STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

NELSON P. DAVIS )

)

Petitioner, )

)

vs. ) CASE NO. 88-3868BID

) DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, this matter came on for formal administrative hearing on August 22, 1988, before William F. Quattlebaum, Hearing Officer, Division of Administrative Hearings.

APPEARANCES

FOR PETITIONER: Bruce A. McDonald, Esquire

Post Office Box 887

151 Mary Esther Cutoff, Suite 105 Mary Esther, Florida 32569

FOR RESPONDENT: Rodney M. Johnson, Esquire

District One Legal Counsel Department of Health and

Rehabilitative Services Post Office Box 8420

Pensacola, Florida 32505-8420 BACKGROUND AND INTRODUCTION

These proceedings arose following the Department of Health and Rehabilitative Services' (Department) issuance of an invitation to bid on lease no. 590-1980. The Department was seeking to lease approximately 26,000 square feet of office space in the Ft. Walton Beach area. Nelson P. Davis (Davis) filed the sole submission in response to the Department's invitation. For reasons discussed in this recommended order, the Department deemed the Davis submission to be "non-responsive" to the invitation to bid and did not further evaluate the Davis bid. The Department thereafter issued a second invitation to bid. Following notification to Davis that his submission had been removed from consideration, Davis filed a written notice of protest and requested formal administrative hearing. The hearing request was forwarded by the Department to the Division of Administrative Hearings which scheduled and appropriately noticed the hearing.

At the hearing, the Petitioner presented the testimony of Nelson P. Davis, Jan C. Kline, Charles Bates, Joseph Pastucha and James C. Peters. The Respondent presented no witnesses. The parties stipulated to the admission into

evidence of four exhibits, identified as Hearing Officer exhibits. The Petitioner introduced and had admitted two additional exhibits.

Following the filing of the transcript, the parties submitted proposed recommended orders. The proposed findings of fact are ruled upon in the appendix which is attached and hereby made a part of this Order.

The issues presented for consideration are:

1. The timeliness of Davis' notice of protest, and

   
   

2. Whether Davis' bid submission was responsive to the Department's invitation to bid.

FINDINGS OF FACT

1. The Department of Health and Rehabilitative Services currently leases approximately 22,000 square feet of space from Nelson P. Davis. The space is contained in two separate buildings, both located at 417 Racetrack Road, Ft. Walton Beach, Florida.

   
   

2. The Department and Davis were involved in a legal dispute involving the currently leased premises, which concluded in 1986 with the entry of judgment in Davis' favor. While some antagonism remains between the parties related to the legal action instituted by Davis, Davis has been an acceptable landlord in all other respects. The current lease expires February 1, 1989.

   
   

3. Davis has been aware, since late February or early March of 1988, that the Department would need space in excess of the currently occupied 22,000 square feet, but was not aware of the actual additional space requirements until the issuance of the invitation to bid. In general, the Department's space requirements have increased annually. In response to the anticipated need for additional space, Davis initiated plans for design of a third Racetrack Road building that could meet the additional need, but did not construct the facility.

   
   

4. In response to the space requirements of previous years, Davis has constructed additional space. The Department has occupied the additional space in such proportions as to avoid the competitive bidding process, however, the current need for additional space exceeds the maximum which can be leased without competitive bidding.

   
   

5. The Department on May 11, 1988, issued an invitation to Bid for approximately 26,165 square feet of space in Ft. Walton Beach, Florida. (HO #1) In response to the invitation, Davis submitted a bid proposal. The Davis proposal, the sole proposal received by the Department, was disqualified by the Department as non-responsive.

   
   

6. On June 23, 1988, the sole bid was opened by Joseph Pastucha, HRS District One Facilities Manager, who initially reviewed the Davis bid. Mr. Pastucha identified items of concern related to the responsiveness of the bid and then provided the information to his supervisor, who in turn provided the information to Mr. James Peters. The Department did not contact Davis for further information or to provide the opportunity to correct any defects.

   
   

7. James Peters, HRS's District One Manager for Administrative Services has expressed on at least one occasion a desire to avoid entering into business

   arrangements with Nelson P. Davis. The bases for Peters' opinion is the earlier litigation between the parties. Peters was on the committee which was to have evaluated bids submitted in response to the invitation. However, Peters has stated that his personal opinion would not influence his participation in the bid solicitation process. The evidence did not indicate that Peters based his opinion regarding the Davis bid submission solely on the earlier litigation or that any other person involved in the agency's action permitted personal opinions to affect the decisional process.

