STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

NATIONAL HEALTH LABORATORIES, INC., )

)

Petitioner, )

)

vs. ) CASE NO. 93-5552BID

) STATE OF FLORIDA, DEPARTMENT OF ) HEALTH AND REHABILITATIVE SERVICES, )

)

Respondent, )

)

and )

)

SMITHKLINE BEECHAM CLINICAL )

LABORATORIES, )

)

Intervenor. )

)

RECOMMENDED ORDER

A formal hearing in this case was held pursuant to notice on October 14, 1993 by Stephen F. Dean, assigned Hearing Office of the Division of Administrative Hearings in Tallahassee, Florida.

APPEARANCES

For Petitioner: Thomas F. Panza, Esquire

3081 East Commercial Boulevard, Suite 200 Fort Lauderdale, Florida 33308

For Respondent: Scott D. Leemis, Esquire

Department of Health and Rehabilitative Services

Post Office Box 2417 Jacksonville, Florida 32231-0083

For Intervenor: SmithKline Beecham

Donald E. Hemke, Esquire Carlton, Fields, Ward, Emmanuel,

Smith & Cutler Post Office Box 3239

Tampa, Florida 33601 STATEMENT OF THE ISSUE

Whether the Department of Health and Rehabilitative Services was arbitrary and capricious in rejecting the bid of the Petitioner, National Health Laboratories, Inc., for its determination that the Petitioner had failed to submit proof of registration to do business in the State of Florida in its bid

package as specifically required by the Department's Invitation to Bid, Section E, Fatal Criteria.

The factual issue presented is whether the materials included in the Petitioner's bid package constituted proof of registration to business in the State of Florida. The legal issue is whether the Department's rejection of the materials presented was arbitrary and capricious.

PRELIMINARY STATEMENT

The Department of Health and Rehabilitative Services issued an Invitation to Bid, DCPHU-93-02, for laboratory services for ten medical clinics located in Duval County, Florida. Subsequently, the Petitioner, National Health Laboratories, Inc., and the Intervenor, SmithKline Beecham Clinical Laboratories, filed responses to the agency's Invitation to Bid (ITB). Both of the responses by Petitioner and Intervenor were timely. At the formal bid opening, the Department through its designated representatives rejected the response of the Petitioner for failure to include in its bid package proof of registration to do business in the State of Florida with the Florida Department of State. The Invitation to Bid contained a requirement that potential bidders include proof that they were registered to do business in the State of Florida with the Florida Department of State. This requirement was contained in Section E, Fatal Criteria, of the Invitation to Bid.

The Petitioner's response having been rejected, the bid was ultimately awarded to SmithKline Beecham, Intervenor, and the Petitioner requested a formal hearing on the Department's rejection of its response to the Invitation to Bid. The Department referred the matter to the Division of Administrative Hearings to conduct a formal hearing on the matters raised by the Petitioner pursuant to Sections 120.53(5) and 120.57(1), Florida Statutes. After the matter was referred to the Division, the Intervenor, SmithKline Beecham Inc., filed a Motion to Intervene which was granted.

This case was duly noticed for hearing and heard on October 14, 1993. All of the parties filed posthearing briefs. The Petitioner's brief contained proposed findings of fact which were read and considered. The Intervenor filed proposed findings which were also read and considered. The Department adopted the proposed findings of the Intervenor. Appendix A to this order states which of the proposed findings were adopted, and which were rejected and why.

FINDINGS OF FACT

1. The Department of Health and Rehabilitative Services (Department or HRS) drafted and published an Invitation to Bid (ITB) DCPHU-93-02, inviting bids for laboratory services for the ten medical clinics located in Duval County, Florida.

   
   

2. ITB DCPHU-93-02 provided that prospective bidders could submit written questions prior to the bidders' conference and make verbal inquiries at the bidders' conference regarding the terms of the ITB.

   
   

3. The ITB provided that "no change, modifications or additions to the bids submitted will be accepted by the Department after the deadline for submitting bids has passed."

4. The ITB provided that any prospective bidder could file a written protest of the provisions of the ITB as outlined in the Item 5 of the General Conditions. See Joint Exhibit 1, Page 13.

   
   

5. The ITB provided that the vendor was responsible to develop the bid as clearly and succinctly as possible to avoid misinterpretations of the information presented, and that the bids would be reviewed and evaluated solely on the basis of the information contained therein.

   
   

6. The ITB provided that the contract would be awarded to the bidder who satisfied the requirements of the evaluation criteria in Section E and who provided the lowest overall valued bid.

   
   

7. The ITB specifically invited the attention of the prospective bidders to Section E of the ITB which contained fatal criteria, i.e., requirements which if the prospective bidders failed to meet would result in the rejection of their bid.

   
   

8. Contained in Section E among the various fatal criteria was the specific requirement that bids were to include proof of registration with the Department of State to do business in the State of Florida.

