STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

ADLEE DEVELOPERS, )

)

Petitioner, )

)

vs. ) CASE NO. 92-2798 BID

)

DEPARTMENT OF HEALTH AND )

REHABILITATIVE SERVICES, )

)

Respondent, )

) and ANTHONY ABRAHAM ENTERPRISES, )

)

Intervenor. )

)

RECOMMENDED ORDER

A hearing was held in this case in Miami, Florida on May 20 and 21, 1992, before Arnold H. Pollock, a Hearing Officer with the Division of Administrative Hearings.

APPEARANCES

For the Petitioner: Melinda S. Gentile, Esquire

200 East Broward Blvd.

P.O. Box 1900

Ft. Lauderdale, Florida 33302

For the Respondent: Paul Martin, Esquire

Department of Legal Affairs The Capitol - Suite 1501

Tallahassee, Florida 32399-1050

For the Intervenor: Peter W. Homer, Esquire

3400 International Place

100 Southeast 2nd Street Miami, Florida 33131

STATEMENT OF THE ISSUES

The issue for consideration in this matter is whether Respondent's intended award of a lease for office space to Intervenor, Anthony Abraham Enterprise, is arbitrary and capricious and whether the proposal of the Petitioner, Adlee Developers, the current lessor, is responsive.

PRELIMINARY STATEMENT

In early April, 1991, the Department of Health and Rehabilitative Services, (DHRS), issued an Invitation to Bid for a lease of office space in Dade County, Florida, for one of its operations. In response to that invitation, four offers

were received and evaluated by the Department's evaluation committee, and by letter dated April 2, 1992, the Office of General Services authorized the award of the least to Intervenor, Anthony Abraham Enterprises, (Abraham). This decision was announced to all offerors on April 7, 1992. Thereafter, Petitioner, Adlee Developers, (Adlee), filed its notice of protest on April 9, 1992 and its formal protest on April 20, 1992.

By Notice of Referral dated May 7, 1992, the Department referred the file to the Division of Administrative Hearings, and on May 8, 1992, Hearing Officer Daniel Manry set the matter for hearing in Miami on May 20, 1992 at which time it was heard as scheduled by the undersigned to whom the file was transferred in the interim.

At the hearing, Petitioner introduced the testimony of Anita Bock, Deputy District Administrator for HRS District 11; Carmen D. Frick, District 11 legal counsel; Steven Gertel, Assistant Staff Director for Facilities Services at Department headquarters in Tallahassee; Ruel B. Atkinson, III, HRS District Manager for Administrative Services, District 11; Philip A. Davis, District 11 General Services Manager and formerly Facilities Service Manager; Elizabeth Werner, Josephine Swiman and John M. Fanatico, evaluation committee members; and James C. Hicks, Jr., property manager for Adlee at its South Dixie Highway property. Petitioner also introduced Petitioner's Exhibits 1 through 4 and 7 through 10. Petitioner's Exhibits 5 and 6 for Identification were not admitted.

Respondent also called Mr. Davis as its witness and presented the testimony of H. James Towey, District 11 Administrator. It also introduced Respondent's Exhibit A. Intervenor introduced the testimony of Warren Bryer, Chief Financial Officer of Anthony Abraham Enterprises. Abraham offered its Exhibit A for Identification.

A transcript was provided. All parties submitted Proposed Findings of Fact which were ruled upon in the Appendix to this Recommended Order.

FINDINGS OF FACT

1. The parties agreed that on April 7, 1991, the Department issued an Invitation to Bid entitled, "Invitation To Bid For Existing Facilities State Of Florida Lease Number 590:2286, Dade County" This procurement was for the provision of 30,086 net rentable square feet to be used for office space in Dade County. A 3% variance was permitted. The facility was to house the District's Aging and Adult Services office which has been a tenant in Petitioner's building for several years and remained there during the pendancy of this protest process. According to the published advertisement, a pre-proposal conference was to be held on April 22, 1991, with all bids due by the bid opening to be held at 10:00 AM on May 30, 1991. The pre-bid conference was conducted by Philip A. Davis, then the District's facilities service manager and included not only a written agenda but also a review of the evaluation process by which each responsive bid would be examined. Petitioner asserts that the potential bidders were told, at that conference, that annual rental increases for the ten year lease period could not exceed five per cent (5%) and claims that Abraham's bid exceeded those guidelines. Thorough examination of the documentary evidence presented and the transcript of the proceedings, including a search for the reference thereto in Petitioner's counsel's Proposed Findings of Fact, fails to reveal any support for that assertion as to an increase limitation.

