STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

BANYAN AREA AGENCY ON AGING, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 88-2305BID

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above matter was heard before the Division of Administrative Hearings by its duly designated Hearing Officer, Donald R. Alexander, on June 9, 1988, in West Palm Beach, Florida.

APPEARANCES

For Petitioner: Colman B. Stein (qualified representative)

100 Worth Avenue, Apartment 416 Palm Beach, Florida 33480

For Respondent: Laurel D. Hopper, Esquire

111 Georgia Avenue, Third Floor West Palm Beach, Florida 33401

BACKGROUND

On April 5, 1988, respondent, Department of Health and Rehabilitative Services (HRS), through its District IX administrator, issued proposed agency action in the form of a letter advising petitioner, Banyan Area Agency on Aging, Inc., that its bid to be designated as an area agency on aging had been rejected. No grounds were cited in the letter. The project called for the designation of an area agency on aging for the planning and service area comprised of Palm Beach, Okeechobee Martin, Indian River and St. Lucie Counties. Thereafter, petitioner timely filed its formal notice of protest on April 15, 1988. In its protest, petitioner alleged generally that the agency had acted in an arbitrary and capricious manner in rejecting its bid.

The matter was transferred by HRS to the Division of Administrative Hearings on May 9, 1988 with a request that a hearing officer be assigned to conduct a hearing. By notice of hearing dated May 12, 1988, a final hearing was scheduled for May 24, 1988 in West Palm Beach, Florida. At the request of the parties, the matter was rescheduled to June 9, 1988 at the same location.

At final hearing petitioner presented the testimony of Colman M. Stein, Dr.

Marilyn Parker, Josephine Gray and Leslie Kalinowski. It also offered petitioner's exhibits 1-11. All exhibits were received in evidence. Respondent presented the testimony of Rebecca Gregory, Robert B. Bertisch, Gloria Gavlin

and Laura Landwirth. It also offered respondent's exhibits 1-12. All exhibits were received in evidence.

This Recommended Order has been prepared without the benefit of a transcript of hearing and is based on the documentation introduced into evidence and the undersigned's notes and recollection of the testimony. The parties waived their right to file proposed findings of fact and conclusions of law.

The issue is whether respondent acted arbitrarily and capriciously in rejecting petitioner's bid to be designated as the area agency on aging in District IX.

Based upon all of the evidence, the following findings of fact are determined:

FINDINGS OF FACT

1. Introduction

   
   

   1. On February 26, 1988 respondent, Department of Health and Rehabilitative Services (HRS), through its District IX office, advertised a Request for Proposal (RFP) in the Florida Administrative Weekly inviting qualified and interested organizations and vendors to submit proposals for the designation of an Area Agency on Aging in District IX. The designation would run from May 2, 1988 through the end of the calendar year but the successful vendor could be expected to be redesignated in subsequent years. According to the advertisement:

      
      

      Proposals will be received by District IX until 12:00 p.m., EST, March 24, 1988, for the designation of an Area Agency on

      Aging authorized under Title III of the Older Americans Act as amended, within the jurisdictional areas of Martin, St. Lucie, Indian River, Okeechobee and Palm Beach Counties.

      * * *

      Contract awards will be based on approximately 75 percent federal funds, 11 percent general revenue and 14 percent local matching funds.

      * * *

      Written inquiries concerning the Request for Proposals will be received until 4:00 p.m., EST, March 11, 1988.

      A Bidders Conference, to review the proposed format and contract award process, will be held on March 4, 1988.

      * * *

      
      

      Under this proposal, HRS intended to award the contract to the best qualified firm since price proposals were not being submitted. To this extent, the proceeding differs from the typical state project where the contract is ordinarily awarded to the lowest and most responsive bidder.

      
      

   2. In response to the above RFP, petitioner, Banyan Area Agency on Aging, Inc. (Banyan), timely submitted its proposal. As it turned out, Banyan was the

      only organization that filed a bid. After being reviewed by a seven person evaluation committee, the proposal was given a score of 480 out of a possible 1525 and a recommendation that it be rejected. This recommendation was later adopted by the District Administrator. This decision was conveyed to petitioner by letter dated April 4, 1988. That prompted a request for hearing by petitioner to challenge the preliminary agency action. As grounds for contesting the action, petitioner contended the agency was arbitrary and capricious in rejecting its proposal.

