STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

IN-REL ACQUISITIONS, INC., )

)

Petitioner, )

)

vs. )

)

DEPARTMENT OF CORRECTIONS, ) CASE NO. 93-3438BID

)

Respondent, )

and )

)

JANC, INC., )

)

Intervenor. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, Michael M. Parrish, conducted a formal hearing in this case at Tallahassee, Florida, on July 7, 1993. Appearances for the parties at the hearing were as follows:

APPEARANCES

For Petitioner: Michael S. Riley, Esquire

200 East Las Olas Boulevard, Suite 1400 Fort Lauderdale, Florida 33301

For Respondent: Steven S. Ferst, Esquire

Assistant General Counsel Department of Corrections 2601 Blair Stone Road

Tallahassee, Florida 32399-2500

For Intervenor: Joseph J. Villacci, Esquire

315 Northeast Third Avenue, Suite 200 Fort Lauderdale, Florida 33301

STATEMENT OF THE ISSUES

This is a bid challenge case in which the primary issue is whether the Petitioner's bid is responsive to the RFP.

PRELIMINARY STATEMENT

At the formal hearing on July 7, 1993, a total of four witnesses were called to testify. The parties also offered numerous exhibits. At the conclusion of the hearing, the parties were allowed 15 days from the filing of the transcript within which to file their proposed recommended orders.

The transcript was filed on July 21, 1993, and on August 5, 1993, all parties filed timely post-hearing submissions. The Petitioner filed a document titled Proposed Findings of Fact. The Respondent and the Intervenor each filed documents titled Proposed Findings of Fact and Conclusions of Law. All post- hearing submissions of all parties have been carefully considered during the preparation of this Recommended Order. All proposed findings of fact submitted by all parties are addressed in the Appendix hereto.

FINDINGS OF FACT

Some basic background facts

1. The Department issued Request for Proposals No. 700:0652, Office Space (the "RFP"). The RFP requested bidders to submit proposals to provide 7,750 square feet of office space (+/- 3 percent) in Broward County to be leased by the Department for a probation and parole office. Under the RFP terms the space had to be available by June 1, 1993. Proposals had to be filed with the Department by January 5, 1993. In-Rel Acquisitions, Inc., and Janc, Inc., submitted bids.

   
   

2. Pursuant to an evaluation of the bids conducted by the Department, In- Rel Acquisitions, Inc., was given a contingent award of the lease on March 31, 1993, as the vendor with the lowest price and the overall highest evaluation score. The contingent award letter of March 31, 1993, read as follows in pertinent part:

   
   

   It is the intent of the Department of Corrections to award the above referenced bid to In-Rel Acquisitions, Inc., as the vendor with the lowest bid price and the overall highest evaluation score.

   
   

   The award to In-Rel Acquisitions, Inc., is contingent upon: (a) obtaining the necessary zoning approval to operate a probation and parole office at the bid premises by May 6, 1993, and (b) the Department obtaining sufficient assurances from the Resolution Trust Corporation that the bid premises will not be taken over by the RTC and the Department's leasehold interest will not be affected.

   
   

3. On May 18, 1993, the Department issued a letter awarding the subject lease to Janc, Inc., because the Department was of the view that In-Rel Acquisitions, Inc., had not met the conditions of the contingent award of March 31, 1993. The award letter of May 18, 1993, read as follows, in pertinent part:

   
   

   This letter is to inform you that the Department of Corrections has determined that the award of the lease for the above referenced bid is hereby made to Janc, Inc.

   
   

   The bid from In-Rel Acquisitions, Inc. has been rejected because it has not met either

   of the conditions stipulated on the March 31st

   award letter, and the property has not been properly maintained under the existing lease agreement.

   
   

4. Both the contingent award letter of March 31, 1993, and the award letter of May 18, 1993, contained "boiler-plate" language advising the addressee of the basic details of the written protest process. In-Rel Acquisitions, Inc., filed a timely protest of the award to Janc, Inc.

   
   

   Facts about the zoning situation

   
   

5. The award of the lease to In-Rel Acquisitions, Inc., was made contingent because the property was not properly zoned to support a probation and parole office for the Department.

   
   

6. At the time of soliciting bids on the subject project, the Department was currently leasing the space proposed by In-Rel Acquisitions, Inc., and had done so for almost five years.

