBAFO. (Ex. 6). ll For this and other reasons set forth in the analysis of Petitioner Verizon’s exception B, this exception is DENIED. GTL takes exception to the ALJ’s conclusion of law in paragraph 80 that the actions of the Department were not contrary to the Department’s statutes, or the Department’s rules or policies, or to the proposed specifications to the extent that the ALJ concluded that the Department did not act arbitrarily, capriciously or in a manner contrary to competition by not rejecting Securus’ proposal as non-responsive to the prohibition against additional fees. Petitioner contends that Securus’ BAFO was materially non-responsive to these requirements and should not have been evaluated by the Negotiation Team or otherwise considered for final contract award. The RBAFO did not require narrative responses to the specifications of Section 3 as the vendors’ responsiveness to that section had been addressed in Part 1 as required by Section 287.057(3), Florida Statutes. (Ex. 2). The RBAFO did, however, require a narrative from vendors for RBAFO Section 4 addressing staffing plan, final implementation plan and value added services. (Ex 5 at 22). As to all other minimum requirements (including Section 3), the RBAFO required only an acknowledgement that the vendor has read and would comply with all minimum requirements and specifications. (Ex. 5 at 24). This exception is DENIED GTL takes exception to the ALJ’s recommendation that GTL’s protest be dismissed For reasons stated in the analysis of the foregoing exceptions, this exception is DENIED. 2. The requirement for local call equipment at each major institution a. Exceptions to the Findings of Fact Petitioner GTL takes exception to paragraph 65 in which the ALJ finds that Securus was responsive to the ITN with regard to redundancy. Securus’ ITN reply and BAFO demonstrated that if the central system fails, local call control takes over and continues to provide all functions at the local site. (Ex. 65; T 877). For reasons stated in the analysis of Petitioner Verizon’s exception Al, this exception is DENIED. GTL takes exception to the ALJ’s implicit finding in subparagraph 60f that the central database and call control equipment are one and the same, In its ITN reply, Securus agreed to provide call control equipment at each site as required by the Q&A 67 of the ITN. (Ex 5, Tab 7; T 865-66, 870). Securus offered both a central and local system. Ex. 65; T 875. Securus’ ITN reply and BAFO demonstrate that if the central system fails, “tocal call control takes over and continues to provide all functionality at the local site. (Ex. 65; T. 877). Securus’ solution allows for the local site to control calls without connection to the Securus central site and with all the requisite call processing functions. (Ex. 65; T. 877, 948). Securus sets forth in its BAFO at section 3.7.13 that its Local Call Control or premise-based solution can fanction as a stand-alone devise at a facility in the event that the centralized part of Securus’ Secure Call Network (SCN). (Ex.6; T 894). In its BAFO narrative, Securus addressed Local Call Control functions and abilities: “Our premise based solution utilizes the power of Secure Call Network (SCN) which allows for efficiencies in call control and storage but can function as a stand-alone device in the event that SCN is unresponsive. (Ex. 6 at 53; T 894). This exception is DENIED. GTL takes exception to the ALJ’s findings in subparagraphs 60¢ and g that there is no requirement for a premise-based system. For reasons set forth in the analysis of Petitioner Verizon’s exception A1, this exception is DENIED. GTL takes exception to the ALJ’s finding in subparagraph 60j that Securus was responsive to the requirements of the ITN with regard to redundancy. For reasons set forth in the analysis of Petitioner Verizon’s exception A1, this exception is DENIED. b. Exceptions to the Conclusions of Law GTL takes exception to the ALJ’s conclusion of law in subparagraph 60j that Securus was responsive to the requirements of the ITN with regard to redundancy, and in 60k that Securus’ response was not contrary to the Department’s governing statutes, the Department’s rules or policies, or the solicitation specifications. For reasons set forth in the analysis of Petitioner Verizon’s exception Al, this exception is DENIED. GTL takes exception to the ALJ’s conclusion of law in 60j that the time for- challenging Securus’ responsiveness passed when no participant successfully challenged the Notice of Intent to Negotiate. For reasons set forth in the analysis of Petitioner Verizon’s exception A1, this exception is DENIED. 