STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

Dr. D. C. COURTNAY, )

)

Petitioner, )

)

vs. ) CASE NO. 89-4317BID

) DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the above-styled master was heard before the Division of Administrative Hearings, by its duly designated Hearing Officer, Daniel M. Kilbride, on August 25-26, 1989 in Orlando, Florida. The following appearances were entered:

APPEARANCES

For Petitioner: Terrence W. Ackert, Esquire

201 East Pine Street, Suite 1402 Orlando, Florida

For Respondent: James Sawyer, Jr., Esquire

District 7 Legal Counsel Departments of Health and

Rehabilitative Services

400 West Robinson Street Orlando, Florida

STATEMENT OF THE ISSUES

Whether the Department of Health and Services acted fraudulently, arbitrarily, capriciously, illegally or dishonestly in issuing an award of bid or HRS Lease No. 590:2069 to Harpaul S. Ohri.

PRELIMINARY STATEMENT

This matter arose when Petitioner filed a formal notice of protest, pursuant to Section 120.53, Florida Statutes (1988 Supp.), and Chapter 28-5, Florida Administrative Code, challenging the Respondents award of Lease No. 590:2069 for existing office space in Orlando, Florida, to Harpaul S. Ohri. On or about June 29, 1989, Petitioner timely filed his Notice of Intent to File Formal Protest, and on or about July 10, 1989, did timely file and serve his Formal Notice of Protest. On August 9, 1989, the Respondent notified the Division of Administrative Hearings to initiate the formal hearing process, by Notice of Referral and Notice to Bidders. Thereafter, this Hearing Officer issued his Pre-Hearing Order, dated August 14, 199, with notice to all parties. On August 17, 1989, Petitioner served Respondent with a Notice to Produce and on

August 18th served Respondent with Petitioners First Interrogatories to Respondent. On or about August 18, 1989, Petitioner filed a Motion for Order Granting Bid Protest, or in the Alternative Striking Any Matter of Defense Filed by the Department, and For Default; and on August 24, 1989, Petitioner filed a Motion for Extraordinary Relief. These motions are hereby DENIED.

Under the conditions of the Pre-Hearing Order, the Respondent had the responsibility to produce documents within 72 hours of the Petitioners Notice to Produce, and to answer the Interrogatories within 5 days from the date of receipt. Respondent failed to file an answer to the Interrogatories and produced a limited number of documents one day before the commencement of the formal hearing. Petitioner moved that the Hearing Officer impose sanctions on Respondent, that a default be entered against Respondent, and that Petitioner be awarded the bid. The parties jointly filed a Pre-Hearing Statement, dated August 24, 1989.

At the commencement of the formal Hearing on August 25, 1989, after hearing argument of counsel, the Hearing Officer denied the motions after affording Petitioner the opportunity to continue the hearing and seek further discovery.

Petitioner declined to move for a continuance on the grounds that Petitioners right to an expeditious resolution of this matter would be jeopardized thereby. In view of recommendations contained in this Recommended Order, these motions are moot.

Petitioner called nine witnesses: Ernie Wilson, HRS Facilities Services Manager; Gary Bergenske President of J & J Metro Moving and Storage; Terry Harrington, owner of K-Lynn Communications; Steven A Shacoski, HRS Program Administrator, and chair of the On-Site Evaluation Committee; Michael Haynie, private investigator and owner of Vision Private Investigations; Bret Bradford, Trooper, FHP; Linda Lang, janitorial services; Timothy J. Monasmith, security services; and the Petitioner. Respondent called as its witness, Ernie Wilson, HRS Facilities Services Manager. Twenty-one composite exhibits were admitted in evidence on behalf of Petitioner, some over objection. Respondent offered nine composite exhibits in evidence.

The transcript of the hearing was filed for record on December 22, 1989.

The parties requested leave to file their proposed findings of fact and conclusions of law 30 days after the filing of the transcript, due to its length and complexity, and the request was granted. The proposed findings of fact submitted by Petitioner was received or, January 17, 1990. Proposed findings of fact have not been submitted thy Respondent.

