STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

OPTIMUM TECHNOLOGY, INC., )

)

Petitioner, )

)

vs. )

)

DEPARTMENT OF HEALTH, )

)

Respondent, ) Case No. 11-0257BID

)

and )

) HEALTH INFORMATION DESIGNS, ) INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

Robert E. Meale, Administrative Law Judge of the Division of Administrative Hearings, conducted the final hearing in Tallahassee, Florida, on February 7, 2011.

APPEARANCES

For Petitioner: Seann M. Frazier, Esqire

David C. Ashburn, Esquire Greenberg Traurig, P.A.

101 East College Avenue Post Office Drawer 1838 Tallahassee, Florida 32302

For Respondent: Stephen C. Emmanuel, Esquire

Ausley and McMullen

123 South Calhoun Street Tallahassee, Florida 32301

Melissa Lloyd, Esquire Department of Health

Office of the General Counsel 4052 Bald Cypress Way, Bin A02 Tallahassee, Florida 32399-1703

For Intervenor: Mark W. Hodge, Esquire

Qualified Representative Chisenhall, Nestrud & Julian, P.A.

400 West Capitol Avenue 2840 Regions Center

Little Rock, Arkansas 72201 STATEMENT OF THE ISSUE

The issue is whether Respondent's notice of intent to award a contract for a Prescription Drug Monitoring System (PDMS) to Intervenor is, under section 120.57(3)(f), Florida Statutes, contrary to governing statutes, rules, policies, or solicitation specifications due to the nonresponsiveness of Intervenor's proposal or flaws in the scoring.

PRELIMINARY STATEMENT

By Request for Proposal for Prescription Drug Monitoring System, DOH 10-035, issued October 14, 2010 (RFP), Respondent solicited proposals for the PDMS described in the RFP. After receiving and evaluating proposals, on December 21, 2010, Respondent issued a notice of intent to award the PDMS contract to Intervenor.

By notice of protest dated December 23, 2010, Petitioner protested Respondent's intent to award the PDMS contract to Intervenor. By Formal Written Protest and Petition for Formal

Administrative Proceedings dated January 3, 2011 (Formal Written Protest), Petitioner alleged that Respondent's bid decision violates the bid specifications and Florida law in a manner that is clearly erroneous, contrary to competition, arbitrary, and capricious. Petitioner claimed that Respondent selected a bid that fails to comply with the material requirements of the bid specifications--specifically, RFP Section 4.21--due to the failure of Intervenor's proposal to itemize and explain costs.

Petitioner claimed that this failure to comply with the RFP rendered Intervenor's proposal nonresponsive and that this noncompliance was not a minor irregularity that Respondent could waive. Petitioner also claimed that Respondent's determination of the winning proposal relied upon the scoring of an evaluator that was arbitrary, capricious, clearly erroneous, and contrary to competition.

On January 26, 2011, Intervenor filed a Petition to Intervene of Health Information Designs, Inc. The petition states that Respondent proposes to award the PDMS contract to Intervenor, whose substantial interests would be determined in the subject proceeding. By Order entered January 27, 2011, the Administrative Law Judge granted the petition to intervene.

On January 27, 2011, Respondent filed a Motion to Strike a Portion of Optimum's Protest and Motion in Limine. On the same date, Petitioner filed a Motion for Protective Order. On

January 28, 2011, Respondent filed a Response to Petitioner's Motion for Protective Order and Incorporated Memorandum of Law.

On February 3, 2011, the Administrative Law Judge entered an Order Granting Motion for Protective Order, Granting and Denying Motion to Strike and Denying Motion in Limine. The stricken portion of the Formal Written Protest is the following sentence in paragraph 19: "No steps were taken by [Respondent] to normalize the scores, in order to eliminate the bias caused by one evaluator's divergent score." The Order explains that the omission from the RFP of any undertaking to normalize scores could only have been challenged by a timely filed challenge to the RFP specifications--absent which, the RFP specifications could not be challenged in the subject case. Consultech of

Jacksonville, Inc. v. Dep't of Health, 876 So. 2d 731n.5 (Fla. 1st DCA 2004) (per curiam); Optiplan, Inc., v. Sch. Bd. of Broward Cnty., 710 So. 2d 569, 572-73 (Fla. 4th DCA 1998); Capelletti Bros., Inc. v. DOT, 499 So. 2d 855, 857 (Fla. 1st DCA 1986). The Order rules that Respondent's failure to normalize the scores was not a basis to set aside the award.

On February 2, 2011, Respondent and Intervenor filed a Joint Motion for Partial Summary Recommended Order of Dismissal. On February 7, 2011, Petitioner filed a response. At the start of the hearing, the Administrative Law Judge orally denied the joint motion. At the same time, the Administrative Law Judge

determined that counsel for Intervenor is a Qualified Representative, pursuant to Florida Administrative Code Rule 28-106.106.

At the hearing, Petitioner called five witnesses, Respondent called one witness, and Intervenor called no witnesses. The parties jointly offered 13 exhibits: Joint Exhibits 1-13. Petitioner offered 16 exhibits: Petitioner Exhibits 1, 4-8, and 10-19. Respondent offered two exhibits: Respondent Exhibits 1-2. All exhibits were admitted.

The court reporter filed the Transcript on February 22, 2011. The parties filed Proposed Recommended Orders on March 4, 2011.

FINDINGS OF FACT

1. RFP

   
   

   1. On October 14, 2010, Respondent issued the RFP. RFP Section 3.1 states that the purpose of the RFP is to acquire and implement a customizable, commercial, off-the-shelf PDMS, in accordance with section 893.055, Florida Statutes. RFP Section

      3.1 states that this statute provides for the establishment of a comprehensive, electronic database securely to collect and store data of the dispensing of Schedule II-IV controlled substances by prescribers and dispensers. Section 3.3 defines a commercial, off-the-shelf program as "computer software or hardware, technology, or computer products that are ready-made

      
      

      and available [to] the general public, which includes systems that are manufactured commercially, and then tailored for specific uses."

   2. RFP Section 3.2 states that the initial term of the PDMS contract is November 30, 2010, through September 30, 2011. The November 30 start date for this ten-month contract anticipated the posting of the intent to award on November 16, 2010 and no challenge to the proposed award. Section 3.2 states that the proposed PDMS should be delivered and accepted by Respondent within 90 days after execution of the contract.

   3. RFP Section 4.1 states:

      
      

      To participate in this solicitation the Proposer must provide documentation to answer all the qualification questions listed in Attachment I. Each mandatory question requires a "Yes" or "No" answer. Proposals that have any "No" answer to these mandatory requirements will be deemed non- responsive and will not be given further consideration. Proposers should use care and integrity in preparing their documentation supporting responses to the qualification questions, since these are mandatory requirements.

      
      

   4. The RFP contains a detailed statement of the scope of services,1 specific tasks,2 projected staffing profiles,3 qualifications,4 technical approach and implementation timelines,5 and other matters.6 Many of these provisions, such as the scope of services and specific tasks, are requirements imposed upon proposals. Among the requirements incorporated

      
      

      into the RFP is PUR 1001, which is the state of Florida "General Instructions to Respondents" to bid solicitation documents.

      Paragraph 4 of PUR 1001 states: "Failure to comply with terms and conditions, including those specifying information that must be submitted with a response, shall be grounds for rejecting a response."

   5. RFP Section 4.21 states that each proposer must submit a cost proposal, using the Cost Proposal Form that is Attachment

      XI. The cost proposal depicts the costs for the term of the contract plus three, one-year renewals.

   6. Of especial significance to this case, RFP Section 4.21 contains four bullet points and two flush paragraphs. Section

      1. states:

         
         

         The cost proposal must include the following items:

         
         

         • The proposer must submit a cost proposal using the worksheet provided in Attachment XI, covering the entire period of the contract, including potential renewals. The cost proposal must show the cost for implementing the system, the cost for the maintenance of the system, the cost for hosting of the date through September 11, 2011, and the cost for providing operational support to the PDMS.

           
           

         • The cost proposal shall include the costs necessary for the proposer to fully comply with the contract terms and conditions, RFP requirements including amendments, and the proposer's proposal.

           
           

         • . . . Only costs incurred after the resulting contract's effective date specifically related to the implementation, maintenance, hosting, and operational support of contracted services should be included in the cost proposal.

           
           

         • Proposers shall provide a firm fixed price for the tasks and deliverables outlined in this RFP. The fixed price shall take into consideration, including but not limited to, all staff hours, equipment, travel costs, overhead, and any profit or fees required for that deliverable.

      
      

   7. Immediately following these four bullet points, the first flush paragraph of RFP Section 4.21 provides:

      The Proposer must submit a narrative itemizing the costs included in the cost proposal. The narrative must specifically address the comprehensiveness of the proposed PDMS and any tasks or services that are excluded and are considered enhancements that may be implemented in the future.

      Proposed costs for prospective enhancements should be included.

      
      

   8. RFP Section 4.21 concludes with the second flush paragraph, which describes the scoring of the cost proposals. Section 4.21 provides that 50 points will be awarded to the lowest cost proposal. For higher cost proposals, the proposers will receive a score that results from multiplying 50 points times a fraction whose numerator is the lowest proposed cost and whose denominator is the proposed cost of the proposer under review.

      
      

   9. RFP Section 4.22 provides:

      
      

      Each qualified proposal will be evaluated and scored based on the criteria defined in Attachment II. Evaluation sheets will be used by the Evaluation Team to designate the point value assigned to each proposal. The scores of each member of the Evaluation Team will be averaged with the scores of the other members to determine the final scoring. . . .

      
      

      The proposer receiving the highest score will be selected for the award.

      
      

   10. RFP Section 5.8 provides:

       
       

       [Respondent] reserves the right to accept or reject any and all proposals, or separable portions thereof, and to waive any minor irregularity, technicality, or omission if [Respondent] determines that doing so will serve the State's best interests. [Respondent] may reject any response not submitted in the manner specified by the solicitation documents.

       
       

   11. Attachment I is "Qualifying Criteria." This attachment states at the top:

       . . . All proposals will be screened for compliance. Failure to comply shall render a proposal non-responsive and ineligible for further evaluation. . . .

       
       

   12. The nine qualifying criteria in Attachment I are stated as questions, and the form implies that Respondent will evaluate each proposal by answering "yes" or "no" to each of the questions. The qualifying criteria are:

       Does the proposal include a fully executed Statement of Financial Capability, including all supporting documentation? Attachment I.

