STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

A. DAN CHISHOLM, INC., STOCKS & ) SONS, INC., W.M.G., INC., CROCCO, ) INC., L. F. HEINE, INC., and )

R. G. THORNTON, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 86-3732

) STATE OF FLORIDA, DEPARTMENT OF ) TRANSPORTATION, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, an administrative hearing was held before Diane D. Tremor, Hearing Officer with the Division of Administrative Hearings, on December 4 and 5, 1986, in Tallahassee, Florida. The issue for determination in this proceeding is whether the Department of Transportation may utilize its intended Request for Proposal to obtain service station operations for the eleven service stations at the eight plazas located along the Florida Turnpike.

APPEARANCES

For Petitioners: Paul D. Newnum, Esquire

Giles, Hedricks & Robinson, P.A.

109 East Church Street, Suite 301 Post Office Box 2631

Orlando, Florida 32802

For Respondent: Judy Rice and Linda G. Miklowitz, Esquire

Haydon Burns Building, Mail Station 58 Tallahassee, Florida 32301

and

James J. Richardson, Esquire Route One, Box 12669 Tallahassee, Florida 32317

INTRODUCTION

The petitioners requested an administrative hearing to determine the validity and propriety of the Department of Transportation's use of the Request for Proposal (RFP) process in soliciting proposals for the operation of service stations on the Florida Turnpike. In support of their position that the process is improper and invalid, petitioners presented the testimony of Bobby W. Carter, Conrad W. Stocks, William Crocco, Augustine (Gus) Crocco, all of whom are

current service station operators on the Turnpike, and Bruce Caswell, the former Turnpike Services Coordinator with the Department of Transportation.

Petitioners' Exhibits 1 through 7. were received into evidence. Exhibits 6 and

7 are confidential and sealed documents.

The respondent Department of Transportation (DOT) presented the testimony of Abdul G. Azhari, the Director of Marketing Research for Amoco Oil; Alan Gold, a qualified proposer; David Dunbar, an insurance agent; and Sam Roddenberry, the Chief of DOT's Bureau of Turnpike Management. The DOT's Exhibits 1 through4 were received into evidence.

Subsequent to the hearing, the parties filed proposed findings of fact and conclusions of law. The factual findings proposed by the parties have been accepted and/or incorporated in this Recommended Order except as noted in the Appendix hereto.

FINDINGS OF FACT

Upon consideration of the oral and documentary evidence adduced at the hearing, the following relevant facts are found:

1. The petitioners are several of the current operators of the eleven service stations located at the eight service plazas on the Florida Turnpike. Each has considerable experience and background in the business of supplying oil and petroleum products to the motoring public on the Turnpike. Currently, the Turnpike service stations are being operated by lessees, or their sublessees, who contracted in 1977 and 1978 with the DOT for a five year term. The leases have been extended due to a series of legal proceedings. Each petitioner is a lessee or a sublessee operator.

   
   

2. Prior to 1984, the DOT obtained service station operations on the Turnpike through the competitive bidding process. In 1984, the Legislature changed the mode of acquiring such services by requiring a request for proposal process. Eight factors, as well as such other factors as the DOT may deem pertinent, were enumerated by the Legislature to be used in evaluating proposals. Section 338.235(2)(a), Florida Statutes.

   
   

3. By letter dated July 31, 1984, the DOT notified the petitioners and other potential proposers of the legislative change in procedures for securing concessionaire services on the Turnpike. Current operators and others were informed of the factors to be used in evaluating upcoming proposals and were informed that the DOT would require both full service and self- service fuel dispensing for each station. The DOT requested input and suggestions regarding the upcoming RFP process.

   
   

4. Interested persons were solicited as proposers through advertisements and were advised to submit their letters of interest and statement of qualifications to the DOT. Some 38 parties, including the petitioners herein, were certified by the DOT as qualified to propose.

   
   

5. The RFP in question was distributed to the prequalified proposers in April of 1986. On June 12, 1986, a preproposal conference was held by the DOT to answer written questions which had previously been submitted and to answer questions from the floor. The 44 questions and answers were later reduced to a single document and were mailed to each of the proposers. The DOT also issued three addendums modifying several of the original RFP requirements.