Petitioners proposed findings of fact have been considered and utilized in the preparation of this Recommended Order except where such proposals were not supported by the greater weight of the evidence or were immaterial, irrelevant, cumulative, in the nature of argument or subordinate. Specific rulings on Petitioners proposed findings of fact, are contained in the Appendix to this Recommended Order.

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

FINDINGS OF FACT

1. Sometime before March, 1989, the Department of Health and Rehabilitative Services (HRS) requested and received approval from the Department of General Services (DGS) for additional office space to provide social services in the western portion of Orlando, Orange County, Florida, including a food stamp distribution office. HRS was authorized to procure, through competitive bidding, a lease for 17,250 net rentable square feet of existing office space, plus or minus 3 percent. The said lease was to provide for a full service period of seven years and two options to renew for three years each at specified rates, with occupancy no later than December 1, 1989 or

   175 days after the bid award is finalized.

   
   

2. The geographic area designated in the bid package for the office space was limited to the following area of Orange County, Florida:

   
   

   Beginning at the intersection of Colonial Drive and Kirkman Road to the intersection of L.B. McLeod Road, then east on L.B. McLeod Road to the, intersection of Rio Grande Avenue then north on Rio Grande Avenue to the, intersection of Colombia Street,, then east on Colombia Street to Interstate 4, then north on Interstate 4 to the intersection of Colonial Drive, then west on Colonial Drive to the point of Beginning.

   
   

3. Public notice that HRS was seeking competitive bids was given and HRS prepared a document entitled Invitation to Bid for Existing Office Space (ITB), which set forth in detail all of HRS requirements. The purpose of the ITB was to inform all potential bidders of the minimum requirements for submitting a responsive bid, and the specific criteria by which the bids would be evaluated. Specific areas of importance to Respondent as reflected in the ITB and addressed by the evidence herein were as follows:

   
   

   1. 17,250 net rentable square feet (plus or minus 3 percent) of existing office space.

   2. General office use for use, as a client service center.

   3. Seven year term with two options to renew of three years each.

   4. 120 off-street, on-site, full size parking spots designated exclusively for use of Department employees and clients, suitably paved and lined, with a minimum of two for the handicapped.

   5. Availability of public transportation within reasonable proximity.

   6. Availability to adequate dining facilities within two miles.

   7. Photographs of the exterior front of the facility, along with documentation of present facility configuration and parking areas including access and egress to public roadways.

   8. Availability of elevator for multi-story use. i). Space requirement criteria:

      1. Minimum telephone requirements.

      2. Back-up interior emergency lighting.

      3. Three separate sets of rest rooms, male and female, one meeting the

         needs of the handicapped

         1. General security requirements.

         2. Specific security requirements for food stamp distribution center.

         3. Window covering over exterior widows to allow both sunlight and energy control; if bidded space without existing windows, then all rooms comprising the exterior of the building would require windows measuring approximately 24 x 36, all secured and inoperable.

         4. Full Service including all utilities and janitorial.

         
         

4. The evaluation factors and their relative weights were stated in the ITB as follows:

Evaluation Criteria

The successful bid will be that one determined to be the lowest and best. All bids will be evaluated on the award factors enumerated below:

1. Associated Fiscal Costs

   1. Rental rates for basic term of lease Evaluated using present value methodology by application of the present value discount rate of 8.69 percent.

      (Weighting: 25)

   2. Rental rates for optional renewal of terms of lease. Rates proposed are within projected budgeting restraints of the department.

      (Weighting: 10)

   3. Associated moving costs, i.e., furniture, equipment, telephone systems, etc,.

      (Weighting: 5)

      
      

2. Location

   1. Proximity of offered space in central or preferred area of map boundaries.

      (Weighting: 10)

   2. Frequency and availability of satisfactory public transportation within proximity of the offered space.

      (Weighting: 10)

   3. The effect of environmental factors, including the physical characteristics of the building

      and the area surrounding it, on the efficient and economical conduct of the departmental operations planned for the requested space.

