STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

HUMAN DEVELOPMENT CENTER )

OF PASCO, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 92-2101BID

)

DEPARTMENT OF CORRECTIONS, )

)

Respondent. )

)

and )

) KANSAS CITY CORRECTIONS CENTER, )

)

Intervenor, )

)

RECOMMENDED ORDER

A hearing was held in this case in Tallahassee, Florida on April 15, 1992, before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings.

APPEARANCES

For the Petitioner: Frank P. Rainer, Esquire

Ruden, Barnett, McClosky, Smith, Schuster & Russell, PA Monroe-Park Tower, Suite 1010

101 North Monroe Street Tallahassee, Florida 32301

For the Respondent: Steven S. Ferst, Esquire

Florida Dept. of Corrections 2601 Blair Stone Rd.

Tallahassee, Fl., 32399-2500

For the Intervenor: Michael J. Cherniga, Esquire

Greenberg & Traurig

101 East College Avenue Tallahassee, Florida 32301

STATEMENT OF THE ISSUES

The issue for consideration in this case is whether the Department of Corrections should issue a contract for conducting drug rehabilitative services at its facility in Brooksville, Florida to the Intervenor, Kansas City Community Center.

PRELIMINARY MATTERS

By Petition To Protest Award, dated March 20, 1992, the Petitioner herein, Human Development Center of Pasco, Inc., (HDCP), contests the Department of Corrections' award of a contract to provide drug rehabilitation services at its facility in Brooksville, Florida, to the Intervenor, Kansas City Community Center, (KCCC), the successful bidder. This matter was originally consolidated with two other similar protests relating to Department facilities in Gainesville, Florida, but prior to the hearing herein, those protests were voluntarily withdrawn.

On April 3, 1992, the instant protest was forwarded to the Division of Administrative Hearings for appointment of a Hearing Officer, and by Order of even date, the undersigned set the matter for hearing in Tallahassee, on April 15, 1992 at which time it was held as scheduled. The successful bidder, KCCC, was granted leave to intervene herein by Order dated April 6, 1992.

At the hearing, Petitioner presented the testimony of Dr. David Barzelay, its Director of Resource Development, and James G. Mitchell, Director of the Department's Adult Services Program Office; and Jane Wagner Broyles, the individual who administered its bid process for this program. It also introduced Petitioner's Exhibits 1 through 4.

The Department also called Ms. Broyles as its own witness and introduced Respondent's Exhibits A through C. Intervenor, KCCC, presented the testimony of Myrna Trickey, who was instrumental in preparing KCCC's bid. It also introduced its Exhibit A. The parties, in addition, offered into evidence Joint Exhibits 1 and 2.

A transcript was provided and subsequent to the hearing, all three parties submitted Proposed Findings of Fact which have been ruled upon in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. Dr. Barzelay, the individual responsible for the drafting of bids for the establishment of drug treatment centers, and also the person who gets them started, prepared and transmitted Petitioner's bid for the establishment and conduct of a drug treatment center for the Department at its facility in Brooksville, Florida prior to the deadline for submission of bids at 11:00 AM on January 20, 1992. It used the mandatory Price Quote Sheet from the ITB. Petitioner's bid was actually transmitted by U. S. overnight Mail, on January 18, 1992, and the package was receipted for by the Department. According to Mr. Mitchell, the Department's evaluator on this ITB, Petitioner's bid was submitted prior to the deadline and was found to be responsive.

   
   

2. After the Petitioner's bid was placed in the mail, and after January 22, 1992, Petitioner received, also by mail, the Department's Addendum #1 to its IFB which extended the submittal deadline to January 24, 1992, and which also implemented a phase-in schedule to hire, bring on board, pay and get reimbursed for the cost of staff to man the proposed facility. The Department's transmittal of the Addendum required acknowledgment of it before January 24, 1992 on pain of being disqualified.