6. In general, the RFP solicits creative and innovative proposals for modernization of the service station operations and facilities. It requires a combination of both full and self-service fuel dispensing, wrecker service, minor repair service and 24-hour a day operations. Basic remodeling changes are required, and major renovations will be considered. The RFP and its addenda provide detailed comments and directions as to the concepts which the proposers are requested to develop. The proposed service station lease agreement is attached to the RFP, and it provides further information as to the basic services required.

   
   

7. Proposals submitted are to be evaluated based upon a point system set forth in the RFP as follows:

   
   

   "Management Plan (Maximum of 50 Points)

   1. 0 - 10 Points - Full intent to comply with the terms of the proposed Lease Agreement for the services as set forth in Section IV of

      this RFP, including specifically the provi- sions covering retail pricing of motor fuels and services to be offered.

   2. 0 - 20 Points - Meeting the needs and des- ires of Turnpike patrons; including but not limited to cleanliness of restrooms, appear- ance of the premises, fast service, quality products, reasonable prices, friendly person- nel.

   3. 0 - 20 Points - Extent and style of ser- vices to be provided; including but not limited to road and wrecker services where applicable, scope of repairs, ratio of self- service to full-service fuel pumps.

      
      

      Additional Considerations (Maximum of 50 Points)

      1. 0 - 25 Points - Renovation concept schedule and financial commitment to provide remodeled facilities.

      2. 0 - 15 Points - Revenue to Department.

      3. 0 - 10 Points - Qualifications -

      Skills and experience of the proposer to under take the Assignment."

      
      

      Each member of a five-member selection committee will independently award the points, the numbers will then be averaged, and the proposals with the highest score and those clustered within ten points of the highest score will be submitted to the DOT Secretary, Assistant Secretary and Deputy Assistant Secretary for final selection. Beyond the quoted point system set forth in the RFP, the DOT has not further articulated the criteria by which the scorers will differentiate between an award of 0 points and 10 or 20 points.

      
      

8. The selection committee is comprised of five DOT employees whose range of experience includes Turnpike operations, maintenance operations, financial matters, real estate matters and the current service station operations. None of the five members has actually operated a service station.

   
   

9. Originally, the RFP required a 5 to 7 year performance bond. However, after receiving criticism as to the availability of such a bond, the bond form

   was revised in a manner which would be acceptable to sureties doing business in Florida. While the form is now acceptable, an actual commitment from an insurance company may be difficult to obtain prior to actual knowledge of the ultimate terms of the contract.

   
   

10. The RFP initially required a 5 to 7 year supply contract agreement with oil companies. The current operators who are petitioners in this proceeding have never been guaranteed a 5 to 7 year commitment by their oil and fuel suppliers. One prequalified proposer had obtained a least one letter of commitment from a major oil company for six and seven year terms. In one of the preproposal questions regarding the reasonableness of the length of the required supply commitment, the DOT responded:

    
    

    "The proposer should indicate in his proposal what is reasonable in the oil industry, i.e., a one year, two year, or three year lease, etc., or the best lease that can be secured from an oil company."

    
    

11. The terms of the lease agreement under the RFP require a Holmes Model No. 440W wrecker. Although some of the current operators utilize this model, the DOT, when informed that the 440W wrecker may be obsolete, responded that

    
    

    "the proposers can propose use of an equiva- lent or this model number with appropriate attachments to ensure compatibility with latest model vehicles."

    
    

12. Previously submitted proposals may be modified at any time prior to the proposal's due date, but modifications will not be considered after that date. The DOT does reserve to itself the right to negotiate certain changes and resolve questions with the successful bidder relating to the final lease agreement. However, this reservation is limited. There can be no substantial changes in the general plan or character of the work such as to evade the competitive process.

    
    

13. Actual and prospective proposers were notified in the cover sheet attached to the RFP that disputes as to the reasonableness, necessity or competitiveness of the terms and conditions of the RFP could be resolved by filing a protest in accordance with Section 120.53(5), Florida Statutes, and applicable agency rules. In the questions and answers provided to all qualified proposers, the DOT stated that protests concerning the RFP could be handled differently from the Section 120.53(5) procedure for protests of competitive bidding, and would be adjudicated like all agency decisions affecting substantial interests under the provisions of Section 120.57. Qualified proposers were also advised that the DOT would rely upon Department of General Services' Chapter 13A-1, Florida Administrative Code, where it pertains to bid invitations.