      (Weighting: 10)

      
      

3. Facility

   1. Susceptibility of design of the space offered to efficient layout and good utilization.

      (Weighting 15)

   2. Provision of the aggregate square footage in a single building. Proposals will be con- sidered, 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 100 yards of each other.

(Weighting: 10)

TOTAL POSSIBLE 100 percent

The bid package contained various bid specifications, bid evaluation criteria and the numerical weight assigned to each of those criteria.

1. Sealed bids were submitted by three bidders, Petitioner, Harpaul S. Ohri and Kensington Gardens Builders Corp.

   
   

2. The bids were opened on April 25, 1989, and Ernie Wilson, HRS District

   7 Facilities Services Manager, determined that all three bids were responsive, and within the mandatory geographical area designated in the bid package.

   
   

3. The District Administrator appointed a bid evaluation committee to review and grade, the responsive bids under the criteria established in the bid package, and to recommend to him the committees choice of the lowest and best bid.

   
   

4. Four individuals who were familiar with the type of work to be done in the proposed space and familiar with the bid process were appointed to the Committee.

   
   

5. On or about May 1, 1990 the bid evaluation committee determined that the bid of Harpaul S. Ohri was the "lowest and best bid" and submitted its determination, in writing, to the District Administrator who, subsequently approved the selection.

   
   

6. On or about June 26, 1989, on behalf of the Department, Ernie Wilson, Facilities Services Manager, notified the bidders of the Departments intent to award the bid to Harpaul S. Ohri, as being in the best interest of the Department.

   
   

7. The bid evaluation committee consisted of four representatives of the Department who visited two of the three bidders sites and questioned the bidders representatives.

8. The members of the committee were familiar with the Petitioners site from previous experience. They choose not to make an on-site visit prior to completing the bid evaluation sheet, although instructed to do so on the Evaluation Committee Duties and Responsibilities/Real Property, Leasing instruction sheet.

   
   

9. Each committee member completed an evaluation sheet and gave a higher total score to Mr. Ohri.

   
   

10. The three major bid evaluation criteria were Fiscal Cost, Location and Facility.

    
    

11. Under the Fiscal Cost criterion were three sub-categories: Rental Rates, Renewal Rates, and Moving Costs.

    
    

    1. For Rental Rates, Petitioner received an average of 22.7 points out of 30 possible,, while Ohri received 21.7, and Kensington Gardens received

       23.7 points. The points were individually assessed by the evaluation committee, after the rental rates were compared by Ernie Wilson based on the present value analysis of bidders proposed rates.

       
       

    2. For Renewal Rates, each of the bidders, including Petitioner, received 5 points out of 10 possible. The present value analysis was not applied, as was noted in the ITB. However, even a cursory examination of the renewal rates submitted by the bidders shows that there is a 15 percent to 33 percent yearly differential in the rates, with the Petitioners rates as the lowest and Kensington Gardens as the highest. Although the committee assigned all three bidders an equal rating, the renewal rates submitted by the bidders were not equal should the Department wish to exercise its options, the rates submitted by Petitioner were substantially lower than the other two bidders and would result in a cost savings to the Department of several hundred thousand of dollars. The award factor points should not have been awarded equally.

       
       

    3. For Moving Costs, Petitioner received 5 points on each of the committee members sheets, while Ohri received 4 points and Kensington Gardens received, an average of 3.7 points. The maximum points possible was 5 points. Petitioner was awarded the maximum points because HRS is presently in the same building and no moving costs would be experienced. The other two bidders were awarded 4 points each by committee members. That determination was based on each members personal experiences. No cost or time lost data was provided or requested.

       
       

12. The LOCATION criterion also had three sub-categories: Proximity to other governmental agencies - 10 points - with all three bidders receiving the same rating; Public Transportation -10 points - with all three ,bidders, receiving the same rating; and Environmental Factors - 10 points - out of which Petitioner received an average of 5.7 points; Ohri - 9.7 points and Kensington Gardens - 6.5 points.

