STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

KARL HEDIN, )

)

Petitioner, )

)

and EDGAR L. SCHLITT, ) CASE NO. 91-7314BID

)

Intervenor. )

vs. )

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent, )

)

and 1436 BUILDING, INC., )

)

Intervenor. )

) EDGAR L. SCHLITT, )

)

Petitioner, )

)

and KARL HEDIN, ) CASE NO. 91-7315BID

)

Intervenor, )

vs. )

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, a formal hearing was held in these consolidated cases on December 16-18, 1991, in Vero Beach, Florida, before Stuart M. Lerner, a duly designated Hearing Officer of the Division of Administrative Hearings.

APPEARANCES

For Petitioner/Intervenor Karl Hedin: Michael O'Haire, Esquire

3111 Cardinal Drive

Vero Beach, Florida 32963

For Petitioner/Intervenor Edgar L. Schlitt:

Martin E. Wall, Esquire

The 2001 Office and Shopping Complex 2001 Ninth Avenue, Suite 210-F

Vero Beach, Florida 32960-6413 For Respondent:

Madonna M. Finney, Esquire

Department of Health and Rehabilitative Services

111 Georgia Avenue, Third Floor West Palm Beach, Florida 33401

For Intervenor 1436 Building, Inc.: David Feldman, Esquire

407 Lincoln Road

Penthouse Suite

Miami Beach, Florida 33139

STATEMENT OF THE ISSUES

1. Whether Petitioner/Intervenor Hedin's challenge to Respondent's preliminary determination to award Lease No. 590:2241 to 1436 Building, Inc. should be sustained?

   
   

2. Whether Petitioner/Intervenor Schlitt's challenge to said preliminary determination should be sustained?

   
   

   PRELIMINARY STATEMENT

   
   

   By letter dated October 21, 1991, Petitioner/Intervenor Schlitt filed a formal written protest, on the following stated grounds, contesting Respondent's initial decision to award Lease No. 590:2241 to 1436 Building, Inc..

   
   

   1. The property offered by the undersigned to the Department of Health and Rehabilitative Services satisfied all requirements set forth in its bid specifications and, in fact, is superior, in most respects, to the properties offered by other bidders, in regard to those specifications.

   2. The undersigned was the low bidder for the referenced lease.

   3. According to information received by the undersigned, the Department of Health and Rehabilitative Services rejected his bid only for reasons of imposing specification requirements and preferences which are not set forth in

      its bid specifications and which requirements and preferences are not important and essential to the objects

      and purposes sought to be achieved by the Department under the lease which it seeks.

   4. The Department of Health and Rehabilitative Services has failed to comply with the appropriate statutory and administrative requirements which it must observe in regard to this matter, thereby damaging the undersigned.

The focus of Schlitt's written protest was the scoring in the category of property/design, which Schlitt described as "arbitrary," "fatally flawed and unrealistic."

Petitioner/Intervenor Hedin filed his formal written protest on October 22, 1991. It read as follows:

Notice is hereby filed of Formal Protest of the Department of Health and Rehabilitative Services' ("Department") Notice of Award of Real Property Lease #590:2241 with:

Department of Health and Rehabilitative Services

State of Florida District Nine

1050 15th Street West Riviera Beach, FL 33404

This protest is filed by Karl D. Hedin ("undersigned"), 3003 Cardinal Drive, Vero Beach, Florida 32963, whose substantial interests will be affected by the Department's Notice of Intended Bid/Contract Award by reason of the fact that Karl D. Hedin is presently Lessor to the Department, has made a better and lower effective bid for renewal of the Department's present lease, on an expanded basis, in the premises it now occupies without a need to incur undetermined, but substantial moving costs, expenses and disruption; the award, if made, will be at unknown expense to the Department and will leave the Department's existing facilities vacant, unoccupied and unproductive to the loss of the undersigned.

The undersigned received notice of the Department's intended award by receipt of two letters, dated October 3 and 4, from James T. Howell, M.D. to David Feldman, by certified mail on October 11, 1991.

The Department is required by law to award to the lowest and best bidder and has failed to do so; bids were not, and cannot, be evaluated to determine the

lowest and best bid; bids were not properly evaluated as required by law and by Department's instructions to Bidders.

Disputed material issues of fact are:

Whether bids were properly and correctly evaluated; whether a determination was made of lowest bid; whether a determination was made of best bid; whether lowest and best bid is susceptible of determination from the bids submitted.

The Department did not properly evaluate bids; bids were not susceptible of proper evaluation; "lowest and best" bid was not determined; Department failed to comply with its instructions to bidders; award was not made to lowest and best bidder. Florida Statute Section 255.25, Florida Administrative Code, Title 10 & 13, Chapters 10-13, 13M-1; Department of Health & Rehabilitative Services' Bid Award Manual.

The undersigned demands that lease #590:2241 be readvertised and rebid by Department, with proper instructions to bidders and specifications.

On November 14, 1991, Hedin's and Schlitt's formal written protests were referred to the Division of Administrative Hearings for the assignment of a Hearing Officer. Hedin's protest was docketed as Case No. 91-7314BID. Schlitt's protest was docketed as Case No. 91-7315BID. Thereafter, Schlitt and 1436 Building, Inc. were granted intervenor status in Case No. 91-7314BID, Hedin was granted intervenor status in Case No. 91- 7315BID, and Case No. 91-7314BID and Case No. 91-7315BID were consolidated.

