STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

SOUTHMARK MANAGEMENT CORPORATION, )

)

Petitioner, )

)

vs. ) CASE NO. 85-3158BID

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent, )

and )

) S & L PROPERTY MANAGEMENT, INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, a final hearing was held in this case in Tallahassee on October 8, 1985, before Donald D. Conn a duly designated Hearing Officer of the Division of Administrative Hearings, at which the parties were represented as follows:

APPEARANCES

Petitioner: William E. Powers, Jr., Esquire Post Office Box 11240 Tallahassee, Florida 32302

Respondent: David P. Gauldin Esquire

Department of Heath and Rehabilitative Services

1323 Winewood Boulevard

Tallahassee Florida 32301

Intervenor: Joseph A. O'Friel, Esquire

100 Twiggs Street Tampa, Florida 33602

The issue in this case is whether the Department of Health and Rehabilitative Services, Respondent, acted unfairly, arbitrarily or capriciously in issuing an award of lease number 590:1651 to S & L Property Managements, Inc., Intervenor, rather than to Southmark Management Corporations Petitioner. During the hearing Intervenor and Respondent objected to the introduction of Petitioner's Exhibits 3(A) and (B); 4(A) and (B); 5(A) and (B), 7, 10;

11 and 13; as well as related testimony. They contend that Petitioner is limited by the terms of its Intent to Protest and Protest (Petitioner's Exhibits 20 and 21) and urge that this evidence which Petitioner seeks to introduce is irrelevant to the issues raised therein. A ruling on the objection was reserved to allow review of the exhibits and Respondent's Rules 10-13.07 and 10-13.11, Florida Administrative Code.

It is clear from Petitioner's Intent to Protest and Protest that Petitioner felt they should have been awarded this lease because they were recommended by Respondent's staff which initially evaluated the bids they contend the evaluation criteria were not properly applied and that they were in compliance with all bid requirements. Moreover, petitioner specifically compares its facility with that of Intervenor, and by so doing puts in issue the reasons for Respondent's choice of Intervenor over Petitioner. In Intervenor's Prehearing Stipulation it contends that "HRS' award of this Lease to S and L, based on the fact that it bid the lowest rate on the basic lease is not irrational arbitrary or capricious but rather was a rational decision made on the basis of the best economic interests of HRS and the State of Florida." Respondent's Prehearing Stipulation restates Petitioner's allegation that "the bidding process was somehow unfair" and Respondent's position "that the bid was properly awarded to S and L Property Management, Inc., by the appropriate departmental authorities." Therefore, the objections to Petitioner's exhibits noted above and related testimony are overruled and said exhibits have been admitted since they are relevant to the issues as presented by the parties.

A total of twenty (20) exhibits were received from Petitioner and three (3) from Respondent. Petitioner's Exhibit 12 was rejected and Petitioner did not offer Exhibits 6 and 8. Petitioner offered the testimony of its Regional Manager, Leonard Polinsky, and Respondent's employee Homer Atchison. Respondent called employees

George A. Smith, Robert Brady, Tom Golder, and Kenneth McLane. Intervenor offered no exhibits but also called George A. Smith to testify. A transcript was filed on October 23, 1985.

The parties were allowed to submit posthearing proposed findings of fact pursuant to Section 120.57(1)(b)4, Florida Statutes, and Petitioner subsequently filed a motion for extension of time to November 12, 1985, to which no objection has been filed. Therefore, Petitioner's motion is hereby granted and a ruling has been made on each proposed finding submitted by the parties as reflected in the Appendix to this Recommended Order.

FINDINGS OF FACT

The following findings of fact are made based upon a stipulation entered into by all parties on the record:

1. S & L Property Managements, Inc., Intervenor, was the lowest bidder for lease number 590:1651 by between approximately $84,000 and $105,000, exclusive of moving costs, over the basic five year term of the lease.

   
   

2. There is no evidence that Intervenor's facility (Howard Building) is structurally unsound, and in fact the Department of Health and Rehabilitative services, Respondent, procured an engineering report which showed Intervenor's facility to be structurally sound.

   
   

3. Both Intervenor's and Southmark Management Corporation's, Petitioner's, bids on this lease met all bid requirements. Both were qualified bidders for award of this leased except for Petitioner's objection and contention that bidders were required to include present value calculations with their bids, which Petitioner did but Intervenor did not.

   
   

4. Intervenor agreed with Respondent that if it received this award, it would renovate the leased space in its facility to meet Respondent's reasonable requirements.

   
   

5. There is no issue regarding the conformity of Intervenor's bid with handicap design requirements.

   
   

6. Preaward documents, memoranda and correspondence from Respondent only recommended that Petitioner be awarded this lease and did not advise Petitioner it had been awarded the lease.

   
   

7. Robert Brady, Respondent's Director of General services, was the person who was to make the final decision concerning the award of this lease.

   
   

8. Prior to the award of the lease to Intervenor, Brady determined that the Department of Corrections, present tenant in Intervenor's facility was satisfied with its occupancy, and also that the leased space would meet bid specifications.

