STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

CARLTON & CARLTON, P.A., )

)

Petitioner, )

)

vs. ) CASE NO. 92-4937BID

) DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, )

)

Respondent. )

) CARLTON & CARLTON, P.A., )

)

Petitioner, )

)

vs. ) CASE NO. 92-4938BID

) DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, )

)

Respondent. )

) CECELIA M. REDMAN & )

ASSOCIATES, P.A., )

)

Petitioner, )

)

vs. ) CASE NO. 92-4939BID

) DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, )

)

Respondent. )

) Law Offices of )

DONALD W. BELVEAL, CHARTERED, )

)

Petitioner, )

)

vs. ) CASE NO. 92-5015BID

) DEPARTMENT OF HEALTH AND ) REHABILITATIVE SERVICES, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Veronica E. Donnelly, held a formal hearing in the above-styled cause on October 8 - 9 and November 2, 1992, in Tampa, Florida.

APPEARANCES

For Petitioners Charles L. Carlton, Esquire Carlton & Carlton, P.A.: 2120 Lakeland Hills Blvd.

Lakeland, Florida 33805

For Petitioner Cecelia M. Redman, Esquire Cecelia M. Redman 2124 West Kennedy Boulevard & Associates, P.A.: Suite B

Tampa, Florida 33606

For Petitioner Donald W. Belveal, Esquire

Law offices of 100 West Kennedy Boulevard

Donald W. Belveal, Suite 600

Chartered: Tampa, Florida 33602

For Respondent Jack Emory Farley, Esquire HRS: 4000 W. M.L. King, Jr. Blvd.

Tampa, Florida 33614

John Davis, Esquire 1170 NE Capital Circle

Tallahassee, Florida 32308 STATEMENT OF THE ISSUES

Whether the specifications allowed for competitive responses on comparable services from various vendors for the legal services sought by the Department of Health and Rehabilitative Services.

PRELIMINARY STATEMENT

On August 3, 1992, the Department of Health and Rehabilitative Services (the Department) issued a Solicitation of Offers for Legal Service Contract(s) for the Child Support Enforcement Program. As part of the solicitation, anyone who believed that his or her substantial interest was affected by the procedures outlined in the solicitation or by the contents or requirements of the package was given 72 hours to file a written protest. All of the Petitioners in the respective consolidated case timely filed their protests regarding the procedures, contents and requirements of the solicitation as they related to the Child Support Enforcement Program, as administered in District VI. Petitioner, Carlton & Carlton, P.A., (Carlton) challenged the Solicitation of Offers for Legal Service Contracts in Polk, Hardee and Highland Counties in Case Nos. 92- 4937BID - 92-4938BID. Petitioner, Cecelia M. Redman & Associates, P.A., (Redman) challenged the solicitations for Hillsborough County Intrastate and Hillsborough County Interstate in Case No. 92-4939BID. Petitioner, Donald W. Belveal, (Belveal) also challenged the solicitations as they related to contracts in Hillsborough County.

Once the Department was able to determine that a material dispute of fact existed between the parties, the formal written protests were referred to the

Division of Administrative Hearings for a formal hearing. Once the protests were reviewed at the Division, the cases were consolidated and were scheduled for final hearing.

During the hearing, the Department presented three witnesses and filed fourteen exhibits. HRS Exhibit No. 9 was later withdrawn by the Department. Petitioners called five additional witnesses and filed the following exhibits: Carlton No. 1 - No. 4, Redman No. 1 - No. 10 and Belveal No. 1 - No. 18. All of the exhibits offered by all of the parties were admitted into evidence.

Although a transcript was ordered by the Department for the first two days of hearing, a transcript was not filed with the Division of Administrative Hearings. All of the Petitioners timely filed proposed finding of fact. The Department chose to file a written legal argument, which was considered by the Hearing Officer. Rulings on the proposed findings of fact are in the Appendix to the Recommended Order.

FINDINGS OF FACT

1. Background

   
   

   1. The procurement of private legal services by the Department for child support enforcement is exempt from the competitive bidding requirements set forth in Chapter 287, Florida Statutes.

      
      

   2. In July 1992, the Department published notice that it was soliciting proposals from interested attorneys to provide intrastate and interstate child support legal services in HRS District VI, including Hillsborough, Hardee, Highlands, and Polk Counties. These services were to be provided from October 1, 1992, through June 30, 1993. Separate proposals were solicited for each of the following: the Hillsborough County Interstate Contract, the Hillsborough Intrastate Contract, the Polk County Contract, and the contract for Hardee and Highland Counties.