       
       

       Does the proposer certify that they [sic] will comply with the Harold Rogers Grant #2009PM-BX-4004? (See Required DOH

       Certifications Attachment III)

       
       

       Does the proposal provide documentation that the prospective proposer currently hosts a PDMS as defined in this RFP in at least one other state for at least one year? See Section 3.2

       
       

       Does the proposal provide documentation that the proposed system is a customizable, commercial-off-the-shelf data base system?

       See Section 4.6.1

       
       

       Does the proposal provide documentation that the proposed system is compatible with existing PDMS used nationally? See Section 4.6.1

       
       

       Does the proposal provide documentation that the proposed system collects electronic data in the format established by the American Society for Automation in Pharmacy (ASAP) 2007, version 4.1, Rules Based Implementation Guide for Prescription Monitoring Programs or its successor? See Section 4.2

       
       

       Will the proposed system be hosted offsite and operate independently of any other systems or networks of the Department or the State of Florida?

       
       

       Does the proposed system comply with Health Insurance Portability and Accountability (HIPPA) as it pertains to protected health information, electronic protected health information (EPHI), and all other relevant state and federal privacy and security laws/regulations? See Section 4.2

       
       

       Does the submitted Statement of Financial Capability and supporting documentation demonstrate the Proposer has the financial

       
       

       capability to complete the tasks of this RFP?

   13. For the last qualifying criterion, Attachment I adds: The Statement of Financial Capability . . .

       will be evaluated by an evaluator designated by the Department as having the knowledge and experience to determine if the Proposer is financially capable of completing all the services and tasks contemplated by this RFP. Failure to receive "YES" shall render a proposal non-responsive and ineligible for further evaluation.

       
       

   14. Attachment II is "Evaluation Criteria." These are the technical scoring items of this RFP. Attachment II states:

       Evaluation sheets will be used by the Evaluation Team to designate the point value assigned to each proposal. The scores of each member of the Evaluation Team will be averaged with the scores of the other members to determine the final scoring.

       
       

       The proposer receiving the highest score will be selected for award.

       
       

       Point Value: Unless otherwise indicated, zero is lowest possible and the number indicated in this column is the highest possible.

       
       

   15. Attachment II lists 19 items to be scored. For each item, Attachment II prescribes what is to be scored, identifies the section of the RFP to which the item relates, and states the maximum available points. The RFP does not contain further guidance for the evaluators in terms of the meaning of the maximum score or a score less than the maximum.

       
       

   16. The 19 scoring items carry a maximum of 500 points.

       
       

       The scoring dispute in this case focuses largely on one evaluator's scores of Items 15-19, each of which has a maximum score of 20 points.7

   17. The five, 20-point items in dispute are stated below, with the item number on the left. The RFP reference for each items is RFP Section 4.21. The five items are:

       1. How well does the cost proposal narrative explain the costs of the customization and the necessity of the costs for delivery of the proposed PDMS?

          
          

       2. How well does the cost proposal narrative explain the operational support costs and the necessity of those costs for the proposed PDMS?

          
          

       3. How well does the cost proposal narrative explain the system maintenance costs and the necessity of those costs for the proposed PDMS?

          
          

       4. How well does the cost proposal narrative explain the costs for hosting and the necessity of those costs for the proposed PDMS?

          
          

       5. How well does the cost proposal narrative explain the need for and the cost of prospective enhancements?

          
          

   18. In contrast to the first 14 items, which require the evaluator to assess "the proposal," Items 15-19 direct the evaluator to assess "the cost proposal narrative." Four of the five challenged items require the proposer to explain the costs for a particular PDMS cost category and the necessity of these

       
       

       costs. The final item requires the proposer to explain the need for, and costs of, enhancements.

   19. Attachment XI, which is the Cost Proposal Form, identifies five categories of costs on a single page. The form requires the proposer to state a total cost for the commercial, off-the-shelf product, which is complete on delivery at the start of the contract, and a total cost for the customization required to conform the off-the-shelf product to the technical specifications in RFP Section 4.6. The RFP defines customization to include implementation, hosting, and maintenance through September 30, 2011.

   20. Attachment XI calls for a total cost for each of the remaining three categories of costs, which are maintenance support, operations support, and hosting for each of the three one-year anticipated renewal periods ending September 30, 2012, 2013, and 2014. The form requires the itemization of these three categories of costs into monthly amounts, which are merely the total annual costs of each category of cost divided by twelve. Lastly, the form requires the totaling of these five categories of costs, so that the proposer states at the bottom of the completed Attachment XI its "grand total cost proposal."

       
       

       1. Responses

          
          

          1. Cost Proposals

             
             

   21. Petitioner's Attachment XI shows no cost for the commercial, off-the-shelf program. The total cost of customization is $94,380. The annual costs for maintenance, operations, and hosting are, respectively, $40,440, $66,912, and

       $49,536, and these costs remain unchanged over the three anticipated renewal years. Petitioner's grand total cost proposal is therefore $565,044. Petitioner Response, p. 190.

   22. Intervenor's Attachment XI shows the total cost for the commercial, off-the-shelf program is $96,730, and the total cost of customization is $115,068. The annual costs for maintenance, operations, and hosting are, respectively, $50,665,

$132,976, and $41,455, and these costs remain unchanged over the three anticipated renewal years. Intervenors grand total cost proposal is therefore $887,059. Intervenor Response, p. 126.

1. Item 15: Customization Costs and Their Necessity

   
   

   1. Petitioner Response

      
      

      1. For its narrative of the cost of customization and the necessity of this cost, Petitioner's response explains that the first part of the customization cost is $15,015. Petitioner Response, p. 191. This is the labor cost of customization. Petitioner Response, p. 192. The narrative explains that most of the features described in RFP Section 4.6.1 are already in

         
         

         the commercial, off-the-shelf program. The labor in customizing the off-the-shelf program includes:

         Time spent in requirement analysis meetings to arrive at the Requirements Definition for customization of the software. We propose to have two sessions.

         
         

         To customize the software such that application security can be configured per user to assign security roles to authorized department staff, dispensers, prescribers, and any other users authorized by law.

         
         

         To make necessary changes and modifications to the application software such that all of the web pages are tuned to comply with the business rules of the State of Florida as agreed upon in the requirements sessions.

         
         

         To include a statement in the software indicating that Florida's PDMS was made available using funds from a federal grant

         . . ..

         
         

         Provide for a method that allows the department to suspend the 15 day requirement during emergency events (e.g., hurricane)

         
         

         Provide a method that allows registered dispensers to request an extension to the reporting requirement (e.g., per individual or per pharmacy) in accordance with proposed Rule 64K-1, F.A.C.

         
         

         Create a method to coordinate and implement the initial mass registration of dispensers and prescribers.

         
         

         Petitioner Response, pp. 192-93.

         
         

      2. To customize its off-the-shelf program, Petitioner stated that it must perform requirements analysis; perform analysis, study, and design; perform design documentation and

         
         

         review; make changes to the database; make changes to the user interface; make changes to the business logic; conduct quality assurance and quality control; prepare user documentation; and perform project management. In documenting $15,010 in total labor for customization, Petitioner's response itemizes the labor costs by hourly rate and number of hours for the following positions: systems analyst, database administrator, senior programmer analyst, programmer analyst, quality analyst, technical writer, and project manager. Petitioner Response,

         p. 193.

         
         

      3. The second part of Petitioner's customization cost is

         
         

         $14,000. This is for all costs and expenses related to implementation, travel, training, setup and data collection for system software and system hardware (servers), and setup for the help desk. Petitioner breaks down these costs into skilled labor and travel expenses. The skilled labor covers individual tasks--e.g., hardware and server setup, data collection help desk setup, and implementation of customized PDMS--by position type, hourly rate, and hours. The travel expenses show airfares, food and per diem for particular tasks, such as the "kick off" and requirements session, and training by a specified number of staff for a specified number of days. The total is

         $28,000, but Petitioner discounts this item by half for what it

         
         

         anticipates will be a long-term relationship. Petitioner Response, p. 191.

      4. The third part of the customization cost is $65,370.

         
         

         This is for the hosting, maintenance, and operations support from the "go-live" date of April 8, 2011,8 through September 30, 2011, or five months. The monthly cost for each of these components is, respectively, $3370, $5576, and $4128.

         Petitioner Response, p. 192.

         
         

         2. Intervenor Response

         
         

      5. For its narrative of the cost of customization and the necessity of this cost, Intervenor's response states:

         all associated start-up costs for development, configuration, and integration are part of the total proposed implementation price. [Intervenor] will fully host the RxSentry solution for [Respondent] utilizing our state-of-the-art co-location data center, AtlantaNAP. Hosting costs include all hardware, software, co-location data center fees, communication fees, maintenance, and technical support as required under the contract. Additional costs for implementation include travel, training, and administrative fees such as bond and FBI criminal background checks for key personnel per [Respondent] requirements. A one-time licensing fee for RxSentry is included in the implementation pricing.

         
         

         Ongoing operational support costs in terms of personnel expense, operating expense, systems expense, corporate overhead, and annual maintenance for RxSentry are included in the total pricing for the initial contract period. [Intervenor] project

         
         

         management, clinical, and technical support staff are provided to ensure a seamless transition from implementation to daily operations. Personnel costs include a primary contact as the PDMP Account Manager Ms. Sheila McCollough, access to clinical expertise from our Training Manager,

         Mr. Steve Espy, RPh, technical writing expertise for customized user guides and training materials, quality and contractual compliance oversight, and a highly skilled technical and customer service staff to maintain the RxSentry solution and provide customer service and support to both [Respondent] staff and the prescriber/dispenser population. [Intervenor] performs regular monitoring and maintenance for all our clients, including routine backup and recovery activity, data archiving and removal, and other system upgrades, improvements, and error corrections to ensure that RxSentry continues to meet our clients' needs and standards.

         
         

         Expense categories used in pricing the project include all line item costs shown in the following table [no costs are shown]:

         
         

         [Technical Lead] Information Systems Manager

         . . . Customer Support Manager [Training Coordinator]

         . . . Technical Support Manager

         . . . Technical Help Desk Staff

         Technical Writing Staff

         
         

         Operating Expenses: Travel

         Training

         Office Supplies Printing fees Mailings

         Administrative fees . . .

         
         

         System Expenses: Hardware leasing

         Software purchase (one time) RxPert License Fee (one time) AtlantaNAP Data Center Fees Communication Fees

         Software Maintenance Hardware Maintenance

         
         

         Intervenor Response, pp. 123-24.

         
         

      6. Under the heading, "Customization," Intervenor's response states that Intervenor will work with Respondent during the implementation requirement sessions to document all specifications for collecting and reporting controlled substance data. This includes:

         1. dentifying required fields and layouts for patient advisory alerts and reports, request forms and authorization requirements, user roles and access, standard and ad-hoc report content and layout, and customization of screens per [Respondent] request.