   
   

2. The ITB for this procurement, in the section related to the evaluation of bids, indicated that pursuant to the provisions of Sections 5-3 and 5-11 of

   HRSM 70-1, dealing with the procurement of leased space, the responsive bids would be reviewed by an evaluation committee which would visit each proposed facility and apply the evaluation criteria to it in order to determine the lowest and best bidder. The evaluation criteria award factors listed in the ITB defined a successful bid as that one determined to be the lowest and best.

   
   

3. That listing of evaluation criteria outlined among its categories associated fiscal costs, location, and facility. As to the first, the committee was to look at rental rates for both the basic term of the lease and the optional renewal period. The rates were to be evaluated using present value methodology applying the present value discount rate of 8.08% and rates proposed were to be within projected budgeting restraints of the Department. The total weight for the rental rate category was to be no more than 40 points with 35 points being the maximum for the basic term and 5 points for the option.

   
   

4. Evaluation of the location was to be based on the effect of environmental factors including the physical characteristics of the building and the area surrounding it on the efficient and economical conduct of the operations planned therefor. This included the proximity of the facility to a preferred area such as a co-location, a courthouse, or main traffic areas. This item carried a maximum weight of 10 points. Also included in location were the frequency and availability of public transportation, (5 points); the proximity of the facility to the clients to be served, (5 points); the aesthetics of not only the building but the surrounding neighborhood, (10 points); and security issues, (10 points).

   
   

5. The third major factor for evaluation was the facility itself and here the committee was to examine the susceptibility of the offered space to efficient layout and good utilization, (15 points), and the susceptibility of the building, parking area and property as a whole to possible future expansion, (5 points). In that regard, the Bid Submittal Form attached to the ITB called for the successful bidder whose property did not have appropriate zoning at the time of award to promptly seek zoning appropriate to the use classification of the property so that it might be used for the purposes contemplated by the department within 30 days. In the event that could not be done, the award could be rescinded by the department without liability.

   
   

6. The committee could award up to 100 points. The basic philosophy of this procurement was found in paragraph 1 of the Bid Award section of the ITB which provided:

   
   

   The department agrees to enter into a lease agreement based on submission and acceptance of the bid in the best interest of the department and the state.

   
   

7. After the bid opening, three of the four bids received, excluding Petitioner's which was initially determined to be non-responsive, were evaluated by the Department's bid evaluation committee according to the above point system which allowed no discretion or deviation from the formula in comparing rental rates between bidders. Once Petitioner's bid was thereafter determined to be responsive, it, too was evaluated by the committee. At this second evaluation session, relating to Adlee's bid only, the committee scored the bid and added its scores to the original score sheets upon which the other three bidders' scores had been placed.

8. Abraham had the lowest rental rates for the basic term of the lease and received the maximum award of 35 points for that category while Adlee received

   1. points. Abraham received an additional 2.29 points for the optional period rates while Adlee got 0. In the other categories, "location" and "facility", which comprised 60% of the points, Adlee's facility was routinely rated superior to Abraham's except for the area related to susceptibility for future expansion in which Abraham was rated higher by a small amount. Overall, however, Adlee was awarded 620.41 points and Abraham 571.03 points and as a result, Adlee was rated by the committee to be the lowest and best bidder. RCL, another bidder, was rated second, with Abraham third and DCIC fourth. Thereafter, the committee chairman, Mr. VanWerne, forwarded the new (and complete) evaluation results to the District Administrator on June 14, 1991 by an addendum dated June 27, 1991 which recommended award of the bid to Petitioner, Adlee Developers.

      
      

9. No award was made at the time. Several factors not pertinent to the issues here caused that delay. Among the major of these was pending legislation which would have transferred the operation needing this space to another agency. This transfer was never consummated, however. On or before March 20, 1992, the new District Administrator, Mr. Towey, who had been appointed to his office in December, 1991, and who was made aware that this procurement had not been finalized, requested all available material on it so that he could study it and make his decision based on his own review of the submission. As a part of his determination process, he visited and inspected both the Adlee and the Abraham sites.

   
   

10. One of the factors he considered was what appeared to be the significant monetary discrepancy between the two pertinent bids. Initial calculations indicated that Abraham's bid was approximately $835,000.00 lower than Adlee's over the ten year basic term of the lease. This amount was subsequently determined to be somewhat lower but the discrepancy is still significant. Nonetheless, because of that difference, Mr. Towey called a meeting with the members of the evaluation committee which had evaluated the bidders and had recommended Adlee. His stated reason for calling that meeting was to allow him to hear their reasons for rating the submissions as they had done and to take that information into consideration when he made his final decision. None of the committee members who testified at the hearing at Petitioner's behest indicated any feelings of pressure or intimidation by Mr. Towey.

