STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

DADE COUNTY INVESTMENTS )

COMPANY AND LOUIS CRUZ, )

)

Petitioners, )

)

vs. ) CASE NO. 91-4470BID

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in this case on August 26, 1991, in Tallahassee, Florida, before Stuart M. Lerner, a duly designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioners: Jose Villalobos, Esquire

Brickel Bay Office Tower 1001 South Bayshore Drive Suite 2704

Miami, Florida 33131

For Respondent: Morton Laitner, Esquire

Department of Health and Rehabilitative Services

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

STATEMENT OF THE ISSUES

Whether Respondent should sustain Petitioners' challenge to the preliminary determination to reject their bid as not responsive to Respondent's Invitation to Bid for Lease No. 590: 2286? 1/

PRELIMINARY STATEMENT

By letter dated July 3, 1991, Petitioners filed a written protest contesting Respondent's initial decision to deem their bid not responsive to Respondent's Invitation to Bid for Lease No. 590: 2286 because the space proposed in their bid did not meet the "dry and measurable" requirement specified in the Invitation to Bid. On July 22, 1991, the matter was referred to the Division of Administrative Hearings for the assignment of a Hearing Officer to conduct a hearing on the matter. The hearing was originally scheduled for August 5, 1991. At the request of the parties, the hearing was rescheduled for August 19, 1991. On August 15, 1991, Petitioners filed an

unopposed motion for continuance. The motion was granted and the hearing was again rescheduled, this time for Monday, August 26, 1991.

Four witnesses testified at hearing: 2/ Louis Russo, the General Services Manager for Respondent's District 11; Alvaro Lopez, an architect whose services were retained by Petitioners; Javier Arrizabalaga, the Vice-President of Petitioner Dade County Investments Company; and Steven Gertel, Respondent's Assistant Staff Director for Facilities. In addition to the testimony of these two witnesses, a total of 18 exhibits were offered and received into evidence.

At the close of the evidentiary portion of the hearing on August 26, 1991, the Hearing Officer announced on the record that post-hearing submittals had to be filed no later than 14 days following his receipt of the transcript of the hearing. The hearing transcript was filed on September 6, 1991. Petitioners and Respondent filed their proposed recommended orders on September 20, 1991, and September 18, 1991, respectively. The proposed findings of fact set forth in these proposed recommended orders have been carefully considered and are specifically addressed in the Appendix to this Recommended Order.

FINDINGS OF FACT

Based on the record evidence, the following Findings of Fact are made:

1. Earlier this year, Respondent issued an Invitation to Bid for Lease No. 590: 2286 (hereinafter referred to as the "ITB").

   
   

2. The first page of the ITB contained the Bid Advertisement, which read as follows:

   
   

   The State of Florida, Department of Health and Rehabilitative Services is seeking an existing facility in Dade County to lease for use as office space containing approximately 30,086 net rentable square feet. The space proposed must be an office environment. Converted factories/warehouses in industrial areas are not acceptable. The facility shall be located within the following boundaries: North By S.W. 8th Street, South By S.W. 88th Street, East By

   S.W. 37th Avenue, Southeast By South Dixie Highway, and West By S.W. 87th Avenue. Any facility located on a parcel of land which abuts any of the street boundaries is consider[ed] within the boundaries. Occupancy date of 8/01/91. Desire a Ten (10) year lease with three (3)- two (2) year renewal options. Information and specifications may be obtained from Mr. Philip A. Davis, Facilities Services Manager, 401 N.W. 2nd Avenue, Suite S721, Miami, Florida 3312, (305) 377-5710. Please reference lease number 590: 2286. Program requirements will be discussed at a

   pre-proposal conference to be held at

   10:00 a.m. on 4/22/91 at 401 N.W. 2nd Avenue, Suite S721 Miami, Florida 33128. Bid opening date will be on 5/30/91 at 10:00 a.m. at the above mentioned address. Minority business

   enterprises are encouraged to attend the pre-proposal conference and participate in the bid process. The Florida Department of Health and Rehabilitative Services reserves

   the right to reject any and all bids and award to the bid judged to be in the best interest of the state.

