STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

KINNEY SYSTEMS OF FLORIDA, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 86-2929BID

) STATE OF FLORIDA, DEPARTMENT OF ) HEALTH AND REHABILITATIVE )

SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, William J. Kendrick, held a public hearing in the above-styled case on September 3, 1986, 1/ in Fort Lauderdale, Florida.

APPEARANCES

For Petitioner: Clifford B. Hark, Esquire

Consolidated Bank Building, 12th Floor

168 Southeast First Street Miami, Florida 33131

For Respondent: Morton Laitner, Esquire

Dade County Health Unit 1350 Northwest 14th Street Miami, Florida 33125

PRELIMINARY STATEMENT

These proceedings arose as a result of an Invitation to Bid issued by Respondent, Department of Health and Rehabilitative Services, Dade County Public Health Unit (Department). The Department sought to secure a parking lot management contract for its parking lot located at 1350 N.W. 14th Street, Miami, Florida.

On its initial bid letting, the Department proposed to award the contract to Kinney Systems of Florida, Inc. (Kinney); however, upon receipt of a protest from Floyd & Associates Protection Corporation (Floyd), 2/ the Department unilaterally elected to rebid the contract because of a perceived ambiguity in the bid specifications. On rebid, the Department again proposed to award the contract to Kinney, but upon receipt of a protest from Floyd reevaluated its decision and proposed to award the contract to Floyd. Kinney protested the award of the contract to Floyd, as well as the Department's decision to rebid the contract.

At final hearing, Kinney called as witnesses: Richard H. Shera, Sr., Charles C. Adams, and Kenneth Deutsch. The Department called as witnesses: Herbert A. Deitch, Richard H. Shera, Sr., and Albert Markovitz. Department exhibits 1-20 and 23-28 were received into evidence.

The parties were granted until September 15, 1956, to file proposed findings of fact and conclusions of law. The proposed findings filed on behalf of the parties have been addressed in the appendix to this Recommended Order.

FINDINGS OF FACT

The Bid

1. The Department, through an Invitation to Bid (ITB), sought to secure a contract for the management of the Dade County Public Health Unit parking lot located at 1340 N.W. 14th Street, Miami, Florida. By April 1, 1986, the bid opening date, bids had been filed with the Department on behalf of Kinney, Floyd, and LaSalle Parking, Inc. (LaSalle).

   
   

2. The Department's selection team reviewed the bids and recommended that the contract be awarded to Kinney. Consistent with the selection team's recommendation, by letter of April 2, 1986, the Department advised the unsuccessful bidders that the contract had been awarded to Kinney and advised them of their right to protest the award.

   
   

3. Floyd filed a timely protest of the award and alleged, inter alia, that Mr. Shera, the Department's Business Manager, had outlined the criteria to be used in evaluating the bids as including a consideration of the bidder's ability to:

   
   

   Provide parking services to . . . employees and clients for the lowest monthly rate. 3/

   
   

4. Upon receipt of Floyd's protest, the Department reevaluated the bids and the ITB specifications, and concluded that the ITB specifications contained an ambiguity which had resulted in a lack of uniform bid response. Therefore, the Department rejected all bids and rebid the contract. 4/

   
   

5. Pertinent to this case the bid specifications provided.

   
   

   SPACES AVAILABLE: 13 Uncovered Reserved,

   present rate $10.50/ month.

   22 Covered Reserved, present rate $10.50/ month.

   115 Reserved for Health Department Employees, present rate $7.35/month.

   3 Handicapped 45 Daily rental

   45 Daily rental

   198 TOTAL

   
   

   CURRENT RATE: Reserved Parking $10.50/month. Health Department Employees $7.35/month Health Department Clients 50 percent

   discount on daily rates. Daily rates: 1st hour $1.00 Additional 1/2

   hour $.50

   All day $2.50 3:00 P.M.

   7:00 P.M.

   $1.50.

   
   

   MANAGERIAL RESPONSIBILITIES:

   
   

   3. That in consideration for such services, the OWNER will allow the MANAGER the exclusive right to charge, collect the established fees for all those wishing to have their cars parked upon the parking premises. All fees must be approved by the owner.