            
            

      7. The next section of Intervenor's response is "Assumptions." This section states:

      No inflationary increase has been added to ongoing operational pricing.

      
      

      Standard technical hours and support for data submitters and requestors will be provided Mon-Fri, EST, from 9:00 AM - 5:00 PM; excluding state and national holidays.

      
      

      Training materials for dispensers and practitioners will be hosted online along with computer-based training as required by [Respondent].

      
      

      Notification letter mailing costs for uploaders is based upon 8,322 active pharmacies and approximately 7,312 active dispensing healthcare practitioners.

      
      

      All tasks and activities will be performed at the [Intervenor's] Corporate Office in Auburn, AL.

      
      

      Proposed pricing and annual maintenance for PMIX Hub is not included in the cost proposal but is provided in the following narrative section, "System Enhancements."

      
      

      Intervenor Response, p. 125.

      
      

2. Item 16: Operational Support Costs and Their Necessity

   
   

   1. Petitioner Response

      
      

      1. For its narrative of the cost of operational support and the necessity of this cost, Petitioner's response states that the operational support costs are $5576 per month for each of the three one-year renewal terms. These costs include "all labor costs . . . to support the collection and uploading of prescription data." These services include collecting, validating, scrubbing, and uploading the data, as well as contacting the data collectors about prescription errors. Petitioner Response, p. 195.

      2. Petitioner breaks down the operational support costs by position, hourly rate, and hours per month. The positions are data collection help desk analyst and data collection senior help desk analyst. Other expenses include infrastructure and

         
         

         office space and telephone. Petitioner's response describes the positions in terms of work experience.

         2. Intervenor Response

         
         

      3. Except for enhancements, Intervenor's entire cost narrative has been described above.

3. Item 17: System Maintenance Costs and Their Necessity

   
   

   1. Petitioner Response

      
      

      1. For its narrative of the cost of system maintenance and the necessity of this cost, Petitioner's response notes that the system maintenance costs are $3,370 per month for each of the three one-year renewal terms. These services are to respond to all emails from Respondent. For system-down calls,

         Petitioner will respond within four hours; for severely impaired-impact calls, Petitioner will respond within 24 hours. For the remaining calls, Petitioner will respond within 72 hours.

      2. Petitioner breaks down the system maintenance costs by position, hourly rate, and hours per month. The positions are database administrator, programmer analyst, quality analyst, and project manager. The proposal assumes 36 hours of software support and maintenance, but acknowledges that there is no limit on hours of support that Petitioner will actually provide.

         
         

         2. Intervenor Response

         
         

      3. Except for enhancements, Intervenor's entire cost narrative has been described above.

4. Item 18: Hosting Costs and Their Necessity

   
   

   1. Petitioner Response

      
      

      1. For its narrative of the cost of hosting and the necessity of this cost, Petitioner's response notes that the hosting costs are $4128 per month for each of the three one-year renewal terms. Hosting is at a secure facility with redundant power and redundant data carriers.

      2. Petitioner breaks down the hosting costs by the single position, which is system/network manager, and her hourly rate and hours per month. Other itemized costs are relatively small and include a backup circuit and server.

         2. Intervenor Response

         
         

      3. Except for enhancements, Intervenor's entire cost narrative has been described above.

5. Item 19: Need for, and Cost of, Prospective Enhancements

   
   

   1. Petitioner Response

      
      

      1. For its narrative of the need for and cost of prospective enhancements, Petitioner's response notes that its software has an available PMIX interface software module. Because PMIX "is beyond the scope of the current proposed

         
         

         project," Petitioner's response proposes the module as a prospective future enhancement.

      2. Petitioner breaks down the cost of the PMIX enhancement into a one-time cost of $10,600, which consists of

         $7800 for customization and implementation, and $2800, which consists of travel costs for training. Monthly costs would increase $1000, which consists of $750 for maintenance and $250 for operations. Petitioner breaks down the one-time labor costs by position, hour rate, and hours, and the travel costs for two persons for one day in Tallahassee.

      3. Additionally, Petitioner's response offers a methodology for how it would approach proposals from Respondent for future enhancements, including the hourly rates of 12 positions that might be involved in such work.

         2. Intervenor Response

         
         

      4. The final section of the cost worksheets in Intervenor's response is "System Enhancements." This section states that Intervenor "is currently developing interchange functionality for RxSentry that will allow the exchange of data between states." Intervenor's response warns: "Pricing for PMIX Hub is not included in the proposed contract pricing but is provided below as a prospective enhancement to the RxSentry solution." The following table lists "PMIX Implementation" at a

         
         

         cost of $40,035 and "PMIX Hub Annual Maintenance" at a cost of

         
         

         $15,000.

         
         

1. Assessment and Scoring of Proposals

   
   

   1. Respondent received only the two proposals of Petitioner and Intervenor. After the submittal deadline had passed, Respondent's Chief of Bureau of Operations, Lola Pouncey, examined each of the two proposals for compliance with the first eight of nine mandatories contained in Attachment I. Respondent hired CPA Richard Long to examine each proposal for compliance with the ninth mandatory, which requires an assessment of demonstrated financial capability. Ms. Pouncey and Mr. Long determined that both proposals met all of the mandatories in Attachment I. These determinations are not at issue. Likewise, one of Respondent's representatives calculated the cost scores for both proposals--50 points for Petitioner and

      31.85 points for Intervenor--and these determinations are not at issue.

   2. The five evaluators had been trained by Respondent's Administrative Lead Janice Brown. By memorandum dated December 7, 2010, she advised them to "evaluate each proposal

      individually" and not to meet with other evaluators to discuss a proposal. Providing a little more guidance for scoring than is found in the RFP, the memorandum adds:

      
      

      The maximum possible score for each category should only be awarded if the vendor addressed each element we requested for that section thoroughly. If a vendor does not address elements in that section, their scores should be reduced accordingly.

      
      

   3. The five evaluators scored all of the Evaluation Criteria of Attachment II. The technical scores for Petitioner averaged 409.2 points--ranging from Ms. Poston's score of 266 to another evaluator's near-perfect score of 496. The technical scores for Intervenor averaged 448.6 points--ranging from scores of 360 to a perfect score of 500. Ms. Poston's total score for Intervenor is 430. Her score for Intervenor is its second lowest.

   4. Two of the evaluators scored Petitioner's proposal higher by 21 and 18 points. Two of the evaluators scored Intervenor's proposal higher by 40 and 32 points. Ignoring Ms. Poston's scores, which favored Intervenor by a lusty 164

      points, Intervenor would have emerged from the technical scoring with an 8.25-point advantage. Because Petitioner earned a 18.15-point advantage from its superior cost proposal,

      Ms. Poston's scores, in this sense, dictated the outcome of the procurement. However, if Ms. Poston had assigned Petitioner's technical proposal the average of the scores of the other four evaluators or even the score of Petitioner's second-lowest evaluator, Petitioner would have prevailed on total points.

      
      

   5. Combining the technical scores with the cost scores, Respondent determined that Intervenor earned 480.45 points, and Petitioner earned 459.20 points. After confirming that Intervenor's references were acceptable, on December 21, 2010, Respondent posted its intent to award the contract to Intervenor. Except for the above-described examination of the proposals for compliance with the nine mandatories of Attachment I, at no time while Respondent processed the proposals did anyone determine whether each proposal was responsive to all of the other requirements of the RFP.

   6. On December 23, Petitioner timely filed a notice of intent to protest the intended award to Intervenor. On or before January 3, 2011, Petitioner timely filed the Formal Written Protest with a proper and sufficient bond. Respondent transmitted the file to the Division of Administrative Hearings on January 19, 2011.

2. Determinations Concerning Responsiveness

1. Respondent misreads the RFP in arguing that Attachment I is an exhaustive list of the requirements of the RFP to which a proposal must respond in order to be responsive. Attachment I lists nine requirements that, if unmet, will render a proposal unresponsive.9 But nothing in Attachment I implies that its nine requirements are an exhaustive list of the requirements of the RFP, or an exhaustive list of the RFP requirements that a

   
   

   proposal must satisfy to be responsive. Respondent's strained interpretation of its RFP creates an unnecessary conflict between Attachment I and paragraph 4 of PUR 1001, which warns proposers that Respondent may reject a proposal for a failure to comply with any RFP condition. On the basis of paragraph 4 of PUR 1001, as well as the authority cited in the Conclusions of Law, requirements contained in other RFP provisions, including Section 4.21, if unmet, may result in a determination that the proposal is nonresponsive, regardless of whether a proposal meets all of the mandatories set forth in Attachment I.

2. As quoted above, Section 4.21 requires a "narrative itemizing the costs included in the cost proposal." (Emphasis supplied.) Intervenor's proposal does not itemize the costs of customization, operations, maintenance, and hosting. Intervenor's proposal minimally itemizes the costs of enhancement--$40,035 for PMIX Implementation and $15,000 for PMIX annual maintenance. The unitemized costs in Intervenor's cost proposal are: 1) $96,730 for the off-the-shelf program;

   2) $115,068 for customization; 3) $50,655 for maintenance;

   
   

   4) $132,976 for operations; and 5) $41,455 for hosting.

   
   

3. The costs included in Petitioner's cost proposal are:

   
   

   1) nothing for the off-the-shelf program; 2) $94,380 for customization; 3) $40,440 for maintenance; 4) $66,912 for operations; and 5) $49,536 for hosting. Petitioner's cost

   
   

   narratives itemize these costs in detail. The $94,380 for customization comprises $15,010 for customization labor, $14,000 for implementation, training, servers setup and data collection, and $65,370 for hosting, maintenance and operations through September 30, 2011, which is defined by the RFP as part of customization. Petitioner further itemizes the $15,015 of labor, $14,000 of implementation, training, servers setup and data collection, and $65,370 for hosting, maintenance and operations, which is merely the monthly costs for these items, as shown in Petitioner's Attachment XI, during the three annual renewal periods.

4. Additionally, Petitioner's proposal itemizes the

   
   

   $3,370 per month for maintenance by showing hourly rates and number of hours by four positions; the $4,128 per month for hosting by showing the hourly rate and number of hours for one position plus various other monthly costs; and the $5,576 per month for operations by showing the hourly rate and number of hours for two positions and various other monthly costs.

   Lastly, for the PMIX enhancement, Petitioner itemizes the one- time customization costs of $7,800, which themselves are broken down; travel costs for training of $2,800, which themselves are broken down; and additional monthly costs of $1,000 for maintenance and operations.