14 B. The Fundamentally Flawed Evaluation Process 1. The requirement to prepare a summary report. a. Exceptions to the Findings of Fact Petitioner takes exception to the ALJ’s findings of fact in paragraph 24 that Ms Atwood testified that it was intended that the summary report of negotiation and recommendation for award was to be presented to Secretary McDonough by the Bureau of Procurement and Supply staff, not the negotiating team. This finding is supported by record evidence. The testimony of Ms. Atwood and the Response Evaluation Manual only require the Negotiators to participate in phases 2 and 8 of the process. (T 720; Ex. 4). The alleged procedural errors are not material as the Secretary was provided with the negotiators’ average scores which reflected their determination of best value. Secretary McDonough’s testimony is that he would have nevertheless determined that Securus provided the best value because of its ability to provide the deliverables and because of its low price and high commission. (Ex. B. 11-17, 34-36, 66, 84, 91). ‘No evidence or testimony was presented that the absence of a summary report prepared at the hands of the Negotiation Team. prejudiced the petitioners or other respondents or otherwise compromised the ITN process. GTL takes exception to the finding of fact in paragraph 25 that to the extent that the ITN appeared to require the negotiating team to prepare a summary report of negotiation and to recommend an award, it is in error. It is the Department’s procurement section that was to supervise the ITN process and to forward any necessary material to the Secretary. (T 720). Although the negotiators themselves did not prepare a summary other than their own score sheets, a summary was prepared and the Petitioners have not 15 alleged that the summary was inaccurate. As to the negotiators recommendations, some negotiators considered their BAFO score sheets as a recommendation and the scoring sheets themselves lend to that conclusion. (T 484, 555). But regardless of how the scoring sheets are characterized, a failure by the negotiation team to prepare a report and lack of a formal statement titled ‘recommendation’ must prove prejudicial for the Petitioner to prevail. Juvenile Services Program, Inc., v. Florida Department of Juvenile Justice, Case No. 96-5982BID, 1997 WL 1052891, at 21 (DOAH April 23, 1997). See also Statistica, Inc., v. G. Christopher, 102 F.3d 1577, 1581 (Fed. Cir. 1996). (“A protestor must show not simply a significant error in the procurement process, but also that the error is prejudicial, if it is to prevail in a bid protest.) The alleged procedural | errors are not material because Petitioners did not allege that the summary report was inaccurate. That the author was the procurement manager and not the negotiators is of no consequence because the report was complete and accurate. Additionally, the lack of a formal recommendation by the negotiators was also immaterial because Secretary McDonough was provided the negotiators’ average scores, which reflected their determination of best value. Even if these errors could be couched as “material”, Secretary McDonough’s testimony leads to the conclusion that he would nevertheless have determined that Securus provided the best value because of its ability to provide the deliverables and because of its low price and high commission. (Ex. B ~ Deposition of Secretary McDonough 11-17, 34-36, 66-67, 84, 91). GTL takes exception to the ALJ’s finding of fact in paragraph 24 that the response evaluation and review manual states that the negotiating team was to participate only in two of the ten phases of the process, to the extent that these findings imply that 16 the response evaluation and review manual or ITN in some way indicate that the negotiating team was not required to make a recommendation of award after evaluation and ranking of the BAFOs. The record shows that the Department considered the ranking sheets completed by the negotiation team to be the team’s recommendation. (T 768-769; 650; 484; 540). For this reason and for reasons set forth in the analysis of GTL’s exceptions B.1., this exception is denied. GTL takes exception to the ALJ’s finding in subparagraph 67a that the language in section 6.3 of the ITN and the response and evaluation manual for the ITN entitled Phase 9, Best and Final Offers, was placed in those documents in error. This finding is supported by record evidence. Both Ms. Atwood and Ms. Bassett testified that this was a mistake, that it is the Procurement Bureau’s normal practice to prepare a summary of the procurement, which they did in this instance. (T 639-640, 720). GTL excepts to the ALJ’s finding of fact in subparagraph 67b that it is clear from the four corners of the ITN that it was the procurement staff that would tabulate the negotiation team’s ranking subsequent to the evaluation of the BAFOs, and it is clear that it was the procurement staff’s job to put the matter in a form that would permit Secretary McDonough to review the results and choose a contractor to the extent that the finding implies that anyone other than the negotiation team was to recommend the award, or that the procurement staff could make its own substantive recommendation apart from