   
   

   And, the mandated Bid Sheet required a response to three proposals:

   
   

   • PROPOSAL FOR OPERATING THE LOT:

   • PROPOSED RATES:

   • PROPOSED NET INCOME DISTRIBUTION:

     
     

6. Kinney's response to the ITB proposed to retain the current rates and offered a net income distribution of 25% to Kinney and 75% to the Department. Floyd's response to the ITB proposed rates of:

   
   

   RESERVED PARKING : $9.35/MONTH HEALTH DEPARTMENT EMPLOYEES: $6.24/MONTH HEALTH DEPARTMENT CLIENTS : 50% DISCOUNT

   ON DAILY RATES

   DAILY RATES : 1ST HOUR $1.00 EACH ADDITIONAL 1/2 HR. $.50

   : MAXIMUM ALL

   DAY $2.50

   : 3PM - 7PM

   $1.50

   
   

   and a net income distribution of 30% to Floyd and 70% to the Department.

   
   

7. While it was the Department's intent to maintain the current rates and to evaluate the bids primarily on a net income distribution basis, the bid specifications were ambiguous and subject to an interpretation which would permit a bid based on different parking rates, as well as a variable distribution basis. Accordingly, because of the ambiguity in the bid specifications, all bids submitted in response to the initial letting should be rejected.

   
   

   The Rebid

   
   

8. On rebid, the Department amended its bid specifications to clarify its intent that the current rates would remain in effect, and delineated the "determining factors for bid award. Specifically, the rebid specifications provided:

   SPACES AVAILABLE: 13 Uncovered Reserved,

   present rate $10.50/ month.

   22 Covered Reserved, present rate $10.50/ month.

   115 Reserved for Health Department Employees, present rate $7.35/ month.

   3 Handicapped.

   45 Daily rental

   
   

   CURRENT RATES: Reserved Parking $10.50/month

   Health Department Employees

   $7.35/month

   Health Department Clients 50% discount on daily rates.

   Daily rates: 1st hour $1.00

   Additional

   1/2 hour $.50.

   All day $2.50 3:00 P.M. -

   7:00 P.M.

   $1.50

   
   

   The rates will remain the same. The owner will have full jurisdiction in raising or lowering said rate any time during the contract period.

   
   

   * * * Determining Factors for Bid Award:

   Unarmed parking attendant (outline measures to be taken to secure vehicles in lot).

   
   

   Experience (outline number of years in parking business as parking lot management firm.)

   
   

   Proposed net income distribution (percent split).

   
   

   Provide bilingual parking attendant (Spanish and English, French desirable but not mandatory).

   
   

9. By May 14, 1986, the rebid opening date, Kinney, Floyd and LaSalle were the only bidders to respond to the ITB. The Department's selection team reviewed the bids and again recommended that the contract be awarded to Kinney. Accordingly, by letter of June 6, 1986, the Department advised the unsuccessful bidders of its decision to award the contract to Kinney and of their right to protest the award.

10. Floyd filed a timely notice of protest and formal written protest of the proposed award. Floyd's formal protest, filed June 6, 1986, asserted that:

    
    

    Floyd & Associates Protection Corp. submitted the lowest responsive, responsible bid, and should be awarded this contract - Bid No.

    DCPHU 4/86. We protest the recommendation of the Parking Lot Management Bid Selection Team that Kinney Systems, Inc. be awarded this contract. The bidding process is supposed to protect small companies from the powers of a large company. At all times, the purchasing officers should operate with integrity and fairness to all suppliers. Floyd & Associates has a proven track record and should not be looked upon as inferior because we haven't been in business as long as Kinney. However, if you judge us on an equal and unbiased basis, Floyd should be awarded this contract. We have enclosed exhibit A as a true comparison as to the merits of both companies. 5/ Floyd & Associates should be awarded this contract; we deserve a piece of the American Dream.

    
    

    The Reevaluation

    
    

11. Floyd's charge of racial discrimination, planted by Floyd's first protest and tacitly reasserted by it's second protest, was not lost on the Department. Notwithstanding the unsubstantiated nature of Floyd's charge, the Department, without notice to Kinney, purportedly reevaluated the bids. By letter of July 2, 1986, the Department advised Kinney, without explanation, that based on the "selection team's" recommendation the contract had been awarded to Floyd. 6. Kinney filed a timely notice and formal protest of the Department's action.