   
   

9. Section E, "Bid Evaluation Criteria," provided, "listed below are the minimum requirements (Fatal Criteria) that all bids must satisfy," and that "a bid given a 'no' response to one or more of these requirements will be removed automatically from further consideration." See Joint Exhibit Page 14.

   
   

10. The Petitioner did not challenge bid specifications or designation of "proof of registration with the Department of State to do within business in the State of Florida" within 72 hours of receiving the ITB.

    
    

11. No bidders provided written questions concerning the meaning of "proof of registration with the Department of State to do business within the State of Florida."

    
    

12. Representatives of the Petitioner attended the bidders' conference on August 11, 1993. Although representatives of the Petitioner asked certain questions at the bidders' conference, they did not question the meaning of the term, "proof of registration with the Department of State to do business within the State of Florida."

    
    

13. Shortly before the bid opening on August 18, 1993, a representative of the Department emphasized to a representative of the Petitioner the need to fully comply with the Fatal Criteria contained in the ITB.

    
    

14. The Petitioner submitted its bid to the Department ten minutes prior to the bid opening scheduled for 10:00 a.m. on August 18, 1993.

    
    

15. The bid opening was conducted in public with representatives of the various prospective bidders in attendance. Among those attending were three representatives of the Petitioner. The Department's representative opened four responses which appeared to be, and were, "no bids." The representative then opened SmithKline's bid and reviewed the Intervenor's submittal to determine if it complied with the Fatal Criteria. Upon review, it was determined that SmithKline complied with the Fatal Criteria.

16. SmithKline's bid contained a certification from the Department of State of the State of Florida certifying that SmithKline Beecham Clinical Laboratories, Inc., was authorized to transact business in the State of Florida and that it had paid all fees and penalties due the State of Florida through December 31, 1993, filing its most recent annual report on May 1, 1993, and that its status was active. This certificate was dated the 13th day of August 1993 under the seal of the Secretary of State of the State of Florida.

    
    

17. The Department's representative next opened the proposal of the Petitioner and evaluated it to determine whether it complied with the Fatal Criteria. This review of the Petitioner's proposal revealed that the Petitioner had not included in its submittal any specific document or paper showing that the Petitioner was registered with the Department of State to do business in the State of Florida. The Petitioner had not filed a certificate of the Secretary of State or a copy of its annual report required to be filed with the Department of State.

    
    

18. The Department rejected the Petitioner's bid for failure to comply with the Fatal Criteria concerning proof of registration with the Department of State to do business in the State of Florida. Because of its rejection, the Department did not consider whether the Petitioner's bid complied with any of the remaining Fatal Criteria and did not consider any amount of the Petitioner's bid in considering which of the proposals was the lowest bid.

    
    

19. At 4:30 p.m. on August 18, 1993, the Petitioner provided the Department a 1975 certificate from the Secretary of State indicating that the Petitioner was authorized to do business in the State of Florida and a copy of an annual report the Petitioner had submitted to the Secretary of State on March 10, 1993. These were filed too late to cure the fatal defect.

    
    

20. The Department also determined that three other bidders, including Consolidated/St. Vincent's failed to comply with Fatal Criteria.

    
    

21. Subsequent to its disqualification of Consolidated/St. Vincent's bid, said bidder brought to the Department's attention of the that its proposal included a copy of a corporate report filed with the Secretary of State and dated August 3, 1993. The Department determined that this was sufficient proof that the bidder was registered to do business in the State of Florida with the Secretary of State.

    
    

22. On August 25, 1993, the Department awarded to the contract to SmithKline Beecham, Intervenor. On August 28, 1993, the Petitioner formally protested this award.

    
    

23. The Petitioner did include in its proposal the following:

    
    

    1. a sworn statement of public entity crimes;

    2. a clinical laboratory certificate of licensure from the Department of Health and Rehabilitative Services of the State of Florida;

    3. a Federal Health Care and Finance Administration number issued pursuant to Federal law; and

    4. a College of American Pathology number.

       CONCLUSIONS OF LAW

       
       

24. The Division of Administrative Hearings has jurisdiction over the parties and the subject matter of this proceeding, subject to Sections 120.53(5) and 120.57(1), Florida Statutes.

    
    

25. The Petitioner's Notice of Intent to Protest and its formal protest were promptly delivered and were timely filed.

    
    

26. The issue presented is whether the Department's decision to reject the Petitioner's bid because it determined that it did not have proof of registration with the Department of State to do business within the State of Florida was arbitrary and capricious. The validity of this requirement, which was part of the Fatal Criteria, is not in question. Section 120.53(5)(a), Florida Statutes, provides for protest of such requirements within 72 hours of receiving an Invitation to Bid. The Petitioner in this case did not challenge this requirement, and cannot at this time raise the propriety of the requirement. See, Mercedes Lighting vs. Department of General Services, 560 So.2d 272 (Fla. 1st DCA 1990); Comb Corp. vs. State, DOT, 556 So.2d 538, 531 (Fla. 2nd DCA 1990).