    
    

    1. In considering the proximity to other governmental agencies of each of the facilities being considered, the committee relied on their own knowledge of the area. They determined that since each was within the geographical area designated in the ITB, each was equally distant from the most frequently visited government agencies in the vicinity. However, Petitioners facility is the most centrally located of the three facilities offered, while the two other facilities were considerably distant from other government agencies. The award factor points should not have been awarded equally.

    2. For Public Transportation, the committee determined that local bus service went near each of the three facilities. They were neither provided, nor did they request, route maps, schedules or passenger capacity for buses servicing each facility. Petitioners facility is centralized in the area served within the bid district, and serviced by, numerous bus lines which pass near the facility ten times per hour. The bus service to the other two facilities are limited to four buses per hour, with buses having a smaller capacity. In addition, most clients would be required to travel to the central bus terminal and transfer to a different route in order, to reach the Ohri or Kensington Gardens facilities, making bus transportation a very time-consuming process. No other form of transportation is available, except for taxi service. In addition, in order for a client to walk from the nearest bus stop to the Ohri facility, a person would cross two heavily traveled six lane streets and then walk across an open shopping center parking lot. This would require approximately a fifteen minute walk. In order to reach Petitioners facility, a client would require approximately a five minute walk utilizing public sidewalks. The committee did not consider these facts in its evaluation. The award factor points should not have been awarded equally.

    
    

    (c)(1). For Environmental Factors, the committee considered each buildings physical characteristics and the surrounding area. The committee, in their letter to the District Administrator, dated May 1, 1989, identified this category as "a very critical area for the new lease." The letter also stated: "The committee took the following into account when evaluating this section:

    
    

    1. Cleanliness of the building aid surrounding areas.

    2. Lack of traffic congestion by motorized vehicles close to the facility.

    3. Easiness of getting to and from the facility by vehicle.

    4. Safety for clients and staff walking to and from the facility.

    5. Upkeep of the surrounding buildings or other sections of the bidders building."

    
    

    1. The following was also taken into account when evaluating this section, but was not so stated in the letter. At least one committee member believed the lack of window space in Petitioners facility was disabling to his bid, and that the willingness of the Ohri representative to install windows on exterior walls was a significant factor in her determination of award. At least one committee member indicated that future expansion was a substantial factor in her favoring the Ohri bid, and that there was janitorial and security problems at Petitioners facility. The committee received no other information other than the committee members opinion regarding the same. The committee as a whole erroneously believed that the extra square footage visible at the Ohri facility at the time of their inspection would necessarily be available to HRS if and when it might expand its offices. Future expansion was specifically removed from the ITB at the pre-bid conference and it was clearly erroneous for them to have included this factor in their bid evaluation.

       
       

    2. The ITB specifically calls for the installation of exterior windows by the winning bid prior to occupancy. However, none of the committee members reviewed the ITB or the actual bids submitted. They relied primarily on the synopsis of the bids prepared by Ernie Wilson. The ITB states substantial general and specific security requirements in detail; however, the evaluation

       criteria forms do not provide a category for evaluating security other than generally under the sub-category of environmental factors. The ITB, under General Specifications and Requirements, called for the availability of adequate dining facilities within two miles of the proposed facility. The evaluation criteria did not provide a category for the committee to rate dining facility availability.

       
       

    3. In consideration of the environmental factors, the committee overlooked or failed to consider a hazardous unfenced high voltage transmission station adjacent to the Ohri facility. In addition, the photographs submitted by Ohri as the front of the building (as required by the ITB) are in fact the rear of the building which was not offered as part of the proposed leased facility.

    
    

13. Of the three sub-categories under FACILITY, out of 15 possible points, Petitioner received an average rating of 9.5, Ohri received an average of 13.7 and Kensington Gardens received 11.2 for Layout/Utilization. Ohri received the most points because his building configuration was a, shell and was more flexible and could be reconfigured for more efficient layout to suit the Departments needs. All three bidders submitted proposals wherein the total square footage of rentable space was to be contained in a Single Building. Therefore, all three bidders received the maximum 10 points. A maximum 5 points was provided for facilities with Street-level space. All three bidders were awarded the maximum 5 points. However, a portion of Petitioners space was offered on the second floor, a fact which the committee overlooked. The Petitioner should not have received the full 5 points for having street-level space.