   
   

3. Petitioner's copy of the Addendum #1 came addressed to Mr. Harding, a former worker at HDCP who, at the time of receipt, was a part time worker there in another office. Petitioner had previously notified the Department that Dr.

   Barzelay was the individual to whom mail pertaining to procurements was to be sent. However, the addendum did not reach him until the afternoon of January 22, 1992. It was logged in at HDCP on January 22, 1992. It should be noted that the Petitioner's proposal listed its Executive Director, Mr. Silikowski, as contact person, not Dr. Barzelay.

   
   

4. The receipt of Addendum # 1 was somewhat of a shock to the Petitioner since it had already submitted it's bid. It was obvious to them that the Department had intended for the bid to be submitted on the basis of the terms of the Addendum. It appears that all other bidders received their copies of the Addendum on time. So did Petitioner, but the lateness of its arrival, Petitioner claims, put it in a disadvantageous position.

   
   

5. Upon receipt of the Addendum, Dr. Barzelay got out the bid file and reviewed it to see if there was some way Petitioner's bid, which as submitted, was not consistent with the Addendum, could be modified so as to conform. After some 5 or 5 more hours of work on it, it seemed to him, on review, there was no way that could be done. Nonetheless, since the Addendum required acknowledgment of its receipt, Dr. Barzelay drafted a letter to the Department (Ms. Broyles) acknowledging receipt of the Addendum and requesting that the rules applying the phase-in schedule be applied to its already submitted figures. This response to Addendum 1 was submitted early, (January 22, 1992), to insure it got to the Department on time. Dr. Barzelay contends that his action was based on his prior experience where a response to another agency in a procurement situation was declared late even though received at the agency on time because, due to internal distribution delays, it did not get to the procurement officials on time.

   
   

6. Notwithstanding the original submittal by Petitioner was for a full first year as well as full second and third years, staff there should have been aware of a phase in requirement for the Brooksville facility as well as the Gainesville site. The last sentence on Page 6 of the IFB reflects that a phase- in for the Brooksville facility would be determined at a later date. Therefore, Petitioner should have known that as to year 1 at least, the figures would not be for a full year at full strength. Mr. Barzelay's assertion that the bid implied the bid should be submitted for a full year to be prorated later has some validity, but the fact remains that the Addendum put out prior to the response date established the requirement to submit the bid on a pro-rata, phased-in basis. If there was any question as to what procedure to follow, Dr. Barzelay might have requested clarification from the Department but none was solicited. He claims the ITB dictated no contact with the Department by any prospective bidder after January 10, 1992. He relied on his experience and his reading of the bid solicitation to Petitioner's detriment.

   
   

7. In the original ITB, all personnel and administrative cost figures were to be calculated on a full time employee, (FTE), basis. The ITB provided for the submittal to be prorated from the date of the contract and the Petitioner suggested this be done based on the Department's applying the phase-in schedule to the information already submitted by the Petitioner. The letter was sent to the Department by FEDEX overnight delivery so as to arrive at the Department before the bids were to be opened. There is no evidence that the Department did not receive this letter. The Department did not, thereafter, declare the Petitioner's bid unresponsive nor did anyone from the Department contact Dr. Barzelay about it.

   
   

8. In early March, 1992, the Petitioner received the Department's Letter of Intent to award the contract in issue to KCCC. From looking at a copy of the

   bid tally sheet received from the Florida Alcohol and Drug Abuse Association, it was obvious to Petitioner's personnel that the Department had not applied the proration to Petitioner costs as had been requested. Therefore, Petitioner's cost figures were higher than they should have been at $1,491,778.00, whereas KCCC's bid was figured at $1,272,398.00. The Petitioner's figure would have been $1,200,151.00 if properly prorated.