   
   

3. The second page of the ITB contained the definitions of various terms used in the ITB. Among the terms defined were "dry and measurable" and "existing building."

   
   

4. "Dry and measurable" was defined as follows:

   
   

   These are essential characteristics to describe "existing" proposed space. To be considered as "dry and measurable" the proposed space must be enclosed with finished roof and exterior walls in place. Interior floors need not be completed. Exterior windows and doors need not be installed.

   The proposed area is not required to be completed. These characteristics conform to standard lessor construction practices.

   
   

   This definition is identical to the definition of this term found on page 1-5 of Respondent's leasing manual, HRSM 70-1.

   
   

5. "Existing building" was defined as follows:

   
   

   To be considered as existing the entire space being bid must be dry and capable of being physically measured to determine net rentable square footage. at the time of bid submittal.

   
   

6. On the ninth page of the ITB, the following advisements, among others, were given:

   
   

   The department reserves the right to reject any and all bids when such rejection is in the interest of the State of Florida. Such rejec- tion shall not be arbitrary, but be based on strong justification which shall be communi-

   cated to each rejected bidder by certified mail.

   * * *

   The department reserves the right to waive any minor informalities or technicality and seek clarification of bids received when such is in the best interest of the state, but not limited to the correction of simple mistakes or typo- graphical errors. Such corrections will be initiated [sic] and dated on the original bid submittal by the bidder.

7. Attached to the ITB and incorporated therein was a document entitled "Standard Method of Space Measurement." It read as follows:

   
   

   The purpose of this standard is to permit communication and computation on a clear and understandable basis. Another important purpose is to allow comparison of values on the basis of a generally agreed upon unit of measurement (net square footage).

   
   

   It should also be noted that this standard can and should be used in measuring office space in old as well as new buildings, leased office space as well as State-owned office space. It is applicable to any architectural design or type of construction because it is based on the premise that the area being measured is that which the agency may occupy and use for its furnishings and its people.

   
   

   This standard method of measuring office space measures only occupiable space, undistorted by variances in design from one building to another. It measures the area of office building that actually has usable (rental) value and, therefore, as a standard can be used by all parties with confidence and a clear understanding of what is being measured. Area Measurement in office buildings is based in all cases upon the typical floor plans, and barring structural changes which affect materially the typical floor, such measurements stand for the life of the building, regardless of readjustments incident to agency layouts.

   
   

   All usable (rentable) office space, private sector leased, State-owned, or other publicly owned shall be computed by:

   
   

   Measuring to the inside finish of permanent outer building walls to the office side of corridors and/or other permanent partitions, and to the center of partitions that separate the premises from adjoining usable areas.

   This usable (rentable) area shall EXCLUDE: bathrooms, public corridors, stairs, elevator shafts, flues, pipe shafts, vertical ducts, air-conditioning rooms, fan rooms, janitor closets, electrical closets, telephone equipment rooms, - - and such other rooms not actually available to the tenant for his furnishings and personnel - - and their enclosing walls.

   No deductions shall be made for columns and projections structurally necessary to the building.

   
   

   The attached typical floor plan illustrates the application of this standard. 3/

   
   

8. Petitioners submitted a bid in response to the ITB. 4/ In their bid they proposed to lease to Respondent space on the first and second floors of a building located at 8500 S.W. 8th Street in Miami, Florida. The space offered by Petitioners is currently occupied.

   
   

9. At the time of bid submittal, all of the proposed space on the second floor was "dry and measurable," as that term is defined in the ITB. It encompassed a total of 26,540 square feet.