These cases were originally scheduled to be heard on November 26, 1991. Following two continuances, the hearing was finally held on December 16-18, 1991. At the outset of the hearing, the Department of Health and Rehabilitative Services (hereinafter referred to as the "Department," "HRS" or "Respondent") contested Hedin's standing to challenge the bidding process. It argued that Hedin "was the third lowest bidder according to the Respondent's bid tabulation" and, inasmuch as he had "failed to demonstrate in his Formal Written Protest that the second lowest bidder was not responsive," he therefore had "not established that [he had] a `substantial interest' to be determined." After hearing argument from the other parties on the matter, the Hearing Officer ruled that the allegations made by Hedin were sufficient to withstand prehearing dismissal on the grounds raised by the Department. He indicated, however, that in his Recommended Order he would revisit the issue of Hedin's standing in light of the evidence adduced on the matter at hearing, if necessary. 1/ Following this discussion on the subject of Hedin's standing, Schlitt made an ore tenus motion that the hearing be continued on the ground that additional time was needed to prepare for hearing The motion was denied.

A total of eleven witnesses testified at hearing: Petitioner/Intervenor Schlitt; John Schlitt, Jr., a licensed architect; Wayne Kleinstiver, a real

estate consultant; James Kramer, the head of the property management department of Petitioner/Intervenor Schlitt's real estate business; Petitioner/Intervenor Hedin; Steven Gertel, the Department's Assistant Staff Director for Facilities Services; Michael Bruce, a member of the Department's District IX five-person management team; Louis Consagra, the former Office Operations Manager for General Services for District IX; Steven Young; the Facilities Services Manager for District IX; Kathy Pelaez, a District IX administrator who served on the evaluation committee that considered the bids submitted in the instant case;

and Alfred Swanson, another District IX administrator who also served on the bid evaluation committee. In addition to the testimony of these eleven witnesses, various exhibits were offered and received into evidence.

At the close of the evidentiary portion of the hearing on December 18, 1991, the Hearing Officer announced on the record that post-hearing submittals had to be filed no later than 20 days following his receipt of the transcript of the hearing. He further indicated that he would issue his Recommended Order within 40 days of his receipt of the hearing transcript. No objection was made to the imposition of these deadlines.

The transcript of the hearing in these consolidated cases was filed on January 23, 1922. Schlitt, Hedin and the Department filed their post-hearing submittals on February 10, 1992, February 11, 1992, and February 12, 1992, respectively. On February 17, 1992, 1436 Building, Inc., filed a notice of its "adoption and endorsement" of the Department's post-hearing submittal. The parties' post-hearing submittals have been carefully considered by the Hearing Officer. While Schlitt's post-hearing submittal attempts to summarize testimony and other evidence adduced at hearing and contains argument regarding the weight that should be given this evidence as well as its legal effect, the submittal is devoid of any separately labelled and clearly identifiable proposed findings of fact. The post-hearing submittals submitted by Hedin and the Department, on the other hand, do contain such proposed findings of fact. These proposed findings of fact are specifically addressed in the Appendix to this Recommended Order.

FINDINGS OF FACT

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

1 In March, 1991, after requesting and receiving approval from the Department of General Services, the Respondent issued an Invitation to Bid for Lease No. 590:2241 (hereinafter referred to as the "ITB").

1. The cover page of the ITB contained the Bid Advertisement, which read as follows:

   
   

   The State of Florida, Department of Health and Rehabilitative services is seeking approximately 17,064 net rentable square feet of office space to lease in Indian River County within the following boundaries: North, to Lindsey Road, South to Olso Road, East to A1A

   and West to Kings Highway. Space must be in an existing building. Occupancy no later than October 1, 1991, or within

   120 days after notification of bid award, whichever occurs last. Desire a five (5) year lease with five (5) one

   year renewal options. Sealed bids will be received until 3:30 p.m.,, April 24,

   199[1] at Riviera Beach, FL. Information and specifications will be provided to all interested parties at a mandatory pre-proposal conference to be held at Department of Health and Rehabilitative Services, 1050 15th Street West, Riviera Beach, FL. 33404, April 5, 1991 at 1:00 p.m. The Department of HRS reserves the right to reject any and all bids received and if necessary to reinstate procedures for soliciting competitive bids.

   
   

   The office space sought by Respondent was to house a client service center that is currently operating out of a 12,000 square foot facility owned by Petitioner/Intervenor Hedin. Respondent needs approximately 5,000 more square feet of office space for this center.

   
   

2. Page B-1 of the ITB contained the definitions of various terms used in the ITB. Among the terms defined was "lowest and best bid."

   
   

3. "Lowest and best bid" was defined as follows:

   
   

   That bid selected by the District Administrator, designee, or Deputy Secretary upon the recommendation of the bid evaluation committee following an objective and detailed process to evaluate and compare bids. "Lowest" refers to the total evaluation score.

   Weights for evaluation criteria are prescribed on pages B-7 through 9.

   
   

4. Actually, this information was found on pages B-5 though 7 of the ITB, which read in pertinent part as follows:

   
   

   EVALUATION OF BIDS

   1. Bids received are first evaluated to determine technical responsiveness, such as use of Bid Submittal Form, inclusion of required information, data, attachments, and signatures. Non- responsive bids will be withdrawn from further consideration. Non-responsive bidders will be informed promptly by certified mail.