    
    

12. The Department contends that Section 120.53(5)(d), Florida Statutes, authorized its reevaluation of the bid to amicably resolve the protest. The Department's reliance on section 120.53(5)(d), as permitting its unilateral decision to vitiate its prior award of the contract to Kinney, is misplaced.

    
    

13. Section 120.53(5), Florida Statutes, establishes a statutory framework for resolution of protests arising from the contract bidding process. Pertinent to this case, section 120.53(5) provides:

    
    

    1. Upon receipt of a notice of protest which has been timely filed, the agency shall stop the bid solicitation process or the contract award process until the subject of the protest is resolved by final agency action, unless the agency head sets forth in writing particular facts and circumstances which require the continuance of the bid solicitation process or the contract award process without delay in order to avoid an immediate and serious danger to the public health, safety and welfare.

    2. The agency, on its own initiative or upon the request of a protestor, shall

    provide an opportunity to resolve the protest by mutual agreement between the parties within 7 days, excluding Saturdays, Sundays, and legal holidays, of receipt of a formal written protest.

    1. If the subject of a protest is not resolved by mutual agreement within 7 days, excluding Saturdays, Sundays and legal holidays, of receipt of the formal written protest and if there is no disputed issue of material fact, an informal proceeding shall be conducted pursuant to s.120.57(2) and applicable agency rules before a person whose qualifications have been prescribed by rules of the agency.

    2. If the subject of a protest is not resolved by mutual agreement within 7 days, excluding Saturdays, Sundays, and legal holidays, of receipt of the formal written protest and if there is a disputed issue of material fact, the agency shall refer the protest to the division for proceedings under s. 120.57(1).

    
    

14. Under the provisions of section 120.53(5)(c), the Department was bound, absent circumstances not present here, to stop the bid solicitation process pending resolution of Floyd's protest by final agency action. Under the framework of 120.53(5)(d), final agency action could only occur through mutual agreement of the parties; an informal proceeding pursuant to Section 120.57(2) Florida Statutes, or a formal proceeding pursuant to Section 120.57(1), Florida Statutes. See: Cianbro Corp. v. Jacksonville Transportation Authority, 473 So.2d 209 (Fla. 1st DCA 1985).

    
    

15. The provisions of section 120.53(5)(d), which provide an opportunity to resolve a protest by "mutual agreement between the parties," is not an invitation to the Department to unilaterally reevaluate its decision. Such resolution can only occur "between the parties"; which must include, at a minimum, the successful bidder, the protestant, and the Department. Since Kinney did not participate or concur in the Department's action, and there existed disputed issues of material fact, Floyd's protest could only be resolved by a formal 120.57(1) proceeding. Accordingly, the Department's subsequent decision to award the contract to Floyd was improper. 7/

    
    

    The Bidders

    
    

16. Kinney, which has operated the subject parking lot under contract with the Department for the past 6 years, is one of the world's largest parking companies, with over 50 years of experience in parking lot operations. Kinney presently parks approximately 20,000,000 automobiles annually in facilities it owns, leases or operates under contract. These facilities range in size from fewer than 50 spaces to those with thousands of spaces. Currently, Kinney operates 20 lots in south Florida, which contain 16-17,000 spaces and generate in excess of $20,000,000 in annual receipts. The proof establishes that Kinney has the requisite experience to operate the subject facility, properly supervise its operations, and accurately account for the proceeds generated by the parking

    operation. Kinney's rebid proposed to operate the subject parking facility predicated on a net income distribution of 25% to Kinney and 75% to the Department.

    
    

17. The protestant, Floyd, was established in August 1982 and, until approximately November 1985, had been exclusively involved in providing security services. In November 1985, Floyd received a contract from the Immigration and Naturalization Service (INS) to manage its parking garage in Miami, Florida; which accounts for Floyd's total experience in parking lot management.