   
   

10. At the time of bid submittal, only a portion of the proposed space on the first floor, amounting to 4,400 square feet, was "dry and measurable," as that term is defined in the ITB, inasmuch as the proposed space on this floor included a breezeway area that did not have either a front or back exterior wall in place. 5/ Subsequent to the submission and opening of bids, Petitioners enclosed this breezeway area by erecting exterior walls.

    
    

11. Accordingly, the entire space offered by Petitioners was not "dry and measurable" at the time of bid submittal as required by the ITB.

    
    

12. Bids were opened by Respondent on May 30, 1991.

    
    

13. By letter dated June 18, 1991, Respondent notified Petitioners that their bid had been deemed non-responsive. The letter read as follows:

    
    

    The bid you submitted for lease No. 590: 2286 has been determined to be non-responsive because the proposed space is not dry and measurable. The breezeway area proposed on the ground level of your premises at 8500 S.W.

    8 Street, Miami, does not have exterior walls in place.

    
    

    The invitation to bid on lease No. 590: 2286 provides on page 2:

    
    

    "Dry and Measurable- These are essential characteristics to describe "existing" proposed space. To be considered as "dry and measur- able," the proposed space must be enclosed with finished roof and exterior walls in place.

    
    

    You have the right to file a protest. The protest must be filed in accordance with S.120.53(5), Florida Statutes and Chapter 10-13.11 Florida Administrative Code.

    Failure to file a protest within the time prescribed in S.120.53(5), Florida Statutes, shall constitute a waiver of proceedings under chapter 120, Florida Statutes.

    To comply with the referenced statute, a written notice of intent to protest must be filed with the contact person listed on the Invitation to Bid for lease No. 590: 2286 within 72 hours after receipt of this notice. Within ten calendar days after the notice of protest is filed, a formal written protest and protest bond must be filed with the contact person. The bond must be payable to the department in an amount equal to one percent of the total lease payments over the term of the lease or $5,000, whichever is less.

    
    

14. This determination was the product of, not any unlawful bias or prejudice against Petitioners, but rather the honest exercise of the agency's discretion.

    
    

15. Petitioners subsequently filed a protest of this preliminary determination to find their bid non-responsive. It is this preliminary determination that is the subject of the instant bid protest proceeding.

    
    

    CONCLUSIONS OF LAW

    
    

16. With certain exceptions not applicable to the instant case, state agencies may lease space in privately owned buildings only through the process of competitive bidding. Section 255.25, Fla. Stat.

    
    

17. It has been said on more than one occasion that competitive bidding requirements, such as those imposed upon state agencies, have as their purpose and object the following:

    
    

    [T]o protect the public against collusive contracts; to secure fair competition upon equal terms to all bidders; to remove not only collusion but temptation for collusion and opportunity for gain at public expense; to close all avenues to favoritism and fraud in various forms; to secure the best values for the [public] at the lowest possible expense; and to afford an equal advantage to all desiring to do business with the [government], by affording an opportunity for an exact comparison of bids.

    
    

    Wester v. Belote, 103 Fla. 976, 138 So. 721, 723-24 (Fla. 1931); Harry Pepper & Associates, Inc. v. City of Cape Coral, 352 So.2d 1190, 1192 (Fla. 2d DCA 1977).

    
    

18. In soliciting and accepting competitive bids, a state agency has wide discretion. See D.O.T. V. Groves-Watkins Constructors, 530 So.2d 912, 913 (Fla. 1988); Liberty County v. Baxter's Asphalt & Concrete, Inc., 421 So.2d 505, 507 (Fla. 1982).

    
    

19. Its discretion with respect to these matters, while broad, is not unbridled. It must exercise such discretion in a manner that is not illegal, dishonest, fraudulent, arbitrary, unreasonable, capricious or in any other way that would subvert or undermine the purpose and object of competitive bidding. See D.O.T. v. Groves-Watkins Constructors, 530 So.2d 912, 913-14 (Fla. 1988);

    Caber Systems v. Department of General Services, 530 So.2d 325, 336 (Fla. 1st DCA 1988); Couch Construction Company, Inc. v. Department of Transportation,

    361 So.2d 172, 175 (Fla. 1st DCA 1978); Wood-Hopkins Contracting Company v. Roger J. Au & Son, Inc., 354 So.2d 446, 450 (Fla. 1st DCA 1978).