    
    

11. During his meeting with the committee members, Mr. Towey went over several of the evaluation criteria award factors to determine the committee's rationale. Of major importance was the issue of cost, of the availability of the facility to transportation to and from the building, employee security and the ability to control access to the facility, and the availability of on-site parking without cost to both employees and clients. It appears the Adlee facility is a multistory building with some parking available on site and would be easier to control. In addition, it is closer to public transportation access points. There is, however, some indication that on-site parking for clients would not be free and the closest free parking is some distance away. According to Adlee's representative, this matter would not be a problem, however, as adequate, free on site parking, which apparently was not initially identified as a problem, could be provided in any new lease.

    
    

12. The Abraham facility is a one story building surrounded by on-site parking. In that regard, however, at hearing, Petitioner raised the claim that the Abraham site did not, in actuality, provide adequate parking because the

    zoning requirements of the City of South Miami, the municipality in which the facility is located, did not permit the required number of parking spaces to accommodate the prospective need. Petitioner sought and received permission to depose the Building and Zoning Director for the city, Sonia Lama, who ultimately indicated that the Abraham site was grandfathered in under the old zoning rule and, thereby, had adequate parking available. In any case, had this not been true, under the terms of the ITB, any zoning deficiencies could have been corrected after award, or the award rescinded without penalty to the Department.

    
    

13. After the meeting with the committee, Mr. Towey indicated he would probably go against the committee's recommendation. One of his reasons for doing so, as he indicated to them, was the appearance certain amenities in the facility would give. In the period between the time the committee met and Mr. Towey was ready to decide, there were several newspaper articles published in the Miami area which were negative in their approach to Department leasing policies and this publicity had an effect on him. In his response to a reporter's question, in fact, Mr. Towey indicated he would not permit the lease of any property which contained such amenities while he was District Director.

    
    

14. There is some evidence that the wet bar referred to here was a sink and counter used by agency employees to make coffee. However, before making his decision, Mr. Towey also met with Herbert Adler of Adlee. Mr. Towey advised him he was concerned about the fact that the Adlee property provided a wet bar, a private bathroom and some other amenities in that suite of offices occupied by the Department. Mr. Towey was adamant in his public and private pronouncements on the subject that there would be no such amenities in HRS offices in his District while he was in charge. At the meeting in issue, Mr. Adler made it very clear he was willing to remove all the offending amenities to bring the space into conformity with Mr. Towey's standards. Mr. Towey obviously took Adler at his word as he did not consider this matter to be an issue when he evaluated the bids.

    
    

15. Based on his independent evaluation of the proposals, and considering all the pertinent factors, Mr. Towey decided not to concur with the committee's recommendation and instead recommended to the Department's Office of General Services that the bid be awarded to Abraham. Because his recommendation differed from that of the evaluation committee, under the provisions of Section 5-13, HRS Manual 70-1, he was required to forward additional justification for his position. In his forwarding memorandum dated March 20, 1992 to Mr. King Davis of the Department's Office of General Services, Mr. Towey listed as his reasons for disagreement with the committee's recommendation, (1) the lower term cost of Abraham's bid, (2) his opinion that the one story floor plan of Abraham was more convenient and accessible to clients, and (3) the provision for ample free parking at the Abraham site as opposed to the limited parking at the Adlee building. Petitioner claims that Mr. Towey's justification for disagreement was improper because, (a) the rental difference he cited was not based on the ITB formula and did not consider the difference in square footage offered; (b) the rental rate comparison compared a proposed lease with an existing lease, not with a proposal; and (c) the reference to on-site parking referred to the situation under the existing lease with Adlee and not to what could occur under a new lease.

    
    

16. The major factor in Mr. Towey's decision was the price differential between the two offerings. While the difference may not have been as great as presented initially by the department staff, even taken in its most conservative light of about half that amount, and considering the appropriate figures, the difference was still considerable and significant. In the continuing period of

    budgetary austerity under which state operations have been and must continue to be conducted, the financial consideration loomed large in his thinking. As for the parking situation, no change for the better was provided for in Adlee's proposal and even if it were, it was but one of several factors.

    
    

17. When Mr. Towey's March 20, 1992 memorandum in justification of his disagreement was evaluated at the Office of General services, it was determined that his decision was rational and objectively justified. Thereafter, by letter dated April 2, 1992, the Office of General Services authorized District 11 to award the lease to Abraham and this decision was transmitted to all responsive bidders by letter dated April 7, 1992. It was this action which prompted Petitioner's protest.