    
    

18. Under Floyd's agreement with INS, it still operates as basically an unarmed security service. Since the majority of patrons utilizing the INS garage are clients of INS, no fees are collected. In the unusual event that the patron's ticket is not validated by INS and a fee is due, Floyd's simply collects the money and immediately gives it to an INS official. Floyd offered no evidence that it has any experience operating an in-and-out lot similar to the subject parking lot, or that it has any established or proposed methods of management, supervision and accounting controls necessary to service the Department's parking lot. Floyd proposed, however, to operate the subject parking lot based on a net income distribution of 20 percent to Kinney and 80 percent to the Department. 8/

    
    

19. The Department's selection team evaluated the responses of Kinney and Floyd, and recommended that the contract rebid be awarded to Kinney even though the net income differential proposed by Floyd would facially generate more income for the Department. The selection team's recommendation was premised on its conclusion that given the experience of Kinney, juxtaposed with the inexperience of Floyd, it could expect a greater return from Kinney even with the lower net income differential.

    
    

20. Of the 198 spaces in the Department's parking lot, only 45 are reserved for daily rental. The balance of the spaces are reserved on a fixed monthly rate for Department and other employees. Accordingly, the ability to maximize revenue in the lot is directly dependent upon the operator's supervision and control of the 45 daily spaces. Kinney has demonstrated its ability to insure that those spaces remain open for their intended purpose, to collect and accurately account for all funds collected, and to maximize revenues. Floyd on the other hand has no such experience and offered no evidence that it had any inkling of what was required to operate such a parking lot or any plans to acquire such expertise. The selection team's recommendation was therefore reasonable, and the Department's decision to award the contract to Kinney was premised on an honest exercise of its discretion.

    
    

21. At hearing, Floyd chose not to participate and, accordingly, offered no evidence discrediting the Department's award to Kinney or supporting its entitlement. The Department did offer evidence, however, to support its decision to "re-award" the contract to Floyd and thereby vitiate its initial decision. The thrust of the Department's evidence was two fold: a claim of mismanagement by Kinney of the subject parking lot and a claim that the selection team incorrectly assumed Floyd was not properly licensed. The Department's assertions lack substance and conviction.

    
    

22. The Department's claims of mismanagement are founded on losses occasioned in the operation of the parking lot from June through November 1985, the theft of a car from the parking lot, and alleged damages to four cars caused by the mechanical arm which controls ingress to the lot. The losses in revenue were not, however, the fault of Kinney. These losses resulted from Kinney's

    inability to use the 45 daily spaces because the Department had issued over 250 gate cards for its employees. Despite Kinney's protests, it was not until December 1985 that the Department cooperated in solving this problem by limiting the number of gate cards, and the severe over crowding in the lot was eliminated. The only other factor bearing on lost revenue was some theft by a Kinney gate guard; however, Kinney, consistent with its routine practice, used "shoppers" to police the integrity of its employee, and the employee was caught and discharged. Rather than reflect unfavorably on Kinney, its discovery of the theft is evidenced of its good supervision. The Department's remaining claims of mismanagement are equally without merit. The one car stolen from the lot during Kinney's tenure was that of a Department employee who had left her keys in the car. The damage, if any (none was shown), to four cars by the mechanical arm, was occasioned by one car following another car too closely into the lot.

    The mechanical arm was not shown to function improperly. The foregoing facts, together with the assurances of Mr. Shera, the Department's local manager, that Kinney and the Department have enjoyed a very favorable working relationship over the past six years, renders the Department's assertions of mismanagement not credible.

    
    

23. The Department's final basis to vitiate its award to Kinney is predicated on its assertion that its selection team incorrectly concluded that Floyd did not hold an occupational license to operate a parking lot. Again, the Department's assertion is not credible.

    
    

24. The proof is that Floyd's licensure was not the motivating factor in the selection team's award of the contract to Kinney. The team's decision was premised on Kinney's superior qualifications and perceived ability to generate more revenue for the Department, compared with the team's well founded concerns of Floyd's ability to perform. As importantly, Kinney advised Mr. Shera by letter of May 15, 1986, of its protest to Floyd's qualifications because of Floyd's purported failure to have an occupational license at the time of bid submittal. Mr. Shera, on behalf of the Department, awarded the contract to Kinney by letter of June 5, 1986, and did not disqualify Floyd. Accordingly, the evidence supports the conclusion that the Department did not incorrectly exclude Floyd because of any licensure requirement.