   
   

7. Shortly after the deadline for the submission of bids, the Department was notified that it was in violation of the Plantation City Code because the office was not properly zoned, and the Department was subject to fines if it did not obtain proper zoning or leave the premises by June 1. The fine was at the rate of $200.00 per day.

   
   

8. In-Rel Acquisitions, Inc., did not obtain necessary zoning approval by May 6, 1993. First, the zoning approval passed by the City of Plantation limited the hours of operation of the probation office. As approved by the City of Plantation, the Department can only operate its probation office Monday through Friday from 8:00 a.m. to 5:30 p.m., plus one evening a week until 7:00

   p.m. These time limits do not satisfy the contingency placed in the March 31, 1993, award because the Department cannot operate a probation and parole office within these limited hours.

   
   

9. The Department has 14,000 probationers in Broward County under its supervision. The caseload puts a severe strain on the caseworkers making it essential that they have flexible hours to get their job done. The caseload also requires working evenings and weekends. For example, some probation officers must maintain evening hours to test offenders for drugs. Although the officers could make the offenders visit the Department's office during the day, this would jeopardize the employment status of many offenders. Therefore, the Department needs flexible evening hours to do the drug testing.

   
   

10. One of the major functions of the probation officer is to help rehabilitate the offender. That means that the Department must do what it can to help the offender stay employed. In addition, the probation officers need evening and weekend hours to do their paperwork, including preparing weekly reporting schedules, and recording their contacts. The officers also need evening hours to receive monetary payments due from offenders, meet with offenders who must report in person into the office each month, and counsel offenders in the office.

    
    

11. Under the prior lease with In-Rel Acquisitions, Inc., the Department had operated and held evening hours at a minimum of three nights per week. This included both probation officers and offenders appearing at the office during the evenings.

12. The RFP specifically notified bidders that there would be evening hours. Section B(14) of the RFP states:

    
    

    Staff of both sexes will be required to work in this facility during both daylight and evening hours. An environment in which staff can expect to be safe is essential.

    
    

13. Section D(11) of the General Provisions of the subject RFP reads as follows:

    
    

    Federal, state, county, and local laws, ordinances, rules, and regulations that in any manner affect the items covered herein apply. Lack of knowledge by the bidder will in no way be a cause for relief from responsibility.

    
    

14. The records of the City of Plantation meetings show that the May 5, 1993, vote was not final. A mandatory second reading of the zoning change took place on May 12, 1993, and the minutes were approved on May 19, 1993, and June 2, 1993, with respect to the first and second reading.

    
    

15. Even if the zoning change with its limited hours had been sufficient to meet the terms of the contingent award, the limited zoning approval was not received before May 6, 1993; and therefore, the mandatory second reading of May 12, 1993, caused the limited zoning approval to be untimely.

    
    

16. Finally, the limited and untimely zoning change as approved on May 5, 1993, was itself contingent on satisfying all concerns of the Landscape Architect.

    
    

    Facts regarding the RTC assurances

    
    

17. The second award contingency required In-Rel Acquisitions, Inc., to provide the Department with sufficient assurances from the Resolution Trust Corporation (RTC) that the bid premises would not be taken over by the RTC and that the Department's leasehold interest would not be affected.

    
    

18. The property submitted by In-Rel Acquisitions, Inc., was in litigation; the RTC as successor mortgagee, had filed or secured a Notice of Lis Pendens, an Amended Complaint, a Summary Final Foreclosure Judgment, and a Notice of Sale.

    
    

19. The RTC has an interest in the property offered by In-Rel Acquisitions, Inc.

    
    

20. Paragraph 1(E) of the Summary Final Foreclosure Judgment provides that the Summary Final Foreclosure Judgment shall eliminate the interest of anyone that has acquired an interest since the filing of the Lis Pendens, including the Department's leasehold interest if it were to enter into a lease on the property.

    
    

21. The property bid by In-Rel Acquisitions, Inc., was subject to a second mortgage. The record does not reflect that the first mortgagee and the second mortgagee entered into any type of written agreement not to disturb the leasehold interest of the Department.

22. By letter dated May 11, 1993, an attorney for the RTC responded to the Department's request for assurances. The May 11, 1993, letter included the following:

    
    

    Pursuant to your request of yesterday, I am writing to belatedly confirm the April 19, 1993 telephone conference had you, Robert Gellman of Real Estate Recovery, Inc., and I. This telephone conversation was had to provide the Department of Corrections (the "Department") with the assurances requested from the RTC in the Department's March 31, 1993 letter of intent to award the subject least [sic] to In Rel Acquisitions, Inc.