   
   

8. Davis' bid proposal included the two buildings constituting approximately 22,000 square feet located at 417 Racetrack Road which the Department currently occupies, plus a third building of approximately 4,000 square feet. The proposed square footage and lease cost were acceptable. The third building was to be either a planned, unconstructed building located at the

   417 Racetrack Road location or an existing building located "7/l0ths of a mile southeast of the present HRS offices," (the off-site building). However, a memorandum attached to Davis' submission stated that he did not intend to use the off-site building for HRS purposes, (HO #2). Further, Davis had previously indicated in conversation with the HRS manager of the 417 Racetrack Road offices that he planned to utilize the off-site space otherwise.

   
   

9. On page one of the bid submittal form Davis indicated the address of the proposed location as 417 Racetrack Road.

   
   

10. By letter dated July 5, 1988, the Department notified Davis that his bid offering was deemed non-responsive and that the Department expected to readvertise for space in Ft. Walton Beach. The letter made no mention of any opportunity to protest the determination. The statement, "[f]ailure to file a protest within the time prescribed in Section 120.53(5), Florida Statutes, shall constitute a waiver of proceedings under Chapter 120, Florida Statutes," which is required to be included in the notice of agency decision by Section 120.53(5)(a), Florida Statutes, was omitted by the Department. (HO #3)

    
    

11. On or about July 7, 1988, Davis contacted the Department of General Services to express his dismay regarding the disqualification of his submittal. A meeting, held on or about July 19, 1988, between Davis and Department representatives, did not alter the Department's position. On or about July 25, 1988, the written notice of protest and request for hearing was filed. The Department forwarded the request to the Division of Administrative Hearings.

    
    

12. The letter dated July 5, 1988, advising Davis that his bid was deemed non-responsive enumerated five reasons for the Department's decision. The reasons stated were:

    
    

    1. No photograph of the proposed facility was submitted as requested;

    2. No floor plan of the facility was submitted as requested;

    3. A substituted site was submitted

    4. Proposed space was not an existing building and was not measurable;

    5. Three buildings in bid proposal

       constitute three locations and are unacceptable.

       
       

       The letter was signed by Chuck Bates, DHRS Deputy District Administrator, District One. The letter was drafted by James Peters. (HO #3) Mr. Bates relied upon Peters and Pastucha to provide information sufficient to justify the

       disqualification of the bid, and was satisfied that the action was justified prior to signing the letter.

       
       

13. Examination of the bid submittal package reveals that Davis failed to acknowledge by initial the requirements of page seven, but that he did, on that page, appropriately respond to questions related to proposed parking spaces being bid. The Department did not base the disqualification of the bid on the failure to acknowledge the page and did not include the failure to initial the page in the stated reasons for deeming the bid non-responsive.

    
    

14. Paragraph 9(a) of the bid submittal form requires the submission of a clear photograph of the exterior front of the building. (HO #2) Davis submitted no photographs.

    
    

15. Paragraph 9(b) of the bid submittal form requires the submission of a scaled floor plan showing present configurations with measurements. (HO #2) Davis submitted floor plans for the proposed-to-be-constructed building and for the off-site building, but failed to submit floor plans for the two buildings which the Department currently occupies. The bid also failed to include calculations of net rentable square footage related to the omitted floor plans.

    
    

16. The letter to Davis stated that an additional reason for disqualification of his bid from further consideration was the submission of a substituted site, (HO #3). The "substituted site" refers to Davis' inclusion of the off-site building not identified in the bid submission other than by the statement that the building was located seven-tenths of a mile southeast of the present HRS office location. No map, street address, legal description, or other identifying information was submitted.

    
    

17. The proposal submitted by Davis included plans to construct a third building at 417 Racetrack Road, which was rejected as not measurable. The invitation to bid states that to be considered, the space must be existing, dry and physically measurable, at the time of bid submitted. (HO #1) The proposed third building clearly fails to meet this requirement.