   
   

5. However, Intervenor's failure to itemize the costs in the cost proposal gave it no competitive advantage. Despite some unclear comments about a "cost-plus" proposal, Intervenor's proposal contains an unambiguous, enforceable statement of costs, as does Petitioner's. Each proposal locks in its proposer in terms of what it is agreeing to provide and at what

   cost.

   
   

6. Nor did the requirement of itemization likely chill

   
   

   the bidding, so as to discourage potential vendors from competing for the PDMS contract. Attachment XI requires each proposer to identify the costs of customization and ongoing operations, maintenance, and hosting. To arrive at these broader category of costs, a diligent vendor probably would have had to assemble the underlying subcosts, so it would be easy to add them to the proposal. The effort in constructing the itemization appears minimal. The monthly costs of maintenance, operation, and hosting are relatively modest, so they do not have many subcosts, and the process of extending these costs for the term of the contract, plus renewals, is a simple matter of multiplication.

7. In its proposed recommended order, Petitioner argues that Intervenor gained competitive advantage as follows:

   1. [Petitioner] recognized that this additional level of detail would enable [Respondent] to understand the level of

      
      

      commitment of resources of each respondent, and to hold the ultimate contract awardee accountable for the provision of the promised level of performance as reflected in the itemized costs.

      
      

   2. If a competitor fails to provide the detailed, itemized costs required by Section 4.21, it will enjoy a competitive advantage relative to bidders that do comply with that requirement. By failing to commit to any particular itemized cost, a bidder such as [Intervenor] may provide less training, and enjoy less expense, than another provider that itemized its costs. Failing to comply with Section 4.21 allows a bidder the flexibility not only to reduce its costs, but to also reduce the level and quality of services provided, without violating a commitment made to [Respondent.]

      
      

      Petitioner's proposed recommended order, p. 9.

      
      

8. These arguments are that cost itemization: 1) enables Respondent to understand the level of commitment of each proposer; 2) enables Respondent to hold the selected proposer accountable for the promised level of performance; and

   3) prevents a nonitemizing proposer from providing less services by reducing the level and quality of services provided.

9. The second argument misses the purpose of itemization.

   
   

   Itemization breaks down the overall costs shown in Attachment

   
   

   XI. The accountability function that Petitioner mistakenly assigns to the itemization requirement is actually served by numerous other provisions of the RFP, such as the undertaking of to satisfy the scope of services, including specified data

   
   

   fields, data, and training10; the undertaking to provide the detailed tasks and services11; the specification of proposed staffing levels, which are enforceable conditions12; the detailed description of the design, capacity, and other features of host facility13; the detailed description of the proposer's approach to providing the technical services that demonstrates a thorough understanding of the project and includes a detailed description of the PDMS and how general maintenance and support services will be performed14; and the focus of the other 14 technical scoring items on various features of the PDMS.15

10. The first and third arguments are also unpersuasive.

    
    

    Respondent rejected the first argument in its preparation of the RFP. Omitting the Section 4.21 requirement of itemization from the five technical scoring items related to cost, Respondent implicitly decided that it did not need the additional insight into a proposer's level of commitment. This is not a complicated procurement. Each proposer has implemented at least one monitoring system of this type in another state. For the same reason that itemization may have been omitted from the scoring items, so it is not especially important in understanding the level of commitment of resources of each proposer. Also, the worries sometimes attendant to the association of underbidding with the failure to include all of

    
    

    the solicited goods and services do not apply here, at least based on the relative cost proposals of both proposers.

11. The third argument implies that the cost narratives will be elevated into the contract itself. But nothing in the RFP compels a proposer to pay a help-desk employee or data programmer the rate of pay specified in any cost itemization. Perhaps, in a deflationary economy, the rate of pay of these employees may decline, as may the office rent and travel costs. The selected vendor may pocket these savings, just as it must absorb the additional expenses, if, in an inflationary economy, these items increase in cost during the term of the initial contract or three annual renewal terms. The floor on services is not provided by a few cost itemizations, but by enforceable contract provisions and the selected vendor's incentive to keep the contract for the three one-year renewal periods, and perhaps beyond.

    1. Determinations Concerning Scoring

       
       

       1. General

          
          

12. Petitioner objects to Ms. Poston's scoring--in general, all of it, but, in particular, her scoring of Items 15-19. In its proposed recommended order, Petitioner seems to make two arguments about Ms. Poston's scoring of its proposal. First, Ms. Poston favored Intervenor's proposal by such a wide margin as to call into question all of her scores. Second,

    
    

    Ms. Poston offered startlingly odd reasons, such as noncompliant formatting, for the relatively low scores of Petitioner's proposal.

13. However, as in the Formal Written Protest and the hearing, Petitioner analyzes Ms. Poston's scoring of Items 15-19 only. Preliminarily, Petitioner's approach to the scoring issue raises two problems. First, absent analysis of Ms. Poston's scoring of the other items, Petitioner fails to prove flawed scoring of these items under the Clearly Erroneous Standard, which is explained in the Conclusions of Law. For this reason, this recommended order will not otherwise consider Ms. Poston's scoring of these items.

14. Second, Petitioner's challenge to Ms. Poston's scoring of Items 15-19 suffers from a misreading of what these items require to be evaluated. Specifically, Petitioner misreads Items 15-19 to require the evaluators to evaluate how well the cost narratives itemize costs, among other things. One example of this misreading occurs at the last sentence of paragraph 18 of its proposed recommended order, which states: "In fact, the Section 4.21 requirement that each proposer submit an itemization of its costs . . . received twice as much weight as the cost proposal itself."

15. Itemization of costs actually receives no weight in the five scoring items that pertain to the cost narrative. None

    
    

    of these five scoring items uses the word, "itemize" or "itemization." RFP Section 4.21 requires the itemization of various costs, and this requirement, as discussed in the preceding section, serves as a basis on which to determine the responsiveness of proposals. But Respondent did not include the itemization requirement of Section 4.21 in the scoring items for the cost narrative.

16. In preparing the RFP, Respondent included some, but not all, of the requirements of Section 4.21 in these five scoring items, which are drawn from the first bullet and first flush paragraph of this section. The first flush paragraph requires a narrative that: 1) itemizes the costs in Attachment XI; 2) specifically addresses the comprehensiveness of the proposed PDMS; and 3) specifically addresses any excluded tasks or services that may be enhancements. The first flush paragraph encourages--through the use of the word, "should"--the inclusion within this narrative of a fourth element: proposed costs for prospective enhancements. The first four scoring items focus exclusively on the four cost categories--customization, operation, maintenance, and hosting--identified in the first bullet of Section 4.21.

17. The five scoring items authorize scoring of the narratives only as to how well they explain the costs and their necessity. When compared to RFP Section 4.21, the five scoring

    
    

    items omit the requirements of an itemization of costs, a specific description of the comprehensiveness of the proposed PDMS, and a specific description of excluded tasks that may be enhancements, although this last requirement is covered to some degree by the fifth scoring item. At minimum, then, the narrative's itemization of costs and specific description of the comprehensiveness of the proposed PDMS receive no direct weight in scoring, except, as noted below, for the indirect value of each of these elements when scoring the cost narrative for its explanations of costs and their necessity.

18. Further distinguishing RFP Section 4.21 from the five scoring items covering the cost narrative, the scoring items add two elements not found in RFP Section 4.21: 1) an explanation of the costs and 2) an explanation of the necessity of the costs. These elements are closely related to the provisions of Section 4.21, but are not explicitly required in this section.

19. Petitioner's misreading of Items 15-19 undermines its scoring argument. This misreading attaches great significance to Petitioner's compliance with the itemization requirement of RFP Section 4.21 and Intervenor's noncompliance with this requirement--facts of some importance to the responsiveness issue discussed in the preceding section, but of no direct importance to the scoring issue discussed in this section.

    
    

20. Also unhelpful to Petitioner's scoring argument is the fact that Ms. Poston's scores of Items 15-19 do not stand out among the evaluators. She gave each proposal 60 points, although she was the sole evaluator to score Intervenor's proposal higher than Petitioner's proposal on Item 15. One other evaluator scored the two proposals a tie on these five items, although his score was 100 points each. Another evaluator scored the two proposals a near-tie, with Petitioner's proposal earning 100 points and Intervenor's proposal earning 98 points. The remaining two evaluators scored these five items substantially in Petitioner's favor, with advantages of 39 and

    20 points.

    
    

21. The proper analysis of Ms. Poston's scores is based on the actual language of Items 15-19. The impact of the inclusion or omission of the itemized costs from these cost narratives is more nuanced than Petitioner argues in its scoring argument. A cost narrative may explain the cost of, say, customization and the necessity of this cost without itemizing or identifying the subcosts of customization, although a cost narrative that starts by itemizing these subcosts may facilitate its explanation of the overall cost and its necessity.

22. Understandably, Petitioner stresses Ms. Poston's testimony at the hearing that she reduced Petitioner's scores in general, at least in part, for the failure of its proposal to

    
    

    conform to various stylistic requirements in the RFP. These nonconformities include excessively small font size, inadequate margins, other unidentified formatting errors, numerous typographical errors, poor organization in which information was just "dropped" into various places, and inconsistency in style where sometimes the proposal uses bullet points and sometimes it uses narrative.

23. Ms. Poston's testimony in the preceding paragraph is problematic for two reasons. First, Ms. Poston's testimony attempts to justify, in part, her scoring on grounds that are not authorized by the provisions of Attachment II. Second, this testimony is inapt. As to Petitioner's cost narrative, at least, the Administrative Law Judge did not measure font size, but did not notice any problems with font size, legibility, margins, formatting, typographical errors, or inconsistencies in style. And the organization of Petitioner's cost narrative permitted the Administrative Law Judge to find the relevant information much more readily than he could find it in Intervenor's cost narrative, which, as seen above, combined most of its responses to Items 15-18 in one section.

24. Ms. Poston's typewritten scoring notes offer more support than her testimony, although her notes for Item 15 incorrectly report that Petitioner's response explained only the labor costs of customization. But her notes for Item 17 suggest

    
    

    that she captured more detail from Intervenor's proposal's explanation of system maintenance costs.

25. However, nothing in the record suggests in any way that Ms. Poston was guilty of bias, fraud, or collusion in scoring, nor does Petitioner suggest as much. When asked, Ms. Poston freely explained her scores on items, using her typewritten notes when she could. She testified candidly and matter-of-factly about her scoring. Although not at all apologetic, Ms. Poston never appeared unduly invested in her scores or Respondent's proposed award. While testifying, she

    never acted adversarially, as an ally of Intervenor or opponent of Petitioner.

