STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

PROFESSIONAL CENTRE IV., INC., )

)

Petitioner, )

)

vs. ) CASE NO. 90-4063BID

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to written Notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Daniel Manry, held a formal hearing in the above-styled case on July 13, 1990, in Miami, Florida.

APPEARANCES

For Petitioner: James Hartley, Pro Se

Professional Centre IV, Inc. 4200 Fourth Street North

St. Petersburg, Florida 33703

For Respondent: Morton Laitner, Esquire

Acting District Legal Counsel Department of Health and

Rehabilitative Services

401 N.W. 2nd Avenue, S-424 Miami, Florida 33128

FOR INTERVENOR: Otis Wallace, Esquire

Wallace and Wallace 869 West Palm Drive

Florida City, Florida 33034 STATEMENT OF THE ISSUES

The ultimate issue for determination at the formal hearing was whether Respondent's determination that the bid submitted by Petitioner was non- responsive, was arbitrary, capricious, or beyond Respondent's scope of discretion as a state agency.

PRELIMINARY STATEMENT

By letter dated May 24, 1990, Petitioner filed a formal written protest of Respondent's determination that Petitioner's bid for proposed lease space was non-responsive. The matter was referred to the Division of Administrative Hearings for assignment of a hearing officer by Notice of Referral and Notice to Bidders filed on June 29, 1990. The matter was assigned to the undersigned on

July 3, 1990. A Notice of Hearing was issued on July 3, 1990, and the formal hearing was scheduled for July 13, 1990, in Miami, Florida.

At the formal hearing, ore tenus orders were entered granting an uncontested Motion to Intervene by the successful bidder and denying Petitioner's Motion for Continuance. Petitioner testified in his own behalf. The parties submitted four joint exhibits which were admitted in evidence.

Respondent presented the testimony of three witnesses and submitted two exhibits which were admitted in evidence without objection. Intervenor presented the testimony of one witness and submitted one exhibit. Ruling on Petitioner's objection to the relevancy and competency of the testimony of Intervenor's witness and related exhibit was reserved for disposition in this Recommended Order.

A transcript of the formal hearing was not requested by any of the parties. Proposed findings of fact and conclusions of law were timely filed by Respondent on July 24, 1990. Petitioner filed a letter with the undersigned on July 25, 1990. Petitioner requested the undersigned to consider the letter "[i]n lieu of a proposed recommended order...". The paragraphs in the letter were not numbered, contrary to the order entered on the record at the formal hearing requiring proposed findings of fact to contain numbered paragraphs.

Petitioner's request to submit a document in lieu of proposed findings of fact and conclusions of law is denied. The parties were informed at the formal hearing that no unnumbered paragraphs in any proposed findings of fact would be addressed in the Appendix to the Recommended Order. No proposed findings of fact and conclusions of law were submitted by Intervenor. Respondent's proposed findings of fact are addressed in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. The invitation for bid regarding Lease No. 590:2169 solicited bids for a 10 year lease of existing office space for occupancy on October 1, 1990. The invitation for bid consisted of 13 pages and solicited bids for approximately 10,633 net rentable square feet located within a prescribed area in Florida City, Florida (the "IFB").

   
   

2. All bids were required to be submitted on a form entitled the "Bid Submittal Form". Any bids not submitted on the Bid Submittal Form were required to be rejected pursuant to the terms of paragraph 1, page 6 of the IFB. The Bid Submittal Form consisted of 24 pages.

   
   

3. The Bid Submittal Form at paragraph 22, page 12, required Petitioner to include a certification letter from a licensed heating, ventilation, and air conditioning contractor attesting to the age and condition of the heating or cooling system existing in the proposed lease space, if any (a "certification letter"). No certification letter was required if the proposed lease space had no cooling or heating system in place. A portion of Petitioner's proposed lease space was air conditioned. Petitioner did not submit the requisite certification letter.

   
   

4. Respondent had no reasonable basis to know from Petitioner's Bid Submittal Form that the proposed lease space had an existing heating or cooling system. Pictures of the proposed lease space disclosed that part of the proposed lease space was enclosed. The pictures were not a sufficient basis for Respondent to conclude that an existing air conditioning system was in place. Petitioner's proposed lease space was in apparent need of renovation before it was tenable for Respondent's needs. Petitioner's failure to submit a

   certification letter would have been consistent with a conclusion that no adequate, existing cooling system was in place and that a new cooling ard heating system would be needed as part of the renovation of the proposed lease space.