   2. Responsive bids are presented to a bid evaluation committee for comparison and formulation of a recommendation for award. This is accomplished by a visit to each proposed property and application of the evaluation criteria. The committee's recommendation will be presented to the Department official having award authority for final

      evaluation and determination of a successful bidder.

      EVALUATION CRITERIA AWARD FACTORS

      The successful bidder will be that determined to be the lowest and best.

      All bids will be evaluated based upon the award factors enumerated below:

      1. Associated Fiscal Costs

         1. Rental

            1. Rental rates for basic term of lease. Evaluated using present value methodology by application of she present value discount rate of 8.74%. 2/ (Weighting: 35 minimum)

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

            (Weighting: 5 minimum)

            Total for rental shall be not less than 40.

         2. Moving Costs:

            1. a) Cost of relocating communications network computer drop lines as determined by a site survey conducted at each proposed facility by the Department's management information office, or:

               (Weighting: 5 maximum)

               b) Cost of relocation of major statewide operational data system as determined by a site survey conducted at each proposed facility by qualified data center management.

               (Weighting: 6 maximum)

            2. Telephone costs as determined by a site survey conducted at each proposed facility by an engineer from the applicable deregulated vendor. (Weighting: 5 maximum)

            3. Relocation of furniture and equipment not addressed above. (Weighting: 5 maximum)

      2. LOCATION

         The effect of environmental factors, including the physical characteristics of the building and the area surrounding it, on the efficient and economical conduct of Departmental operations planned for the requested space.

         1. Proximity of facility to a preferred area, such as a courthouse or main traffic arteries. (Will not be applicable if there are no preferred areas within the bid boundaries). (Weighting: 5 maximum)

         2. Frequency and availability of

            satisfactory public transportation near the offered space.

            (Weighting: 5 maximum)

         3. Proximity of offered space to the clients to be served by the Department at this facility.

            (Weighting: 5 maximum)

         4. Aesthetics of the building, property the building site [is] on, and of the surrounding neighborhood.

            (Weighting: 1 maximum)

         5. Security issues posed by building and surrounding neighborhood. (Weighting: 1 maximum)

      3. PROPERTY

      1. Susceptibility of the property's design to efficient layout and good utilization, such as ability of physical structure to house large units together and in close proximity to interdependent units.

         (Weighting: 15 maximum)

      2. Suitability of the building, parking area and property as a whole for future expansion.

         (Weighting: 5 maximum)

      3. Provision of the aggregate square footage in a single building. Proposals will be considered (but fewer points given) which offer the aggregate square footage in not more than two buildings provided the buildings are immediately adjacent to or within 100 yards of each other. If in separate buildings, the structures are connected by enclosed climate controlled walkways.

         (Weighting: 2 maximum)

         
         

5. Prospective bidders were instructed on page B-3 of the ITB that they had to submit their bids on the 22-page Bid Submittal Form, which comprised Section C of the ITB.

   
   

6. The Bid Submittal Form (BSF) provided detailed information regarding the needs of the Department and the terms, conditions and requirements that prospective bidders were expected to meet.

   
   

7. Among the requirements addressed was that the proposed space be an "existing building," meaning that it was "dry, fully enclosed, and capable of being physically measured."

   
   

8. The BSF further indicated that a multistory building would be acceptable, provided that it met certain specified requirements.

   
   

9. In addition, pages C-3 through 4 of the BSF informed prospective bidders that, as part of their bid submittal, they would have to provide, among other things, the following:

   * * * b. A scaled (1/16" or 1/8" or 1/4" 1'0") floor plan showing present configurations with measurements. The final floor plan will be described in the specifications.

   * * *

   1. A scaled site layout showing present location of building(s), location, configuration and number of parking spaces assigned to the Department, access and egress routes and proposed changes. This is to be drawn to scale. Final site layout will be a joint effort between Department and Lessor so as to best meet the needs of the Department.

   
   

10. The subject of floor plans was also discussed on page C-11 of the ITB, which provided in pertinent part as follows:

    
    

    Final floor plans will be a joint effort of Departmental staff and the successful bidder. The successful bidder is to provide architectural services by a licensed architect to prepare renovation plans. The final floor plan is subject to Departmental determination and State Fire Marshal review and approval. 3/

    
    

11. Prospective bidders were issued the following advisement and warning on page B-8 of the ITB regarding their protest rights:

    
    

    Any person may dispute any part of the competitive bid process through the filing of a protest.

    To be considered, a protest must be filed in accordance with Section 120.53(5), Florida Statutes, and Chapter 10-13.11 Florida Administrative Code. Failure to file a protest within the prescribed time limits shall constitute a waiver of proceedings under Chapter 120, Florida Statutes.

    
    

12. Prospective bidders, who did not want to file a protest, but merely desired clarification regarding a matter relating to the bidding process, were directed, on page B-3 of the ITB, to follow the following procedure:

    
    

    Any questions concerning an interpretation of meaning, ambiguity, or inconsistency on this project are to be received in writing by the project contact person listed on page A-1 [Steven Young) at least 5 working days prior to bid opening so that a written response may be provided to all bidders. 4/

13. The mandatory pre-proposal conference on the ITB was held as scheduled on April 5, 1991. Petitioner/Intervenor Schlitt, Petitioner/Intervenor Hedin, and Intervenor 1436 Building, Inc. (hereinafter referred to as "`1436") appeared in person or through a representative at the conference. One other prospective bidder, Alan Taylor, was also in attendance.