   
   

9. Utilizing those prorated figures, Dr. Barzelay then evaluated the points for bid amount based on the Department's award system but modified the formula somewhat. Under that system, the low bidder was to get 50 cost points. On the original Department tally sheet, KCCC, the apparent low bidder, received

   50 cost points, and Petitioner got 41.38 points. If, however, Petitioner's bid were actually the $1,200,151.000 figure, it would have been the low bidder and been entitled to the full 50 points for price, with KCCC getting a somewhat lower number. Petitioner got 39.40 other points for a total of 80.78 total points. KCCC got 40.20 other points for a total of 90.20 total points. Evaluating the entire process on the basis of Petitioner's proposed change to give it the 50 cost points and KCCC somewhat less would result in a net change of somewhere around 10.19 points overall. Since, overall, Petitioner was only approximately 9.42 points behind KCCC, the Petitioner's suggested correction would make it the highest ranked responsive bidder by a small margin on the basis of a prorated first year and full second and third years. As it was, the Department used a full three years in evaluating Petitioner's bid because of the failure of Petitioner to timely prorate in compliance with Addendum 1.

   
   

10. Respondent also recalculated the points using Petitioner's prices as contained in Petitioner's recalculated tally sheet, (Dr. Barzelay's figures), under the formula contained in Section 4.7.1 of the ITB and arrived at an award of 41.38 points for Petitioner, which is exactly what it was awarded originally.

    
    

11. When Petitioner finally determined what had happened, it filed a notice of protest and requested information on other bidders from the Department. Though the requested information was provided, it was not received within the 10 day period Petitioner had in which to file its actual protest.

    The information received revealed that KCCC received it's copy of Addendum #1 on January 20, 1992.

    
    

12. The actual bids received from Petitioner and the seven other bidders were opened and reviewed by Ms. Broyles, the Department's administrator for this procurement. She determined them all to be responsive as submitted and ready to be scored, a process done by Ms. Hallee Combs. Petitioner's submittal under Addendum #1 was delivered to the Department, but Ms. Broyles does not recall seeing either it or Dr. Barzelay's cover letter which accompanied it prior to the hearing.

    
    

13. According to Ms. Broyles, the individual who put this procurement package together for the Department, the Addendum in issue here was probably sent out to all bidders on or about January 15, 1992. The original bid was sent out on January 3, 1992 and indicated that the first year of the contract would end on September 30, 1992. The bids were actually opened at the Department at 9:00 AM on January 24, 1992. Neither Petitioner's figures nor those of any other bidder were changed by the Department. Prior to the opening date, presumably in accordance with the terms of Addendum #1, several other bidders submitted updated cost figures. KCCC, for example, had already submitted its original bid when it received the addendum on January 20, 1992. After receipt, it took only 2 to 3 hours to prepare the information sought for the amendment and it was sent out the same days as received.

14. Other bidders did not make any change, however, choosing instead to rely on the prices previously submitted. Petitioner received it's copy of the Addendum on January 22, 1992. By Dr. Barzelay's admission, it could have made the requested changes and dispatched its response by alternate transmission methods, i.e., FEDEX Overnight, UPS Overnight, US Overnight Mail, had it chosen to do so, but a decision was made to follow the course it took.

1. Ms. Broyles also points out that at no time did Petitioner complain it did not have adequate time to respond to Addendum #1. In any case, Petitioner's proposal to have the Department prorate its previously submitted figures would not and could not have been honored. It is the Department's policy not ever to change prices submitted on a bid at a bidders request. To do so would impact the integrity of the bid process. Bids can be changed by the bidder itself, but then only prior to bid opening. Petitioner could have done that here.

   
   

2. Ms. Broyles also asserts that considering the Petitioner's original bid, the addendum, and Petitioner's response thereto, it would not have been possible for the Department to recompute Petitioner's price quotation with any certainty. This is not so. Petitioner's prices initially quoted were for a full year. The Department put out its implementation schedule which it could have applied to Petitioner's prices. However, there were possible variables, such as start-up costs, and the like which would make it not a good idea to do so. Any mistakes in doing so would be laid at the feet of the agency. Also, there is no requirement for an agency to recompute a bidder's figures, and the strict and long standing agency policy not to do so is ample justification for it's not doing so.