    During this discussion you expressed the concern of the Department that the RTC intended to take title to the property and would then utilize special powers and privileges to dispossess the Department. If that were to be the case, you indicated that the Department would want an assurance that it would receive 90-days' notice before it could be dispossessed. (You indicated that 90-days is how long it would take to complete

    the bid process that would have to precede the Department's move.) Robert Gellman indicated that he was pursing [sic] numerous resolutions to the pending litigation, some of which might involve the RTC's taking title to the

    property and others which might not. Mr. Gellman assured you, however, that the RTC perceived it to be in its own best interest, and in the interest of any subsequent landlord, that the Department be kept happy and its tenancy undisturbed. Mr. Gellman also explained that he could not agree to anything at the time, as the appropriate committee approval had to be secured, but that he anticipated no problem in obtaining the necessary approvals of any writing consistent with our discussions once those writings were prepared. (I believe at the time we contemplated a written lease and a written assurance letter from the appropriate RTC official.) You indicated that your concerns had been satisfied and that these assurances were sufficient to satisfy the Department.

    The three of us discussed that it would not make sense to begin drafting anything at that time as the issues regarding the property's zoning still had to be cleared up and our efforts might otherwise "be all for not." Accordingly, it was mutually decided that we would wait to see the outcome of the May 5, 1993 hearing on the zoning issue before proceeding further. In

    the interim you indicated that you would be providing us with a list of the specific items of tenant improvements that your local officials expected to have made to the property. (We received this list on May 3, 1993.)

    
    

    On May 5, 1993 the Plantation City Council approved In-Rel Acquisition Inc.'s, request for a rezoning of its property and for a "special use" condition by a 4-0 vote, thus effectively resolving the zoning issue.

    Yesterday you and I spoke on this issue and discussed the situation. I indicated that the RTC is now in a position to provide you with written assurance that it has no intention of dispossessing the Department or interfering with its lease tenancy (either under the old or the new lease), and that the Department's leasehold interest would not be affected by the RTC taking title to the property (if it ever does). I asked and you indicated that this would give you what you needed and everything would be fine. In addition, I indicated that once the lease

    by and between the Department and In Rel is finalized, the RTC, if it still owns the note and mortgage, would be able to approve same.

    
    

    In light of the foregoing your call to me this morning, indicating that the Department had decided to withdraw its award to In Rel Acquisitions, Inc. and make the award to "Viloci" (phonetic(?), the next ranked bidder. During this discussion you indicated that Viloci's legal counsel had stated that the RTC would never be able to provide the Department with the requisite assurances. It is unfair for you to make decisions based in whole or in part on any statements made by Viloci's counsel regarding what the RTC can

    and cannot do without giving us an opportunity to respond -- especially in light of your indications on April 19th and again yesterday that the Department was satisfied with the RTC.

    
    

23. The record reflects that the "Notice of Sale" failed to contain language providing that the property would be sold subject to any leasehold interest, either previously or subsequently acquired.

    
    

    CONCLUSIONS OF LAW

    
    

24. The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this proceeding. Chapter 120, Florida Statutes.

25. In a case of this nature, the Petitioner seeking to be awarded a contract bears the burden of proving its entitlement to the relief sought. Florida Department of Transportation v. J.W.C. Company, Inc., 396 So.2d 778 (Fla. 1st DCA 1981).

    
    

26. As a general rule, an agency decision concerning a bid award or bid rejection will not be disturbed unless it is demonstrated that the agency acted arbitrarily, illegally, fraudulently, or dishonestly. Department of Transportation v. Groves-Watkins Constructors, 530 So.2d 912 (Fla. 1988); Liberty County v. Baxter's Asphalt and Concrete, Inc., 421 So.2d 505 (Fla. 1982); Moore v. Department of Health and Rehabilitative Services, 596 So.2d 759 (Fla. 1st DCA 1992); Asphalt Pavers, Inc. v. Department of Transportation, 602 So.2d 558 (Fla. 1st DCA 1992).

    
    

27. Thus, as a general rule, an agency has wide discretion in all aspects of bid letting and awarding bids, and such discretion, even if wrong, will not be disturbed unless it is found to be arbitrary, illegal, fraudulent or dishonest. Groves-Watkins, supra, at 913-914; Baxter's Asphalt, supra, at 507; Moore, supra, at 761; Asphalt Pavers, supra, at 560-561.