   
   

5. The Bid Submittal Form, at Paragraph 11, page 5, required any bidder with proposed lease space that was partially or wholly occupied, either at the time of the submission of the bid proposal or at the time of the proposed occupancy date (October 1, 1990), to submit written documentation by the tenants indicating each tenant's acknowledgment of the lessor's bid and each tenant's ability to vacate the proposed lease space by the proposed occupancy date (or earlier date if renovation was required). The IFB, paragraph 7, page 13, also listed existing tenant acknowledgments as one of the types of documents required to be submitted by any bidder with lease space occupied by existing tenants.

   
   

6. A portion of Petitioner's proposed lease space was occupied by tenants at the time that the Bid Submittal Form was prepared and submitted by Petitioner. Petitioner never physically inspected the proposed lease space. Petitioner's Bid Submittal Form represented that there were month-to-month tenants in the proposed lease space but that the requirement for existing tenant acknowledgments was "not applicable". Contrary to the requirements of the Bid Submittal Form and IFB, Petitioner submitted no existing tenant acknowledgments.

   
   

7. Petitioner had control of its proposed lease space within the meaning of the IFB, paragraph 1, page 3. Petitioner had a contractual right to purchase the proposed lease space pursuant to a Deposit and Sale-Purchase Agreement dated March 30, 1990 (the "Purchase Agreement"). A copy of the Purchase Agreement was attached to Petitioner's Bid Submittal Form. The Addendum to the Purchase Agreement provided in relevant part that Petitioner would purchase the proposed lease space subject to the occupancy of any and all tenants in possession.

   
   

8. Respondent determined that Petitioner's bid proposal was not responsive because the Bid Submittai Form prepared and submitted by Petitioner failed to include both the certification letter and the existing tenant acknowledgments. Each such omission was determined to be a material deviation from the bid requirements by Samir Elmir, Facilities Management Assistant for Respondent at the time of the bids were opened on April 2, 1990.

   
   

9. The initial determination of non-responsiveness by Mr. Elmir was confirmed by Luis Cerezo, Facilities Services Manager for Respondent who was also present at the bid openings. Their determination of non-responsiveness was confirmed by Warner Von Werne, Acting General Services Manager. 1/ Petitioner was advised of the non-responsiveness of its bid proposal at the time of the bid openings by deficiencies noted on the Bid Technical Responsiveness Checklist (the "Checklist"). The Checklist was completed and marked "Non-Responsive" by Mr. Elmir aid delivered to Petitioner.

   
   

   CONCLUSIONS OF LAW

   
   

10. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter in this proceeding. Section 120.57(1), Florida Statutes. The parties were duly noticed for the formal hearing.

    
    

11. Petitioner's objection to the competency of testimony concerning the presence of existing tenants in the proposed lease space is overruled. Petitioner argued that Ms. Tami Maldonado was not an attorney and was not competent to testify as to whether occupants of the proposed lease space had any

    legal rights which gave them the status of tenants. The testimony of Ms. Maldonado addressed facts within her competency as a nonlawyer, including the presence of occupants of the proposed lease space, the number of such occupants, their identity, their use of the occupied space, the business activities carried out by each occupant, and payments made by Ms. Maldonado for her occupancy of a portion of the proposed lease space.

    
    

12. Petitioner's objection to the relevancy of testimony by Ms. Maldonado concerning the existing air conditioning system is denied. Petitioner cbjected that a determination of the responsiveness of its Bid Submittal Form had to be made within the four corners of the Bid Submittal Form and could not be made based on extraneous evidence. Ms. Maldonado's testimony explained the deminimis nature and scope of the existing system and corroborated the reasons for Petitioner's failure to include a certification letter in Petitioner'S Bid Submittal Form.

    
    

13. Petitioner has the burden of proof in this proceeding. Petitioner must demonstrate that Respondent's determination that Petitioner's bid was non- responsive was arbitrary, capricious, or beyond the scope of Respdndent's discretion as a state agency. Capeletti Brothers, Inc. v. State Department of General Services, 432 So.2d 1359, 1363 (Fla. 1st DCA 1983); Volume Services Division v. Canteen Corp., 369 So.2d 391, 395 (Fla. 2d DCA 1979); Mayes Printing Company v. Flowers, 154 So.2d 859, 864 (Fla. 1st DCA 1963); William A. Berbusse, Jr., Inc. v. North Broward Hospital Dist., 117 So.2d 550 (Fla. 2d DCA 1960). 2/

    
    

14. Bid proposals containing material or substantial deviations from the requirements of an invitation to bid are not responsive. Harry Pepper & Associates, Inc. v. City of Cape Coral, 352 So.2d 1190, 1192-1193, (Fla. 2nd DCA 1977); cf. Robinson Electrical Co. v. Dade County, 417 So.2d 1032, 1034 (Fla. 3rd DCA 1982). 3/ A material or substantial deviation in a bid proposal cannot be waived. Robinson Electrical, 417 So.2d at 1034 (citing Harry Pepper & Associates, 352 So.2d 1190).