1. The prices submitted in the various bidders' last submittal, either the original bid or the amendment, were tabulated by the Department and the decision was made to award to KCCC.

   
   

   CONCLUSIONS OF LAW

   
   

2. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter in this case. Section 120.57(1), Florida Statutes.

   
   

3. The burden of proof in this case is upon the unsuccessful bidder which seeks to establish its entitlement to an award. Florida Department of Transportation v. J.W.C. Company, Inc., 396 So.2d 778 (Fla. 1DCA 1981). Here, therefore, Petitioner has the burden to establish by a preponderance of the evidence that the Department's decision to award this contract to KCCC was not the result of a fair, full and honest exercise of its discretion. Liberty County

   v. Baxter's Asphalt and Concrete, 421 So.2d 505 (Fla. 1982).

   
   

4. An agency has wide discretion in soliciting and accepting bids and a decision based upon an honest exercise of that discretion may not be overturned by a Hearing Officer even if reasonable persons disagree with the outcome. C.H. Barco Contracting Co. v. State, Department of Transportation, 483 So.2d 796 (Fla. 1DCA 1986). The issue is whether the purpose of the competitive bid process has been subverted, and the Hearing Officer's sole responsibility is to ascertain whether the agency acted fraudulently, arbitrarily, illegally or dishonestly. Department of Transportation v. Groves-Watkins Constructors, 530 So.2d 912, 914 (Fla. 1988).

5. While an agency has wide discretion in evaluating bids and awarding contracts, it may not act arbitrarily or capriciously, nor can its decision be based on bias or favoritism. An agency action has been held to be arbitrary where it is not supported by facts or logic or is despotic. Agrico Chemical Company v. Department of Environmental Regulation, 565 So.2d 759, 763 (Fla. 1DCA 1989). The review for arbitrariness is limited, however. An agency's action needs to show only a rudimentary rationality to be supportable. Adam Smith Enterprises, Inc. v. Department of Environmental Regulation, 553 So.2d 1260, 1273 (Fla. 1DCA 1989). The Hearing Officer's review may not substitute his or her judgement for that of the agency but may insure only that the agency has used reason rather than whim in arriving at its decision. Id. at 1273.

   
   

6. Here, Petitioner seeks to have the Department's intention to award this contract to KCCC, the lowest responsive bidder, determined to be invalid on the basis that it did not have adequate opportunity to present its true bid to the Department, and because the Department failed to perform certain proration calculations for it on the figures supplied by it in its original bid.

   
   

7. The evidence is clear that Petitioner, as well as all other prospective bidders was given a bid package to which it responded in a timely fashion. In its interpretation of the bid requirements, it determined that though a proration of first year costs would, at some time, be made, at the time of bid, the proposed contractors should submit full first year cost figures. It did this, as did most, if not all other bidders. However, at some time prior to the bid opening date set out in the original ITB, presumably on January 15, 1992, the Department sent out Addendum #1 to the ITB which required all bidders to prorate the first year cost figures on a phase in schedule provided, and, to facilitate that, extended the time for bid opening to June 24, 1992.

   
   

8. Admittedly, most bidders received their copies of Addendum #1 before Petitioner did and most, including KCCC, made the requested proration and submitted their addenda in a timely manner. KCCC's representative indicated it took between 2 to 3 hours to do the requested computation, and the amended proposal was transmitted to the Department on the same day the Addendum was received.

   
   

9. Accepting Petitioner's account of the situation, it did not receive its copy of the Addendum until in the afternoon of January 22, 1992, still a good 36 hours prior to the bid opening. Instead of sitting down and doing the calculations required, Petitioner's agents made the conscious determination not to do that, but to write a letter to the Department requesting the Department do the proration for it based on the previously submitted full first year figures. Without determining that alternative transmissions were available which would have gotten a Petitioner generated response to the Department on time, it must be determined only that Petitioner has not shown there was not. It determined, based on some alleged prior experience, to get a response in by the time required so as to not be defaulted.