    
    

25. The totality of the evidence, including the demeanor of the witnesses, compels the conclusion that the Department's decision to support Floyd's bid was occasioned by its desire to avoid any appearance of discrimination, as opposed to a fair exercise of its discretion. Such conduct is arbitrary and capricious. Accordingly, the evidence supports the award of the subject contract to Kinney.

    
    

    CONCLUSIONS OF LAW

    
    

26. The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of, these proceedings.

    
    

27. Section 287.057(2) Florida Statutes, provides in pertinent part:

    
    

    . . . all Contracts for contractual services shall be awarded by competitive sealed bidding. An invitation to bid shall be issued which shall include a detailed description of the services sought; the date for submittal of bids; and all contractual terms and conditions applicable to the procurement of contractual services,

    including the criteria which shall include, but need not be limited to, price, to be used in determining acceptability of the bid.

    Evaluation of bids shall include consideration of the total cost for each year as quoted by the bidder. No criteria may be used in determining acceptability of the bid that was not set forth in the invitation to bid. The contract shall be awarded with reasonable promptness by written notice to the qualified and responsive bidder who submits the lowest and best bid. This bid must be determined in writing to meet the requirements and criteria set forth in the invitation to bid.

    
    

28. The purpose of competitive bidding has been stated in Hotel China & Glassware Co. v. Board of Public Instruction, 130 So.2d 78,81 (Fla. 1st DCA 1961), as follows:

    
    

    Competitive bidding statues are enacted for the protection of the public. They create a system by which goods or services required by public authorities may be acquired at the lowest possible cost. The system confers upon both the contractor and the public authority reciprocal benefits, and exacts from each of them reciprocal obligations.

    The bidder is assured fair consideration of his offer, and is guaranteed the contract if his is the lowest and best bid received. The principal benefit flowing to the public authority is the opportunity of purchasing the goods and services required by it at the best price obtainable. Under this system, the public authority may not arbitrarily or capriciously discriminate between bidders, or make the award on the basis of personal preference. (Emphasis added)

    
    

    Competitive bidding statutes should be construed to advance their purpose and to avoid their being circumvented. Webster v Belote, 103 Fla. 976, 138 So. 721

    (1931).

    
    

29. The proof established that the bid specifications on the initial bid letting contained an ambiguity which resulted in a lack of uniform bid response. This ambiguity requires that all bids submitted in response to the initial offering be rejected. With respect to the rebid, however, the proof established that the bids were fairly evaluated by the selection team and the award to Kinney founded on an honest exercise of the Department's discretion. The Department failed to articulate any rational basis to vitiate its award of the bid to Kinney. Rather, the Department's decision was predicated on an irrational response to unsupported charges of racial discrimination. In sum, the Department's decision to revoke the award to Kinney and award the contract to Floyd was arbitrary and capricious.

    
    

30. Based on the foregoing Finds of Fact and Conclusions of Law, it is

RECOMMENDED that the Department enter a Final Order rejecting all bids on the initial letting of Bid No. DCPHU 4-86; and, awarding Bid No. DCPHU 4-86 to Kinney Systems of Florida, Inc., as a result of the Department's rebid of the subject contract.

DONE AND ENTERED this 10th day of October 1986, at Tallahassee, Florida.

WILLIAM J. KENDRICK

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

FILED with the Clerk of the Division of Administrative Hearings this 10th day of October 1986.

ENDNOTES

1/ To comply with the provisions of Section 120.53(5)(e), Florida Statutes, this case was originally set for hearing on August 20, 1986. The parties waived the provision of Section 120.53(5)(e), and the case was reset for hearing.

2/ Floyd & Associates Protection Corporation (Floyd) was noticed of the pendency of this action, but made no application to participate. Mr. Floyd and Herbert Deitch, Executive Director of Floyd's, were in attendance at hearing.

Mr. Deitch was called as a witness by the Department.