      
      

   3. The solicitation package does not incorporate any of the Florida Statutes or the agency's own rules regarding solicitation and award procedures in competitive bidding situations. Instead, the solicitation purports to be a self contained package of reasonably definite specifications with its own evaluation criteria and award procedures.

      
      

   4. The Petitioners in all four of the consolidated cases timely filed written protests which challenge the contents and requirements of the package.

      
      

2. Evaluation Criteria

   
   

   1. In addition to the evaluation criteria contained in the solicitation package, the Department adopted and distributed to its employees additional criteria to be used in evaluating the proposals submitted.

      
      

   2. The additional criteria are set forth in the following documents which were entered into evidence as Belveal Exhibit No. 7: Work Sheet for Evaluating Criteria and Determining Relative Value to be Applied to Technical Information, Evaluation Criteria, Scoring Matrix for Structured Interview of Offerers, Work sheet for Scoring Oral Interview, and Questions for Use at Interview.

   3. The additional criteria set forth in these documents were intended for use to award points in the evaluation of offers, and to make the award of the contracts. They were not revealed to potential offerers.

      
      

   4. Such a procedure affords opportunities for favoritism, whether or not any favoritism is actually practiced by the Department.

      
      

   5. Once the representation is made in a solicitation package that it contains the evaluation criteria, the offerers should not be subjected to an additional evaluation process.

      
      

   6. Anne Donovan, Assistant Secretary of the Department of Health and Rehabilitative Services, admitted during hearing that the additional criteria which was not included in the solicitation package are intentionally biased to give existing legal services contractors an advantage in obtaining renewal of their contracts. This is contrary to the representation made in the solicitation package which states, "Through this solicitation for offers to provide legal services, the department seeks to obtain the highest possible standard of legal representation... while ensuring free and open competition among prospective offerers."

      
      

3. Specifications

1. The proposed contract to be executed at the conclusion of the bid solicitation and contract award process was to provide for compensation to the contractor based on (a) the number of cases referred to the contractor during the contract term, and (b) the number of final orders obtained by the contractor in these cases referred for action.

   
   

2. The solicitation package contains a document identified as Attachment VI, which sets fort numbers purporting to be the Department's estimates of the number and type of cases which would be referred to the successful bidder during the course of each of the contracts, the number of payable orders to be expected, and the maximum fees which would be paid for each type of order obtained pursuant to the contract. Separate estimates have been given for the following contracts: Hillsborough County Intrastate, Hillsborough County Interstate, Polk County, and Hardee and Highlands Counties.

   
   

3. The actual numbers set forth in each of the four separate contract proposals were estimates made by the field office staff of the Department and compiled by the headquarters office.

   
   

4. Rosemary O'Neil, the contract manager in District VI, estimated the number of functions for each of the four contracts in District VI. In identifying the direct cost amount for each individual contract, she used automated and manual statistics or the tracking of functional activities for the past year.

   
   

5. During the preparation of her projections, Ms. O'Neil tracked only nine activities, as originally required by the Department. Later, she was required to break these down into twenty-two functions, which may have adversely affected the estimates. Ms. O'Neil and other Department personnel testified that the estimates for District VI might be too low based upon past estimates and current needs. Ms. O'Neil completed the estimates in good faith and in accordance with the Department's stated requirements.

6. Attachment VI also contains a fee schedule based upon a functional cost survey devised and carried out by the Department between April 15, 1991 and March 31, 1992.

   
   

7. The survey randomly selected 3,800 cases throughout the state for tracking to determine the average cost the Department paid over the stated time period for each legal activity represented in the survey.

   
   

8. During the survey, only 2,100 of these cases were actually tracked.

   
   

9. In October 1992, the functional cost survey was changed to include 22 instead of 10 categories of legal service activity.

   
   

10. The implementation of the survey was faulty in that different districts tracked attorney time and paralegal time in different ways. In addition, the administrative procedures utilized by judges and hearing officers in different districts directly affected statistics in ways which were not contemplated in the survey. Without uniform procedures, the legal services performed and attorney fees charged in different counties cannot be effectively reviewed on a comparable basis to create a true average cost per function.

    
    

11. Many of the fees allocated to different functions in the specifications were illogical. For example:

    
    

    1. Fees paid for stipulated matters were, in many cases, higher than the fees paid for contested matters of the same type.

    2. Fees paid for simple matters, such as contempt hearings, were substantially the same as fees paid for more complex litigation involving the establishment of paternity and support.

    3. Certain orders obtained by the attorney, such as bankruptcy matters, required the expenditure

       of time by the contractor, but did not pay any fee.