    
    

20. In exercising its discretion, a state agency may not accept a bid that is materially at variance with the invitation to bid. "However, although a bid containing a material variance is unacceptable, not every deviation from the invitation to bid is material. It is only material if it gives the bidder a substantial advantage over the other bidders and thereby restricts or stifles competition." Tropabest Foods, Inc. v. Department of General Services, 493 So.2d 50, 52 (Fla. 1st DCA 1986). If it does not provide the bidder with such a palpable competitive advantage, it constitutes a minor irregularity that should be waived by the agency. See Robinson Electrical Co., Inc. v. Dade County, 417 So.2d 1032, 1034 (Fla. 3d DCA 1982).

    
    

21. In the instant case, Respondent, in the ITB, specified that the entire space being offered had to be "dry and measurable" at the time of bid submittal.

    
    

22. Petitioners' bid was at variance with this just and reasonable specification 6/ inasmuch as only a portion of the space they proposed to lease to Respondent was "dry and measurable" at the time of bid submittal.

    
    

23. Respondent has heretofore taken the position that this was not a minor irregularity that should be waived, but rather was a material variance that rendered Petitioners' bid invalid. The Hearing Officer agrees with Respondent and thus finds that Respondent's preliminary decision to reject Petitioners' bid as non-responsive was based upon the exercise of sound discretion. To allow Petitioners to continue to compete for Lease No. 590: 2286 notwithstanding their failure to offer space that was, at the time of bid submittal, "dry and measurable" in its entirety as required by the ITB would give Petitioners an unfair competitive advantage over other bidders whose bids were in compliance with this requirement. See Boozer v. Department of Health and Rehabilitative Services, 11 FALR 4824 (DOAH 1989). 7/

    
    

24. Because Petitioners' failure to comply with the ITB's "dry and measurable" requirement was a material variance, their bid should be found non- responsive and should be rejected.

RECOMMENDATION

Based upon 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 rejecting Petitioners' bid for Lease No. 590: 2286 on the ground that said bid is non-responsive.

RECOMMENDED in Tallahassee, Leon County, Florida, this 25th day of September, 1991.

STUART M. LERNER

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 25th day of September, 1991.

ENDNOTES

1/ Petitioners sought to expand the scope of the instant case to include the issue of the responsiveness of bids other than its own, an effort that was opposed by Respondent. Following the presentation of argument on the matter during which he was advised that no award had yet been made, the Hearing Officer announced on the record at hearing that he would not make any recommendation regarding the responsiveness of any bids other than that submitted by Petitioners. In view of this ruling, RLC, Ltd. (RLC), which on August 23, 1991, had filed a petition for leave to intervene in this matter for purposes of disputing Petitioners' claim that RLC's bid should be rejected because it was not timely submitted, chose not to participate in the hearing.

2/ With the agreement of the parties, the instant case was consolidated for purposes of hearing only with DOAH Case No. 91-4471R, a case in which Petitioners are challenging as an invalid rule a portion of Respondent's leasing manual which defines the term "dry and measurable."

3/ The foregoing is essentially a restatement of the Department of General Services' Standard Method of Space Measurement found in Rule 13M-2.003, Florida Administrative Code.

4/ The bid opening officer initially determined Petitioners' bid to be untimely, but subsequently reconsidered his determination.

5/ The opening in the front was approximately 30 feet across. The opening in the rear was approximately 16 feet across.

6/ Not only does this specification promote fairness in the competitive bidding process, it is consistent with the rule provisions found in Chapter 13M, Florida Administrative Code, concerning the uniform measurement of space proposed to be leased. Respondent is obliged to follow these rule provisions, which were promulgated by the Department of General Services pursuant to Section 255.249(2), Florida Statutes.

