STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

GULF SOUTH REALTY, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 88-3765BID

)

DEPARTMENT OF HEALTH ) AND REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

The final hearing in this case was held on October 7, 1988, in Tampa, Florida, before Donald D. Conn, a duly designated Hearing Officer of the Division of Administrative Hearings. The parties were represented as follows:

For Petitioner: Michael V. Giordano, Esquire

7821 North Dale Mabry, Suite 100

Tampa, Florida 33614

For Respondent: Jack Farley, Esquire

W. T. Edwards Facility 4000 West Buffalo Fifth Floor, Room 520 Tampa, Florida 33614

The issue in this case is whether the Department of Health and Rehabilitative Services (Respondent) should award Lease Number 590:1927 for office space and client related services to Gulf South Realty, Inc. (Petitioner). Prior to the commencement of the hearing, the Respondent filed a Motion To Dismiss, urging that Petitioner had failed to allege any basis upon which relief could be granted. In order to allow a reasonable opportunity for Petitioner to respond in writing, and since Respondent waited until the commencement of the hearing to file this Motion, a ruling on the Motion was reserved and will be incorporated in this Recommended Order. During the hearing, the Petitioner called three witnesses and introduced seven exhibits, while the Respondent called two witnesses. Five joint exhibits were received in evidence.

A transcript of the final hearing was filed on November 21 1988, and the parties were thereafter allowed to file proposed recommended orders, including proposed findings of fact, and memoranda on the Motion To Dismiss. The Appendix to this Recommended Order contains a ruling on each timely filed proposed finding of fact.

FINDINGS OF FACT

1. During March 1988, the Respondent issued an Invitation to Bid by which it sought to lease 17,973 net usable square feet of office space to be located

   within a specified geographic area in Tampa, Florida, under a nine year lease with two additional three year option periods. This Invitation to Bid is referred to as Lease Number 590:1927.

   
   

2. Three bids were received in response to the Invitation to Bid, and they were opened on May 13, 1988. Bids were received from the Petitioner, 8900 Centre, Ltd., and the Allen Morris Management Company.

   
   

3. All bidders were determined to be responsive to the Invitation to Bid. Despite the fact that petitioner submitted the lowest bid, Respondent notified Petitioner by letter dated June 10, 1988, of its intent to award Lease Number 590:1927 to 8900 Centre, Ltd., as the lowest and best bidder. Petitioner has timely filed its protest seeking review of that decision.

   
   

4. It is undisputed that Petitioner submitted the lowest bid. For the first year of the lease, Petitioner bid $7.85 per square foot, while 8900 Centre bid $7.95 per square foot. Thereafter, Petitioner proposed a yearly increase of

   50 cents per square foot, reaching $11.85 per square foot in the ninth year of the lease, while 8900 Centre proposed annual increases of approximately 75 cents, reaching $14.00 per square foot in the ninth year. This equates to an actual dollar difference over the nine year term of approximately 185,000. However, using a present value methodology and a present value discount rate of

   8.81 percent referred to on page 17 of the bid submittal form, the present value difference in these two bids is approximately $1,000 per month, which would result in a present value difference between Petitioner and 8900 Centre of approximately $108,000 over the nine year period.

   
   

5. Neither the Invitation to Bid, bid specifications, nor the actual bids were offered into evidence. One page of the bid submittal form, designated as page 17 of 18, was offered and received in evidence. This portion of the bid submittal form states that the "successful bid will be that one determined to be the lowest and best." It also sets forth evaluation criteria, and assigns weights to each criteria. The evaluation criteria include associated fiscal costs (35 points), location (40 points) and facility factors (25 points) . A synopsis of bids was also offered and received in evidence showing the points awarded to each bidder by the Respondent's bid evaluation committed. Out of a possible 100 points, 8900 Centre received 95.17 points, while Petitioner received 82.25 points and the Allen Morris Management Company received 70.67 points.

   
   

6. Petitioner asserts that the members of the evaluation committee were not qualified or knowledgeable in basic construction, design and engineering principles, and therefore could not competently evaluate the bids submitted. However, Petitioner did not offer competent substantial evidence to support this contention. Only the chairperson of the committee, Susan Jennings, was called to testify, and she appeared thoroughly knowledgeable in the bid process, the needs of the agency, the bid requirements and the representations made to the committee members by each bidder, including Petitioner, when the committee made its site visit to each location. Since the actual Invitation to Bid, bid specifications, and evidence about the other committee members were not introduced, it is not possible to know what the specific duties of the committee were, how they were to carry out their duties their qualifications and training, and whether they failed to competently carry out these duties, as alleged by Petitioner.

