STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CARL N. NAPOLITANO, )

)

Petitioner, )

)

vs. ) CASE No. 89-5064B1D

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Mary Clark, held a formal hearing in the above- styled case on October 2, 1989, in Orlando, Florida.

APPEARANCES

For Petitioner: James C. Barth, Esquire

Callahan & Barth

433 North Magnolia Drive Tallahassee, Florida 32308

For Respondent: James A. Sawyer, Esquire

Department of Health and Rehabilitative Services

400 W. Robinson Street Suite 701

Orlando, Florida 32801 STATEMENT OF THE ISSUES

As identified by the parties in their prehearing stipulation filed on October 2, 1989, the nature of the controversy in this proceeding is a challenge by Carl M. Napolitano, Trustee, to the Department of Health and Rehabilitative Services' cancellation of the agency's bid award for lease number 590:1986.

Petitioner contends that the space renovation floor plans he submitted are responsive to the Invitation to Bid and should be accepted by the Department so that a lease may be executed.

The Department's position is that the Invitation to Bid permits the agency to require the winning bidder to make extensive renovations without adjustment to the rental rate contained in the bid. The Department further contends that the bidder's refusal to make those renovations justifies cancellation of the bid award and readvertisement of the bid.

PRELIMINARY STATEMENT

In a letter dated July 31, 1989, the Department of Health and Rehabilitative Services notified the owner of Welaka Office Building in Sanford, Florida, that its lease award was cancelled for nonperformance and that the Department would proceed to readvertise to procure the space required.

The owner responded with a petition for formal hearing, and the case was referred to the Division of Administrative Hearings on September 18, 1989.

On September 20, 1989, Carl M. Napolitano, Trustee, filed his Motion for Stay, requesting an order from the Division of Administrative Hearings prohibiting the Department from readvertising or rebidding the lease until resolution of the administrative proceeding.

Section 120.53(5)(c), F.S., provides that upon receipt of a timely formal written protest, an agency shall stop the bid solicitation or award process until the protest is resolved by final agency action. An agency, may, however, declare an emergency and resume the process. There is no authority for the Division of Administrative Hearings to effectuate a "stay." The motion was made moot by the Department's stipulation, at hearing, that it would not re-advertise the bid during the pendency of this proceeding.

At the hearing, the Petitioner presented the testimony of two witnesses: Carl M. Napolitano and Jennifer Nichols. Five exhibits were received in evidence.

Respondent submitted no exhibits and the testimony of three witnesses: Phillip Procacci, Ernie Wilson and David Croy.

The transcript of hearing was filed and, by stipulation, the parties were given the opportunity to file proposed recommended orders on or before November 1, 1989.

The findings of fact proposed by Petitioner are addressed in an attached Appendix; Respondent's written closing argument has also been considered.

FINDINGS OF FACT

1. The following facts are stipulated by the parties, as reflected in their prehearing statement filed on October 2, 1989:

   
   

   1. HRS released an Invitation to Bid on

      Lease No. 590:1986 seeking at least 23,051 sq. ft. of rental space in Sanford, Seminole County, Florida;

   2. Petitioner, Carl M. Napolitano,

      Trustee, is the owner of record of the Welaka Office Building in Sanford, Florida.

      Napolitano was the winning responsible bidder on Lease No. 590:1986, which lease HRS awarded to Napolitano on December 12, 1988, without subsequent protest;

   3. Subsequent to the award of Lease No. 590:1986, at HRS' request, Napolitano submitted floor plans for the Welaka Office

      Building, which plans have been designated Plan "A" and are Napolitano's Exhibit [2] in these proceedings;

   4. HRS' Facilities Services Manager rejected Napolitano's Plan "A" and demanded that additional plans be submitted which

      encompassed additional renovations desired by HRS, which renovations were identified subsequent to the award of the lease to Napolitano;

   5. HRS accepted Plan "B", Napolitano's Exhibit [4] in these proceedings, which was drafted at the request and direction of HRS by Napolitano's draftswoman;

   6. Napolitano maintains Plan "A" is in compliance with the requirements of HRS' Invitation to Bid and specifications and stands ready and willing to perform the required renovations. HRS maintains Plan "A" is unacceptable, Plan "B" is the only acceptable floor plan which complies with HRS' Invitation to Bid and specifications. HRS stands ready to accept Plan "B" and enter into a lease with Napolitano based on the Plan "B" renovations;

   7. The renovations contemplated in HRS' Plan "B" are not specifically identified in

      HRS' Invitation to Bid, and those renovations will require significant uncontemplated expenditures by Napolitano; and

   8. The term "counter-proposal" used by

      HRS in its notice of cancellation of the lease [exhibit # deleted] is not intended to have legal significance. No "counter-proposal" was made.