or in addition to the negotiating team. Record evidence supports this finding. The ITN clearly states that the Negotiation Team would complete Phase 2 (Review and Evaluation of Statement of Qualifications) and Phase 8 (Negotiations), (Ex. 2, at 57). There is no 17 requirement that the Negotiation Team score the Best and Final Offers. (Ex.2). The ITN does contain a statement that the Negotiation Team “will prepare a summary report of negotiations and recommend an award.” (Ex. 2), Both Ms. Atwood and Ms. Bassett testified that this was a mistake, that it is the Procurement Bureau’s normal practice to prepare a summary of the procurement, which they did in this instance. (T 639-640; 720. A “summary report” is not defined in the ITN. (Ex. 2). There is no evidence or testimony that the absence of a summary report prepared at the hands of the Negotiation Team prejudiced the Petitioners or other respondents or otherwise compromised the ITN process. A summary report of negotiations and recommendation for award will be presented to the Secretary for final approval prior to posting of the agency’s decision. (Ex. 4). This exception is DENIED. GTL takes exception to the finding of fact in paragraph 67h that the ITN process was not fundamentally flawed. . For reasons set forth in the analysis of Petitioner GTL’s exception B.1., this exception is DENIED. b. Exceptions to Conclusions of Law Petitioner takes exception to conclusions of law 80 and 67h. These findings are supported by record evidence. (T. 639-40; 720) This exception is DENIED. GTL takes exception to the ALJ’s conclusion of law in paragraph 80 to the extent that the ALJ held that the Department did not violate its own ITN requirement that “after receipt of the BAFOs, the Negotiation Team will prepare a summary report and recommend an award.” This finding is supported by record evidence. (T 639-40; 720). For reasons set forth in the analysis of Petitioner GTL’s exception BL, this exception is DENIED. GTL takes exception to the ALJ’s conclusion of law in paragraph 80 to the extent that the ALJ held that it was not arbitrary, capricious and contrary to competition for the Department’s procurement staff to take the recommendation of award out of the hands of _ the Negotiation Team and to inject the procurement staff’s own subjective opinions outside of the evaluation process set forth in the ITN. For reason set forth in the analysis of Petitioner GTL’s exceptions B.1. and B.2., this exception is DENIED. 2. Documents presented to the Secretary and Matters considered by the Secretary.. a. Findings of fact. GTL takes exception to the ALJ’s finding in paragraph 53 that the information contained in the COA was objective. This finding is supported by record evidence. In preparing the Courses of Action document, Ms. Bassett used many objective factors that she obtained from multiple sources, including the ranking sheets from the negotiation team, discussions with her staff and the negotiation team, her own observations during the negotiations, the BAFO documents and the ITN and replies to the ITN. (T 621-631; Ex 10). This exception is DENIED. 19 GTL takes exception to the findings of fact in paragraph 56 that “Ms Seay presented these materials to Secretary McDonough and discussed the results with him” to the extent that the finding implies that “these materials” included the ITN summary report, the Best and Final Offer Ranking Sheets, and the Scoring Summarization sheet. This exception only applies to a minor part of finding 56. The actual language in finding 56 states: Ms. Seay presented these materials to Secretary McDonough and discussed the results with him. He decided that Securus would provide the best value to the Department and made a notation to that effect on the COA that was presented to him. That document was misplaced. Accordingly, he instructed Ms. Seay to pose a Notice of Agency Decision stating the Department’s intent to award the ITS contract to Securus. In a memorandum of May 25, 2007, Secretary McDonough stated that the offer by Securus”...is the best value to the State, since it provides the lowest rate for customers combined with the highest commission rate to the State and meets the service delivery requirements in the Invitation to Negotiate. (RO at 32). -* The conclusion complained of in the exception is not found in the actual finding being challenged. Additionally, there is record evidence that the described documents were utilized in preparation of the course of action document. (T 621-631, Ex. 10). Secretary McDonough’s testimony is that, upon review of the negotiators average scores which reflected their determination of best value, he determined that Securus provided the best value because of its low price and high commission. (Ex.B 11-17, 34-36, 66, 84, 91). This exception is DENIED. GTL takes exception to the ALJ’s finding of fact in paragraph 5 that for all purposes of the ITN, Verizon and GTL were considered