   
   

7. Despite Petitioner's lower bid, Respondent awarded this lease to 8900 Centre, Ltd., based upon the evaluation committee's determination assigning 8900

   Centre the highest number of evaluation points. Out of a possible 35 points for fiscal costs, Petitioner received 34 and 8900 Centre received 31.5. Thus, Petitioner's status as low bidder is reflected in the points awarded by the committee. Since neither the bid invitation or specifications were introduced, no finding can be made as to whether the difference between these two bidders comports with any instructions or directions provided by the agency to potential bidders, or whether this difference of 2.5 points on this criteria reasonably reflects and accounts for the dollar difference in these two bids.

   
   

8. Petitioner received 34.75 points out of a possible 40 points on the general evaluation criteria "location," while 8900 Centre received the full 40 points. Within this criteria, there were three subcategories, and on the first two subcategories (central area and public transportation) there was an insignificant difference of less than one-half point between Petitioner and 8900 Centre. The major difference between these two bidders which accounts for their significant difference on the location criteria, was in the subcategory of environmental factors, in which Petitioner received 15.17 points and 8900 Centre received the full 20 points.

   
   

9. Petitioner did not present competent substantial evidence to discredit or refute the committee's evaluation in the subcategory of environmental factors. To the contrary, the only testimony from a committee member was that of Susan Jennings, and according to her, Petitioner failed to explain the availability of individual air conditioning and heating controls, or the possibility of separate program entrances, which could be made available under its bid. Although Petitioner sought to explain at hearing that these desires of the agency could be accommodated in its bid, there is no evidence that such an explanation was provided in its bid or during the bid process when the evaluation committee visited the Petitioner's site. The committee was aware, however, that 8900 Centre would provide individual heating and air conditioning controls, as well as separate outside entrances for the three programs which would occupy the leased space. Additionally, the committee was concerned, according to Jennings, that parking areas at Petitioner's facility were more remote and removed from the building entrance than at 8900 Centre, and were somewhat obscured by trees and shrubbery, thereby presenting a potential safety concern for employees working after dark. Finally, every employee would either have a window or window access at 8900 Centre, while it was not explained that Petitioner's site would offer a similar feature. Thus, Petitioner failed to establish that the evaluation committee erred in assigning a significantly greater number of points for environmental factors to 8900 Centre than to Petitioner. The evidence reflects a reasonable basis for this difference.

   
   

10. The other significant difference between these two bidders was in the subcategory for layout and utilization under the evaluation criteria "facility." Petitioner received 13.67 points while 8900 Centre received a full 20 points. Jennings explained that the separate outside entrances leading directly into the three programs that would occupy this space was preferred to a single reception area for all three programs. Petitioner offered the single reception area in its bid and site visit presentation, while 8900 Centre made it clear that each program would have its own entrance. Since these programs do not have a receptionist position, and none wanted to give up a secretarial position to serve as receptionist for all three programs, the committee did not consider the single reception area entrance to be desirable. Additionally, Petitioner's facility was a two-story building, while 8900 Centre is a single story facility. Jennings explained that the committee considered a ground level facility to be preferable to a two story building, particularly since the Medicaid program was to occupy the major portion of this space. The Medicaid program would have to

    be split up at Petitioner's facility, either in two separate buildings or on two levels of the same building, while at 8900 Centre, Medicaid could be accommodated in one, single story building, with the other two programs in a second, single story building. Finally, parking at 8900 Centre was directly next to, and outside the entrance of the building, while Petitioner offered to make assigned spaces available in a general parking area which serves its entire 100,000 square foot complex. The parking offered by Petitioner is more remote than that offered by 8900 Centre, and would be less secure at night due to a greater distance from the building entrances and the parking lot. Thus, Petitioner failed to establish that the committee erred in assigning a significantly greater number of points for layout and utilization to 8900 Centre than to Petitioner. There is a reasonable basis for this difference, according to the evidence in the record.

    
    

    CONCLUSIONS OF LAW

    
    

11. The Division of Administrative Hearings has jurisdiction over the parties, and the subject matter in this cause. Sections 120.53(5) and 120.57(1) Florida Statutes.

    
    

12. An agency has wide discretion in awarding contracts to responsible bidders, and its exercise of that discretion will not be overturned unless it is arbitrary or capricious. Baxter's Asphalt and Concrete, Inc. v Department of Transportation, 475 So.2d 1284 (Fla. 1st DCA 1985) ; Capeletti Brothers v. Department of General Services, 432 So.2d 1359 (Fla. 1st DCA 1983); Wood-Hopkins Contracting Co. v. Roger J. Au and Son, Inc., 354 So.2d 446 (Fla. 1st DCA 1978). Agencies do not have unbridled discretion, however, and must act in a reasonable manner in the award of contracts.