   
   

10. The Department has elucidated a perfectly rational policy against performing the calculations on a bidder's submittal that Petitioner here has requested. Petitioner has not shown any compelling reason why the Department should have complied with its request and violated its own policy.

    
    

11. Even more, Petitioner has come forward with no evidence whatever to demonstrate that the Department's actions herein were fraudulent, arbitrary, illegal or dishonest. To the contrary, the evidence shows that the Department acted completely within the parameters of its disclosed contracting procedure

and policies and not on whim. That Petitioner was shut out of the process was the result not of those procedures but of its own conscious election not to do the calculation but to submit a timely alternative response.

RECOMMENDATION

Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore:

RECOMMENDED that the Department of Corrections enter a Final Order in this case dismissing the protest of Human Development Center of Pasco, Inc., in regard to the proposed award of contract in procurement number 91-INST-5448, concerning the implementation and operation of the Brooksville Drug Treatment Center.

RECOMMENDED this 10th day of June, 1992, in Tallahassee, Florida.

ARNOLD H. POLLOCK, 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 10th day of June, 1992.

APPENDIX TO RECOMMENDED ORDER

The following constitutes my specific rulings pursuant to

Section 120.59(2), Florida Statutes, on all of the Proposed Findings of Fact submitted by the parties to this case.

FOR THE PETITIONER:

1. Accepted.

2. - 7. Accepted and incorporated herein.

1. Accepted and incorporated herein but as to year one only.

2. & 10. Accepted and incorporated herein.

1. Accepted.

2. - 18. Accepted but not material to the issues herein.

1. Accepted and incorporated herein except for the use of the work "entirely", substituting therefore the word "partially."

2. Rejected as speculation and argument.

3. & 22. Accepted and incorporated herein.

1. Not a Finding of Fact but a comment on the evidence. Last sentence rejected as a Conclusion of Law.

2. Rejected as not supported by evidence of record.

3. Accepted and incorporated herein.

4. Redundant.

5. A restatement of prior Findings of Fact.

6. Rejected as not supported by evidence of record.

7. Not a Finding of Fact but a commend on the evidence.

8. Not a Finding of Fact but a restatement of testimony.

9. Rejected. Petitioner mad no effort to comply - only objected and asked Respondent to accomplish the task.

10. & 33. Rejected as argument and not a Finding of Fact.

1. Accepted as a restatement of the process involved which Petitioner could have accomplished itself.

2. Not a Finding of Fact but a statement of Petitioner's position.

3. Accepted.

4. Rejected.

5. Rejected.

6. Accepted.

7. Accepted but not material to the issues.

8. & 42. Restatement of testimony and a rgument.

43. & 44. Not a proper Finding of Fact.

1. Not a Finding of Fact.

2. & 47. Accepted but not dispositive of any issue. Last sentence rejected.

1. Rejected as a restatement of and argument on the evidence.

2. & 50. Not relevant to issues at hand.

1. Redundant.

2. Not a Finding of Fact.

3. - 58. Not Findings of Fact but argument.

1. Rejected as not supported by the evidence.

2. & 61. Rejected.

10. - 12. Accepted and incorporated herein.

13. - 15. Accepted and incorporated herein.

16. - 21. Accepted and incorporated herein.

22. & 23. Accepted and incorporated herein.

24. & 25. Accepted and incorporated herein.

1. Accepted.

2. - 30. Accepted and incorporated herein.

1. Not a Finding of Fact but a Conclusion of Law.

2. - 34. Accepted and incorporated herein.

35. - 37. Accepted and incorporated herein.

38. & 39. Not Findings of Fact but Conclusions of Law.

40. - 42. Accepted and incorporated herein.

43. - 46. Accepted and incorporated herein.

47. - 49. Accepted and incorporated herein.

1. Accepted and incorporated herein.

2. Accepted but not relevent to any issue.

3. Accepted and incorporated herein.

4. Accepted.

5. & 55. Accepted and incorporated herein.