       
       

12. The functional cost survey used to establish the terms in the solicitations for estimated number of cases, types of cases and the maximum fees to be paid is defective as it relates to District VI. Proposals cannot be comparatively reviewed because the data upon which the proposals are created is inaccurate. After the contract award, it is reasonably anticipated that the Department would be required to make modifications to the contract which would afford opportunities for favoritism.

    
    

    CONCLUSIONS OF LAW

    
    

13. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter addressed pursuant to Section 120.57(1), Florida Statutes.

    
    

14. The procurement of legal service contracts for the Child Support Enforcement Program is governed by the solicitation package as these contracts are specifically exempted from the competitive bidding requirements set forth in Chapter 287, Section 287.059(3)(a), Florida Statutes.

15. In Paragraph II, "Statement of Need", the Solicitation of Offers for Legal Service Contract(s) Child Support Enforcement Program provides as follows, in pertinent part:

    
    

    Through this solicitation for offers to provide legal services, the department seeks to obtain

    the highest possible standard of legal representa- tion at the lowest possible cost while ensuring

    free and open competition among prospective offerers.

    
    

16. Once the Department chose to use a competitive bidding system to determine how the legal service contracts would be awarded, the benefits and obligations established by Florida case law applied to the solicitation. In Hotel China and Glassware Co. v. Board of Public Instruction of Alachua County,

    130 So. 2d 78 (Fla. 1st DCA 1961), the First District Court of Appeal explained the benefits and obligations in the use of the competitive bidding system in Florida as follows:

    
    

    ... The system confers upon both the contractor and the public authority reciprocal benefits, and exacts from each of their 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. The principal benefit flowing to the

    public authority is the opportunity of purchasing the goods and services required by it at the best price obtainable. Under this system, the public authority may not arbitrarily or capriciously discriminate against bidders, or make the award on the basis of personal preference.

    
    

17. In a challenge to the solicitation, the burden is on the protestants to establish that the Department acted in an arbitrary manner. Department of Transportation v. JWC Company, Inc., 396 So. 2d 778 (Fla. 1st DCA 1981). During the hearing, Petitioners were able to prove by clear and convincing evidence that the unannounced solicitation evaluation criteria, the projected case counts for District VI, and the fees allocated to many of functions in the specifications undermined the integrity of the solicitation.

    
    

18. The unannounced evaluation process is an impropriety that causes the Department's reliance on any resulting award to be an arbitrary action under the standards announced in Department of Transportation v. Groves-Watkins Constructors, 530 So. 2d 912 (Fla. 1988). As stated in the findings of fact, this occurs because the unannounced review criteria was biased towards existing legal service contractors. The criteria was designed to give existing contractors an advantage in obtaining renewal of their contracts, contrary to the representation in the solicitation package that the Department was seeking competitive bids which could be comparatively reviewed.

    
    

19. The projected case counts for District VI in the solicitation and many of the fee allocations were not established by reasonable means. The results are illogical and contradict the historical data and trends established within the district. As a result, these provisions are also arbitrary under the

    Groves- Watkins standard. Due to the unreliability of these specifications, it is reasonably anticipated that exceptions, modifications, and releases will have to be made in the four contracts after they are awarded. Subsequent

    modifications make it impossible to complete a comparative review of the offers submitted to the Department.

    
    

20. In Webster v. Belote, 136 So. 721 (Fla. 1931), the Supreme Court of Florida ruled:

    
    

    [I]t is the duty of public officers charged with the responsibility of letting contracts under the statute to adopt, in advance of calling for bids, reasonably definite plans for specifications, as a basis on which bids may be received. Such officers, in view of such requirement, are without power to reserve in the plans or specifications so prepared in advance of the letting the power to make exceptions, releases, and modifications in the contract after it is let, which will afford opportunities for favoritism, whether any favoritism is actually practiced or not.

    Neither can they include other reservations which by their necessary effect will render it impossible to make an exact comparison of the bids. [emphasis supplied]

    
    

21. The evidence adduced at hearing shows that the award of the contracts under the criteria in the current solicitation package would be contrary to the public policy of competitive bidding and the stated contractual intent to promote competition in the procurement process. Accordingly, the solicitation package should be revised to support the representation that the Department seeks free and open competition among prospective offerers if the Department wishes to continue with a competitive bidding process.

    
    

22. In their Proposed Recommended Orders, the Petitioners contend that the agency was required to use the rule making procedure in its establishment of the evaluation criteria and the change in Department policy regarding the application of competitive bidding to the legal service contracts in the Child Support Enforcement Program.