    
    

28. The question of whether agency discretion is broad enough to authorize an agency to issue bid awards that are contingent upon actions to take place in the future need not be decided here, because no one has challenged the agency's authority to issue an award contingent on future events. As made clear by such cases as Feimster-Peterson, Inc. v. Florida A & M University, 18 FLW D267 (Fla. 1st DCA Dec. 31, 1992): "The finder of fact may not rule upon issues which are outside the scope of the hearing." Because there is no challenge to the Agency's authority to issue contingent awards, and because it is ultimately irrelevant to the disposition of this case, for purposes of this case it has been assumed that the agency was acting within the lawful scope of its authority when it imposed contingencies on its initial award to In-Rel Acquisitions, Inc.

    
    

29. It is clear from the facts in this case that neither of the two contingencies mentioned in the agency's award letter of March 31, 1993, ever came to pass. Quite to the contrary, the zoning approval was both tardy and insufficient and the RTC never made any enforceable assurances. To the contrary, the representative of the RTC explained "that he could not agree to anything at this time, as the appropriate committee approval had to be secured .

    . . ." (No fault on the part of the RTC is implied; representatives of the RTC appear to have done as much as they were asked to do, they simply were not asked to do enough.)

    
    

30. Because the two contingencies mentioned in the agency's award letter of March 31, 1993, never came to pass, the Petitioner is not entitled to an award of a lease contract under the terms of that letter. And because the property offered by the Petitioner was, at the time of the bid opening, and continued to be as of the date of the formal hearing, unsuitable for the purposes for which the agency seeks to lease property, the Petitioner's bid is non-responsive. Because it is non-responsive, the Petitioner's bid should be rejected and the agency should award the bid to the Intervenor.

RECOMMENDATION

On the basis of all of the foregoing, it is RECOMMENDED that a Final Order be issued in this case dismissing the Petition of In-Rel Acquisitions, Inc., and awarding the subject lease to the Intervenor, Janc, Inc.

DONE AND ENTERED in Tallahassee, Leon County, Florida, this 17th day of September 1993.

MICHAEL M. PARRISH

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 17th day of September 1993.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-3438BID

The following are the Hearing Officer's specific rulings on all proposed findings of fact submitted by all parties.

Proposed Findings of Fact submitted by Petitioner

Paragraph 1: First three sentences accepted in substance. Fourth sentence rejected as constituting primarily irrelevant or subordinate details. Last sentence reject as contrary to the greater weight of the evidence to the extent it is intended to imply that the zoning change obtained was sufficient.

Paragraph 2 and 3: Rejected as contrary to the greater weight of the evidence.

Paragraphs 4 and 5: Accepted in substance.

Paragraph 6: The first two sentences are rejected as irrelevant or as subordinate and unnecessary details. Last sentence rejected as irrelevant and also as contrary to the greater weight of the evidence and as suggesting implications not warranted by the evidence.

Paragraph 7: Rejected because it goes further than the evidence and suggests inferences not warranted by the evidence. Messrs. Gellman and Guerra told Mr. Ferst that they did not expect that the Department would have any problems with RTC, but the statements of Messrs. Gellman and Guerra stopped short of making any guarantees or of binding the RTC.

Paragraph 8: Rejected as contrary to the greater weight of the evidence.

Paragraph 9: Accepted in substance, with the deletion of the words "in ignoring the foregoing."

Paragraph 10: Rejected as constituting a summary of a party's argument or statement of position, rather than a proposed finding of fact.

Paragraph 11: First sentence is accepted in substance. Second sentence is accepted as literally true, but as also substantially irrelevant because during most of the original five-year lease there was no issue about hours of operation because there was no effort at restriction of hours of operation. The last sentence is rejected as not supported by persuasive competent substantial evidence.

Paragraph 12: The first two sentences are rejected as constituting a summary of a party's argument or statement of position, rather than a proposed finding of fact. The third and fourth sentences are rejected because they go further than the evidence and suggest inferences not warranted by the evidence. As noted above, Messrs. Gellman and Guerra told Mr. Ferst that they did not

expect that the Department would have any problems with RTC, but the statements of Messrs. Gellman and Guerra stopped short of making any guarantees or of binding the RTC.

Paragraph 13: Rejected as constituting argument or proposed conclusions of law, rather than proposed findings of fact.

Paragraph 14: First two sentences accepted in substance. Last sentence rejected as constituting argument or proposed conclusions of law, rather than proposed findings of fact.