1. Not a Finding of Fact but a Conclusion of Law.

2. Not a Finding of Fact but speculation.

3. Accepted.

4. - 63. Accepted and incorporated herein.

64. - 67. Accepted but not proper Findings of Fact.

1. Accepted and incorporated herein.

2. Accepted except for the characterization in the last four words.

3. & 71. Accepted and incorporated herein.

72. - 75. Accepted and incorporated herein.

1. Speculation and a comment on a party position.

2. - 80. Accepted and incorporated herein.

1. Not a proper Finding of Fact.

2. Accepted.

3. & 84. Accepted and incorporated herein.

1. Accepted and incorporated herein.

2. Accepted and incorporated herein.

3. - 92. Accepted and incorporated herein.

93. - 99. Accepted.

1. Accepted and incorporated herein.

2. Accepted.

3. Accepted and incorporated herein.

4. Speculation.

5. - 106. Accepted.

107. & 108. Accepted and incorporated herein.

109. - 114. Accepted.

115. - 118. Accepted and incorporated herein.

119. & 120. Not Findings of Fact but Conclusions of Law.

121. - 123. Accepted.

1. Accepted and incorporated herein.

2. Not a Finding of Fact but a comment on evidence.

3. & 127. Accepted and incorporated herein.

128. - 131. Accepted and incorporated herein.

132. - 135. Not Findings of Fact but comments on evidence.

136. & 137. Argument, not Findings of Fact.

138. & 139. Accepted.

140. Not a Finding of Fact but a comment on evidence.

FOR THE INTERVENOR:

1. Accepted and incorporated herein.

2. & 6. Accepted.

7. & 8. Accepted and incorporated herein.

9. - 11. Accepted and incorporated herein.

1. Accepted and incorporated herein.

2. Not a Finding of Fact but a procedural matter.

3. Accepted and incorporated herein.

4. & 16. Accepted.

17. - 19. Accepted and incorporated herein.

1. Not a Finding of Fact but a comment on evidence.

2. Accepted and incorporated herein.

3. - 27. Accepted.

28. - 35. Accepted and incorporated herein.

36. - 40. Accepted and incorporated herein.

41. - 43. Accepted and incorporated herein.

44. & 45. Accepted.

46. - 48. Accepted and incorporated herein.

1. Accepted.

2. & 51. Accepted and incorporated herein.

52. - 54. Accepted.

55. & 56. Accepted and incorporated herein.

57. & 58. Not Findings of fact but statements of party position.

59. - 61. Accepted.

62. - 65. Accepted and incorporated herein.

1. Not a Finding of Fact but a restatement of testimony.

2. & 68. Accepted and incorporated herein.

69. Accepted.

70 i - xvi. Not Findings of Fact but comments of the evidence and argument.

COPIES FURNISHED:

Frank P. Rainer, Esquire Gerald Sternstein, Esquire

Ruden, Barnett, McClosky, Smith, Schuster & Russell, P.A.

Monroe-Park Tower, Suite 1010

101 North Monroe Street Tallahassee, Florida 32301

Steven S. Ferst, Esquire Department of Corrections 2601 Blair Stone Road

Tallahassee, Florida 32399-2500

Michael J. Cherniga, Esquire Greenberg, Traurig, Hoffman,

Lipoff, Rosen & Quentel, P.A.

P.O. Drawer 1838 Tallahassee, Florida 32302

Harry K. Singletary, Jr. Secretary

Department of Corrections 2601 Blair Stone Road

Tallahassee, Florida 32399-2500

Louis Vargas General Counsel

Department of Corrections 2601 Blair Stone Road

Tallahassee, Florida 32399-2500

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 within which to submit written exceptions. You should consult with the agency which will issue the Final Order in this case concerning its rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency which will issue the Final Order in this case.

Docket for Case No: 92-002101BID

Orders for Case No: 92-002101BID