    
    

14. The unanimous recommendation of the evaluation was to award the lease to Ohri. In reaching that conclusion, the committee did not properly utilize the weighted bid criteria and, in addition, included improper bid considerations in their evaluation of the three facilities. Some of the reasons given by the committee for distinguishing and preferring one bid over another were rational and reasonable considerations and were covered by the bid evaluation criteria. However, others were erroneous and improper.

    
    

    CONCLUSIONS OF LAW

    
    

15. The Division of Administrative Hearings has jurisdiction over the subject matter of this proceeding, and the parties thereto, pursuant to subsections 120.53 and 120.57(1), Florida Statutes.

    
    

16. Pursuant to Section 255.249, Florida, Statutes, and Chapter 13M-1, Florida Administrative Code. HRS is required to utilize the competitive bidding process for leased space of 2,000 square feet or more in privately owned buildings. HRS was clearly required to utilize the competitive bidding process for Bid No. 590:2069 since the bid specification required a minimum of 17,240 square feet.

    
    

17. Section 255.25, Florida Statutes, provides in relevant part that an agency may not lease a building or a part thereof "unless prior approval of the lease conditions and of the need there for is first obtained from the [Department of General Services]," and that "no state agency may enter into a lease for the use of 2,000 square feet or more in a privately-owned building except upon advertisement for and receipt of competitive bids and awards to the lowest and best bidder."

18. Section 255.249, Florida Statutes, requires each state agency to develop procedures for soliciting and accepting competitive bid proposals for leased space of 2,000 square feet or more in privately-owned buildings. The agency is also required to develop methods of allocating space in both state- owned office buildings and privately-owned office buildings, acceptable terms and conditions of lease agreements, maximum rental rates, and conditions and requirements which must be met for leasing a building by the agency.

    
    

19. To meet these statutory requirements an agency sets forth its minimum requirements for a particular bid in a bid submittal form. A conforming or responsive bid is one that meets the minimum requirements as set out in the bid submittal form. There is no dispute that the three bidders met the minimum requirements set forth in the bid submittal form and, accordingly, are conforming bids.

    
    

20. Additionally, the Respondents authority is limited by the nature of the competitive bidding process as established in the statutes. In Hotel China and Glassware Co. v. Board of Public Instruction of Alachua County, 130 So.2d 78 (Fla. 1st DCA 1961), the First District Court of Appeal explained the benefits and obligations in the use of the competitive bidding system in Florida as follows:

    
    

    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.

    
    

    See also: Department of Transportation v. Grove-Watkins Constructors, 530 So.2d 912 (Fla. 1988), and Liberty County v. Baxter's Asphalt & Concrete, Inc., 1421 So.2d 505 (Fla. 1981).

    
    

21. Part of the reciprocity achieved under the competitive bidding process is achieved in the bid specifications and weighted bid evaluation criteria. Potential bidders are advised in advance of the requirements to be met in order to receive the contract award, as well as the standards by which each bid will be evaluated by the agency and each standards relative importance to the agency. In essence, this advance notice enables a potential bidder to gauge the agency's notions of the type of bid best suited to its purpose for the money involved. A potential bidder can then determine whether he can meet the bid specifications and criteria and thereby determine whether he wishes to go to the time, expense and trouble of preparing and submitting a fairly lengthy and detailed bid proposal. Therefore, central to the integrity and reciprocity of the competitive bidding process is the requirement that an agency's action on a bid can be expressed within the bid specifications and evaluation criteria which it created. In other words, should an agency reject a bid for reasons not given

    weight in the bid evaluation criteria, that action would go to the integrity of the competitive bidding process and would be arbitrary and capricious. Grove Watkins, supra.

    
    

22. In addition to the above rule, there may be implied criteria for certain bids since competitive bidding is, in essence, a contractual process. These implied criteria would be very limited since there is a preference in the competitive bidding statutes and rule for written criteria.