    
    

23. According to Section 120.535(2)(a), any person substantially affected by an agency statement is required to file a petition for an administrative determination of an agency statement with the Division of Administrative Hearings. This procedure was not followed in this case, nor was the issue addressed at the prehearing conference or the final hearing. As proper notice and the opportunity to respond to Petitioners allegations were not given to the Department, this matter was not addressed in the Recommended Order.

    
    

24. There is no statutory basis for an award of attorney fees to Petitioners' at this stage of the proceedings. If Petitioners are ultimately found to be the "prevailing parties" as defined in Section 57.111, Florida Statues, appropriate action may be taken within the time frame set forth by law.

RECOMMENDATION

Based upon the foregoing, it is RECOMMENDED:

1. The previously undisclosed evaluation criteria should be included in the solicitation package if the Department intends to use them in the evaluation process.

   
   

2. The current specifications on the projected number of cases to be referred in each contract in District VI should be revised to more reasonably and accurately reflect potential referrals within the District.

   
   

3. The designated attorney fee for each function should be revised so that the charges are reasonably related to the work expected by the specifications in the proposal.

   
   

4. The contents of the functional cost survey should be reevaluated based upon the evidence presented during the protest proceedings.

   
   

5. The current specifications should be rejected as they are so flawed as to be arbitrary, in violation of state standards regarding the competitive bidding process.

DONE and ENTERED this 22nd day of December, 1992.

VERONICAL E. DONNELLY

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 22nd day of December, 1992.

APPENDIX

Petitioner Carlton's proposed findings of fact are addressed as follows:

1. Accepted.

2. Accepted. See HO No. 1.

3. Accepted.

4. Accepted.

5. Accepted.

6. Accepted.

7. Accepted.

8. Accepted.

9. Accepted.

10. Accepted.

11. Accepted.

12. Accepted. See HO No. 5

13. Accepted. See HO No. 7

14. Accepted.

15. Accepted.

16. Accepted.

17. Accepted.

18. Accepted.

19. Accepted.

20. Accepted.

21. Accepted.

22. Rejected. Irrelevant.

23. Rejected. Irrelevant.

24. Accepted. See HO No. 16.

25. Accepted. See HO No. 19.

26. Accepted. See HO No. 17.

27. Accepted. See HO No. 18.

28. Accepted.

29. Accepted.

30. Accepted.

31. Accepted.

32. Accepted.

33. Accepted.

34. Accepted.

35. Accepted.

36. Accepted.

37. Accepted.

38. Accepted. See HO No. 20 - No. 21.

39. Accepted.

40. Accepted.

41. Accepted.

42. Accepted.

43. Accepted.

44. Accepted.

45. Accepted.

46. Rejected. Contrary to fact. See HO No. 21.

47. Accepted. See HO No. 21.

48. Accepted.

49. Accepted. See HO No. 12.

50. Accepted. See HO No. 12.

51. Accepted. See HO No. 15.

52. Accepted.

53. Accepted.

54. Accepted.

55. Accepted.

56. Accepted.

57. Accepted.

58. Accepted.

59. Accepted.

60. Accepted.

61. Accepted.

62. Accepted.

63. Accepted.

64. Rejected. Contrary to fact. See HO No. 22.

65. Accepted.

66. Accepted.

67. Accepted.

68. Accepted.

69. - 81. Rejected. Without jurisdiction to determine.

82. - 87. Rejected. Beyond the jurisdiction of the Hearing Officer under the Grove-Watkins review standards.

88. - 100. Rejected. Beyond the jurisdiction of the Hearing Officer.

Petitioner Redman's proposed findings of fact are addressed as follows:

1. Accepted.

2. Accepted. See HO No. 1.

3. Accepted.

4. Accepted.

5. Accepted.

6. Rejected. Contrary to fact. See HO No. 3.

7. Accepted.

8. Accepted.

9. Accepted.

10. Accepted. See HO No. 7.

11. Accepted.

12. Accepted. See HO No. 8 - No. 9.

13. Accepted. See HO No. 16.

14. Accepted.

15. Accepted.

16. Accepted.

17. Accepted.

18. Rejected. Irrelevant.

19. Rejected. Irrelevant.

20. Accepted.

21. Accepted. See HO No. 20 and No. 22.

22. Accepted.

23. Accepted. See HO No. 17.

24. Accepted. See HO No. 18.

25. Accepted. See HO No. 16.

26. Accepted.

27. Accepted.

28. Accepted.

29. Accepted. See HO No. 19.

30. Accepted.

31. Accepted.

32. Accepted.

33. Accepted.

34. Rejected. Irrelevant.

35. Accepted.

36. Accepted. See HO No. 20. The word "misleading" should be replaced by the "faulty".

37. Accepted.

38. Accepted.

39. Accepted.

40. Accepted.

41. Accepted.

42. Accepted.

43. Accepted.

44. Accepted.

45. Accepted.

46. Accepted.

47. Accepted.

48. Accepted. See HO No. 20 and No. 22.

49. Accepted.

50. Rejected. Speculative.

51. Accepted. See HO No. 21.

52. Accepted. See HO No. 21.

53. Accepted. See HO No. 21.

54. Accepted.

55. Accepted.

56. Accepted.

57. Accepted.

58. Accepted.

59. Accepted.

60. Accepted.

61. Accepted.

62. Accepted.

63. Accepted.

64. Accepted.

65. Accepted.

66. Accepted.

67. Accepted.

68. Accepted.

69. Accepted.

70. Accepted.

71. Accepted.

72. Accepted.

73. Accepted.

74. Accepted.

75. Accepted.

76. Accepted.

77. Accepted.

78. Accepted.

79. Accepted.

80. Accepted.

81. Accepted.

82. Accepted.

83. Accepted. See HO No. 22.

84. Accepted. See HO No. 21.

85. Accepted. See HO No. 21.

86. Accepted.

87. Accepted. See HO No. 21.

88. Accepted. See HO No. 21.

89. Accepted. See HO No. 21.

90. Rejected, except for the determination that the specifications are arbitrary. All other allegations were not proved at hearing.

91. Accepted. See HO No. 11.

92. Accepted. See HO No. 12.

93. Rejected. Contrary to fact. See HO No. 13.

94. Accepted. See HO No. 13.

95. Accepted.

96. Accepted.

97. Accepted.

98. Accepted.

99. Accepted. See HO No. 13.

100. Accepted. See HO No. 13.

101. Accepted.

102. Accepted.

103. - 105. Rejected. Beyond the hearing officer's jurisdiction.

1. Accepted.

2. Rejected. Contrary to findings, except the determination that the specifications were arbitrary and unreliable.

3. Rejected. Beyond subject matter jurisdiction.

4. Rejected. Competency not determined.

5. Accepted.

6. Accepted.

7. Accepted.

8. Accepted.

9. Accepted.

10. Accepted. See HO No. 20.

11. Rejected. Contrary to fact.

12. Accepted.

13. Rejected. Contrary to fact.

14. - 128. Rejected. Beyond subject matter jurisdiction.

Petitioner Belveal's proposed findings of fact are addressed as follows:

1. Accepted.

2. Accepted.

3. Accepted.

4. Accepted.

5. Accepted. See HO No. 1.

6. Accepted.

7. Accepted.

8. Accepted.

9. Accepted. See HO No. 2.

10. Accepted.

11. Accepted. See Preliminary Statement & HO No. 4.

12. Accepted. See HO No. 11.

13. Accepted. See HO No. 3.

14. Accepted.

15. Accepted. See HO No. 5.

16. Accepted. See HO No. 5 - No. 6.

17. Accepted. See HO No. 7.

18. Accepted. See HO No. 10.

19. Accepted. See HO No. 12.

20. Accepted.

21. Accepted.

22. Accepted.

23. Accepted.

24. Accepted.

25. Accepted.

26. Accepted.

27. Accepted. See HO No. 16.

28. Accepted.

29. Rejected. Irrelevant.

30. Accepted. See HO No. 21.

31. Accepted.

32. Accepted.

33. Accepted.

34. Accepted.

35. Accepted. See HO No. 21.

36. Accepted.

37. Accepted. See Preliminary Statement.

COPIES FURNISHED:

CHARLES L CARLTON ESQ 2120 LAKELAND HILLS BLVD LAKELAND FL 33805

CECELIA M REDMAN ESQ

2124 W KENNEDY BLVD - STE B TAMPA FL 33606

DONALD W BELVEAL ESQ

100 W KENNEDY BLVD - STE 600 TAMPA FL 33602

JACK EMORY FARLEY ESQ

HRS DISTRICT VI LEGAL OFFICE 4000 W DR MARTIN LUTHER

KING JR BLVD TAMPA FL 33614

JOHN DAVIS ESQ

1170 NE CAPITAL CIRCLE TALLAHASSEE FL 32308

JOHN SLYE ESQ GENERAL COUNSEL

DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES

1323 WINEWOOD BLVD

TALLAHASSEE FL 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 contact the agency that will issue the final order in this case concerning agency rules on the deadline for filing exceptions to this Recommended Order. Any exceptions to this Recommended Order should be filed with the agency that will issue the final order in this case.

Docket for Case No: 92-004937BID

Orders for Case No: 92-004937BID