    
    

    CONCLUSIONS OF LAW

    
    

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

    
    

19. Section 120.53, Florida Statutes, provides that any person who is affected adversely by an agency decision on a bid solicitation may file a protest of that decision. If the protest cannot be resolved by mutual agreement within 7 days from the receipt of a formal written protest, the agency must forward the protest to the Division of Administrative Hearings for a formal hearing under Section 120.57(1), Florida Statutes. This was done here.

    
    

20. The burden of proof in a case such as this rests upon the unsuccessful bidder who seeks to establish that it is entitled to the award. Department of Transportation v. J.W.C. Co., Inc., 396 So.2d 778, (Fla. 1DCA 1981). As the unsuccessful bidder protesting this award, Adlee has the burden to establish, by a preponderance of the evidence, that the award of this bid in issue to Anthony Abraham Enterprises was not the result of an honest exercise of discretion, but rather the result of fraud, illegality, oppression or misconduct. Liberty County v. Baxter's Asphalt and Concrete, 421 So.2d 505, 507 (Fla. 1982).

    
    

21. An agency has wide discretion in soliciting and accepting competitive bids, Department of Transportation v. Groves-Watkins Constructors, 530 So.2d 912 (Fla. 1988), and the Florida courts have long recognized an unsuccessful bidder's heavy burden in seeking to overturn the bid award decision of a public body. Such a decision, if based on an honest exercise of discretion will not be overturned by a court even if it may appear erroneous and even if reasonable persons may disagree. Liberty County, supra, 421 So.2d at 507. In applying this standard, the court has severely limited the scope of an inquiry into an agency's award decision and has determined the Hearing Officer's sole responsibility is to ascertain whether the agency acted fraudulently, arbitrarily, illegally or dishonestly. Groves-Watkins, supra, 530 So.2d at 914.

    
    

22. The courts have long recognized the need for integrity in the procurement process utilized by governmental agencies. As seen in Harry Pepper & Associates, Inc. v. City of Cape Coral, 352 So.2d 1190 (Fla. 2DCA 1977), the competitive bidding process was developed for use:

    
    

    ... to 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.

    
    

23. As was also held in Hotel China & Glassware Co. v. Board of Public Instruction of Alachua County, 130 So.2d 78 (Fla. 1DCA 1961):

    
    

    The system confers upon both the contractor and the public authority reciprocal benefits, and exacts from each of them, reciprocal obligations. The bidder is assured fair consideration of his offer, and is guaranteed the contract if his is the lowest and best bid received. ... Under this system, the public authority may not arbitrarily or capriciously discriminate between bidders, or make the award on the basis of personal preference.

    
    

24. Under these guidelines, it can easily be seen that an agency's action will be reversed if it subverts the purpose of competitive bidding or if the agency acted arbitrarily. An agency issuing an ITB must evaluate the bids received thereunder solely on the criteria stated in the ITB. Aurora Pump, Division of General Cigna Corporation v. Gould Pumps, inc., 424 So.2d 70 (Fla. 1DCA 1982). Consistent therewith, as late as February, 1990, the Division of Administrative Hearings recognized the propriety of the use of weighted bid evaluation criteria as something upon which bidders can rely, and if an agency rejects a bid for reasons not given weight in the bid evaluation criteria, that action would go to the integrity of the competitive bidding process and would be arbitrary and capricious. Courtenay v. Department of Health and Rehabilitative Services, DOAH Case No. 89-4317 BID, February 12, 1990, 12 FALR 2226. Notwithstanding, if the appropriate criteria have been applied and utilized, a Hearing Officer need not second guess the agency to determine whether he and/or other reasonable and well-informed persons might have reached a different result. Scientific Games, Inc. v. Dittler Brothers, Inc., 586 So.2d 1128 (Fla. 1DCA 1991).

    
    

25. Here, Petitioner claims that Abraham's bid was not responsive because it allegedly deviated from the purported oral instruction supposedly given at the pre-bid conference to the effect that rental rate increases were not to exceed 5% per year, and Abraham's did. Petitioner has, however, failed to produce any credible evidence to demonstrate that such an instruction was given. Mr. Davis, the alleged utterer, denies it and no other evidence to show that the instruction was given, either documentary or through testimony, was presented. That contention is, therefore, without merit.