7/ In Boozer, like the instant case, Respondent solicited bids to lease space through the issuance of an invitation to bid which specified that all of the space offered had to be "dry and measurable" at the time of bid submittal. One of the bidders, Fred Boozer, as did Petitioners in the instant case, submitted a

bid that did not meet this specification. In recommending that Boozer's bid be rejected on the basis of this variance, the Hearing Officer persuasively reasoned:

The Petitioner BOOZER held an advantage not enjoyed by other bidders. He was able to submit a bid for space that was not in an "existing building" as required by the bid documents, and after being awarded the bid, could then make a determination whether he wanted the job bad enough to incur the additional expense of constructing the balance of the premises subject to his bid proposal. By his own testimony, BOOZER indicated that he has spent $28,000.00 to the date of the hearing in completing the balance of the premises subject to his bid proposal. The determination to make these expenditures was not made until after he was awarded the bid. He was also allowed to retain the investment opportunity income from his money for the period of time he did not have to complete the premises subject to his bid proposal, together with other carrying charges. The portion of the premises that had not been completed also allowed BOOZER to construct that portion of his premises to direct specifications of HRS, thereby eliminating any interior alteration and modification expenses that would be incurred by other bidders. As a result of the foregoing, the fact that the total premises subject to the bid proposal of BOOZER was not in an "existing building" at the time of the bid submittal and opening was material. BOOZER's bid was nonresponsive.

8/ Petitioners' Exhibit 2, not 1, contains the Bid Advertisement which is described in this proposed finding.

9/ That the bid opening officer accepted another bidder's bid, notwithstanding that it may have been submitted after the 10:00 a.m. submittal deadline set forth in the ITB, does not demonstrate that Respondent acted fraudulently, arbitrarily, illegally or dishonestly in preliminarily deciding to reject Petitioners' bid because it did not meet the "dry and measurable" requirement specified in the ITB.

10/ There was no need to take precise measurements of the space offered by Petitioners because it was obvious from a mere visual inspection that it did not constitute an "existing building," as that term is defined in the ITB, in that it was not "dry and measurable" in its entirety.

11/ The greater weight of the evidence establishes that there were 30,940 square feet of "dry and measurable" space offered by Petitioners.

12/ Bid opening was on May 30, 1991, not April 22, 1991. April 22, 1991, was the date of the pre-bid conference.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 91-4470BID

The following are the Hearing Officer's specific rulings on the findings of fact proposed by the parties in the instant case:

Petitioners' Proposed Findings of Fact

1. To the extent that this proposed finding states that Petitioners' Exhibit 1 was "received into evidence," it has been rejected because it is more in the nature of a statement of the case than a finding of fact. To the extent that it asserts that this exhibit "defines the scope of this hearing," it has been rejected because it constitutes argument inappropriate for inclusion in the

   Hearing Officer's Findings of Fact. Furthermore, the description given in this proposed finding of the contents of Petitioners' Exhibit 1 is inaccurate. 8/

2. To the extent that it states that the ITB indicated that Respondent was seeking to lease "approximately 30,086 net rentable square feet" of office space, this proposed finding has been accepted and incorporated in substance in this Recommended Order. To the extent that it suggests that the ITB specified that "approximately" meant "more or less 3%," this proposed finding has been rejected because it is not supported by persuasive competent substantial evidence.

3-6. Accepted and incorporated in substance.

1. Rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer. 9/

2. Rejected as a finding of fact because it is more in the nature of a statement of the case.

3. Rejected because it is more in the nature of a summary of testimony than a finding of fact based upon such testimony.

4. To the extent that this proposed finding states that the space offered by Petitioners is presently occupied, it has been accepted and incorporated in substance. To the extent that it asserts that the space is "licensed to do rental business in Dade County, Florida," it has been rejected because it is not supported by persuasive competent substantial evidence.