    
    

14. Among the topics discussed at the pre-proposal conference was the present value index discount rate that would be applied in evaluating proposals. The prospective bidders were advised that the rate which appeared on page C-21 of the ITB-- 7.73%--, not the 8.74% rate appearing on page B-5, would be used.

    
    

15. Prospective bidders were also told at the pre- proposal conference that the maximum number of total points available for moving costs was not 15 or

    16 as a reading of the ITB might suggest, but 21: 5 for item 1)a) (computer drop lines);6 for item 1)b) (statewide operational data system equipment); 5 for item 2 (telephones); and 5 for item 3 (furniture and other equipment).

    
    

16. Under the ITB, as originally issued and clarified at the pre-proposal conference (hereinafter referred to as the "Original ITB"), Respondent was to pay its own moving costs, as it had consistently done in the past, without any contribution on the part of the successful bidder and it would award points to each bidder for moving costs based upon what it would cost Respondent, according to its estimates, to relocate computer drop lines, statewide operational data system equipment, telephones, and furniture and other equipment to the facility proposed by that bidder. The less the expense to the Department to relocate these items, the more points a bidder would receive. Accordingly, to the extent that he intended to offer space already occupied by Respondent, Petitioner/Intervenor Hedin had an advantage over the other prospective bidders under the Original ITB.

    
    

17. Some time after the pre-proposal conference, David Feldman, 1436's representative, complained to Respondent about this advantage enjoyed by Hedin in the category of moving costs and inquired if anything could be done about it. Steven Gertel, the Respondent's Assistant Staff Director for Facilities Services, Kevin McAloon, the General Services Manager for Respondent's District IX, Louis Consagra, the then Office Operations Manager for General Services for District IX, and Steven Young, the Facilities Services Manager for District IX and the contact person referenced in the ITB, discussed the matter during a telephone conference call held on April 11, 1991. During their discussion, it was decided that it would be in the best interest of the Department, which was operating under severe fiscal constraints, to change the ITB to allow prospective bidders to essentially buy points by agreeing to pay all or a portion of Respondent's estimated moving costs. Such a change, it was thought, would enhance the competitiveness of the bidding process.

    
    

18. Before making the change, however, Respondent attempted to quickly estimate what its costs would be if it had to relocate computer drop lines, statewide operational data system equipment, telephones, and furniture and other equipment to another facility in Indian River County within the geographical boundaries prescribed in the ITB.

    
    

19. Respondent estimated that it would cost between $25,000 and $30,000 to relocate computer drop lines and statewide operational data system equipment,

    $35,000 to $45,000 to relocate telephones and $8,000 to $10,000 to relocate furniture and other equipment. In arriving at these estimates, Respondent relied upon agency personnel who, because of their experience, expertise and/or

    access to contracts with vendors and other pertinent documents, appeared to be reliable sources of information.

    
    

20. On April 12, 1991, the day after the telephone conference call and twelve days before the scheduled bid opening, Facilities Services Manager Young, on behalf of the Department, sent by United States Certified Mail, return receipt requested, to all four prospective bidders who attended the mandatory pre- proposal conference on April 5, 1991, the following memorandum:

    
    

    Page C-22 of the Bid Submittal Form has been changed and is enclosed for use in the Invitation to Bid.

    Please call me if you have any questions on this change/addition or any information that is needed to complete your Bid Submittal on or before 3:30 p.m., April 24, 1991.

    
    

21. The "changed" page C-22 of the ITB, which accompanied the foregoing memorandum, provided as follows with respect to moving costs:

    
    

    The bidder will respond to the items as stated in the Bid submittal,, Page B-6,

    b. Moving Costs: 1) a) b), 2), 3).

    Department Bidder

    Estimate Response 1) a) b) $25,000 to

    $30,000

    2) $35,000 to

    $45,000

    3) $8,000 to

    $10,000

    
    

22. Young also telephoned each of the four prospective bidders and explained to them how moving costs would be evaluated in light of this revision to the ITB. He told them that if they indicated under "Bidder Response" on page C-22 that they would be willing to pay up to $30,000 for item 1, $45,000 for item 2 and $10,000 for item 3, and in Hedin's case, provided he submitted a bid that included the 12,000 square feet of space presently occupied by Respondent, 28% of these amounts, they would capture the maximum number of points available for each of these items, and that if they indicated a willingness to contribute less than these amounts, they would be awarded points in proportion to amount of their proposed contribution. 5/

    
    

23. Respondent's decision to allow Hedin to earn the same amount of points as the other prospective bidders for moving costs by pledging to contribute only 28% of what his competitors had to pledge was based upon square footage considerations. If a bidder other than Hedin was awarded the lease, Respondent would have to move into more than 17,000 square feet of space. If, on the other hand, Hedin submitted a bid that included the 12,000 square feet of space presently occupied by Respondent and he was the successful bidder, Respondents would be occupying only 5,000 or so square feet of space it had not previously occupied, or approximately 28% of the square footage that it would have to move into if the lease had been awarded to another bidder.

    
    

24. The ITB, as so revised and clarified by Respondent (hereinafter referred to as the "Revised ITB"), contemplated that the successful bidder would

    be obligated to pay only Respondent's actual moving costs up to the amounts pledged on page C-22 of the bidder's completed BSF. Moving costs in excess of the amounts pledged by the successful bidder would be borne by Respondent.