    
    

18. While the Department may permit the correction of minor deficiencies, the deficiencies were adjudged by the Department to be more than minor. The proposal's inclusion of nonexisting space (Racetrack Road building #3) or in the alternative a building, the location of which can not be determined from the bid information and which the bidder apparently intends not to provide, is non- responsive to the specifications of the invitation.

    
    

19. As to the fifth enumerated reason for disqualification of the bid (three buildings/three locations) the Department and Petitioner presented extensive testimony related to paragraph 3(b) of page 15 of the bid submittal form. Page 15 of the bid submittal form is titled "Evaluation Criteria" and contains a list of weighted factors which were to be used in the evaluation of bids. (HO #2) Paragraph 3(b) states, as one factor for consideration in evaluation, whether the bid provides for the required aggregate square footage in a single building, and continues, "[p]roposals will be considered, but fewer points given, which offer the aggregate square footage in not more than two locations provided the facilities are immediately adjacent to or within yards of each other." (HO #2) The space left for the specification of maximum yardage was erroneously left uncompleted by the Department and the Department did not learn of the error until the bid was submitted.

20. The Department's disqualification of the bid on this basis relies on the Department's assertion that the three buildings included in the Davis proposal constitute three locations and that a responsive bid may contain not more than two locations. The Department's position is that "location" and "building" are synonymous and that paragraph 3(b) of the evaluation criteria prohibits consideration of a bid submission including more than two buildings. The Department's position is rejected as arbitrary.

    
    

21. The bid package does not state that proposals including more than two buildings will be disqualified. The sole reference to the number of buildings in a responsive bid submission is as stated and contained on the page of "Evaluation Criteria", wherein it is identified with a weighting factor of five percent of total possible points.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

23. The Department at hearing raised the issue of the timeliness of the Petitioner's Notice of Protest and request for hearing. However, as the Department noted in its proposed recommended order, a notice of agency decision that fails to contain, as did the July 5th letter to Mr. Davis, the language required by Section 120.53(5)(a), Florida Statutes, does not allow a clear point of entry to the administrative hearing process and thus the applicable deadline for filing the written protest is waived. Capital Copy Inc. v. University of Florida, 526 So.2d 988, (Fla., 1st DCA 1988).

    
    

24. The system of competitive bidding protects against collusion, favoritism, and fraud in the award of public contracts. The competitive bidding process is designed to secure fair competition upon equal terms to all bidders. Liberty County v. Baxter's Asphalt & Concrete, Inc., 421 So.2d 505, (Fla., 1982). A public agency has wide discretion in soliciting and accepting bids and its decision should not be overturned even if it may appear erroneous and even if reasonable persons may disagree. Id.

    
    

25. The scope of the administrative hearing in a challenge to the agency's decision to award or reject bids is limited to whether the purpose of competitive bidding has been subverted. The hearing officer's sole responsibility is to ascertain whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly. Department of Transportation v. Groves- Watkins Constructors, 13 F.L.W. 462 (Fla., Case No. 71,081, August 18, 1988). Accordingly, as the party asserting the affirmative of the issue, the burden is on the Petitioner to show by a preponderance of the evidence that the action of the Department in disqualifying the Davis bid submission was fraudulent, arbitrary, illegal, or dishonest. The Petitioner has failed to meet the burden. The assertion that the sole reason for the disqualification of the Davis response was ill-feelings on the part of James Peters is rejected. There were material flaws in the response which prevented the response from substantial compliance with the specifications expressed in the invitation to bid.

    
    

26. The Petitioner asserts that the defects in the Davis submission were minor and should have been waived or that Petitioner should have been allowed to correct such defects. Considering the ill-feelings between the Petitioner and Mr. Peters, a Department official with considerable input into the bidding process, a refusal to permit Davis to correct a minor flaw could be viewed as

    arbitrary. However, the defects in Davis' submission were not minor. To the contrary, failure to identify the location of a substantial portion of the proposed space is a material defect as is the inclusion of the nonexisting building. To grant Davis the ability to correct such defects would have given the Petitioner an advantage over other potential bidders who may have participated had the bid invitation permitted planned-but-unbuilt structures or unidentified properties to be included in a bid submission. On those grounds alone, the disqualification of the Davis submission is well- founded.