    
    

26. Petitioner claims that Abraham's offered facility does not meet the bid criteria because of alleged zoning problems at the site which supposedly make it impossible for Abraham to provide the required number of parking spaces. At the hearing, counsel for the Department and Abraham both pointed out that the terms of the ITB clearly indicate that if, at the time of award, there were

    zoning problems, the successful bidder would have 30 days in which to correct them. In the event correction efforts were unsuccessful, an alternate avenue was open to the Department which permitted it to rescind the award without penalty. Nonetheless, Petitioner's counsel insisted she had information which led her to believe that the Building and Zoning Director of the City of South Miami would testify that proper zoning was unavailable, and pursuant to her request, leave was granted to take a post-hearing deposition of the zoning official for subsequent submission to the Hearing Officer. When the deposition was filed with the Division and read, it became abundantly clear that there was no major impediment to Abraham's providing the required parking spaces and thereafter, counsel for the Department and for Abraham moved for the imposition of sanctions against the Petitioner. Movants' request would appear to be well founded but they failed to present any evidence along with their motion upon which the Hearing Officer could base or adjudicate any sanctions and it is denied. Nonetheless, the claim of unresponsiveness relating to parking and zoning is clearly without merit as well.

    
    

27. The evidence shows that the award of this lease was held up as a result of some question as to whether the Division to use the leased property would remain a part of the Department or be moved to some other agency. In that hiatus between the completion of the evaluation and the resolution of that issue, a new District Director was appointed who, based on a barrage of negative publicity regarding his District's prior leasing practices, determined to re- study this procurement to insure that not only was the award to be made to the lowest and best bidder, but also that it be made consistent with proper and appropriate leasing practices.

    
    

28. In furtherance of those aims, he reevaluated the submissions of all bidders and personally visited the two sites in issue here. He also talked with Mr. Adler and apparently accepted Adler's representations that all offending amenities in the Adlee property would be removed. That factor, however, was not the basis for his decision. After calling a meeting with the members of the original evaluation committee to have them explain to him their rationale for the point awards they made, and without any effort to cause a change in their position, upon consideration of all factors, weighted as he deemed appropriate, he recommended selection of Abraham's offer, contra to the prior recommendation of the evaluation committee. It is clear that his decision was based upon those factors included within the evaluation criteria - price, location, and the facility, with price being the paramount consideration. Petitioner has failed to present a preponderance of evidence that that decision was arbitrary or capricious, fraudulent or illegal, or the result of any dishonesty on the part of Mr. Towey or any other Department official. Petitioner cannot establish, by allegation, what it cannot show by evidence to the required standard.

RECOMMENDATION

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

RECOMMENDED that a Final Order be entered dismissing the protest by Adlee Developers, Inc., of the award of procurement No. 590:2286 to Anthony Abraham Enterprises.

RECOMMENDED this 10th day of July, 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 July, 1992.

APPENDIX TO RECOMMENDED ORDER IN CASE NO. 92-2798

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. - 4. Accepted and incorporated herein.

1. Accepted.

2. Accepted that the pre-bid conference was held but reject the finding that a 5% limit was mentioned.

3. Accepted and incorporated herein.

4. Accepted.

5. Accepted and incorporated herein.

6. & 11. Accepted and incorporated herein.

12. - 14. Accepted and incorporated herein.

15. - 19. Accepted and incorporated herein.

1. Accepted and incorporated herein.

2. Accepted.

3. Accepted except for the next to last sentence which is rejected.

4. Accepted.

5. Accepted and incorporated herein.

6. Accepted but not probative of any material issue.

7. Accepted and incorporated herein.

8. Accepted.

9. Accepted and incorporated herein.

10. & 30. Rejected.

1. - 33. Accepted and incorporated herein.

   
   

   FOR THE RESPONDENT AND INTERVENOR:

   1. & 2. Accepted and incorporated herein.

3. - 5. Accepted.

1. Accepted and incorporated herein.

2. Accepted and incorporated herein.

3. Accepted and incorporated herein.

4. - 16. Accepted and incorporated herein.

17. - 19. Accepted and incorporated herein.

20. & 21. Accepted and incorporated herein.

1. Accepted and incorporated herein.

2. - 25. Accepted.

COPIES FURNISHED:

Melinda S. Gentile, Esquire Ruden, Barnett, McClosky, Smith,

Schuster & Russell

200 East Broward Blvd.

P.O. Box 1900

Fort Lauderdale, Florida 33302

Paul J. Martin, Esquire Department of Legal Affairs The Capitol - Suite 1501

Tallahassee, Florida 32399-1050

Peter W. Homer, Esquire Greer, Homer & Bonner, P.A. 3400 International Place

100 S.E. 2nd Street Miami, Florida 33131

John Slye General Counsel

Department of Health and Rehabilitative Services

1323 Winewood Blvd.

Tallahassee, Florida 32399-0700

Sam Power Agency Clerk DHRS

1323 Winewood Blvd.

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 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: 92-002798BID

Orders for Case No: 92-002798BID