11-12. Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer.

13-14. Rejected because they are unclear.

15. Rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer.

16-18. Accepted and incorporated in substance.

19. First sentence: Rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer; Second sentence: Accepted and incorporated in substance.

20-22. Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer.

23. Accepted and incorporated in substance.

24-27. Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer. 10/

28. Rejected because it is more in the nature of a summary of testimony than a finding of fact based upon such testimony.

29-31. Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer.

1. Accepted and incorporated in substance.

2. Rejected because it is more in the nature of a summary of testimony than a finding of fact based upon such testimony.

34-36. Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer.

1. Accepted and incorporated in substance.

2. First and second sentences: Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer; Third sentence: To the extent that it states that the ITB indicated that Respondent was seeking to lease "approximately 30,086 net rentable square feet" of office space, this proposed finding has been accepted and incorporated in substance. To the extent that it suggests that the ITB specified that "approximately" meant "more or less 3%," this proposed finding has been rejected because it is not supported by persuasive competent substantial evidence.

3. Rejected because it is not supported by the greater weight of the evidence. 11/

4. Rejected as a finding of fact because it is more in the nature of a statement of the case.

41-42. Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer.

43. Rejected because it is more in the nature of a summary of testimony than a finding of fact based upon such testimony.

44-46. Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer.

1. Rejected because it is more in the nature of a summary of testimony than a finding of fact based upon such testimony.

2. Rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer.

Respondent's Proposed Findings of Fact

1. First and second sentences: Accepted and incorporated in substance; Third sentence: Rejected because it is not supported by persuasive competent substantial evidence. 12/

2-5. Accepted and incorporated in substance.

1. Rejected because it is more in the nature of a description of photographs that were received into evidence than a finding of fact based upon this exhibit.

2. To the extent that it states what the plans submitted by Petitioners "show," this proposed finding has been rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer. To the extent that it asserts that "at the time of bid opening no walls existed in said openings," this proposed finding has been accepted and incorporated in substance.

8-10. Accepted and incorporated in substance.

11-12. Rejected because they constitute argument inappropriate for inclusion in the Hearing Officer's Findings of Fact.

13-15. Accepted and incorporated in substance.

16. Rejected because it is not supported by persuasive competent substantial evidence.

17-18. Rejected because they constitute argument inappropriate for inclusion in the Hearing Officer's Findings of Fact.

COPIES FURNISHED:

Jose A. Villalobos, Esquire Brickel Bay Office Tower 1001 South Bayshore Drive Suite 2704

Miami, Florida 33131

Morton Laitner, Esquire Department of Health and

Rehabilitative Services

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

Harleston R. Wood, Esquire 1000 Brickell Avenue, 3rd Floor Miami, Florida 33131

R.S. Power, Agency Clerk Department of Health and Rehabilitative Services

1323 Winewood Boulevard Building One, Suite 407

Tallahassee, Florida 32399-0700

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS:

ALL PARTIES HAVE THE RIGHT TO SUBMIT WRITTEN EXCEPTIONS TO THIS RECOMMENDED ORDER. ALL AGENCIES ALLOW EACH PARTY AT LEAST 10 DAYS IN WHICH TO SUBMIT WRITTEN EXCEPTIONS. SOME AGENCIES ALLOW A LARGER PERIOD OF TIME WITHIN WHICH TO SUBMIT WRITTEN EXCEPTIONS. YOU SHOULD CONTACT THE AGENCY THAT WILL ISSUE THE FINAL ORDER IN THIS CASE CONCERNING AGENCY RULES ON THE DEADLINE FOR FILING EXCEPTIONS TO THIS RECOMMENDED ORDER. ANY EXCEPTIONS TO THIS RECOMMENDED ORDER SHOULD BE FILED WITH THE AGENCY THAT WILL ISSUE THE FINAL ORDER IN THIS CASE.

Docket for Case No: 91-004470BID

Orders for Case No: 91-004470BID