      
      

   3. If its preliminary action is sustained, HRS intends to seek authority from the Department of General Services to negotiate a noncompetitive bid. Under this process, HRS desires to designate, after a screening process, one person from each of the five counties to serve on the board of a corporation to

      be established to run the program. Thus, HRS does not intend to readvertise the RFP and seek competitive proposals a second time.

      
      

2. The Contract

   
   

   1. The contract in question is funded principally through federal grant dollars under the federal Older Americans Act of 1965, as amended. The monies, commonly known as Title III funds, are used to provide programs for senior citizens. Respondent is the State agency charged with the responsibility of administering the program funds. To receive federal funds, HRS was required to prepare a state plan and submit it to the U.S. Commissioner on Aging for his approval. A part of that plan calls for HRS, or District IX in this case, to designate an area agency on aging (AAA) to plan and administer a comprehensive and coordinated system of services for the aging in the five county area of Palm Beach, Okeechobee, Indian River, Martin and S. Lucie Counties. Among other things, the local AAA must develop an area plan for supportive services, senior centers and nutrition services in the five county area. The AAA will receive

      $300,000 to cover administrative costs in administering the program and will be in charge of dispensing several million dollars annually in grant dollars for aging programs.

      
      

   2. District IX had previously designated Gulfstream Area Agency on Aging (Gulfstream) as its AAA. However, due to a combination of faulty management, lack of supervision and other factors, Gulfstream was designated as AAA in May, 1987. Since then, HRS has received several waivers from the Commissioner on Aging but now faces a mandate to designate a District IX AAA by October 1, 1988 or lose its federal funding.

      
      

   3. To avoid a recurrence of the Gulfstream problem, the HRS District IX contract manager, and several other district personnel, prepared a comprehensive RFP to be issued in conjunction with the selection of a new AAA designee. After a draft was assembled at the local level, the RFP was forwarded to HRS' Tallahassee office where further refinements were made. The final product has been received in evidence as petitioner's exhibit 9 and respondent's exhibit 11. According to the District IX contract manager, the RFP is the "state of the art" in terms of what an AAA ought to be.

      
      

   4. The RFP is a voluminous document, weighing some 6 1/2 pounds according to Banyan, and requires a great deal of information and detail regarding the AAA organization, procedures, and program plans and goals to satisfy the federal act. The RFP was given to interested organizations, including Banyan, around March 1, 1988. This gave vendors approximately three and one-half weeks to prepare and submit a proposal. Only Banyan was interested in being the designee and thus was the only bidder on the job. Its proposal contained 135 pages.

3. Evaluation Process

   
   

   1. HRS created a seven person evaluation committee to review the proposals. The committee included five HRS employees and two non-HRS members. All members were given Banyan's proposal prior to the selection date. On March 28, 1988 the committee met and each member independently evaluated Banyan's proposal. Although a top score of 1525 was theoretically possible, Banyan received an average overall score from each There of 480, or a rating of approximately thirty-one and one half percent. After the scores were tallied, Banyan was given one hour to orally explain its proposal before the full committee. At the conclusion of the presentation, the committee voted unanimously to reject the proposal.

      
      

   2. The reasons for rejecting Banyan's proposal are set forth in respondent's exhibit 2. The three primary deficiencies, as broadly stated, were

      1. the "proposal did not develop ideas fully enough to demonstrate a clear understanding of the needs and conditions of the District IX 60+ population,"

      2. the proposal "did not demonstrate a clear understanding of the role and responsibility of area agency on aging nor was there evidence of administrative capability,' and (c) the proposal "did not offer assurance that current board members fully understood their position as the governing board."

      
      

   3. At hearing, several members of the committee amplified on the above three shortcomings and pointed out specific deficiencies in Banyan's proposal which led them to reject the proposal. For example, the proposal failed to focus on areas outside of Palm Beach County, did not contain a proposed budget, lacked minority representation, failed to fully identify goals and objectives, did not include a detailed description of the fair hearing process and the make- up and procedure of the advisory council and omitted the corporation's bylaws. Given these deficiencies, and others, HRS was justified in rejecting the bid.