    
    

27. The Hearing Officer's consideration of this matter is limited in scope. As opposed to a de novo review of the agency's determination, in this type of case, the Hearing Officer is limited to determining whether the agency's decision was made in bad faith, or was arbitrary or capricious. The standard that the Petitioner must meet is proof that the award to SmithKline was not the result of an honest exercise of discretion, but rather resulted from fraud, illegality, undue influence, or misconduct. See Liberty County vs. Baxter Asphalt and Concrete, 421 So.2d 505, 507 (Fla. 1982) and Department of Transportation vs. J.W.C. Company, Inc., 396 So.2d 778, 789-790 (Fla. 1st DCA 1981).

    
    

28. The Petitioner admits that the items included in its bid are not direct evidence of Petitioner's registration with the Department of State to do business within the State of Florida. Rather, the Petitioner argues that the information provided would put a knowledgeable person on notice that the Petitioner is doing business in the State of Florida. The Department's representative, in reviewing the various proposals, looked for a certificate or similar document evidencing the bidder's registration with the Department of State to do business within the State of Florida. In Petitioner's submittal she could find no such a document because it was not included in the proposal.

    
    

29. Under the foregoing circumstances, the Department's rejection of the Petitioner's bid does not evidence fraud, illegality, undue influence, misconduct, or a decision which is arbitrary and capricious.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, the Hearing Officer

RECOMMENDS:

that the Department dismiss the Petition of National Health Laboratories, Inc., and award the contract to the Intervenor, SmithKline Beecham Clinical Laboratories.

DONE and ENTERED this 17th day of November, 1993, in Tallahassee, Florida.

STEPHEN F. DEAN, Hearing Officer Division of Administrative Hearings The DeSoto Building

1230 Apalachee Parkway

Tallahassee, FL 32399-1550

(904) 488-9675

Filed with the Clerk of the Division of Administrative Hearings this 17th day of November, 1993.

APPENDIX TO RECOMMENDED ORDER, CASE NO. 93-5552BID

The Petitioner filed proposed findings which were read and considered. The Intervenor filed proposed findings which were read and considered. The Respondent adopted the findings of the Intervenor. The following states which of the proposed findings were adopted, and which were rejected and why.

Intervenor's Recommended Order Proposed Findings

Paragraph 1 Adopted in paragraph 1.

Paragraph 2 Adopted in paragraphs 2 - 9.

Paragraph 3 Adopted in paragraph 10.

Paragraph 4 Adopted in paragraph 11.

Paragraph 5 Adopted in paragraph 12.

Paragraph 6 Rejected, argument.

Paragraph 7 Adopted in paragraph 13.

Paragraph 8 Adopted in paragraph 14.

Paragraph 9 Adopted in paragraphs 15, 16 and 20.

Paragraph 10 Adopted in paragraph 19.

Paragraph 11 Adopted in paragraph 20 and 21.

Paragraph 12 Adopted in paragraph 22.

Paragraph 13 Adopted in paragraph 23.

Paragraph 14-25 Arguments and ultimate findings

contained in conclusions of law.

Petitioner's Recommended Order Proposed Findings

Paragraph 1 Adopted in paragraph 1.

Paragraph 2, 3 Rejected, irrelevant.

Paragraph 4 Adopted in paragraph 4.

Paragraph 5 Adopted in paragraph 8.

Paragraphs 6-13 Rejected, irrelevant. All

argument based upon attack on criteria.

Paragraph 14 Adopted in paragraph 13.

Paragraph 15, 16 Rejected, irrelevant.

Paragraph 17, 18 Adopted in paragraph 13.

Paragraphs 19-31 Rejected. See comments to

paragraph 6, et seq. above.

Also see paragraphs 15, 16, 17 and 18.

Paragraph 32 Adopted in paragraph 23

Paragraph 33-45 See comments to paragraph 19 above.

COPIES FURNISHED:

Thomas F. Panza, Esquire

3081 East Commercial Boulevard, Suite 200 Fort Lauderdale, Florida 33308

Scott D. Leemis, Esquire Department of Health and

Rehabilitative Services Post Office Box 2417

Jacksonville, Florida 32231-0083

SmithKline Beecham Clinical Laboratories Donald E. Hemke, Esquire

Carlton, Fields, Ward, Emmanuel, Smith & Cutler

Post Office Box 3239 Tampa, Florida 33601

Robert L. Powell, Agency Clerk Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

Tallahassee, Florida 32399-0700

Kim Tucker, Esquire Department of Health and

Rehabilitative Services 1323 Winewood Boulevard

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. 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: 93-005552BID

Orders for Case No: 93-005552BID