      
      

2. The Welaka Office Building, a two-story 100 year old historic building, is located in downtown Sanford, Seminole County, Florida.

   
   

   At the time of purchase by its present owners, approximately five years ago, HRS was already occupying space in the building, along with another state agency. That agency, the Probation and Parole Commission, has moved, and the HRS bid space includes the suites which it formerly occupied. HRS has remained in the building as a month-to-month tenant since the prior lease expired in March 1989.

   
   

3. Jennifer Nichols is an interior designer specializing in commercial space planning. In December 1988, she was retained by Carl Napolitano to work with HRS in developing renovation plans preliminary to execution of a lease.

   
   

   In December and early January she began meeting with the HRS supervisors and staff occupying the Welaka Building, listening to their suggestions and working from an existing floor plan. From the space requirements expressed by those staff, and after several preliminary drawings, Ms. Nichols developed what has been referred to in this proceeding as "Plan A."

4. Ms. Nichols sent the plan to David Croy, an HRS program administrator in the Welaka Building. Mr. Croy called her the following week and explained that although "staff" were happy with the plan, there might be issues regarding room sizes and the like that some of the superiors might find objectionable.

   
   

   Subsequent to that contact Ms. Nichols met with Mr. Croy and Lynn Maubley, a representative from HRS' Facility Services Manager's office. She was given a tracing paper overlay of the existing floor plan to show the modification HRS desired and she incorporated that into what ultimately became "Plan B."

   
   

5. Plans A and B are the same regarding space on the second floor. They differ materially as to the first floor space, as Plan B requires substantially more renovation, particularly to an area utilized by the child support unit. Until this latest meeting, Ms. Nichols had understood from the child support unit supervisor that only minor changes would be required.

   
   

6. Lynn Nichols informed Carl Napolitano of the new requirements. He instructed her to be receptive and continue working with the agency.

   
   

7. Lynne Nichols prepared a "demolition plan" showing what changes would have to be made to get from the existing floor plan to Plan B.

   
   

   Carl Napolitano took the demolition plan to his contractors and learned that the changes would cost a minimum of $80,000.00.

   
   

8. HRS approved Plan B and not Plan A or any of the variations between the two. Sometime around May 1989, negotiations broke down and Napolitano refused to proceed with Plan B.

   
   

9. The bid specifications included in the invitation to bid do not provide any detail with regard to floor plan renovations or any cost ceilings. Floor plans cannot be provided, as the agency cannot anticipate the configurations in the buildings which are offered in response to the advertisement. Instead, the specifications provide the total net square footage required and a listing of "approximate number/size" of different types of space, including offices, clerical areas, reception rooms, conference rooms, mailroom, lounge, and other speciality rooms. [Petitioner's Exhibit #1, p.6.]

   
   

   The specifications also include this language: SPACE REQUIREMENT CRITERIA

   FLOOR PLAN: The successful bidder shall provide architectural and engineering services as necessary to prepare renovation plans. Finalized floor configuration plans will be dependent on the layout of the proposed building and as determined by HRS staff.

   [Petitioner's Exhibit #1, p.6]

   
   

   Carl Napolitano acknowledged this requirement on the bid response form by placing his initials in the space provided at the bottom of the page.

10. The square foot approximations are included in the package in order to comply with Department of General Services rules allocating space according to staff paygrade. These allocations cannot be precise. Each building is different, and the Welaka Building is particularly unique as some walls are twelve inches thick and should not be moved.

    
    

    With 23,000 square feet total, it is improbable that the floor plan, even with renovations, could precisely match the numbers and sizes provided in the specifications.

    
    

11. Plan B does not precisely match the numbers and sizes in the specifications.

    
    

    For example, paragraph c.1. of the invitation to bid specifies "2 offices not to exceed 150 sq. ft. each;" instead there are 21 offices in that range and, there are 12 offices ranging from 155 to 200 square feet.

    
    

    Forty-four offices, rather than the specified 35, are under 110 square feet.

    
    

    The total number of offices in Plan B is 87 rather than the 88 called for in the specifications.

    
    

    According to Lynn Nichols, Plan A is not in precise conformance either, but there is less variation and she has not computed the difference between the plan and specifications.

    
    

12. The room sizes and numbers in Plan B are materially consistent with the approximate numbers and sizes listed in the invitation to bid.

    
    

    Petitioner has not suggested that other aspects of Plan B would be nonresponsive to the invitation to bid. Instead, he argues that the extent of renovations required by HRS are nowhere reflected in the specifications and that he contemplated only minor changes when he computed his rental rates.

    
    

13. Napolitano cites no basis for that assumption.

    
    

    Only approximately 25% of the space leased in HRS-District 7 is shelled-in, or vacant, space. The rest is in existing buildings, and the form specifications permit HRS to require a complete renovation of the building.