to be separate entities. The subject of GTL’s purchase of Verizon’s inmate telephone business was raised during the review of the ITN replies after evaluations had been done on each of the six 20 replies. (T 759). The same issue was raised later in the negotiation sessions with GTL and Verizon, but the Department was informed by GTL’s counsel that they were legally two separate entities. (T 519; Ex. 1). The Department treated them as such during the negotiations and BAFO process, although it was a fact noted later when the Secretary was briefed on the procurement. (T 629; 520). This factor was a very minor issue at most for the Secretary and one that he did not consider germane to his decision to award to Securus. (Exh. B; Deposition of Secretary McDonough, pages 80-81). This exception is DENIED. GTL takes exception to the finding of fact in paragraph 58 that “the staffing plan, the final implementation plan and transition date schedule, the commission rate, and value-added services were all important factors in Secretary McDonough’s decision.” This finding is supported by record evidence. (Ex. B; Deposition of Secretary McDonough pages 11- 17, 34-36, 66, 84, 91). This exception is DENIED. GTL takes exception to the ALJ’s finding of fact in subparagraph 67c that Secretary McDonough memorialized his reasons for awarding the contract to Securus in a memorandum dated May 25, 2007. This finding is supported by the record. Secretary McDonough made a notation on the Courses of Action Sheet to document his decision on the date that Ms. Seay and he met in April, 2007; however that document was apparently lost. (Ex. B - Deposition Secretary McDonough pages 27-29). When the Secretary learned that the document could not be found, he directed his staff to prepare a memorandum as a recordation of the 21 basis for his decision. (Ex. B - Deposition of Secretary McDonough pages 55-57; Ex. 12). This exception is DENIED. GTL takes exception to the ALJ’s finding of fact in subparagraph 67d, contending that the ALJ failed to address GTL’s contentions regarding the equal weighting of price. Prior to issuing the RBAFO document, the Department did an extensive analysis of different scenarios for the pricing methodology using records from the previous year to ensure that it had a good estimate of what type of revenue could be generated by a Commission paid to the Department. (T 494-496). The Department ended up setting a “to connect” surcharge and rate that varied depending on the nature of the call (collect or prepaid) and asked respondents to give a proposed rate per minute for each-call type and a set commission rate. (Ex. 5). This change was also vendor-driven as all respondents indicated during negotiations that they were not happy with the initial blended rate proposed in the ITN. (T 730). The pricing methodology chosen is reflected in the RBAFO at Section 4.1.4, which, in pertinent part, states: It is the Department’s intention to generate the highest percentage of revenue for the State commensurate with the lowest surcharge and rates per minute for telephone calls for inmates and families similar to those available to the public-at-large. Therefore, based on the initial blended rates proposed the Department has determined the most advantageous pricing methodology would be to establish a “to connect” surcharge and rate per minute for local and local extended area calls and to request submission of best and final offers for fixed rates per minute for interlata, intralata and interstate calls. The most favorable initial blended rate proposed by a Respondent to the ITN was $0.125 cents per minute with a proposed commission of 30% (Securus’ Initial Offer). Based upon an established “to connect” charge of $1.20 for 22 Collect and $1.02 for Prepaid calls, the Department is anticipating receiving, in the BAFO, final proposed rates per minute significantly lower than the aforementioned rate of $0.125 along with a commission in keeping with the intent set forth above. Therefore Respondents are asked to submit the lowest rate per minute and the highest commission they can offer, as set forth in Section 3.83 and outlined on the Price Tables 1 (Collect Calls) and Price Table 2 (Prepaid Calls). (emphasis added) (Ex. 5, Page 23). The language in Section 4.1.4 of the RBAFO is consistent with the ITN language that describes the Department’s intention with regard to pricing: Specifically, Section 2.5 of the ITN provided that: It is the Department’s intention, through the ITN process, to generate the highest percentage of revenue for the State, while ensuring a quality telephone service with reasonable and justifiable telephone call rate charges for inmates and families similar to those available as to the public at large. Initial Cost Proposal Pricing should be submitted with the most favorable terms the Respondent can offer in terms of highest commission and lowest phone rates. Initial cost points will be awarded