26. Nor are Ms. Poston's scores of Items 15-19 arbitrary or capricious. Notwithstanding her comments about formatting, proofreading errors, and organization, Ms. Poston's scoring of these items is neither illogical nor irrational. Her typewritten notes reveal a clear understanding of the RFP and Petitioner's proposal, suggest an organized pattern to her thoughtful approach to scoring the items in question, and dispel any randomness in the scoring.

27. The sole remaining question is whether Ms. Poston's scores of Items 15-19 are within the range of the reasonable. Consideration of the reasonableness of Ms. Poston's scoring must start with the acknowledgement that the phrasing of Items 15-19

    
    

    invites a wider range of scores than would questions imposing on evaluators a task requiring more precision. These open-ended scoring items ask only "how well" a response "explains" certain costs and their necessity or, in the case of Item 19, "how well" a response explains the necessity and cost of prospective enhancements.

    1. Scoring of Item 15: Customization

       
       

28. For Item 15, Petitioner first explains the labor in terms of the communications with Respondent's staff to obtain particularized information about what Respondent needs, programming to customize the off-the-shelf program to ensure that it delivers these communicated needs, and specific methods to allow registered dispensers to request extensions for reporting events and the mass registrations of dispensers and prescribers required on the initiation of the PDMS. Detailing this explanation of the labor involved in the customization of the off-the-shelf program, Petitioner's response outlines the tasks, which largely comprise the expected activities of analysis, design, design review, quality assurance and control, user documentation, and project management, but also identify changes to user interface and business logic. Petitioner's response further explains the costs of customization by detailing, by numbers of hours, the work to be done by systems analysts, database administrators, senior programmer analysts,

    
    

    programmer analysts, quality analysts, technical writers, and project managers.

29. Second, Petitioner explains the costs of customization by discussing the costs and expenses related to implementation, travel, training, setup and data collection for system software and system hardware (servers), and setup for the help desk. This discussion shows individual tasks, such as hardware and server setup, data collection help desk setup, and implementation of customized PDMS, but distinguishes itself by identifying the hours of work by position type. The travel expenses show airfares, food and per diem for particular tasks,

    such as the "kick off" and requirements session, and training by a specified number of staff for a specified number of days.

    Petitioner's explanation of costs is particularly relevant for this topic because it further explains that it has halved these projected costs.

30. Third, Petitioner explains the costs of customization with respect to the operational support, hosting, and maintenance costs from the "go-live" date through the end of the original term of the contract. Petitioner's explanation of these costs is ample.

31. For Item 15, Intervenor explains that it starts with an off-the-shelf program that necessitates the payment of a one- time license fee. From there, Intervenor's proposal states that

    
    

    it will perform "all associated start-up costs for development, configuration, and integration [that] are part of the total proposed implementation price." "Additional costs for implementation include travel, training, and administrative fees such as bond and FBI criminal background checks for key personnel per [Respondent] requirements." Intervenor's proposal identifies some "line item costs" by position type, but this table omits hours or total costs and pertains largely, if not entirely, to operational support, hosting, and maintenance.

32. Intervenor's proposal addresses customization costs explicitly in a relatively brief section devoted to this component. Intervenor explains that it will identify required fields and layouts for patient advisory alerts and reports, request forms and authorization requirements, user roles and access, standard and ad-hoc report content and layout, and customization of screens, as requested by Respondent.

33. Ms. Poston assigned 15 points to Intervenor's conclusory explanation of customization costs and their necessity and 10 points to Petitioner's detailed explanation of these costs and their necessity. A score that assigns more points to Intervenor than to Petitioner for Item 15 is outside the range of the reasonable by five points.

    
    

    1. Scoring of Item 16: Operational Support

       
       

34. For Item 16, Petitioner explains that operational support costs include "all labor costs . . . to support the collection and uploading of prescription data." These services include collecting, validating, scrubbing, and uploading the data, as well as contacting the data collectors about prescription errors. Petitioner identifies two positions--two help desk analysts--and breaks down the operational support costs by hourly rate and hours per month. Petitioner's response describes these positions in terms of work experience.

35. For Item 16, Intervenor explains ongoing operational support costs in terms of personnel expense, operating expense, systems expense, corporate overhead, and annual maintenance for RxSentry, all of which are included in the total pricing for the initial contract period. Intervenor explains that project management, clinical, and technical support staff will assist Respondent in the transition from implementation to daily operations. Intervenor identifies available personnel by name and position--although not the expected extent of availability or use.

36. Ms. Poston assigned each proposal 10 points for Item

1. Petitioner's explanation of hours per month is of some utility, but the range of personnel--two help desk analysts-- limits the value of this response when compared, say, to the

   
   

   wider range of labor tasks involved in customization. Although more explanation might have been expected of Intervenor on this item, given the large difference between the two proposals for operations costs, the two explanations of operations costs and their necessity are roughly comparable, and Ms. Poston's scores for Item 16 are within the range of the reasonable.

   1. Scoring of Item 17: System Maintenance

      
      

      1. For Item 17, Petitioner explains that these costs involve email responses to service calls from Respondent, and Petitioner provides call-back deadlines based on the severity of reported problems. Petitioner breaks down the system maintenance costs by position, hourly rate, and hours per month. The positions are database administrator, programmer analyst, quality analyst, and project manager. The proposal assumes 36 hours of software support and maintenance, but acknowledges that there is no limit on hours of support that Petitioner will actually provide.

      2. For Item 17, Intervenor explains that maintenance is included in hosting and it will undertake all software and hardware maintenance. Additionally, Intervenor explains that it will perform routine backup and recovery activity, data archiving and removal, and other system upgrades, improvements, and error corrections necessary for the PDMS.

         
         

      3. Ms. Poston gave Intervenor 15 points and Petitioner 10 points for Item 17. She may legitimately have valued Intervenor's emphasis on system solutions over Petitioner's emphasis on customer service, so Ms. Poston's scores for Item 17 are within the range of the reasonable.

   2. Scoring of Item 18: Hosting

      
      

      1. For Item 18, Petitioner explains that the hosting is at a secure facility with redundant power and redundant data carriers. Petitioner breaks down the hosting costs by a single position, which is system/network manager, and her hourly rate and hours per month. Other itemized costs are relatively small and include a backup circuit and server.

      2. For Item 18, Intervenor explains that the hosting is at its "state-of-the-art" data center. Intervenor explains that hosting costs include all hardware, software, co-location data center fees, communication fees, maintenance, and technical support as required under the contract.

      3. Ms. Poston gave both proposals a 10 for Item 18. She understandably found no difference between a secure facility with redundant power and redundant data carriers and a state-of- the-art data center, so Ms. Poston's scores for Item 18 are within the range of the reasonable.

         
         

   3. Scoring of Item 19: Prospective Enhancements

      
      

      1. For Item 19, both parties identified the PMIX hub as a prospective enhancement. For this item, the RFP requires an explanation of the need for, and costs of, any enhancement. Neither party addressed the need for the enhancement in any detail, but perhaps that is because the PMIX hub is in the RFP Scope of Services, at RFP Section 4.2, although it is not in the Tasks and Services, at RFP Section 4.6.1.

      2. Petitioner explains that its software has an available PMIX interface software module. Petitioner further explains this cost by breaking the PMIX enhancement into one-time costs of customization and implementation and travel costs for training and monthly costs for maintenance and operations. Petitioner breaks down the one-time labor costs by position, hour rate, and hours. Petitioner further explains this cost by describing a methodology for how it would approach proposals from Respondent for future enhancements, including the hourly rates of 12 positions that might be involved in such work.

      3. Intervenor warns that it "is currently developing interchange functionality for RxSentry that will allow the exchange of data between states." Intervenor identifies the implementation and maintenance costs of a PMIX hub.

      4. Ms. Poston assigned Petitioner 20 points and Intervenor 10 points for Item 19. Contrasted to Petitioner's

         
         

         detailed explanation of enhancement costs, Intervenor's proposal acknowledges a present inability to provide this service, which certainly limits its ability to explain the costs that will eventually go with this service, once it is developed.

         Ms. Poston's scores for Item 19 are within the range of the reasonable.

   4. Summary of Scoring Findings

   
   

   1. Another shortcoming in Petitioner's scoring challenge is its failure to explain why the flaws in Ms. Poston's scoring of Items 15-19 should result in the rejection of all of her scores. To outpoint Intervenor, Petitioner needs over 100 more points from Ms. Poston. Items 15-19 are worth a total of 100 points, and Petitioner already received 60 points from her on these items, so Petitioner's scoring challenge, despite its focus on Items 15-19, necessarily seeks to overturn more than Ms. Poston's scores on these five items in Petitioner's proposal.

   2. But Petitioner does not seek more points from

      
      

      Ms. Poston. The gist of Petitioner's complaint with the scoring starts with the fact that it won or lost, by narrow margins, with the other four evaluators, but Ms. Poston's overall scoring margin--430 for Intervenor and 266 for Petitioner--determined the outcome of the scoring. Petitioner argues that Ms. Poston's scoring of Items 15-19 was illogical, irrational, and so outside

      
      

      the range of the reasonable that its effect cascades through all of her scores and, to preserve the integrity of the subject procurement, her scores must be thrown out in their entirety, resulting in a recommendation that Respondent rebid the PDMS contract or award it to Petitioner.

   3. Whatever the exact form of this argument, after close analysis of the five scoring items that Petitioner challenged, the Administrative Law Judge has found nothing arbitrary or capricious in Ms. Poston's scoring and only one item that falls outside the range of the reasonable--by only five points. As discussed in more detail in the Conclusions of Law, this finding provides no platform for Petitioner's larger attack on the reliability of Ms. Poston's overall scoring and its role in Respondent's overall evaluation of the two proposals.

      CONCLUSIONS OF LAW

      
      

   4. The Division of Administrative Hearings has jurisdiction over the subject matter. §§ 120.569 and 120.57(1) and (3), Fla. Stat. (2010).

   5. To prevail, Petitioner must prove that the intended award is "contrary to the agency’s governing statutes, the agency’s rules or policies, or the solicitation specifications."

      § 120.57(3)(f), Fla. Stat.

      
      

   6. As to responsiveness, Petitioner bears the burden of proving that any deviation from the requirements of the RFP is

      
      

      material. Cf. Accela, Inc. v. Sarasota County, 993 So. 2d 1035, 1039 (Fla. 2d DCA 2008), the county awarded a contract under an exception to county procurement rules that allowed the county to "piggyback" onto an existing contract between same vendor and another governmental entity for same product. A competing vendor challenged the resulting contract. Noting that the issue was whether the county had acted arbitrarily or capriciously in entering into the contract, the court rejected the vendor's argument that the county was obligated to prove that the piggybacking exception applied to the transaction. Instead, the court held that the burden imposed on the competing vendor to prove its claim included the negation of the piggybacking exception.