    Respondent wanted to avoid a situation where, because of Respondent's estimating errors, a successful bidder: was forced to bear a cost in connection with its bid that it did not anticipate at the time it had submitted the bid.

    Respondent, however, was quite confident that the estimates it had made and incorporated in the Revised ITB would not prove to be too low. 6/

    
    

25. All four of the prospective bidders who participated in the mandatory pre-proposal conference submitted timely bids.

    
    

26. Each of bids was deemed to be responsive.

    
    

27. Facility Services Manager Young then performed the calculations necessary to determine the number of points that each bidder should be awarded for associated fiscal costs, including rental costs and moving costs. This was purely an objective and non-judgmental exercise.

    
    

28. Young performed these calculations in accordance with the methodology that had been described to all of the bidders prior to the submission of their bids.

    
    

29. Schlitt had the lowest rental rates for the basic term of the lease, as well as for the five option years. Accordingly, he was awarded the maximum 35 points for the former and the maximum 5 points for the latter, for a total of 40 points. The scores received by the other bidders for rental costs were as follows: 1436- basic term: 34.125, and option years: 4.340; Hedin- basic term: 28.865, and option years: 3.710; and Taylor- basic term: 31.938, and option years: 4.575.

    
    

30. Schlitt and 1436 indicated on page C-22 of their completed BSFs that they were each willing to pay up to $30,000 for the relocation of computer drop lines and statewide operational data system equipment, up to $45,000 for the relocation of telephones and up to $10,000 for the relocation of furniture and other equipment. Accordingly, they were both awarded the maximum 21 points for moving costs.

    
    

31. Hedin indicated on page C-22 of his completed BSF that he was willing to pay up to 28% of these amounts ($8,400.00 for the relocation of computer drop lines and statewide operational data system equipment, $12,600 for the relocation of telephones and $2,800 for the relocation of furniture and other equipment). Accordingly, he too was awarded the maximum 21 points for moving costs.

    
    

32. Taylor, who indicated on page C-22 of his completed BSF a willingness to contribute only a small fraction of the Respondent's estimated moving costs, received a total of 1.667 points for moving costs.

    
    

33. After computing these scores 7/ Young prepared a written synopsis of all four bids that had been submitted. He gave copies of his synopsis to the four members of the bid evaluation committee, along with score sheets for them to use in their evaluation of these bids. Typed in on each score sheet were the scores the bidders had received for rental costs and moving costs. These scores were accurately reported on the score sheets except for the score that Hedin had been awarded for rental costs associated with the basic term of the lease. The

    score sheets erroneously indicated that Hedin had been awarded 32.375 points, rather than 28.665 points, for this item.

    
    

34. The four members of the bid evaluation committee were: General Services Manager McAloon; Frank Mueller, District IX's chief financial officer; and Kathy Pelaez and Alfred Swanson, two HRS administrators who supervise staff headquartered in Respondent's Indian River County client service center. 8/

    
    

35. Young, because he was the Facilities Services Manager, was prohibited by agency practice 9/ from serving on the bid evaluation committee.

    
    

36. The bid evaluations committee visited each of the bidder's proposed facilities before determining the amount of points to award them for the non- economic categories, i.e., location and property, set forth in the Revised ITB.

    
    

37. The committee members visited Schlitt's, 1436's and Taylor's proposed facilities on the same day. They subsequently paid a visit to Hedin's proposed property, which consisted of the building presently occupied by Respondent, plus an addition of approximately 5,000 square feet connected to the existing building by a walkway. The delay in visiting Hedin's proposed facility was the result of a determination, later overturned, that the entire facility was not dry and measurable as required by the Revised ITB.

    
    

38. Following their visits to Schlitt's, 1436's and Taylor's proposed facilities, the members of the bid evaluation committee met as a group and discussed each of these proposed facilities. They had a similar meeting and discussion about Hedin's proposed facility after their visit to that proposed facility.

    
    

39. Applying the criteria set forth in the Revised ITB, the committee members agreed that the following point awards should be made for the categories of location and property: location/proximity to preferred area (evaluation criterion 2.a., 5 point maximum)- Schlitt: 3, 1436: 2, Hedin: 5, and Taylor: 1; location/public transportation (evaluation criterion 2.b., 5 point maximum)-

    all four bidders: 0; location/proximity to clients (evaluation criterion 2.c.,

    5 point maximum)- Schlitt: 3, 1436: 2, Hedin: 5, and Taylor: 1; location/aesthetics (evaluation criterion 2.d., 1 point maximum): Schlitt, 1436, and Hedin: 1, and Taylor: 0; location/security (evaluation criterion 2.e., 1 point maximum)- all bidders: 1; property/design (evaluation criterion 3.a., 15 point maximum)- Schlitt: 9, 1436: 15, Hedin: 14, and Taylor 10; property/future expansion (evaluation criterion 3.b., 5 point maximum): Schlitt: 4, 1436: 5, Hedin 3.5, and Taylor 3, and property/square footage in single building (evaluation criterion 3.c., 2 point maximum)- Schlitt, 1436, and Taylor: 2, and Hedin: 1.

    
    

40. Each of the members of the evaluation committee then recorded these scores on their individual score sheets.

    
    

41. Although they agreed to each award the same number of points, evaluation committee members were free to do otherwise. They were not subjects to any threats or coercion.