    
    

14. The DOT has not promulgated separate rules for the instant request for proposal process. As indicated above, it has instead stated its intent to rely upon Chapter 13A, the Department of General Services rules, in its administration of the present RFP process. The petitioners currently have pending in the Circuit Court of the Second Judicial Circuit for Leon County (Case No. 86-3546) a declaratory judgment suit for statutory interpretation of Section 338.235, Florida Statutes. The primary issue in that proceeding is

    whether the Legislature required the DOT to adopt rules before utilizing the RFP process for obtaining service station operations on the Turnpike.

    
    

    CONCLUSIONS OF LAW

    
    

15. The Department of Transportation has the statutory authority to grant concessions or sell motor fuel services, with attendant towing and maintenance facilities, along turnpike projects. Section 338.234(1), Florida Statutes. The Legislature has determined that, in order to secure high quality products and services for turnpike patrons, motor fuel and restaurant services should be secured through the request for proposal process. Section 338.235(2)(a), Florida Statutes. The Legislature further enumerated eight factors to be considered when evaluating proposals, and allowed the DOT to consider other factors deemed pertinent. The eight factors set forth by Statute are:

    
    

    1. The financial capacity of the provider;

    2. The willingness to contribute toward the cost of facility construction;

    3. The type and quality of the service or product offered;

    4. The price structure of the service or product offered;

    5. Management experience and capabilities;

    6. The national brand names offered;

    7. The originality of the concept and its relationship to the turnpike system;

    8. The lease rate.

    
    

    Section 338.235(2)(a), Florida Statutes

    
    

16. The request for proposal process, as opposed to the competitive bidding process, is generally utilized when an ultimate goal is desired, but the agency does not or can not tell the offerors, by detailed plans and specifications, how to perform toward the achievement of that goal. System Development Corporation v. Department of Health and Rehabilitative Services, 423 So.2d 433 (Fla. 1st DCA, 1982). The RFP process contemplates that those making the proposal will address the goal with creativity and initiative and develop plans which meet the needs of the State and, in this instance, the motoring public.

    
    

17. The petitioners' challenge to the instant RFP is based upon several grounds. It is alleged that its terms with respect to the required performance bond, the oil company supply contracts and the type of wrecker required are unreasonable and demonstrate the DOT's lack of knowledge regarding service station operations. It is alleged that there are conflicts and confusions within the RFP documents and addenda with respect to the resolutions of protests. Petitioners contend that the point system is vague, and that the provisions allowing negotiated changes after the award of the contract are destructive of the competitive process. Finally, petitioners contend that, prior to utilizing the RFP process for service station operations on the Florida Turnpike, the DOT must promulgate new rules.

    
    

18. The burden is upon the petitioners in this proceeding to demonstrate that the RFP in question is unreasonable or arbitrary, unlawful or otherwise destructive of the competitive public bidding process. That burden has not been met.

19. A review of the RFP, the preproposal conference responses and the revisions by addenda demonstrate that the DOT has made a diligent and reasonable effort to develop a request for proposal which will meet its goal and responsibility to the motoring public to provide fast service, quality products, reasonable prices, clean and modern surroundings and friendly personnel at the service station facilities along the Florida Turnpike. It encouraged proposers to submit creative and innovative proposals, and provided guidelines for doing so. The DOT invited and encouraged prospective proposers to participate in the development of an appropriate RFP and attempted to answer and resolve questions prior to the submission of proposals. In keeping with the RFP concept, applicants were also encouraged to include services, programs and benefits not listed in the RFP.

    
    

20. The evidence demonstrates that the DOT has been fully responsive to the concerns of the petitioners regarding the performance bond, the oil supply commitments and the type of wrecker required. The performance bond form was rewritten to conform to the surety industry standards of acceptability. By its responses to written questions, the DOT has indicated its intent to encourage proposers to submit the best oil supply commitment they could obtain. Likewise, the DOT has expressed its willingness to consider an equivalent wrecker model. These were reasonable responses and solutions to the petitioners' concerns. Petitioners have failed to demonstrate that the terms of the RFP, as revised, are either arbitrary or unreasonable.