Paragraph 15: Rejected as constituting argument or proposed conclusions of law, rather than proposed findings of fact.

Paragraph 16: It is accepted that Messrs. Gellman and Guerra made statements as to what they expected the RTC's position to be, but, as noted several times above, the statements of Messrs. Gellman and Guerra stopped short of making any guarantees or of binding the RTC.

Proposed findings submitted by Respondent Paragraphs 1, 2, 3, 4, 5, 6, 7, 8 and 9: Accepted.

Paragraph 10: Rejected as constituting subordinate and unnecessary

restatement of a party's position.

Paragraphs 11, 12 and 13: Accepted in substance. Paragraph 14: Rejected as repetitious.

Paragraphs 15, 16 and 17: Accepted.

Paragraph 18: First sentence is accepted. The second sentence is rejected as constituting argument, rather than proposed findings of fact.

Paragraphs 19, 20, 21, 22, 23, 24, 25, 26, 27 and 28: Accepted in substance.

Paragraph 29: Rejected as constituting argument or proposed legal conclusion, rather than proposed findings of fact.

Paragraph 30: Accepted.

Paragraph 31 and 32: Rejected as constituting argument or proposed legal conclusion, rather than proposed findings of fact.

Paragraphs 33 and 34: Accepted in substance.

Paragraphs 35 and 36: Rejected as irrelevant or as subordinate and unnecessary details.

Paragraph 37: Rejected as constituting argument or proposed legal conclusion, rather than proposed findings of fact.

Paragraphs 38, 39, 40 and 41: Rejected as irrelevant or as subordinate and unnecessary details.

Paragraphs 42, 43, 44 and 45: Rejected as constituting argument or proposed legal conclusion, rather than proposed findings of fact.

Paragraphs 46, 47, 48 and 49: Accepted in substance.

Paragraph 50: Accepted.

Paragraph 51: Rejected as constituting argument or proposed legal conclusion, rather than proposed findings of fact.

Paragraph 52: First sentence rejected as subordinate and unnecessary details. Second sentence rejected as repetitious.

Paragraphs 53, 54 and 55: Rejected as constituting argument or proposed legal conclusion, rather than proposed findings of fact.

Paragraph 56: First sentence accepted in substance. Second sentence rejected as constituting argument, rather than proposed findings of fact.

Paragraph 57: Accepted in substance.

Paragraph 58: Rejected as irrelevant or as subordinate and unnecessary details.

Paragraphs 59, 60, 61, 62, 63 and 64: Rejected as primarily constituting argument or proposed legal conclusion, rather than proposed findings of fact.

Proposed findings submitted by Intervenor

Although there are some differences in the numerical sequence, the vast majority of the proposed findings of fact submitted by the Intervenor are identical to those submitted by the Respondent. It would serve no useful purpose to repeat the rulings on all of those findings. The following rulings address the few proposed findings submitted by the Intervenor that are different from the ones submitted by the Respondent.

Paragraph 11: Rejected as constituting subordinate and unnecessary restatement of a party's position.

Paragraph 30: Rejected as constituting argument or proposed legal conclusion, rather than proposed findings of fact.

Paragraph 37: Rejected as irrelevant or as subordinate and unnecessary details.

Paragraph 44: Rejected as constituting argument or proposed legal conclusion, rather than proposed findings of fact.

Paragraph 54: Rejected as constituting argument or proposed legal conclusion, rather than proposed findings of fact.

Paragraphs 55, 56, 57, 58, 59 and 60: Accepted in substance.

Paragraph 61: Rejected as constituting argument or proposed legal conclusion, rather than proposed findings of fact.

Paragraphs 62, 63 and 64: Accepted in substance.

Paragraphs 65, 66 and 67: Rejected as constituting argument or proposed legal conclusion, rather than proposed findings of fact.

COPIES FURNISHED:

Michael S. Riley, Esquire

200 East Las Olas Boulevard, Suite 1400 Fort Lauderdale, Florida 33301

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

Tallahassee, Florida 32399-2500

Joseph J. Villacci, Esquire

315 Northeast Third Avenue, Suite 200 Fort Lauderdale, Florida 33301

Harry K. Singletary, Jr., Secretary Department of Corrections

2601 Blair Stone Road Tallahassee, Florida 32399-2500

Louis A. 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 ten 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: 93-003438BID

Orders for Case No: 93-003438BID