3/ In addition to alleging that its bid was the most responsive, Floyd's formal protest also averred that:

We protest the recommendation . . . that Kinney . . . has submitted the most favorable proposal . . . We protest the words "most favorable proposal" without explanation.

Words like these have been used in the

past to mark favoritism, prejudice, and racism.

The Selection Team has made a grave error and I fear, so have we. We included in our bid documents that Floyd . . . is a minority black vendor. Did this make our proposal less favorable?

The proof establishes that Floyd's mere assertion of discrimination was the motivating factor in the Department's decision to reevaluate the bids and bid specifications, and that Floyd's assertion of discrimination had a chilling effect on the Department's conduct upon rebidding the contract.

4/ The Department's action was contrary to the provisions of Section 120.53(5), Florida Statutes, and never became final agency action. See: Cianbro Corp. v Jacksonville Transportation Auth., 473 So.2d 209 (Fla. 1st DCA 1985), and Capeletti Brothers, Inc. v. State of Florida Department of General Services, et.

al, 432 So.2d 1359 (Fla. 1st DCA 1983). Since Kinney was not previously accorded a point of entry, its challenge of the Department's decision to rebid is viable. Further, by failing to comply with the provisions of section 120.53(5), as discussed more fully infra paragraphs 12-15, and by unilaterally electing to rebid the contract, the Department placed its fiscal purse in a position of peril. See: Baxter's Asphalt & Concrete, Inc. v. Liberty County,

406 So.2d 461 (Fla. 1st DCA 1981), reversed on other grounds, 421 So.2d 505 (Fla. 1982).

5/ Exhibit A to Floyd's formal protest was a list of 10 "failings" of Kinney's employees or supervisors (Respondent's Exhibit 15). The same exhibit had been attached to Floyd's protest of the initial bid. Accordingly, Floyd's protest of the rebid offered no information the Department was not aware of when the rebid was evaluated.

6/ The Department's letter of July 2, 1986 was misleading since the selection team had not readdressed the bids following Floyd's protest. In fact, the decision was made by management.

7/ By unilaterally reevaluating the bids, the Department violated the provisions of Section 120.57(5), Florida Statutes, and denied Kinney its right to defend against the protest. Such action was patently arbitrary and capricious.

8/ Floyd's 20/80 distribution base was offered on rebid after it became aware of Kinney's initial offer of 25/75.

APPENDIX

Kinney's proposed findings of fact are addressed as follows:

1. Addressed in paragraphs 1 and 2. 2-3. Addressed in paragraphs 3-7.

1. Addressed in paragraphs 9, 16-18.

2. Addressed in paragraphs 9-11.

3. Addressed in paragraph 24.

4. Addressed in paragraphs 16-18.

5. Addressed in paragraphs 4-7.

6. Addressed in paragraphs 11, 16-25.

The Department's proposed findings of fact are addressed as follows:

1. Not at issue; irrelevant.

2. Addressed in paragraphs 1-3.

3. Addressed in paragraphs 4-7.

4. Addressed in paragraphs 4, 7, 12-15.

5. Addressed in paragraph 8.

6. Addressed in paragraphs 16-18.

7. Addressed in paragraphs 16-25.

8. Addressed in paragraphs 16-19, 23-24.

9. Addressed in paragraph 23-24.

10. Addressed in paragraph 10.

11. Addressed in paragraphs 12-15.

12. Addressed in paragraphs 11, 16-25.

13. Addressed in paragraph 11.

14. Addressed in paragraphs 11-15.

COPIES FURNISHED:

Morton Laitner, Esquire

Dade County Health Department 1350 N.W. 14th Street

Miami, Florida 33125

Clifford B. Hark, Esquire Consolidated Bank Building

168 S. E. First Street, 12th Floor Miami, Florida 33131

Floyd and Associates Protection Corp.

155 N. W. 167th Street - Suite 202 Miami, Florida 33169

William Page, Jr.

Secretary

Department of Health and Rehabilitative Services

1323 Winewood Boulevard

Tallahassee, Florida 32301

Steven W. Huss, Esquire General Counsel Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32301

Docket for Case No: 86-002929BID

Orders for Case No: 86-002929BID