   7. A bid proceeding is de novo. § 120.57(3)(f), Fla.

      
      

      Stat. A de novo hearing means that the parties may produce evidence that is not limited to what was available to Respondent when it selected Intervenor's bid.16 In a bid case, though, a de novo hearing does not mean that the Administrative Law Judge puts himself in the role of the agency in determining if bids are responsive, scoring bids, or performing similar tasks. The purpose of the bid hearing is merely to review the proposed agency action. State Contracting & Eng'g Corp. v. DOT, 709 So. 2d 607, 609 (Fla. 1st DCA 1998); Intercontinental Properties,

      Inc. v. HRS, 606 So. 2d 380, 386 (Fla. 1st DCA 1992).

      
      

   8. Absent a contrary statute, the standard of proof in an administrative proceeding is a preponderance of the evidence.

      § 120.57(1)(j), Fla. Stat. In a bid case involving the proposed selection of a bid, though, the standard of proof is whether the "proposed action was clearly erroneous, contrary to competition, arbitrary, or capricious" (cumulatively, Clearly Erroneous Standard). § 120.57(3)(f), Fla. Stat.

   9. These two standards of proof apply to factfinding at different stages of the decisionmaking process. In all cases, including bid cases, the Administrative Law Judge finds the evidentiary facts--sometimes called "direct" or "basic" facts-- by the preponderance standard. Evidentiary facts include such issues as whether a bid included an attachment. See Asphalt Pavers, Inc. v. DOT, 602 So. 2d 558 (Fla. 1st DCA 1992).17

   10. Between the evidentiary facts and the proposed agency action are intermediate determinations, which often are complex and drive the proposed agency action. To give effect to the statutory requirement that the Clearly Erroneous Standard applies to the proposed agency action, it is necessary to apply this standard to these intermediate determinations.

   11. These intermediate determinations include the determination of ultimate facts,18 mixed questions of fact and law, and facts based on technical matters within the agency's expertise.19 In a bid case, these ultimate facts, mixed

       
       

       questions of fact and law, and technical facts include whether a bid is responsive, State Contracting, supra, and whether a deviation in a bid is a minor irregularity, which the agency may waive, or a material variance, which the agency may not waive.

       Intercontinental Properties, supra. These intermediate determinations extend to the review of an evaluator's score, especially if the act of scoring requires technical expertise implicating agency policymaking.20

   12. The application of the Clearly Erroneous Standard to these intermediate determinations ensures that, for these determinations, the Administrative Law Judge will review the agency's factfinding and decisionmaking, rather than engage in original factfinding and decisionmaking. If a preponderance of the evidence establishes evidentiary facts, the Administrative Law Judge makes the original findings accordingly. But the Administrative Law Judge may not disturb the remaining determinations of ultimate facts, mixed questions of fact and law, and technical matters, on which the proposed agency action depends, except to the extent that these determinations violate the Clearly Erroneous Standard.

   13. Although all four statutory standards within the Clearly Erroneous Standard reinforce the review role of the Administrative Law Judge, there are important distinctions in meaning among them. The "clearly erroneous" standard applies

       
       

       when an appellate court reviews de novo an agency's interpretation of a statute that it administers. In such a case, the clearly erroneous standard requires the court to determine only if the agency's determination is "within the range of possible and reasonable interpretations." See, e.g., Cagle v. St. Johns Cnty. Scl. Dist., 939 So. 2d 1085, 1089 (Fla. 5th DCA 2006).

   14. On its face, "contrary to competition" encompasses the other three standards, as a violation of any of them is also contrary to competition. However, this standard probably derives from the longstanding requirement of Florida courts that the bidding process assures "fair competition" to all bidders. As expressed in Wester v. Belote, 103 Fla. 976, 981, 138 So. 721, 723-24 (1931), the effect of this standard is:

       to protect the public against collusive contracts; to secure fair competition upon equal terms to all bidders; to remove not only collusion but temptation for collusion and opportunity for gain at public expense; to close all avenues to favoritism and fraud in its various forms; to secure the best values for the county at the lowest possible expense, and to afford an equal advantage to all desiring to do business with the county, by affording an opportunity for an exact comparison of bids.

       
       

   15. As used in bid cases, "arbitrary" and "capricious" require that the agency determination is "supported by logic so that it is not irrational." Hadi v. Liberty Behavioral Health

       
       

       Corp., 927 So. 2d 34, 38 (Fla. 1st DCA 2006). This is consistent the meanings assigned to these words by statutes governing rule challenges. §§ 120.56(1)(a) and 120.52(8)(e), Fla. Stat. The latter statutes states: "A rule is arbitrary if it is not supported by logic or the necessary facts; a rule is capricious if it is adopted without thought or reason or is irrational."

   16. The first issue in this case is the responsiveness of Intervenor's proposal. In general, responsiveness means that a bid has satisfied all of the requirements of a procurement document. Section 287.012(25), Florida Statutes, defines a "responsive proposal" as a "proposal . . . submitted by a responsive and responsible vendor that conforms in all material respects to the solicitation." This statutory requirement is introduced into the RFP by paragraph 4 of PUR 1001.

   17. Case law divides deviations from the requirements of a procurement document into material variances and minor irregularities and allows the agency to waive the latter, but not the former. As the court stated in Tropabest Foods,

       Inc. v. Department of General Services, 493 So. 2d 50, 52 (Fla. 1st DCA 1986):

       although a bid containing a material variance is unacceptable, not every deviation from the invitation to bid is material. It is only material if it gives the bidder a substantial advantage over the

       
       

       other bidders and thereby restricts or stifles competition.

       
       

   18. Respondent overcomplicates the responsiveness issue by essentially limiting its argument to the claim that responsiveness is entirely a function of earning "yes" marks on each of the nine Qualifying Criteria contained in Attachment I. As a matter of law, Respondent is incorrect.21

   19. Many solicitation documents highlight certain requirements, sometimes referring to them as "mandatories." Highlighting certain requirements does not dispense with the need to comply with the other requirements of a procurement document. In this case, as Petitioner contends, such an interpretation would leave Respondent in the untenable position of being unable to reject a proposal as nonresponsive even though it lacked a cost proposal, as Attachment I does not include a cost proposal among the explicit mandatories. Equally bad, Respondent's argument would allow it to decline to enforce an RFP requirement, if omitted from the mandatories, free of any review of the materiality of the requirement and whether the agency's inaction conferred a competitive advantage on a bidder.

   20. The purpose of Attachment I is merely to allow Respondent to determine, as a threshold issue, whether a proposal meets certain basic requirements that are easy to

       check--here, all but one being documentation requirements. If a

       
       

       response were to omit one of these items, Respondent saves much time and effort by rejecting the response prior to submitting it to the evaluators for scoring. This matter of convenience does not relieve the proposers from complying with other RFP requirements or Respondent of the obligation of enforcing these requirements, unless a waiver of a requirement would not confer a competitive advantage.

   21. Respondent complicates the responsiveness issue in a second respect. At no time during the processing of the proposals did Respondent determine that any failure by Intervenor to itemize its costs would be a minor irregularity. Posing as a standard of proof, the Clearly Erroneous Standard is really a standard of review, and, as such, it depends on something to review.

   22. At the hearing, during opening statement, Respondent's counsel mentioned that, even if itemization were a requirement and Intervenor's proposal failed to itemize, the failure to satisfy this requirement would be a minor irregularity because it conferred no competitive advantage. But none of the witnesses called by Respondent or Intervenor testified how the failure to itemize affected the competitiveness of this procurement. Similarly, in its proposed recommended order, Respondent briefly mentioned that any deviation by Intervenor in failing to provide "a detailed

       
       

       breakdown of line item costs" would be a minor irregularity that Respondent "could have and may waive." Respondent/Intervenor, proposed recommended order, p. 20. But, again, Respondent offered no explanation of the grounds for a waiver, or even a statement that a waiver has taken place.

   23. Regardless whether an agency determines that a deviation from a bid document is a minor irregularity, the burden remains on Petitioner to prove nonresponsiveness, including the materiality of any deviation. § 120.57(3)(f), Fla. Stat., and Accela, supra.22 For the reasons set forth in the Findings of Fact, Petitioner has failed to prove that the failure of Intervenor to itemize its costs conferred on it a competitive advantage. Petitioner has thus failed to prove that this departure from the requirements of the RFP rendered Intervenor's proposal nonresponsive.

   24. The other issue in this case involves the scoring of Ms. Poston. As noted above, Petitioner takes its turn on this issue in overcomplicating the case. First, Petitioner wrongly reads into these scoring items the itemization requirement from RFP Section 4.21, so as to make Ms. Poston's scores, given the absence of any itemization by Intervenor, seem distorted.

   25. Second, even without regard to this error, Petitioner's scoring argument is difficult to follow due to the fact that it needs more points than are available in its

       
       

       challenge of Ms. Poston's scoring of Items 15-19. To achieve this result, Petitioner's scoring challenge apparently relies on a cascading effect--if one or more items in an evaluator's score must be discarded, then all of her scores must be discarded--but cites little evidence and offers little argument in support of this ambitious claim.

   26. If an evaluator were guilty of bias, fraud, or collusion, it is unlikely that only the scores proved to be tainted would be tossed out. For many reasons, including the difficulty of proving bias, fraud, or collusion and the disruptive effect of such wrongdoing on a procurement, it is likely that all of the evaluator's scores would be rejected.

   27. The situation may similar if the evaluator scored items illogically or irrationally. If the proof suggests that the evaluator lacked the ability or will to score portions of bids and some of his scores were thus truly illogical or irrational, it may prove necessary to toss out the rest of his scores.

   28. But Petitioner did not attempt to prove bias, fraud, or collusion and did not prove illogical or irrational scoring on Ms. Poston's part. Items scored outside the range of reasonableness do not invite the rejection of all of the evaluator's score. Such cores are badly wrong, but that is all. The misinformation or randomness that results from fraudulent or

       
       

       nonsensical scoring is not present when the scores are honest and reveal the thinking of the evaluator, but are merely outside the range of reasonable scores. Unlike scores that are contrary to competition, arbitrary, or capricious, scores that are clearly erroneous may provide some useful information.23

   29. In finding that scores are outside of the reasonable range, the Administrative Law Judge necessarily finds a reasonable range. Having done so, depending on the technical complexity of the material and, even if technically complex, the technical assistance available in the record, the Administrative Law Judge may be able to determine the extent to which the scores depart from the range of the reasonable.