    
    

21. It is difficult to comprehend the petitioners' claim of confusion regarding the proper procedures to be followed in protesting the RFP. The documents reference both Chapter 120 of the Florida Statutes and Rule 13A-1 of the Florida Administrative Code. While the time period for requesting a hearing may vary somewhat between the proceedings contemplated in Section 120.53(5), Section 120.57 or Chapter 13A, none of those provisions have been utilized in this instance to deny petitioners a right or a point of entry to challenge the RFP at issue. Petitioners have surely had their "day in court" with regard to this RFP.

    
    

22. Petitioners contend that the point system is vague and that the DOT has never explained to them the actual number of points which will be awarded for the various matters listed in the factors for evaluation. Just as an agency is not required to inform a bidder in a traditional Invitation to Bid process of the amount which will assure a bid award, so it is not required to explicitly identify the number of points a proposer will receive for each of the criterion to be reviewed. To require otherwise would destroy the entire concept of each bidder or proposer coming forward with its best, good faith bid or proposal and would erode the integrity of the public bidding process. The DOT has fully informed each proposer of the criteria it will utilize in evaluating the proposals and the relative weight it will accord to each criterion. When all proposals are received and reviewed, the point system allows an objective rating on a comparative basis. The time for challenging any claimed abuses in the discretionary award of points is after the DOT's notice of intent to award to a particular proposer.

    
    

23. It is apparent from the questions and answers provided to all proposers, as well as other provisions of the RFP, that the DOT will not require or permit major revisions to the original proposals selected for award. The DOT's reservation of the right to negotiate changes prior to the actual lease agreement being signed is intended for functional purposes only and not substantive changes in the plan or character of the proposal offered.

24. Finally, petitioners contend that, prior to soliciting proposals for the Florida Turnpike service station operations, the DOT must promulgate separate rules for the RFP process. In support of this position, petitioners rely upon two Senate bills -- Chapter 84-276 and Chapter 84-309, passed in the 1984 legislative session. This exact issue is currently pending before the Circuit Court in and for Leon County, and the undersigned therefore declines to rule as to the asserted conflict between those two legislative acts. Such a ruling, also, is unnecessary in the instant proceeding. This is not a petition for rule-making filed pursuant to Section 120.54(5), Florida Statutes. It is a proceeding challenging the RFP itself. The DOT clearly has the authority (indeed, it is required) to utilize the RFP process when securing motor fuel services and other services on turnpike projects. Section 338.235, Florida Statutes. The petitioners and other proposers have been afforded ample opportunity to provide input into the proposal documents and to challenge its terms and requirements in this proceeding. Even if the "establishment" of rules and regulations were required, the DOT has clearly and explicitly indicated and noticed its intent to follow the established rules of the Department of General Services in implementing the instant RFP.

    
    

25. In conclusion, petitioners have failed to demonstrate that the instant RFP's procedural or substantive requirements are invalid. By nature and design, its terms are flexible, and petitioners have not demonstrated that they are arbitrary, unreasonable or provide any unfair competitive advantage to one proposer over another.

RECOMMENDATION

Based upon the findings of fact and conclusions of law recited herein, it is RECOMMENDED that the petition for hearing be DISMISSED, and that the Department of Transportation reschedule the proposal deadline after reasonable notice to all prequalified proposers.

Respectfully submitted and entered this 17th day of February, 1987, in Tallahassee, Florida.

DIANE D. TREMOR

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 17th day of February, 1987.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-3732

The proposed findings of fact submitted by the petitioners and the respondent have been fully considered and have been accepted and/or incorporated in this Recommended Order, except as noted below.

Petitioner

Page 4, last 2 sentences: Rejected; irrelevant and

immaterial.

Page 6, last paragraph through page 7 through

1st full paragraph: Rejected; not supported by competent, substantial evidence, and argumentative.

Page 7, 2nd full

paragraph: Rejected; see Finding of Fact 10. Page 8, last sentence of

1st paragraph: Rejected; argumentative.