    
    

42. The members of the evaluation committee made a good faith effort to fairly base their point awards on the evaluation criteria for the categories of location and property prescribed in the Revised ITB. For instance, they awarded Schlitt only nine out of a possible 15 points for property/design because of their reasonable concerns that the space he offered, which was located in a

    multistory building which would have other tenants in addition to the Department, would not be able to house large units together and in close proximity to interdependent units. The committee members did not have similar concerns about the space offered by 1436. Accordingly, they awarded 1436 the maximum 15 points for this category.

    
    

43. The points awarded by the evaluation committee for location and property were added to the points the bidders had previously received for rental and moving costs to obtain a total point award for each bidder. The; results were as follows: 1436- 87.465 total points; Schlitt- 84 total points; Hedin- 83.875 total points; and Taylor- 56.18 total points.

    
    

44. 1436's bid was therefore the "lowest and best bid," as defined on page B-1 of he Revised ITB. Consistent with the Revised ITB's pronouncement that "[t]he successful bid will be that determined to be the lowest and best," the evaluation committee recommended to the District IX Administrator that 1436 be awarded Lease No. 590:2241. General Services Manager McAloon, in his capacity as chairman of the evaluation committee, provided the District IX Administrator with a written justification for the committee's recommendation. 10/ The committee's recommendation, as well as its written justification, were adopted by the District IX Administrator, who, by letter dated October 3, 1991, to 1436, gave notice of the Department's intention to award 1436 Lease No. 590:2241. Copies of this letter were sent to all bidders.

    
    

45. The Department's preliminary decision to award the lease to 1436 was the product of, not any fraudulent, arbitrary, capricious or unlawful conduct on the Department's part, but rather the honest exercise of the agency's discretion.

    
    

46. After receiving their copies of the District IX Administrator's October 3, 1991, letter to 1436, Schlitt and Hedin filed protests and initiated the instant proceedings.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

48. 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).

    
    

49. 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).

    
    

50. 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).

    
    

51. If the agency fails to exercise its discretion in this fashion, an adversely affected bidder or prospective bidder may file a protest with the agency pursuant to Section 120.53(5), Florida Statutes, which provides in pertinent part as follows:

    
    

    An agency which enters into a contract pursuant to the provisions of . . . chapter 255 . . . shall adopt rules specifying procedures for the resolution of protests arising from the contract bidding process. Such rules shall at least provide that: 11/

    1. The agency shall provide notice of its decision or intended decision concerning a bid solicitation or contract award as follows:

       1. For a bid solicitation, notice of a decision or intended decision shall be given by United States mail or by hand delivery.

       * * *

       3. For any other agency decision, notice of a decision or intended decision shall be given either by posting the bid tabulation at the location where bids were opened or by certified United States mail or other express delivery service, return receipt requested.

       The notice required by this paragraph shall contain the following statement: "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."

    2. Any person who is adversely affected by the agency decision or

    intended decision shall file with the agency a notice of protest in writing within 72 hours after the posting of the bid tabulation or after receipt of the notice of the agency decision or intended decision and shall file a formal written protest within 10 days after the date he filed the notice of protest. With respect to a protest of the specifications contained in an invitation to bid or in a request for proposals, the notice of protest shall be filed in writing within 72 hours after the receipt of notice of the project plans and specifications or intended project plans and specifications in an invitation to bid or a request for proposals, and the formal written protest shall be filed within 10 days after the date the notice of protest is filed. Failure to file a notice of protest or failure to file a formal written protest shall constitute a waiver of proceedings under this chapter. The formal written protest shall state with particularity the facts and law upon which the protect is based.

    * * *

    1. The agency, on its own initiative or upon the request of a protestor,

       shall provide an opportunity to resolve the protest by mutual agreement between the parties within 7 days, excluding Saturdays, Sundays, and legal holidays, of receipt of a formal written protest.

       * * *

       2. If the subject of a protest is not resolved by mutual agreement within 7 days, excluding Saturdays, Sundays, and legal holidays, of receipt of the formal written protest, and if there is a disputed issue of material fact, the agency shall refer the protest to the [D]ivision [of Administrative Hearings] for proceedings under s. 120.57(1).

    2. Upon receipt of a formal written protest referred pursuant to this subsection, the division director shall expedite the hearing and assign a hearing officer within 15 days of the receipt of the formal written protest by the division and render a recommended order within 30 days after the hearing

    or within 30 days after receipt of the hearing transcript by the hearing officer, whichever is later. The provisions of this paragraph may be

    waived upon stipulation of all parties.

    
    

52. In a bid protest proceeding, "[t]he hearing officer's sole responsibility is to ascertain whether the agency acted fraudulently, arbitrarily, illegally, or dishonestly." See D.O.T. v. Groves-Watkins Constructors, 530 So.2d at 914.

    
    

53. "The Hearing Officer need not in effect, second guess the members of the evaluation committee to determine whether he and/or other reasonable and well-informed persons might have reached a contrary result. Rather, a `public body has wide discretion' in the bidding process and `its decision, when based on an honest exercise' of the discretion, should not be overturned `even if reasonable persons may disagree."' Scientific Games, Inc. v. Dittler Brothers, Inc., 586 So.2d 1128, 1131 (Fla. 1st DCA 1991).