    
    

13. The burden is upon the unsuccessful bidder which seeks to establish that it is entitled to the award, or that the award to another bidder is arbitrary, capricious, illegal, or violative of established procedure. J. W. C. Co., Inc. v. Department of Transportation, 396 So.2d 778 (Fla. 1st DCA 1981).

    As the low bidder and substantially affected party in this proceeding, Petitioner must establish at hearing that Respondent's intended award of the lease in question to 8900 Centre is not the result of the honest exercise of the agency's discretion, but results from illegality, fraud, oppression or misconduct. Liberty County v. Baxter's Asphalt and Concrete, Inc., 421 So.2d

    505 (Fla. 1982). See also Department of Transportation v. Grove-Watkins Constructors, 10 F.A.L.R. 4827, 13 F.L.W. 462 (Fla. Sup. Ct. No. 71,081, filed August 18, 1988). Petitioner has failed to sustain its burden in this case.

    
    

14. The principal issue in this case is whether Petitioner or 8900 Centre have offered the "lowest and best bid." There is no dispute that Petitioner has bid the lowest lease cost, but 8900 Centre received a substantially greater number of points on the evaluation performed by the Respondent's committee which reviewed not only the bids themselves, but also conducted site visits to each proposed location.

    
    

15. The record in this case does not contain the Invitation to Bid, the bid specifications, Petitioner's actual bid, 8900 Centre's bid, nor any evidence about the evaluation performed by each committee member. As such, no comparison of the bids, or review of the committee's determination can be made. The best evidence of each bid would be the bids themselves, and the best evidence of what the Respondent was seeking in its Invitation to Bid would be the Invitation itself, along with bid specifications. The record is devoid of this

    information, and there is, therefore, no basis to conclude that Petitioner, rather than 8900 Centre, submitted the lowest and best bid.

    
    

16. Petitioner did not introduce competent substantial evidence to discredit the committee or to support its allegation of lack of knowledge and competence. The chairperson of the committee, Susan Jennings, was called to testify, and presented credible competent testimony concerning the committee's actions. She demonstrated knowledge of the bids, the bidding process and the needs of the agency which this lease space is intended to meet. There is no basis in the record of this case upon which the actions and evaluation of the committee should be overturned. To the contrary, her testimony fully supports and explains the basis upon which Respondent concluded that 8900 Centre, Ltd., submitted the lowest and best bid in this case.

RECOMMENDATION

Based upon the foregoing, it is recommended that Respondent enter a Final Order dismissing Petitioner's protest to Lease Number 590:1927.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 9th day of December 1988.

DONALD D. CONN

Hearing Officer

Division of Administrative Hearings The Oakland Building

2009 Apalachee Parkway

Tallahassee, Florida 32399-1050

Filed with the Clerk of the Division of Administrative Hearings this 9th day of December 1988.

APPENDIX

(DOAH Case Number 88-3765 BID) Rulings on Petitioner's Proposed Findings of Fact:

1. Adopted, in part, in Finding of Fact 1, but Rejected in Finding of Fact 10, and otherwise as not based on competent substantial evidence in the record.

2. Adopted in Finding of Fact 5.

3-5. Adopted in Finding of Fact 4, but Rejected in 7. 6-7. Rejected in Finding of Fact 8.

1. Rejected in Finding of Fact 10, and otherwise as not based on competent substantial evidence in the record.

2. Rejected in Findings of Fact 9 and 10, and otherwise as not based on competent substantial evidence.

Rulings on the Respondent's Proposed Findings of Fact:

1. Adopted in part in Finding of Fact 1, but otherwise rejected as not based on competent substantial evidence.

2. Adopted in Finding of Fact 4.

3-4. Adopted in part in Findings of Fact 5 and 6, but otherwise rejected as not based on competent substantial evidence in the record of this case.

1. Adopted In Findings of Fact 5, 7-10.

2. Adopted in Finding of Fact 5.

3. Adopted in Finding of Fact 7.

4. Adopted in Finding of Fact 8.

5. Rejected as irrelevant and unnecessary since the point difference in this subcategory is insignificant.

6. Adopted in Finding of Fact 9.

11-12. Adopted in Finding of fact 10.

COPIES FURNISHED:

Michael V. Giordano, Esquire 7821 North Dale Mabry

Suite 100

Tampa, Florida 33614

Jack Farley, Esquire

W. T. Edwards Facility 4000 West Buffalo Fifth Floor, Room 520 Tampa, Florida 33614

Sam Power, Clerk Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Gregory Coler, Secretary Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

John Miller, General Counsel Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Docket for Case No: 88-003765BID

Orders for Case No: 88-003765BID