      
      

4. Petitioner's Case

   
   

   1. Petitioner contends that three and one-half weeks was too short a time to prepare a responsible proposal to the RFP. In this regard, HRS acknowledged it was a lengthy RFP, but it considered the time adequate for a qualified and experienced organization, particularly since much of the RFP was reference material. Banyan also pointed out that its board of directors was made up of highly qualified people with impressive work experience. While this is true, as evidenced by testimony at hearing, none were experienced in managing a federally funded program of this magnitude. Banyan further stated that, after the proposal was filed, it could have corrected or expanded on many of its abbreviated responses. However, once the proposal was filed, such changes were impermissible. Finally, Banyan conceded that while many of its responses were brief and nonspecific, this was because Banyan intended to rely upon HRS for technical assistance to implement the programs. However, the RFP called for specific, detailed responses so that HRS could properly evaluate the proposal.

      
      

5. Allegations of Bias or Impropriety

1. There is no evidence that the committee acted unfairly or improperly during the evaluation process or that any eber was personally biased towards Banyan. There is also no evidence that HRS rejected the bid so that it could "control" the management of the program.

   CONCLUSIONS OF LAW

   
   

2. The Division of Administrative Hearings has jurisdiction of the subject matter and the parties thereto pursuant to Subsection 120.57(1), Florida Statutes (1987).

   
   

3. As the party challenging the agency's decision to reject its bid, Banyan carries the burden of demonstrating that the agency's action was arbitrary and capricious, or was otherwise improper. Cf. Capeletti Bros., Inc.

   v. State, Department of General Services, 432 So.2d 1359, 1363-64 (Fla. 1st DCA 1983) (no error in requiring challenging party to bear burden of proving agency action incorrect). To do this, the challenger must show that the agency was not "proceeding rationally within the bounds of discretion," Couch Construction Co., Inc. v. Department of Transportation, 361 So.2d 172, 175 (Fla. 1st DCA 1978), and that the agency's decision was not based on facts which reasonably support its decision. Mayes Printing Co. v. Flowers, 154 So.2d 859, 864 (Fla. 1st DCA 1963). At the same time, it is well-established that an agency is accorded "wide discretion in soliciting and accepting bids . . . and its decision, when based on an honest exercise of this discretion, will not be overturned by a court even if it may appear erroneous and even if reasonable persons may disagree." Liberty County v. Baxter's Asphalt and Concrete, Inc., 421 So.2d 505, 507 (Fla. 1982) Finally, a bidder cannot be permitted to change its bid, or any provisions therein, after the bids have been opened, except to cure minor irregularities. Harry Pepper & Associates, Inc. v. The City of Cape Coral, 352 So.2d 1190, 1192 (Fla. 2nd DCA 1977).

   
   

4. Applying the foregoing principles to the evidence, it is concluded that petitioner has failed to sustain its burden of proving that the agency was arbitrary or capricious in rejecting its bid. Indeed, the record shows that, given the deficiencies in petitioner's proposal, the agency proceeded rationally within the bounds of discretion in rejecting the bid and such rejection was based on facts supporting that decision. Couch Construction Co., Inc. and Maves Printing Co., supra. Once the proposal was submitted, Banyan could not modify its provisions to cure any deficiencies. Harry Pepper, supra. Therefore, the protest must fail.

   
   

5. Finally, it should be noted that petitioner's organization is made up of well-intended, civic-minded citizens who should be commended for becoming involved in an important community and area project. However, given the shortcomings in Banyan's proposal, the agency was justified in refusing to designate Banyan as the AAA.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, it is RECOMMENDED that the protest filed by petitioner be DENIED and that a Final

Order be entered confirming the rejection of petitioner's proposal.

DONE AND ORDERED this 20th day of June, 1988, in Tallahassee, Leon County, Florida.

DONALD R. ALEXANDER

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 20th day of June, 1988.

COPIES FURNISHED:

Mr. Colman B. Stein

100 Worth Avenue Apartment 416

Palm Beach, Florida 33480

Laurel D. Hopper, Esquire

111 Georgia Avenue Third Floor

West Palm Beach, Florida 33401

R. S. Power, Esquire Agency Clerk

Department of Health and Rehabilitative Services

1323 Winewood Boulevard Building One, Room 407

Tallahassee, Florida 32399-0700

Gregory L. Coler, Secretary Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Docket for Case No: 88-002305BID

Orders for Case No: 88-002305BID