on weighted criteria as established in Section 6 . .. Commission structure and telephone rates will be negotiated. Best and Final Offers from vendors will be_solicited to establish the lowest_possible_rates_and surcharges accompanied by the highest percentage of revenue to be paid to the Department. (emphasis added) (Exh. 2, Page 10). Nearly identical language was contained in Section 5.9 of the ITN, making the Department’s intent on pricing abundantly clear to any respondent. The Department’s expressed intention that it wanted the lowest possible telephone call rate for inmates and their families, the users of the telephone service, together with the highest possible rate of commission to be paid to the Department, is reflected in the testimony of the Secretary of the Department, James R. McDonough. Secretary McDonough emphasized that, 23 throughout the process, his overriding concern was that the cost to the inmates’ families combined with the rate of commission to be paid to the State. (Ex. B - Deposition of Secretary McDonough, pages 11-17, 34-36, 66-67, 84, 91). 3. Qualifications of evaluators. GTL takes exception to the ALJ’s conclusion of law in paragraph 80 to the extent that the ALJ concluded that the Department’s ITN process complied with section 287.057(17), Florida Statutes. Record evidence supports the finding that the process complied with s. 285.057(17), Florida Statutes, which addresses the qualification of evaluators for category 4 purchases. (T 714-715, 732, 617-18, 515, 304-306, 726, 505, 423, 543, 383, 494-495, Ex. 5). This exception is DENIED. 4. Weighing evaluation components GTL takes exception to the ALJ’s conclusion of law in paragraph 80 to the extent that the ALJ held that the Department did not violate its own proposal specifications by failing to weigh the two components of price, per minute rate and commission to be paid by the State, equally as required in the ITN and RBAFO. For reasons provided in analysis of Petitioner GTL’s exception B.2., this exception is DENIED. 5. Contract File GTL takes exception to the ALJ’s conclusion of law in paragraph 80 to the extent that the ALJ held that the Department did not violate the requirements of Section 287.057 (3), Florida Statutes, specifically, that the contract file must contain a short plain statement that explains the basis for vendor selection. 24 This finding is supported by the record. The memorandum dated May 25, 2007 serves as a statement of the basis for Secretary McDonough’s decision. “My decision that the Department should post an intent to award the Statewide Inmate Telephone Services contract to Securus Technologies, Inc. was made after reviewing the attached documentation and was based on the fact that Securus’ offer is the best value to the State, since it provides the lowest rate for customers combined with the highest commission rate to the State and meets the service delivery requirements in the Invitation to Negotiate.” (Ex. B - Deposition of Secretary McDonough, pages 55-57; Ex. 12). However, it was reasonable for the Department to determine that it does not have a contract file as defined in Section 287.057(3)(b) since it does not yet have a contract on this matter. Even if the Department failed to comply with this section, the absence of a short and plain statement is without remedy under Section 287.057(3)9b) and Petitioners have not established any prejudice on this issue. This exception is DENIED. IV. RULINGS ON INTERVENOR PCS’S EXCEPTIONS Intervenor PCS takes exception to finding of fact 39 in which the ALJ finds that the time to complain about the selection of the winners of Part 1 was when the Notice of Intent to Negotiate was published. For reasons set forth in the analysis of Petitioner Verizon’s exception 2, this exception is DENIED. 25 V.___ RULINGS ON RESPONDENT’S EXCEPTIONS 1, Presentation of materials to the Secretary. Respondent takes exception to Findings of Fact 52 and 53 to the extent that they do not state that the Negotiating Team’s averaged scores were presented to the Secretary as part of the COA document, thus as a matter of fact the Negotiation Team’s individual recommendations were given to the Secretary and were part of his decision making process. (T 621-631; Ex. 10). Because the statement made by Respondent more accurately reflects the process as evidenced by the record in this case, this Exception is GRANTED. The following statement is added to Finding 53 of the Recommended Order: “The scoring summary sheet was provided to the Secretary for review.” 