Page 8, 2nd paragraph: Rejected; irrelevant and

immaterial.

Page 9, subsection c: Rejected; irrelevant and

immaterial to the issues in dispute.

Respondent

#2, beyond 1st two

sentences: Rejected; irrelevant and immaterial.

#3: Rejected; irrelevant, immaterial and argumentative.

#7: Rejected in so far as it contains argument of counsel and legal conclusions as opposed to factual findings.

#8: Same as above.

#11, 2nd paragraph: Rejected insofar as it includes legal conclusions as opposed to factual findings.

#12, 1st paragraph: Rejected; irrelevant and immaterial.

#12, 2nd paragraph: Rejected; argumentative.

#13, 2nd paragraph: Rejected; argumentative.

COPIES FURNISHED:

Paul D. Newnum, Esquire

Giles, Hedricks & Robinson, P.A.

109 E. Church Street, Suite 301 Post Office Box 2631

Orlando, Florida 32802

Judy Rice and Linda G. Miklowitz, Esquire Haydon Burns Building, MS-58 Tallahassee, Florida 32301

James J. Richardson, Esquire Route One, Box 12669 Tallahassee, Florida 32317

Kaye Henderson, Secretary Department of Transportation Haydon Burns Building Tallahassee, Florida 32301

=================================================================

AGENCY FINAL ORDER

=================================================================

STATE 0F FLORIDA DEPARTMENT 0F TRANSPORTATION

A. DAN CHISHOLM, INC., STOCKS & SONS, INC., W.M.G., INC., and

R. G. THORNTON, INC., Petitioners,

vs. CASE NO. 86-3732

STATE OF FLORIDA,

DEPARTMENT OF TRANSPORTATION,

Respondents.

/

FINAL ORDER

The Record in this proceeding has been reviewed along with the Recommended order of the Hearing Officer, a copy of which is attached. The Exceptions to the Recommended order submitted on behalf of the Respondent have been considered and to the extent incorporated below have been adopted in this Final Order. The Recommended Order is supported by the Record and is incorporated as a part of this Order. However, to the extent the Conclusions of Law imply that the Department is required to use the Request for Proposal process when the Department itself elects to provide the turnpike motor fuel services, the following clarification is noted herein:

The Department is empowered either to grant concessions or itself sell motor fuel with attendant towing and maintenance facilities on the Florida Turnpike pursuant to sec. 338.234, Fla. Stat. (1985) . When the Department elects to sell the fuel itself, the general purchasing regulations in sec. 287, Fla. Stat. (1985) would apply. Additionally, sec. 287, Fla. Stat. authorizes the emergency procurement of commodities and contractual services under specific circumstances.

IT IS ORDERED that the petition for hearing be DISMISSED and that the Department of Transportation is authorized to proceed with the Request for Proposal process.

DONE AND ORDERED this 24th day of March, 1987.

KAYE N. HENDERSON, P.E.

Secretary

Department of Transportation Haydon Burns Building

605 Suwannee Street

Tallahassee, FL 32399-0450

Judicial review of agency final order may be pursued in accordance with Section 120.68, Florida Statutes, and Florida Rules of Appellate Procedure 9.030(b)(1)(c) and 9.110. To initiate an appeal, a Notice of Appeal must be filed with the Department's Clerk of Agency Proceedings, Haydon Burns Building, 605 Suwannee Street, MS 58, Tallahassee, Florida 32301-8064, and with the appropriate District court of Appeal within 30 days of the filing of this Final Order with the Department's Clerk of Agency Proceedings. The Notice of Appeal filed with the District Court of Appeal should be accompanied by the filing fee specified in Section 35.22(3), Florida Statutes.

COPIES FURNISHED:

Diane D. Tremor, Hearing Officer Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32301

Judy Rice, Esquire Department of Transportation Haydon Burns Building, MS 58

Ta llahassee, Florida 32399-0450

Paul D. Newnum, Esquire

109 E. Church Street, Suite 301 Post Office Box 2631

Orlando, Florida 32802

James J Richardson, Esquire Route One, Box 12669 Tallahassee, Florida 32317

Docket for Case No: 86-003732

Orders for Case No: 86-003732