    
    

27. On the other hand, the assertion by the Department that the terms "location" and "building" are synonymous is rejected. The terms are not defined by the Department in any formal manner. The testimony at hearing clearly demonstrated a difference of opinion even within the agency, which has resulted in the subsequent deletion of the word "location" and substitution of the word "building" in the relevant paragraph of the second invitation to bid. To disqualify the proposal on such grounds is not logical. Further, the assertion that the preference for not more than two locations, as expressed in paragraph 3(b) of the evaluation criteria, operates to preclude consideration of bid submissions involving more than two buildings is also rejected. At most, paragraph 3(b) would operate to reduce the available evaluation points by the five-percent weight assigned in the evaluation criteria. If the Department does not desire to be located in more than two buildings, the specifications should have so stated. They did not. While the Department may for its reasons favor a single-building site over a multiple-building site, it is arbitrary to disqualify a bid from further consideration for the apparent failure to comply with an evaluation factor worth no more than one-twentieth of the total available score. An arbitrary decision is one not supported by facts or logic, or despotic. Agrico Chemical Company v. State of Florida, 365 So.2d 759 (Fla. 1st DCA 1978).

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is hereby

RECOMMENDED:

That the Department of Health and Rehabilitative Services enter a Final Order dismissing Case No. 88-3868BID.

DONE and ENTERED this 28th day of September, 1988, in Tallahassee, Florida.

WILLIAM F. QUATTLEBAUM

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 28th day of September, 1988.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-3868BID

The following constitute rulings on the proposed findings of fact submitted by the parties.

Petitioner:

1. Accepted in part. The use of the word "required in the fourth sentence is rejected. The referenced section relates to evaluation factors, not specific requirements.

2. Accepted.

3. Accepted in part. The third building was proposed

   as either the off-site building or the planned, non-existent space.

4. Accepted.

5. Accepted.

6. Accepted.

7. Rejected as restatement of testimony. Other testimony indicated that Petitioner planned to use the off-site location for non-HRS purposes.

8. Rejected, immaterial.

9. Accepted.

10. Accepted.

11. Accepted as modified.

12. Accepted in part. The use of the word "technical" is rejected.

13. Accepted.

14. Accepted as modified.

15. Accepted as modified.

16. Accepted.

17. Accepted.

18. Accepted.

19. Accepted as modified.

20. Accepted as modified.

21. Accepted as modified. The change between the two invitations to bid was to clarify the obvious confusion related to the use of terms "location" and "building" and was made not to the bid specifications but to evaluation criteria.

22. Rejected as restatement of testimony.

23. Rejected, conclusion of law.

24. Accepted so far as relevant. While the Davis bid was disqualified as non-responsive, the right to reject any and all bids encompasses the disqualification of a bid as non-responsive to the specific requirements of an invitation to bid.

Respondent:

1. Rejected, conclusion of law.

2. Accepted.

3. Accepted.

4. Accepted.

5. Accepted.

6. Accepted.

7. Accepted.

8. Accepted.

9. Accepted.

10. Rejected. Floor plan of the off-site building was submitted showing that the building is essentially a hollow, box-like structure.

11. Accepted.

12. Accepted.

13. Accepted.

14. Rejected, irrelevant. While the usual distance may be 100 yards, the actual bid specifications do not state such. Further the sole reference to the distance between "locations" was contained in evaluation criteria. At no time prior to the June 23, 1988 bid opening did the Department attempt to identify the preferred distance between locations.

15. Accepted.

16. Accepted.

17. Accepted.

COPIES FURNISHED:

Bruce A. McDonald, Esquire Post Office Box 887, Suite 105

151 Mary Esther Cutoff

Mary Esther, Florida 32569

Rodney M. Johnson, Esquire

Acting District One Legal Counsel Post Office Box 8420

Pensacola, Florida 32505-8420

Joseph J. Pastucha

3300 North Pace Boulevard Room 109

Town & Country Plaza Pensacola, Florida 32505

Jan Kline

417 Racetrack Road

Ft. Walton Beach, Florida 32548

James V. Peters

Department of General Services

160 Governmental Center Fourth Floor, Room 412 Pensacola, Florida 32501

Sam Power, Clerk Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Gregory L. Coler, Secretary Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Tom Batchelor Staff Director

House HRS Committee The Capitol

Tallahassee, Florida 32399-1300

Docket for Case No: 88-003868BID

Orders for Case No: 88-003868BID