2. Preparation of summary report Respondent contends that Finding of Fact 25 overlooks the undisputed evidence that the absence of a summary report prepared by the hands of the Negotiation Team did not prejudice the Petitioners or other respondents or otherwise compromised the ITN process, There is record evidence to support Respondent’s contention. Ms. Bassett, with her procurement staff, prepared a report on the negotiation process and forwarded the report to her immediate supervisor, Millie Seay. (T 620): The “COA” format is routinely used by the Department as a briefing document and a sumunary of the process to inform the Secretary of the various options available to him in making a procurement decision. (T 620; Ex. B-Deposition of Secretary McDonough at 19). The first column of the COA contained a summary of the BAFO process including the categories used for ranking the 26 BAFOs, the averaged rankings taken from the ranking sheets and the specific rates and commission proposed in the BAFOs. (T 621). The next two columns were proposed courses of action. (T 625, 631). The first course of action was “Secretary considers the rankings and selects vendor based on Best Value decision.” (T 625). The second course of action was “Secretary selects Verizon based on rankings.” (T 632). The alleged procedural errors are not material because the Petitioners did not allege that the summary report prepared by procurement staff was inaccurate. Put differently, that the author of the report was the procurement manager and not the negotiators is of no consequence because the report was complete and accurate. Additionally, the lack of a formal. recommendation by the negotiators was also immaterial because Secretary McDonough was provided the negotiators’ average scores, which reflected their determination of best value. Secretary McDonough’s testimony leads to the inescapable conclusion that he would nevertheless have determined that Securus provided the best value because of its ability to provide the deliverables and because of its very low price and high commission. A review of the total record reflects that Petitioners did not allege or present evidence that prejudice resulted from the mere fact that the summary report was not prepared by the Negotiation Team. For this reason and reasons set forth in the analysis of Petitioner GTL’s exception B.1,, this exception is GRANTED. Finding 25 is amended to include the following statement: “The fact that the summary report was not prepared by the Negotiation Team did not prejudice any participant in the process or otherwise compromise the ITN process.” 27 3. Mistake as to CSRs Respondent contends that this finding overlooked evidence that despite Mr. deRemer’s admitted mistake in his notation regarding GTL’s mentioning of “CSRs,” that this mistake did not change the fact that GTL would still have been ranked a distant third even if it received the maximum amount of points for this category, since their average score was a 5.25, and that many other facts went into his ranking of the staffing plan and that his ranking would not have changed. While these statements are supported by record evidence, there is no allegation that this would have changed the ultimate outcome. Therefore, this exception is DENIED. 4. Fees. Respondent contends that subparagraphs 64a.-j. overlook the fact that Section 3 and Section 4 of the ITN and RBAFO are distinct and concern different services. Moreover, that Securus unequivocally agreed to abide by the Department’s requirement that no fees be passed on to friends and families when it stated it had read and would , comply with that requirement. As a matter of law, this was sufficient and thus it was not arbitrary or capricious for the Department to rely on the “read and will comply language” Furthermore, there was no requirement to provide a narrative as a matter of fact. This exception is supported by record evidence. The RBAFO did not require narrative responses to the specifications of Section 3 as the vendors’ responsiveness to that section had been addressed in Part 1 as required by Section 285.057(3), Florida Statutes. Section 4 did require narratives addressing the staffing plan, final implementation plan, and value-added services. (Ex. 5 at 22). Securus met the requirements of both sections by acknowledging that they would comply with all 28 minimum requirements and specifications for Section 3 and by providing narratives for Section 4. (Ex. 5 at 24). This exception is GRANTED. An additional finding will be added to paragraph 64 of the recommended order as follows: “k Sections 3 and 4 of the ITN and RBAFO are distinct and concern different services. Section 4 requires narrative statements while Section 3 merely requires a signed acknowledgement agreeing to comply with all minimum requirements and specifications. Securus met the requirements of both Section 3 and Section 4.” DETERMINATION An agency may not reject an ALJ’s findings of fact unless the agency first determines from a review of the entire record, and states with particularity in the order, that the findings of fact were not based upon competent substantial evidence or that the proceedings on which the findings were based did not comply with essential requirements of law. Section 120.57(1)(1), Florida Statutes; see also Florida Power and Light v. State of