   30. The Administrative Law Judge may not revise fraudulent or random scores without becoming an evaluator. But the Administrative Law Judge may revise scores that are merely outside the range of the reasonable, if sufficient evidence is available to give effect to the evaluator's thinking. The distinction between the roles of the Administrative Law Judge, when confronted with fraudulent or random scores, on the one hand, and clearly erroneous scores, on the other hand, is analogous to the traditional responsibilities of a circuit judge considering a request to allow parole evidence to inform her interpretation of a contract. If the contract is patently ambiguous, the judge lacks the authority to receive parole

       
       

       evidence of the parties' intent because she would essentially be establishing the agreement for the parties. But if the contract is only latently ambiguous, due to some extrinsic fact or extraneous evidence, the judge may receive parole evidence because there is sufficient evidence of the parties' agreement that the judge would not be establishing an agreement, only interpreting the agreement for a contingency not explicitly addressed. See, e.g., GE Fanuc Intelligent Platforms Embedded v. Brijot Imaging Sys., Inc., So. 3d, 2011 Fla. App. LEXIS 233 (Fla. 5th DCA 2011); Hunt v. First Nat'l Bank, 381 So. 2d 1194, 1196 (Fla. 2d DCA 1980).

   31. In this case, analysis of Ms. Poston's scoring of Items 15-19 has revealed only a single departure from the range of the reasonable--and then only by five points. This small anomaly in Ms. Poston's scoring does not call into question her other scores. Therefore, Petitioner has failed to prove that Ms. Poston's overall evaluation of the proposals violates the Clearly Erroneous Standard.

   32. Based on the findings and conclusions concerning the responsiveness of Intervenor's proposal and Ms. Poston's scoring, there is thus no basis to conclude that the intended award to Intervenor violates the applicable statutes, rules, policies, or RFP.

RECOMMENDATION

It is

RECOMMENDED that the Department of Health enter a final order dismissing the Formal Written Protest.

DONE AND ENTERED this 8th day of March, 2011, in Tallahassee, Leon County, Florida.

S

ROBERT E. MEALE

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 8th day of March, 2011.

ENDNOTES

1 Under Scope of Service, RFP Section 4.2 requires the selected proposer to provide a customizable, commercial, off-the-shelf PDMS that complies with the system and system-training requirements of the Harold Rogers Grant #2009-PM-BX-4004; sections 893.055 and 893.0551, Florida Statutes; and Florida Administrative Code proposed rule 64K-1. RFP Section 4.2 provides that the PDMS must pass acceptance testing and, among other things, be hosted offsite and operate independently of any other systems or networks of the state of Florida; comply with the federal Health Insurance Portability and Accountability Act, electronic protected health information, and all other applicable state and federal privacy and security laws; contain the data fields specified in section 893.055(3), Florida Statutes, and proposed Florida Administrative Code Rule 64K-1;

be capable of providing specific dispensed controlled prescription drug medication information to a patient's healthcare practitioner and pharmacist; be capable of providing information of dispensed prescriptions of controlled substances; be capable of producing patient prescription history information reports, be compatible with national prescription drug monitoring systems and be capable of providing connectivity to the "PMIX hub system" that has been developed by other states with PDMS programs.

Under Scope of Service, RFP Section 4.2 states that the selected proposer must complete a number of additional tasks and services, which should be completed within 120 days of execution of the contract. These tasks and services are registering and training authorized users that need to submit electronic information or query the database; providing Respondent, dispensers and prescribers with secure access to the database; securing, collecting, storing and reporting the required data for the dispensing of Schedule II-IV controlled substances; producing a user manual and training materials; producing the reports required by section 893.055, Florida Statutes, and Florida Administrative Code proposed rule 64K-1; and providing requested advisory alerts to dispensers, pharmacies, pharmacists and patients.

2 Under Tasks and Services, RFP Section 4.6.1 states that the selected proposer must complete a number of tasks and services, which should be completed within 90 days of execution of the contract. These tasks and services include: manage the implementation plan identified in its response to the RFP, coordinate with Petitioner's project manager during implementation, participate in at least two requirements sessions with Petitioner--in person or by teleconference--to document the level of customization required for the PDMS to meet the requirements of RFP Section 4.6, meet various security requirements specified in the RFP, provide a test environment and testing strategy to allow Respondent to confirm the successful implementation of the requirements and correction of critical and severe defects during the testing period, provide a Respondent-approved method to allow authorized prescribers and dispensers to access database information relating to a patient of that pharmacy, prescriber or dispenser, provide a process for implementing patches, software updates and bug fixes and explain any costs not covered by the annual support fees, provide for offsite backup of data, and provide a disaster-recovery plan to restore operations within 72 hours.

Under Tasks and Services, RFP Section 4.6.1 states that the selected proposer must complete a number of tasks and services, which should be completed within 120 days of execution of the contract. These tasks and services include: "[t]ransition the support for implementation to maintenance and operational support," produce and maintain a user manual, develop initial and ongoing training plans and materials, implement an online registration tool to register and collect data from prescribers and dispensers, implement a process by which a prescriber or dispenser may have access to the database information relating to a patient of that prescriber or dispenser to review the patient's controlled-drug prescription history, implement a reporting tool to allow Respondent to run reports identifying indicators of controlled-substance abuse, implement a method to track requestors and authorized persons that request data on individual patients, implement a method to identify a prescriber or dispenser as a potential controlled-substance abuser, maintain data logs (including a history of user access to the database), provide for daily updating of data and real-time availability of data, provide a mechanism to allow law enforcement agencies to register and request information, and provide a toll-free number and email address by which dispensers and prescribers may contact the selected proposer's staff to resolve problems and receive information about data transmission.

Under Tasks and Services, RFP Section 4.6.1 states that the selected proposer must complete a number of tasks and services, which should be completed within 180 days of execution of the contract. These tasks and services include: provide an implementation project closing report detailing lessons learned, deliverables completed and accepted and outstanding issues, provide a method to archive older records, unloads or reports, and provide an interface for creating new report formats.

3 RFP Section 4.10 states:

Each proposer shall include a copy of its organization chart and its proposed staffing for project management, training coordinator and technical lead. The selected proposer shall maintain an adequate administrative organizational structure and support staff sufficient to perform its contractual responsibilities. In the event [Respondent] determines that the selected proposer's staffing levels do not conform to those

promised in the proposal, it shall advise the selected proposer in writing who shall have thirty (30) days to remedy the identified staffing deficiencies.

RFP Section 4.11 requires the selected proposer to "staff the project with key personnel identified in the proposer's proposal who are considered by [Respondent] to be essential to this project (Project Manager, Training Coordinator and Technical Lead)." This section adds that the selected proposer may not remove or substitute for any such persons without Respondent's written approval.

4 RFP Section 4.23 states that each proposal must provide a detailed statement of qualifications and a summary of relevant experience, a history of the proposer's organization, an organizational chart showing key staff, and a detailed description of the design, capacity, disaster recovery plan, backup procedures, generators and security of the facility at which the system and data will be located.

5 RFP Section 4.24 requires each proposal to detail the proposer's approach to providing the technical services. The approach must demonstrate a thorough understanding of the project. At minimum, each proposal should include a detailed description of the PDMS and how general maintenance and support services will be performed.

RFP Section 4.25 requires a detailed plan for the delivery of the PDMS. Each proposal must describe concisely each implementation task, the timeframe for executing each task, and the person or position responsible for each task.

6 RFP Section 5.0 contains various special instructions. Section

5.0 states that these special instructions override any conflicting instructions in PUR 1001, which is incorporated into the RFP, unless the PUR 1001 instructions are required by statute.

RFP Section 5.4 provides formatting instructions for proposals. This section states that the proposal should be single-spaced and organized as indicated in the RFP. The pages should be numbered and one-inch margins "should be used where possible." Section 5.4 leaves the font size and type to the discretion of the proposer, but the font size must be at least as large as the font type of the RFP, which is described as "Ariel 12."

RFP Section 6.0 contains various special instructions.

Section 6.0 states that these special instructions override any conflicting instructions in PUR 1000, which is incorporated into the RFP, unless the PUR 1000 instructions are required by statute.

7 Five of the remaining 14 scoring items are for 15 or fewer maximum points each. In descending order, the remaining nine items, with maximum scores of at least 20 points, are as follows, with the item number on the left and the maximum points for each item on the right:

12. How well does the proposal's 70

Approach To Performing Tasks demonstrate the Proposer's ability to successfully implement, host, operate, and maintain the proposed PDMS?

4. How well does the proposal 50

demonstrate the proposer's ability to perform the requirements outlined in the Scope of Service?

1. How well does the proposal 50

   demonstrate the proposer's ability to perform the requirements outlined in the General System Specifications and Tasks?

2. How well does the proposal 50

demonstrate that the proposer's Qualifications and Organizational Experience will ensure the successful implementation, hosting, maintenance and operational support for the proposed PDMS?

13. How well does the proposal 50

present a clear and reasonable Implementation Work Plan including a realistic timeline?

5. How well does the proposal 20

present a demonstrative successful track record as a PDMS provider, as contemplated by this RFP?

1. How well does the proposal 20

   describe the adequacy of proposer's Facility Description and Security?

2. How well does the proposal 20

detail the Data Backup and Disaster Recovery capabilities of the proposed PDMS?

14. How well does the proposal 20

describe general maintenance and system support services?

8 A "go-live" date is not identified as such in the RFP. However, if the original timeline in the RFP had been met and Respondent had posted its notice of intent around November 30, 2010, this date would be approximately correct. After allowing three days for a party to protest the intended award, the contract would be signed on December 3, 2010. Ninety days later, on March 3, 2011, the selected proposer should have delivered a working PDMS to Respondent. Thirty days later, on April 2, 2011, the project would have been substantially complete. These time estimates explain why the hosting, maintenance, and operations costs extend only five months during the initial, ten-month contract term.

9 In its proposed recommended order, Petitioner mischaracterizes the requirements of Attachment I as stating the requirements for a proposer to be responsible, not for a proposal to be responsive. As noted above, Attachment I uses the language of responsiveness, not responsibility. Also, the requirements of Attachment I apply to what is contained in the proposal, which suggests a responsiveness determination. Several of the requirements pertain to features of the PDMS product, not the vendor. Although the last requirement of Attachment I describes the evaluation of the financial soundness of the proposer, which is a responsibility determination, the requirement itself is that the proposer provide the financial statement necessary for this financial analysis--the point of this requirement being that, if the financial statement is missing, the proposal will be rejected.

However, Petitioner's mischaracterization of Attachment I is harmless and is probably only a means of emphasizing that the other requirements of the RFP, not included in Attachment I, are available for determinations of nonresponsiveness. This is

correct, even if Attachment I is characterized as a source of requirements for a determination of proposal responsiveness, not proposer responsibility.