    
    

54. Petitioners/Intervenors Schlitt and Hedin have failed to demonstrate that the Department's preliminary decision to award Lease No. 590:2241 to 1436 was the product of anything other than an honest exercise of the Department's discretion that, in all material respects, was in accordance with the provisions of the Revised ITB.

    
    

55. To the extent that Schlitt and Hedin are challenging the provisions of the Revised ITB relating to the evaluation of bids, their challenges are not only without substantive merit, they also come too late because they were not made within the 72-hour time limit prescribed by Section 120.53(5), Florida Statutes. See Capeletti Brothers, Inc. v. Department of Transportation, 499, So.2d 855, 857 (Fla. 1st DCA 1986).

    
    

56. Inasmuch as it has not been shown that the Department acted "fraudulently, arbitrarily, illegally, or dishonestly" in preliminarily deciding to award 1436 Lease No. 590:2241, the award should stand.

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 awarding Lease No. 590:2241 to 1436 over the protests of Schlitt and Hedin.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 24th day of February, 1992.

STUART M. LERNER

Heading 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 24th day of February, 1992.

ENDNOTES

1/ For reasons that will become apparent, the Hearing Officer has determined that it is unnecessary to further address this issue in this Recommended Order.

2/ Section E of the ITB contained a sample present value calculation to illustrate how points would be awarded for this category.

3/ While the provisions of the ITB recited in this and the preceding paragraph of these Findings of Fact informed prospective bidders that the successful bidder's design of the space offered in its bid was subject to change, these provisions did not suggest that a bidder, after the bid submittal deadline, would be able to substantially alter its bid and offer space that was not the same as that identified in its earlier [submitted proposal.

4/ At no time prior to bid opening did Petitioner/Intervenor Hedin submit such written questions.

5/ While the Department did not have a rule adopted in accordance with the procedures set forth in Section 120.54, Florida Statutes, specifically providing that moving costs would be evaluated in such a manner, the absence of such a rule did not fatally flaw the bidding process., See Department of Transportation

v. Blackhawk Quarry Company of Florida, Inc., 528 So.2d 447 (Fla. 2d DCA 1988). Pronouncements, such as those found in the ITB, as revised and clarified by Young, that do not constitute "statements of general applicability" are not "rules," within the meaning of Section 120. 52(16), Florida Statutes, and therefore need not be the product of the rulemaking procedures prescribed by Section 120.54, Florida Statutes.

6/ No proof was submitted at hearing to establish that these estimates made by Respondent are likely to be exceeded if it moves into the facility offered by 1436.

7/ To the extent that it was a deviation from the prescribed evaluation procedures for Young, rather than the members of the bid evaluation committee, to calculate these scores, such a deviation was an immaterial one having no bearing on the outcome of the bid selection process.

8/ Paragraph 5-3a. of HRS Manual 70-1, the Department's leasing manual, provides that "[m]embers of the [bid evaluation] committee should be chosen to represent various areas of expertise for effective evaluation." It appears that the selection of the four members of the bid evaluation committee in the instant cases was consistent with this policy. It has not been demonstrated that any of these committee members lacked the necessary qualifications to properly evaluate the bids that had been submitted.

9/ This practice is codified in paragraph 5-3c. of HRS Manual 70- 1, which provides as follows:

The facilities services manager will serve as a resource to the [bid evaluation] committee, but may not serve as member of the committee due to conflict of interest.

10/ Paragraph 5-11h. of HRS Manual 70-1 requires there to be an "explicit, documented justification to support the [committee's] recommendation of lowest and best bid" where "the scores are unusually competitive." It appear's that there was no violation of this requirement in the instant case.

11/ The rules adopted by the Department in accordance with this statutory mandate are found in Chapter 10-13, Florida Administrative Code.

12/ The Department's proposed recommended order contains two proposed findings of fact 54. The first of these proposed findings is referred to herein as" proposed finding of fact 54A. The second of these proposed findings is referred to herein as proposed finding of fact 54B.

APPENDIX TO RECOMMENDED ORDER

IN CASE NOS. 91-7314BID and 91-7315BID

The following are the Hearing Officer's specific rulings on the findings of fact proposed by the Petitioner/Intervenor Hedin and the Department in their proposed recommended orders:

Petitioner/Intervenor Hedin's Proposed Findings of Fact

1-3. Accepted and incorporated in substance, but not necessarily repeated verbatim, in this Recommended Order.

1. Rejected because it is not supported by persuasive competent substantial evidence. There was no intent to "require" bidders to pay the Department's moving costs.

2. Accepted and incorporated in substance.

3. Rejected because it is not supported by the greater weight of the evidence. On this matter, the Hearing Officer has credited the testimony of Facility Services Manager Young, which is contrary to the assertion made in this proposed finding.

4. To the extent that this proposed finding states that the Department's estimated moving costs "were not based on any documentation," it has been rejected because it is not supported by persuasive competent substantial evidence. To the extent that it states that there was no "evidence offered in the form of proposals or estimates required by rule and Agency practice," it has been rejected because it is more in the nature of commentary regarding the state of the evidentiary record than a finding of fact.

5. To the extent that this proposed finding states that the Revised ITB permitted "a maximum award of evaluation points for `moving costs' of either 15 or 16 points," it has been rejected because it is not supported by the greater weight of the evidence. To the extent that it states that the Revised ITB permitted "a maximum of 21 points, for relocation expense," it has been accepted and incorporated in substance.