    
    

15. A deviation is material or substantial if its waiver would either:

    1. deprive the public body of an assurance that a contract will be entered into, performed, and guaranteed in accordance with specified requirements; or

    2. adversely affect competitive bidding. Robinson Electrical, 417 So.2d at 1034. A deviation adversely affects competitive bidding if its waiver would either place a bidder in a position of advantage over other bidders or otherwise undermine the necessary common standard of competition. Id.

    
    

16. A determination of whether a deviation is material or substantial must be made based on the facts and circumstances present in a particular case. A deviation in a bid proposal in which the proposed yield exceeded the yield requirements for beverage mixes solicited in the invitation for bid was found not be a material or substantial deviation. Tropabest Woods, Inc. v. Florida Department of General Services, 493 So.2d 50 (Fla. 1st DCA 1986). 4/ The submission of either a cashier's check instead of a required bid bond or a bid bond instead of a required certified check was found not to be a material deviation. Robinson Electrical, 417 So.2d at 1034-1035 (citing Bryan Construction Co. v. Board of Trustees, 106 So.2d 303 (N.J. App. 1954) for the latter proposition).

    
    

17. Deviations have been found to be substantial, and non-waivable under different facts and circumstances. A deviation caused by the use of a brand manufactured by a company that was not listed in the invitation for bid and that was not equal to listed manufacturers was found to be a material deviation which

    could not be waived by a public body. Harry Pepper & Associates, 352 So.2d at 1192-1193. Submission of a bid for boat charters for two terms of five years each when the invitation for bid specified only one term of five years was found to be a deviation that could not be waived. City of Miami Beach v. Klinger, 179 So.2d 864, 866 (Fla. 1st DCA 1965). 5/

    
    

18. Deviations in a bid proposal comprised of the failure to comply with the form required by a public body and the failure to list exceptions to the successful bidder's proposal for maintenance and service of a city water system were found to be deviations that could be waived. Any subsequent exceptions to the maintenance and service proposed by the successful bidder could be treated by the public body as nonbinding proposed alternatives. Technical Sales of Jacksonville, Inc., v. City of Jacksonville, 258 So.2d 839 (Fla. 1st DCA 1972).

    
    

19. Petitioner's failure to include a certification letter was immaterial, insubstantial, and could have been waived by Respondent. No certification letter was required by the terms of the Bid Submittal Form unless a cooling or heating system was in place in the proposed lease space. While Petitioner's proposed lease space in fact contained a deminimis cooling system, the absence of the requisite certification letter in Petitioner's Bid Submittal Form was consistent with the absence of an existing cooling system in Petitioner's proposed lease space. Any subsequent exception by Petitioner for an existing cooling system could have been treated by Respondent as a nonbinding alternative proposal.

    
    

20. Petitioner's failure to include the existing tenant acknowledgments was a material and substantial deviation that could not have been waived by Respondent. Petitioner's omission of the existing tenant acknowledgments deprived Respondent of adequate assurances that the contract would be performed and adversely affected the competitive bidding process.

    
    

21. Unlike the public body in Technical Sales of Jacksonville, Respondent could not treat any exceptions to Petitioner's representation concerning the inapplicability of the requirement for existing tenant acknowledgments as a nonbinding alternative. Petitioner's contractual right to title of the proposed lease space was subject to the right of existing tenants in possession. If any one tenant in possession of Petitioner's proposed lease space asserted a right to possession superior to that of Respondent's, Petitioner may not have been able to perform its obligations under the proposed lease agreement by October 1, 1990. The existing tenant acknowledgments were required by Respondent as assurances that the proposed lease could be entered into, performed, and guaranteed in accordance with specified requirements. Without the existing tenant acknowledgments, Respondent was deprived of reasonable and adequate assurances that the proposed lease could be performed by Petitioner.

    
    

22. Petitioner's failure to attach existing tenant acknowledgments adversely affected the competitive bidding process by undermining the necessary common standard of competition applied to all bidders. Other bidders were required to disclose the presence of existing tenants and to provide Respondent with adequate assurances of the bidders' ability to perform their proposed leases. To allow Petitioner to correct its deviation after the bids were opened would have shown favoritism to Petitioner over other bidders and would have impermissibly undermined the common standard of competition. City of Opa-Locka

    v. Trustees of the Plumbing Industry Promotion Fund, 193 So.2d 29 (Fla. 3rd DCA 1966).