10

11

12

13

14

15 See, e.g., endnote 7.

16 Of course, no party may amend or supplement a bid after the agency opens the bids and announces its intended agency action.

§ 120.57(3)(f), Fla. Stat.

17 The Asphalt Pavers court reasoned:

Factual issues susceptible of ordinary methods of proof that are not infused with policy considerations are the prerogative of the hearing officer as the finder of fact.

McDonald v. Department of Banking & Finance,

346 So. 2d 569 (Fla. 1st DCA 1977). It is the hearing officer's function to consider all the evidence presented, resolve conflicts, judge credibility of witnesses, draw permissible inferences from the evidence, and reach ultimate findings of fact based on competent, substantial evidence. State Beverage Department v. Ernal, 115 So. 2d 566 (Fla. 3d DCA 1959). If, as is often the case, the evidence presented supports two inconsistent findings, it is the hearing officer's role to decide the issue one way or the other. The agency may not reject the hearing officer's findings unless there is no competent, substantial evidence from which the finding could reasonably be inferred. The agency is not authorized to weigh the evidence presented, judge credibility of witnesses, or otherwise interpret the

evidence to fit its desired ultimate conclusion.

Asphalt Pavers, supra, at p. 551. But see discussion in endnote 23, infra. The Asphalt Pavers court's assignment of the "ultimate facts" to the Administrative Law Judge is dictum and, even though post-Groves-Watkins, may have been legislatively overruled by the 1996 statutory changes described below.

18 A good discussion of ultimate facts occurs in Costin

v. Florida A&M University, 972 So. 2d 1084, 1086-87 (Fla. 5th DCA 2008). In this decision, which also describes the greater factfinding responsibilities of the Administrative Law Judge in cases not involving bids, an Administrative Law Judge found that the university had proved that a university employee was guilty of misconduct, but had failed to prove that the misconduct had adversely affected the university, so as to justify the employee's termination. The university declined to accept the recommendation of dismissal of the charges. In explaining an alternative holding that the adverse-affect determination was an ultimate finding within the province of the Administrative Law Judge, the court stated:

In its final order, FAMU rejected the ALJ's critical "no adverse affect" finding on the theory that it constituted a conclusion of law. We agree with Costin, however, that the finding of "no adverse affect" is an "ultimate fact" best left to the trier of fact under these circumstances. As explained in Tedder v. Florida Unemployment Appeals Commission, 697 So. 2d 900, 902 (Fla. 2d DCA 1997) (Danahy, A.C.J.,

specially concurring), ultimate facts are those "necessary to determine issues in [a] case" or the "final facts" derived from the "evidentiary facts supporting them." Id. (citing Black's Law Dictionary 1522 (6th ed. 1990). Ultimate facts are also regularly described as "mixed questions" of law and fact, see, e.g., Antonucci v. Unemp. App.

Comm'n, 793 So. 2d 1116, 1117 (Fla. 4th DCA

2001), and must generally be made by the fact finder in an administrative proceeding because they are "necessary for proper review of administrative orders." Tedder,

697 So. 2d at 902; see also San Roman v. Unemp. App. Comm'n, 711 So. 2d 93 (Fla. 4th DCA 1998) (finding that whether "good cause" exists for unemployment compensation claimant to voluntarily leave work frequently involves mixed question of law and fact, and is an ultimate fact best left to the fact-finder); Heifetz v. Dep't of Bus. Reg., Div. of Alcoholic Beverages & Tobacco, 475 So. 2d 1277 (Fla. 1st DCA 1985) (finding that "negligent supervision and lack of diligence are essentially ultimate findings of fact clearly within the realm of the hearing officer's fact-finding discretion.") (citations omitted). Because the ALJ's finding on the "adverse affect" issue is supported by the record, FAMU was required to accept it. See, e.g., Fonte v. State, Dep't of Envtl. Reg., 634 So. 2d 663 (Fla. 2d DCA 1994) (noting that an agency may only reject a hearing officer's findings of fact if it determines from a review of the complete record that the findings were not based upon competent, substantial evidence); Brevard Co. Sheriff's Dep't v.

Fla. Comm'n on Human Relations, 429 So. 2d 1235, 1237 (Fla. 5th DCA 1983) ("What the

Commission has done, in effect, is ignored or rejected the hearing officer's findings of fact without determining that they are not supported by competent, substantial evidence. This it cannot do.")

19 See, e.g., S. Fla. Cargo Carriers Ass'n v. Dep't of Bus. & Prof'l Reg., 738 So. 2d 391, 394 (Fla. 3d DCA 1999) (distinction between evidentiary findings and ultimate factual findings, which usually resolve the legal issues). Citing McDonald v. Dep't of Banking & Fin., 346 So. 2d 569, 579 (Fla. 1st DCA 1977), the S. Fla. Cargo Carriers court reasoned that greater deference is owned to ultimate findings calling for agency expertise).

20 The greater the technical expertise calling for agency policymaking, the greater the deference. McDonald, supra, at p. 593: "The displaced findings of [the] hearing officer . . . lessen in probative force as the "facts" blur into opinions and

opinions into policies, and the Department's power to substitute findings based on record evidence correspondingly increases."

21 As is, unfortunately, the conclusion of law supporting Respondent's argument in Texas Aquatic Harvesting, Inc. v. DEP, DOAH Case No. 06-4217BID, 2007 WL 626288 (2007), on which Respondent relies.

22 Because Respondent never considered, while processing the proposals or at hearing, Intervenor's failure to itemize its costs, Petitioner is left in the unenviable position of trying to anticipate Respondent's arguments and answer them. In its proposed recommended order, Petitioner has trotted out the usual competitive-advantage suspects, to which the Administrative Law Judge has added one or two. But none appears to be at work in this case.

Respondent's failure to address the materiality of Intervenor's failure to itemize may have a bearing on the standard of proof applied to this issue. If Respondent waived this failure as a minor irregularity, this determination would be subject to the deferential Clearly Erroneous Standard. By not determining whether Intervenor's failure is material, Respondent has provided nothing to which to apply the Clearly Erroneous Standard, which is a standard of review posing as a standard of evidence. Perhaps the deferential standard of review applies because of the proximity of the presumed determination of nonmateriality of Intervenor's failure to the proposed award of the PDMS contract to Intervenor. But, if not, then the Administrative Law Judge would determine the materiality issue, de novo, by the preponderance standard. In an abundance of caution, the Administrative Law Judge has applied the preponderance standard in determining that Intervenor's failure to itemize is not material.

23 This case touches on the unique role of the clearly erroneous standard, as compared to the other standards within the Clearly Erroneous Standard. Textually, there is considerable overlap between "contrary to competition," "arbitrary," and "capricious," as they apply to a proposed agency action to award, under § 120.57(3)(f), Fla. Stat., and the standards that apply to a proposed agency action to reject all bids, which is reviewed for a determination of whether it is illegal, arbitrary, dishonesty, or fraudulent. Id. "Arbitrary" occurs under both schemes, "capricious" rarely adds much to "arbitrary," and "contrary to competition" captures illegality, dishonest, and fraud. "Clearly erroneous" thus stands out as

the review criterion that effectively adds more robustness to the review of proposed awards, as compared to the review of proposed rejections of all bids.

The statutory language for the review of a proposed agency action to reject all bids is derived from DOT v. Groves-Watkins Constructors, 530 So. 2d 912, 914 (Fla. 1988), which held that the sole responsibility of a DOAH hearing officer, in a case in which the agency proposed to reject all bids, is to determine "whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly."

Four years later, the Groves-Watkins standard arose in three other bid cases. In Moore v. HRS, 596 So. 2d 759, 761 (Fla. 1st DCA 1992), the court, rejecting the hearing officer's attempt to evaluate de novo the bids, held that the Groves-Watkins standard applied in cases in which the agency proposed to award the contract.

In Procacci v. HRS, 603 So. 2d 1299 (Fla. 1st DCA 1992), the court again applied the Groves-Watkins standard to an intent-to- award case. The Procacci court rejected a stipulation of the parties that, based on the record, the DOAH hearing officer would determine which bidder should have been awarded a lease.

The court held that the agency impermissibly delegated its statutory duties to the hearing officer, whose role was limited to reviewing the proposed agency action under the Groves-Watkins standard.

An agency tried to extend the Groves-Watkins standard to factfinding of evidentiary facts in Asphalt Pavers, Inc. v. DOT, 602 So. 2d 558 (Fla. 1st DCA 1992). In this case, the court rejected the agency's holding in its final order that the

Groves-Watkins standard applied to a finding of whether a bid contained a list of disadvantaged business enterprises when it was opened. In reversing the final order, the court determined that the hearing officers' finding on a threshold issue was not subject to such a deferential standard.

In 1996, the Legislature comprehensively revised bid law in Florida by enacting § 120.57(3), Fla. Stat. Ch. 96-159, § 19, pp. 190-91, Laws of Fla. The Legislature restricted the Groves- Watkins standard to the Groves-Watkins situation--the proposed rejection of all bids. Manifesting a legislative determination to subject agency determinations to do business to more rigorous review than agency determinations not to do business, the

Legislature added the clearly erroneous criterion to the review criteria applied to proposed agency action to award a bid--thus, perhaps, casting some doubt on the continued viability of Moore and Procacci, supra, at least when the challenge is based on the clearly erroneous standard.

COPIES FURNISHED:

Seann M. Frazier, Esquire David C. Ashburn, Esquire Greenberg Traurig, P.A.

101 East College Avenue Post Office Drawer 1838 Tallahassee, Florida 32302

Stephen C. Emmanuel, Esquire Ausley and McMullen

123 South Calhoun Street Tallahassee, Florida 32301

Melissa Lloyd, Esquire Department of Health

Office of the General Counsel 4052 Bald Cypress Way, Bin A02 Tallahassee, Florida 32399-1703

Mark W. Hodge, Esquire, Qualified Representative

Chisenhall, Nestrud & Julian, P.A.

400 West Capitol Avenue 2840 Regions Center

Little Rock, Arkansas 72201

R. Samuel Power, Agency Clerk Department of Health

4052 Bald Cypress Way, BIN A02 Tallahassee, Florida 32399-1703

Shairi Turner, M.D. Department of Health

4052 Bald Cypress Way, BIN A00 Tallahassee, Florida 32399-1701

Kimberly Berfield Department of Health

4052 Bald Cypress Way, BIN A00 Tallahassee, Florida 32399-1701

E. Renee Alsobrook, Acting General Counsel Department of Health

4052 Bald Cypress Way, BIN A00 Tallahassee, Florida 32399-1701

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 must be filed with the agency that will issue the final order in this case.

Docket for Case No: 11-000257BID

Orders for Case No: 11-000257BID