Florida, Siting Board, 693 So. 2d 1025, 1027 (Fla. 1* DCA 1997). An agency may not reweigh the evidence presented at formal hearing and substitute its findings for those of the ALJ. South Florida Water Management District v. Caluwe, 459 So. 2d 390, 394 (Fla. 4" DCA 1984). Accordingly, an agency must accept an ALJ's findings of fact if they are supported by competent substantial evidence in the record. Id. At 395. Only in extraordinary circumstances may an agency add findings of fact to a final order where they are not contained in the recommended order. Friends of Children y. Department of Health and Rehabilitative Services, 504 So. 2d 1345 (Fla. 1" DCA 29 1987). While an agency may remand a case to the administrative law judge to make supplemental findings of fact, such remands are not favored. Henderson Signs v. Department of Transportation, 397 So. 24 769 (Fla. 1* DCA 1981). Finally, an agency may not circumvent these requirements by simple characterizing an ALJ’s findings of fact as legal conclusions. Goin v. Commission on Ethics, 658 So. 2d 11318 (Fla. 1" DCA 1995). The ALJ’s Findings of Fact, as amended by this Order, are hereby adopted as the’ Findings of Fact of the Final Order and made a part hereof as if fully set forth herein. The agency is free to exercise its judgment and to reject the hearing officer’s conclusions of law. See. ¢.g., Macpherson v. School Board of Monroe County, 505 So. 2d 682 (Fla. 3% DCA 1987); Siess v. Department of Health and Rehabilitative Services, 468 So. 2d 478 (Fla. 2d DCA 1985); and Alles v. Department of Professional Regulation, 423 So. 2d 624 (Fla. 5" DCA 1982). However, an agency may modify or reject conclusions of law only when the agency has substantive jurisdiction over the statutes or rules involved. Section 120.57(1)(1), Fla. Stat. “When rejecting or modifying such conclusions of law or interpretation of administrative rule, the agency must state with particularity its reasons for rejecting or modifying such conclusion of law or interpretation of administrative rule and must make a finding that its substituted conclusion or law or interpretation of administrative rule is as or more reasonable that that which was rejected or modified.” Stokes v. State Board of Professional Engineers, 952 So. 2d 1224 (Fla. Ist DCA 2007). The ALJ’s Conclusions of Law are adopted as Conclusions of Law in this Final Order and made a part hereof as if fully set forth herein. 30 CONCLUSION After reviewing the complete record filed in this matter, it is accordingly ORDERED and ADJUDGED that the Recommended Order of the ALJ, as amended by this Order, is adopted. It is further ORDERED and ADJUDGED that the relief requested by Petitioners Verizon and GTL and Intervener PCS is denied. THIS ORDER CONSTITUTES FINAL AGENCY ACTION. PURSUANT TO 120.68(2), FLORIDA STATUTES, JUDICIAL REVIEW OF THIS PROCEEDING MAY BE INSTITUTED BY FILING A NOTICE OF APPEAL IN THE DISTRICT COURT OF APPEAL IN THE APPELLATE DISTRICT WHERE THE AGENCY MAINTAINS ITS HEADQUARTERS OR WHERE A PARTY RESIDES. SUCH NOTICE OF APPEAL MUST BE FILED WITH THE DISTRICT COURT OF APPEAL WITHIN THIRTY 30) CALENDAR DAYS OF THE DATE THIS ORDER IS FILED IN THE OFFICIAL RECORDS OF THE DEPARTMENT OF CORRECTIONS, AS INDICATED IN THE CERTIICATE OF THE AGENCY CLERK BELOW, OR FURTHER REVIEW WILL BE BARRED. gt DONE AND ORDERED this 3 | day of August , 2007, in Tallahassee, Florida. FILED - AGENCY CLERK| initiate__\, \\- AUG 3 1 2007 Lm AMES R. MCDONOUGH, SECRETARY 3 t 2 ; Department of Corrections Time po renc/ Oiales 2601 Blair Stone Road Department of Corrections | Tallahassee, Florida 32399-2500 Filed inthe official records of the Department of Corrections on this 3/ day of day , 2007. aeptthen ry Clerk 31 Copies furnished to: Susan P. Stephens, Esquire Karen E. Armstrong, Esquire Department of Corrections 2601 Blair Stone Road Tallahassee, Florida 32399-2500 Gary V. Perko, Esquire Wesley S. Haber, Esquire Hopping, Green and Sams, P.A. 123 South Calhoun Street Post Office Box 6526 Tallahassee, Florida 32314 Allan P. Clark, Esquire John A. Tucker, IV, Esquire Foley and Lardner One Independent Drive, Suite 1300 Post Office Box 240 Jacksonville, Florida 32202 Robert H. Hosay, Esquire Foley and Lardner, LLP 106 East College Avenue Highpoint Center, Suite 900 Tallahassee, Florida 32301-7732 W. Robert Vezina, III, Esquire Eduardo S. Lombard, Esquire Verina, Lawrence and Piscitelli, P.A. 413 East Park Avenue Tallahassee, Florida 32301 Brian A. Newman, Esquire Cynthia S. Tunnicliff, Esquire Pennington, Moore, Wilkinson, Bell and Dunbar, P.A. 215 South Monroe Street, Second Floor Post Office Box 10095 Tallahassee, Florida 32302-2095 James R. McDonough, Secretary Department of Corrections 2601 Blair Stone Road Tallahassee, Florida 32399-2500 32 . Kathleen Von Hoene, General Counsel Department of Corrections 2601 Blair Stone Road Tallahassee, Florida 32399-2500 33

Docket for Case No: 07-002469BID

Orders for Case No: 07-002469BID