9. Petitioner chose to leave its bid open, even though it could have withdrawn its bid after the expiration of the thirty day period following the bid opening.

   
   

10. Both Petitioner and Intervenor took actions and expended sums of money in the expectation of being awarded the lease. Intervenor acted after being advised it had been awarded this lease.

    
    

11. There is no allegation by Petitioner that the award of this lease to Intervenor was made on the basis of any improper influence exerted upon or by Respondent by any of the bidders, or by any other person.

    
    

12. Respondent delayed the award of this lease beyond thirty days after the bid opening.

    
    

    The following findings of fact are made based upon the evidence presented:

    
    

13. Petitioner and Intervenor timely submitted bids in response to Respondent's Invitation to Bid on lease number 590:1651 which was for 12,312 square feet of space for the Office of Disability Determination in Tampa, Hillsborough County, Florida. The Office of Disability Determination had been a tenant in Petitioner's facility for six years, and continues to occupy space in Petitioner's facility until this bid protest is resolved. Since approximately October 1984 Respondent has not had a written lease with Petitioner for its present space despite repeated efforts by Petitioner to obtain an executed lease from Respondent.

    
    

14. Bids which were received were evaluated by a three person committee composed of Respondent's employees familiar with the space needs of the Office of Disability Determination. The evaluation criteria, or award factors, were set forth in the Invitation to Bid. Rental rate over the basic term of the lease was weighted twice as heavily as any of the other eleven (11) criteria. Upon its initial review, the committee recommended that the award be made to Petitioner, and Leonard Polinsky, Property Manager for Petitioners was informed of this recommendation. Based upon a 100 point scaled Petitioner's initial evaluation was from .2 to 2 points higher than Intervenor's. Polinsky assumed that the actual award was a mere formality, and therefore expended approximately $700 for preliminary

    architectural sketches of lease space renovations. This initial evaluation committee recommendation was based, in part, on its concerns about the structural soundness and maintenance of Intervenor's facility.

    
    

15. Petitioner did not know who would actually make the award on behalf of Respondent or what the authority of the evaluation committee was.

    
    

16. Petitioner did not object to Respondent's delay of this award beyond the thirty-day time period called for in the Invitation to Bid, and suffered no harm as a result of this delay. The delay was caused by Respondent's investigation of the structural soundness of Intervenor's facility, as well as the experience of its present tenants.

    
    

17. Following completion of this investigation, the evaluation committee met again, reevaluated the bids, and recommended Intervenor be awarded this lease. Respondent, through Robert Brady, determined that the award should be made to Intervenor after completing its investigation, reviewing the committee's reevaluation of bids, and being satisfied that this award would be in the best interests of the state. This decision was based primarily on the following factors:

    
    

    1. After investigation, no structural or maintenance problems were found to exist, which had been initial concerns of the committee.

       
       

    2. Intervenor was low bidder for the lease over the five year term of the lease.

       
       

    3. Both bids were responsive and met all bid requirements.

       
       

    4. Intervenor's facility was shown to be structurally sound and suitable for Respondent's needs.

    
    

18. Intervenor's failure to include present value calculations of the rental rate in its bid did not disqualify it since bidders were not required to include these calculations. Respondent routinely did its own calculations of present value on each bid.

    
    

    CONCLUSIONS OF LAW

19. The Division of Administrative Hearings has jurisdiction over the parties and subject matter in this cause. Section 120.57(1), and Section 120.53(5), Florida Statutes, as amended by Chapter 85-180, Laws of Florida.

    
    

20. In accordance with Section 255.249(2)(b), Florida Statutes, the Division of Building Construction and Property Management has adopted Rule 13D-7.092, Florida Administrative Code, which governs the leasing of 2,000 square feet or more in privately owned buildings, and which requires all agencies to advertise for competitive bids, and award to the lowest and best bidder." Respondent seeks to lease more than 2,000 square feet and property advertised for competitive bids to which Petitioner and Intervenor responded. Respondent determined that Intervenor submitted the lowest and best bid and seeks to make the award. Petitioner contends the award should properly be made to it, and that Respondent has acted unfairly, arbitrarily and capriciously. The evidence does not support Petitioner's contention.

21. First the parties have stipulated that Intervenor's bid was lower than Petitioner's by between

    $84,000 and $105,000, exclusive of moving costs, over the basic five year term of the lease. Second the evaluation committee determined that Intervenor's bid was the lowest and best after they reviewed the results of an investigation into structural soundness and maintenance of this facility and Robert Brady, Respondent's representative with the authority to make an award, determined that Intervenor's bid was best for the agency and the state.