23. Public bidding requirements serve many purposes including protection against collusive contracts, prevention of favoritism toward contractors, and the assurance of fair competition upon equal terms to all bidders. Requirements in Respondent's invitation for bid afforded a basis for an exact comparison of bids and prohibited Respondent from reserving the power to make exceptions, releases, and modifications that may have afforded opportunities for favoritism after the contract was let, whether or not such favoritism was actually practiced. Wester v Belote, 103 So 721 (Fla. 1931); Clark v. Melson, 89 So 495 (Fla. 1921); Suburban Inv. Co. v. Hyde, 55 So 76 (Fla. 1911). Such requirements were adopted, appropriately, prior to receiving bids. Wester, 103 So. at 724; Robinson's, Inc. v. Short, 146 So.2d 108 (Fla. 1st DCA 1962).

    
    

24. Respondent's determination that Petitioner's bid proposal was non- responsive was not arbitrary, capricious, or beyond the scope of Respondent's discretion as a state agency. A public body has wide discretion in soliciting and accepting bids. The decision of a public body will not be overturned if it is based on an honest exercise of discretion even though the decision appears to be erroneous and even though reasonable persons may disagree with the decision. Liberty County v. Baxter's Asphalt and Concrete, Inc., 421 So.2d 505,507 (Fla. 1982); Culpepper v. Moore, 40 So.2d 366 (Fla. 1949). 6/

    
    

25. Respondent had no discretion to waive a material deviation caused by the pretermitted existing tenant acknowledgments. Petitioner presented no evidence that Respondent acted in any manner other than in the honest exercise of its discretion when Respondent failed to waive the immaterial deviation caused by Petitioner's omission of a certification letter.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner's written formal protest be DENIED.

DONE AND ORDERED in Tallahassee, Leon County, Florida, this 6th day of August, 1990.

DANIEL MANRY

Hearing Officer

Division of Administrative Hearings The DeSoto Building

1230 Apalachee

Tallahassee, Florida 32399-1550

(904) 488-9675

Filed with the Clerk of the Division Administrative Hearings this 6th day of August, 1990.

ENDNOTES

1/ The determination by Mr. Von Werne was made during a telephone conference between Mr. Von Werne, Mr. Cerezo, and Mr. Elmir which was conducted shortly after the bids were opened.

2/ See also System Development Corp. v. Department of Health and Rehabilitative Services, 423 So.2d 433, 434 (Fla. 1st DCA 1982); Glatstein v. City of Miami,

399 So.2d 1005 (Fla. 3rd DCA 1981) (pertaining to the burden of proof in an administrative proceeding involving a protest of a request for proposals).

3/ See also Glatstein v. City of Miami, 399 So.2d at 1008 (pertaining to deviations in responses to requests for proposals).

4 See also System Development Corporation v. Department of Health and Rehabilitative Services, 423 So.2d 433 (Fla. 1st DCA 1982) (holding that proposed technological enhancements, innovations, and improvements that include advanced, state-of-the art equipment and processes do not constitute material irregularities in bid proposals submitted in response to requests for proposals).

5/ See also Glatstein, 399 So.2d 1005 supra (holding that deviations comprised of alterations to an existing design plan and substitution of a management contract for a contract for professional services when the request for proposal solicited proposals for professional services contracts based on an existing design plan was a material deviation which could not be waived).

6/ See also Volume Services Division of Interstate United Corporation v. Canteen, 369 So.2d 391, 397 (Fla. 2nd DCA 1979) (cited for the stated proposition in connection with requests for proposal).

APPENDIX TO RECOMMENDED ORDER, CASE NO. 90-4063BID

Petitioner did not submit proposed findings of fact. The document submitted by Petitioner contained no numbered paragraphs. Intervenor did not submit proposed findings of fact.

Respondent submitted proposed findings of fact. It has been noted below which proposed findings of fact halve been generally accepted and the paragraph number(s) in the Recommended Order where they have been accepted, if any. Those proposed findings of fact which have been rejected and the reason for their rejection have also been noted.

The Respondent's Proposed Findings of Fact

Proposed Finding Paragraph Number in Recommended Order of Fact Number of Acceptance or Reason for Rejection

1. Rejected as immaterial.

2. Accepted in Finding 6

3-4 Rejected as irrelevant

1. Accepted in finding 5

2. Accepted in finding 6

7-8 Accepted in finding 7

1. Rejected as irrelevant

2. Rejected as immaterial

   
   

3. Rejected as not supported

by competent and substantial evidence.

COPIES FURNISHED:

James Hartley

Professional Centre IV, Inc. 4200 Fourth Street North

St. Petersburg, Florida 33703

Morton Laitner, Esquire Acting District Legal Counsel Department of Health and

Rehabilitative Services

401 N.W. 2nd Avenue, S-424 Miami, Florida 33128

Sam Power, Clerk 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: 90-004063BID

Orders for Case No: 90-004063BID