9-12. Accepted and incorporated in substance.

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

14-15. Accepted and incorporated in substance.

1. Rejected because it is more in the nature of a summary of testimony purportedly adduced at hearing than a finding of fact.

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

3. To the extent that it asserts that the successful bidder would receive a "profit" if the hypothetical situation described in this proposed finding occurred, it has been rejected because it is not supported by persuasive

   competent substantial evidence. Otherwise it has been accepted and incorporated in substance.

4. To the extent that this proposed finding states that the "Department did not consider requiring bidders to absorb all moving costs associated with a bid award, regardless of amount, so eliminating the risk of having to make up an under- estimate or of permitting windfall profits," it has been rejected because it is not supported by persuasive competent substantial evidence. Although this option was ultimately rejected by the Department, it was considered. To the extent that it states that the Department "acknowledged [at hearing] that that would have best accomplished Respondent's objective," it has been rejected because it is more in the nature of a summary of testimony purportedly adduced at hearing than a finding of fact.

20-23. Accepted and incorporated in substance.

1. First sentence: Rejected because it is not supported by persuasive competent substantial evidence; Second sentence: Accepted and incorporated in substance.

2. To the extent that this proposed finding asserts that "the bid of [Hedin] involved a minimal move at lower cost to Department than those of either [1436] or [Schlitt]," it has been rejected because it is not supported by persuasive competent substantial evidence. No showings was made at hearing that the amounts 1436 and Schlitt indicated they would be willing to pay would be insufficient to cover the Department's moving costs if it moved to their proposed facilities. Otherwise, this proposed finding has been accepted and incorporated in substance.

The Department's Proposed Findings of Fact

1-18. Accepted and incorporated in substance.

1. Rejected because it is contrary to the greater weight of the evidence. Movers where contacted after the ITB was revised.

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

3. Accepted and incorporated in substance.

22-24. Rejected because it would add only unnecessary detail to the factual findings made by the Hearing Officer.

25-35. Accepted and incorporated in substance.

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

37-45. Accepted and incorporated in substance.

46. Rejected because it is a legal conclusion, which is erroneous to the extent that it suggests that the leasing manual had the force and effect of law, notwithstanding that it had not been adopted as a rule pursuant to the rulemaking procedures prescribed in Section 120.54, Florida Statutes. See Infantino v. Department of Health and Rehabilitative Services, No. 89-6637R (Fla. DOAH October 1, 1990).

47-48. Accepted and incorporated in substance.

49-54A. 12/ Rejected because they would add only unnecessary detail to the factual findings made by the Hearing Officer.

54B-59. Accepted and incorporated in substance.

COPIES FURNISHED:

Michael O'Haire, Esquire 3111 Cardinal Drive

Vero Beach, Florida 32963

Martin E. Wall, Esquire Suite 210-F

The 2001 Office and Shopping Complex 2001 Ninth Avenue

Vero Beach, Florida 32960-6413

Madonna M. Finney, Esquire

Department of Health and Rehabilitative Services Ill Georgia Avenue, Third Floor

West Palm Beach, Florida 33401

David Feldman, Esquire

407 Lincoln Road Penthouse Suite

Miami Beach, Florida 33139

R.S. Power, 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.

================================================================= DISTRICT COURT OPINION

=================================================================

IN THE DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FOURTH DISTRICT JANUARY TERM 1993

KARL D. HEDIN, NOT FINAL UNTIL THE TIME EXPIRES TO FILE REHEARING MOTION,

Appellant, AND, IF FILED, DISPOSED OF.

vs. CASE NO. 92-1163

L.T. CASE NO. 91-7315BID

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 1436 BUILDING, INC. and EDGAR L. SCHLITT,

Appellee.

/ Decision filed March 24, 1993.

Appeal from the State of Florida Division of Administrative Hearings.

Michael O'Haire of Smith, O'Haire, Quinn & Smith, Vero Beach, for appellant.

Madonna M. Finney, Assistant General Counsel, Tallahassee, (withdrawn after filing brief) and Karen M. Miller, District Legal Counsel, West Palm Beach, for Appellee-Department of Health and Rehabilitative Services.

PER CURIAM.

AFFIRMED.

LETTS, STONE, JJ. and MAY, MELANIE G., Associate Judge, concur.

MANDATE

From

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA FOURTH DISTRICT

This cause having been brought to this Court by appeal, and after due consideration the Court having issued its opinion;

YOU ARE HEREBY COMMANDED that such further proceedings be had in said cause in accordance with the opinion of this Court, and with the rules of procedure and laws of the State of Florida.

WITNESS the Honorable Hugh S. Glickstein, Chief Judge of the District Court of Appeal of the State of Florida, Fourth District, and the seal of said Court at West Palm Beach, Florida on this day.

DATE: April 3, 1993.

CASE NO.: 92-1163

COUNTY OF ORIGIN: STATE OF FLORIDA DIVISION OF

ADMINISTRATIVE HEARINGS

T. C. CASE NO.: 91-7314BID & 91-7315BID

STYLE: HEDIN v. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES

Marilyn Beuttenmuller, Clerk District Court of Appeal Fourth District

ORIGINAL TO: STATE OF FLORIDA DIVISION OF ADMINISTRATIVE HEARINGS

cc: Michael O'Haire Madonna M. Finney Karen M. Miller

Docket for Case No: 91-007314BID

Orders for Case No: 91-007314BID