    
    

23. The evidence showed that Ohri's bid was the bid the agency determined was the "lowest and best bid." Several of the reasons given for the unanimous selection of the higher priced bid were based on incomplete or clearly erroneous information. In addition, reasons outside the bid criteria played an important part in their determination. Contributing to these facts were the Committee's failure to review the ITB and the bids and their failure to personally inspect Petitioners facility prior to submitting their evaluation. To reject a bid for reasons outside the bid evaluation criteria goes to the heart and integrity of the bid process and constitutes an arbitrary action on the part of HRS, if they are substantial. In this case they were substantial.

    
    

24. The burden of proof and going forward with the evidence is upon the unsuccessful bidder who 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 procedures. J.W.C. Co., Inc. v. Department of Transportation, 396 So.2d 778 (Fla. 1st DCA 1981).

    
    

25. As the protestor and substantially affected party in this proceeding, it was the Petitioner's burden to establish at the hearing that the Department's intended award of the lease in question to Ohri was not the result of an honest exercise of the Departments discretion, but rather resulted from illegality, fraud, oppression or misconduct. Liberty County v. Baxter's Asphalt and Concrete, Inc., 421 So.2d 505 (Fla. 1982).

    
    

26. A state agency has wide discretion in soliciting and accepting bids, and its decision, if based on an honest exercise of this discretion may not be overturned even if reasonable persons disagree with the outcome. C. H. Barco Contracting Co. v. State, Dept. of Transportation, 483 So.2d 796, 800 (Fla. 1st DCA 1986); Liberty County v. Baxter's Asphalt and Concrete, Inc., 421 So.2d 505, 507 (Fla. 1982).

    
    

27. The improper award factors, incorrect weighting of the criteria and the erroneous or inaccurate information, cited by the committee and approved by the District Administrator, were substantial. These facts tainted the entire bidding process. The credible evidence in this case shows that the Department acted arbitrarily and capriciously in awarding the bid. State, Dept. of Transportation v. Groves-Watkins Constructors, 530 So.2d 912, 914 (Fla. 1988). Thus, petitioner has sustained his burden in this case. However, it is not this Hearing Officers function to reweigh the award factors and award the bid to the protester. That is the prerogative of the Department.

RECOMMENDATION

Based on the foregoing findings of fact and conclusions of law, the Hearing Officer recommends that the Secretary of the Department of Health and Rehabilitative Services enter a Final Order rejecting all bids for lease number 590:2069 and issue a new invitation to bid.

DONE AND ENTERED this 12th day of February, 1990, in Tallahassee, Leon County, Florida.

DANIEL M. KILBRIDE

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 12th day of February, 1990.

APPENDIX

The following constitutes my specific rulings, in accordance with section 120.59, Florida Statutes, on findings of fact submitted by the parties.

Proposed Findings of Fact submitted by the Petitioner:

Accepted: paragraphs 1, 2, 3, 5, 6, 7, 9 (in substance, except for subparagraphs f, g, j and k which are not relevant), 10 (in substance), 12(a), (b), (f-in substance), (g-in substance), (h-in substance), (j), (k-in substance), (l-in substance), (p-in substance).

Rejected: Not relevant: paragraphs 4, 12(c), (d), (e), (m), (n), (o), (p- the proposed future location of the Greyhound Station; insure wooded area nearby), (q), (r).

Argument: paragraphs 11 and 13.

Procedural matters, covered in the preliminary statement: paragraphs 8 and

14.

Respondent did not submit proposed findings of fact.

COPIES FURNISHED:

Terrence W. Ackert, Esquire

201 East Pine Street Suite 1402

Orlando, Florida

James Sawyer, Jr., Esquire District 7 Legal Counsel Department of Health and Rehabilitative Services

400 West Robinson Street Orlando, Florida

Sam Power Clerk

Department of Health and Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, FL 32399-0700

John Miller General Counsel

Department of Health and Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, FL 32399-0700

Docket for Case No: 89-004317BID

Orders for Case No: 89-004317BID