    Third there is no credible evidence of unfairness on the part of Respondent. Respondent's representative did inform Petitioner that it was initially recommended by the committee, but that representative did not have final decision authority and did not indicate an award had been made. Respondent did delay an award beyond thirty days after the bids were opened but Petitioner agreed to this by failing to withdraw its bid and continuing to participate in the award process. Petitioner did expend $700 in contemplation of an actual award but Respondent did not request or require this expenditure. There is no evidence of undue influence prejudice or personal involvement on the part of any representative of Respondent. Distinguish

    Wood-Hopkins Contracting Co. v. Roger J. Au and Son, Inc.

    354 So.2d 446 (Fla. 1st DCA 1978), Solar Energy Control, Inc. v. State, Department of Health and Rehabilitative Services, 377 So.2d 746 (Fla. 1st DCA 1979).

    
    

22. As reiterated in Baxter's Asphalt and Concrete, Inc. v. Department of Transportation, et al. Case No. AZ-

110 (Fla. 1st DCA, Opinion filed September 17, 1985):

A public body has wide discretion in soliciting and accepting bids . . . and its decisions, when based on honest exercise of this discretion will not be overturned by a court even if reasonable persons may persons may disagree.

Citing, Liberty County v. Baxter's Asphalt and Concrete,

421 So.2d 505, 507 (Fla. 1982). The record in this case demonstrates the honest exercise of discretion by Respondent and even if Petitioner reasonably disagrees, Respondent's decision to award to Intervenor should not be overturned.

RECOMMENDATION

Based upon the foregoing, it is recommended that Respondent enter a Final Order awarding lease number 590:1651 to Intervenor.

DONE and ENTERED this 15th day of November 1985, at Tallahassee Florida.

Hearings

Hearings

DONALD D. CONN, Hearing Officer Division of Administrative

The Oakland Building 2009 Apalachee Parkway

Tallahassee Florida 32301

(904) 488-9675

Filed with the Clerk of the Division of Administrative

this 15day of November 1985.

APPENDIX

(DOAH Case No. 85-3158BID)

Rulings on Petitioner's Proposed Findings of Fact: 1-2. Adopted in Finding of Fact 13.

1. Rejected as a Finding of Fact but included in

   introductory material.

2. Rejected as simply a statement of position.

3. Adopted in part in Finding of Fact 14.

4. Rejected as irrelevant and unnecessary.

5. Adopted in Findings of Fact 9, 12, 16.

8-9. Adopted in part in Finding of Fact 13, otherwise rejected as irrelevant and unnecessary.

10-11. Adopted in part in Finding of Fact 14, otherwise rejected as irrelevant and not based on competent substantial evidence.

1. Rejected as unnecessary and irrelevant.

2. Adopted in part in Finding of Fact 14.

14-16. Rejected as simply a statement of position and argument in support of Petitioner's position.

17. Adopted in Finding of Fact 1.

18-19. Adopted in part in Finding of Fact 14, but rejected in part in Finding of Fact 17.

1. Rejected as simply a statement of position and argument thereon.

2. Rejected in Findings of Fact 14, 17 and otherwise not based on competent substantial evidence.

3. Adopted in part in Findings of Fact 2, 8 but otherwise rejected as simply a statement of position and argument thereon.

Rulings on Respondent's Proposed Findings of Fact:

1. Adopted in Finding of Fact 13.

2-3. Rejected as irrelevant and unnecessary in light of Findings of Fact 6, 7, 17.

1. Adopted in Finding of Fact 14.

2. Adopted in Finding of Fact 6.

3. Adopted in Finding of Fact 14.

4. Adopted in Finding of Fact 17.

8-12. Rejected as irrelevant, unnecessary and cumulative.

1. Rejected as irrelevant and unnecessary.

2. Adopted in Finding of Fact 18.

Rulings on Intervenor's Proposed Findings of Fact:

1-2. Rejected as a conclusion of law and otherwise unnecessary.

3. Adopted, as to the first sentence; in Finding of Fact 17, otherwise rejected as simply a statement of position.

4-5. Rejected as simply a statement of position.

1. Adopted in Findings of Fact 1-12 with the exception of proposed finding 6(k) which the transcript does not reflect as part of the stipulation, but which is adopted in Findings of Fact 14, 15, 17.

2. Adopted in Finding of Fact 13.

8-10. Adopted in Finding of Fact 14.

1. Rejected as simply a summary of testimony.

2. Rejected as simply a summary of testimony, and otherwise cumulative and unnecessary.

3. Adopted in Finding of Fact 18.

4. Adopted in Finding of Fact 14.

5. Adopted in Finding of Fact 15.

16-18. Adopted in Finding of Fact 16.

19. Rejected as irrelevant and unnecessary.

20-21. Adopted in part in Finding of Fact 17, but otherwise rejected as cumulative.

22-26. Rejected as cumulative and unnecessary.

COPIES FURNISHED:

William E. Powers, Jr., Esquire Post Office Box 11240 Tallahassee, Florida 32302

David P. Gauldin Esquire Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee Florida 32301

Joseph A. O'Friel Esquire

100 Twiggs Street Tampa, Florida 33602

David Pingree, Secretary Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee Florida 32301

Docket for Case No: 85-003158BID

Orders for Case No: 85-003158BID