    
    

    The cost of renovations has to be factored into the bid.

    
    

14. Phillip Proccacio, a developer whose primary business is leasing, with extensive experience in dealing with state agencies, uses $20.00 per square foot as a rule of thumb to figure renovation costs. This figure is adjusted up or down, depending on the age of the building and its state of compliance with the mechanical specifications.

    
    

    As HRS' facility service manager responsible for preparing invitations to bid, Ernie Wilson is aware that other lessors use that rate and find it reasonable.

    
    

    At that rate, the renovation of the Welaka Building would amount to

    $460,000.00 for 23,000 square feet.

    CONCLUSIONS OF LAW

    
    

15. The Division of Administrative Hearings has jurisdiction over the subject matter and parties to this proceeding pursuant to Sections 120.53(5) and 120.57(1), F.S.

    
    

16. Once a public body has advertised for bids, awarded the bid and notified the successful bidder, a contract exists, even where, as here, the lease has not been executed. Dedmond v. Escambia County, 244 So.2d 758 (Fla. 1st DCA 1971), Berry v. Okaloosa County, 334 So.2d 349 (Fla. 1st DCA 1976).

    
    

17. The bid specifications give the department the authority to require renovations in a building offered for lease, and to dictate the floor plan for that space.

    
    

    Napolitano argues too late that the specifications should have included more guidance to the bidder. The time to protest bid specifications is within

    72 hours of notice. Section 120.53(5), F.S., Capeletti Brothers, Inc. v. Dept. of Transportation, 499 So2d 855 (Fla. 1st DCA 1986,) rev. den. 509 So2d 1117 (Fla. 1987).

    
    

18. Napolitano failed to prove that HRS accepted any plan but "Plan B" or that the renovations required in that plan are arbitrary or unreasonable. By his own estimation, the costs of such renovation are well within the standard accepted in the profession.

    
    

19. Rescission, and not reformation of a contract, is the appropriate remedy when a contractor makes a unilateral error in formulating his bid for a public contract. Department of Transportation v. Ronlee, Inc., 518 So2d 1326 (Fla. App. 3rd DCA 1987).

    
    

    This is the remedy HRS is offering Napolitano in response to his claim that he underestimated the extent of renovations that would be required.

    
    

20. Alternately, HRS proved Napolitano's unwillingness to proceed with the plan it selected, a plan in conformance with the specifications. Napolitano breached first, and the agency is entitled to proceed with a new invitation to bid.

RECOMMENDATION

Based on the foregoing, it is hereby, RECOMMENDED

That a Final Order be entered revoking the bid award of lease #590:1986 to Petitioner.

DONE AND RECOMMENDED this 11th day of December, 1989, in Tallahassee, Leon County, Florida.

MARY CLARK

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 11th day of December, 1989.

APPENDIX

The following constitute specific rulings on the findings of fact proposed by Petitioner:

1. Adopted in Statement of the Issues. 2.through 4. Adopted in paragraph 1.

1. Adopted in substance in paragraphs 4 and 5.

2. through 8. Rejected as irrelevant.

1. Adopted in substance in paragraph 8.

2. Rejected as immaterial.

3. Adopted in paragraph 8. 12. Adopted in paragraph 1.

13. and 14. Rejected as contrary to the weight of evidence. The plan does comply, as the sizes are mere approximations and for practical reasons cannot be more precise.

15. through 17. Adopted in paragraph 11.

1. Rejected as unnecessary.

2. Rejected as contrary to the weight of evidence. (Ernie Wilson's testimony in this regard is credited.)

3. Rejected as unnecessary and immaterial.

4. Adopted in substance in paragraph 13.

5. Rejected as contrary to the evidence. Napolitano failed to prove the basis for his mistaken belief prior to bid that renovations would be minor.

6. through 25. Rejected as unnecessary.

1. The cancellation is addressed in the Preliminary Statement. That Napolitano has been prevented from presenting plans in conformance with the specifications is unsupported by the record.

2. through 32. Rejected as irrelevant or unnecessary.

COPIES FURNISHED:

James C. Barth, Esquire

433 North Magnolia Drive Tallahassee, FL 32308

James A. Sawyer, Esquire Dept. of Health and

Rehabilitative Services

400 W. Robinson St., Suite 701 Orlando, FL 32801

Gregory L. Coler, Secretary Dept. of Health and

Rehabilitative Services 1323 Winewood Blvd.

Tallahassee, FL 32399-0700

John Miller General Counsel

Dept. of Health and Rehabilitative Services

1323 Winewood Blvd.

Tallahassee, FL 32399-0700

R. S. Power, Agency Clerk Dept. of Health and

Rehabilitative Services 1323 Winewood Blvd.

Tallahassee, FL 32399-0700

Docket for Case No: 89-005064BID

Orders for Case No: 89-005064BID