STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

NATIONAL BEVERAGES, INC., )

d/b/a PEPSI-COLA, )

)

Petitioner, )

)

vs. )

) THE UNIVERSITY OF CENTRAL FLORIDA, )

acting under the authority and on ) Case Nos. 96-5320BID behalf of THE FLORIDA BOARD OF ) 96-6089BID

REGENTS, a Body corporate, )

)

Respondent, )

and )

) FLORIDA COCA-COLA BOTTLING COMPANY, )

)

Intervenor. )

)

RECOMMENDED ORDER

On February 12-13, 1997, a formal administrative hearing was held in this case in Orlando, Florida, before J. Lawrence Johnston, Administrative Law Judge, Division of Administrative Hearings.

APPEARANCES

For Petitioner: Frank Scruggs, Esquire

David Oliver, Esquire Greenberg, Traurig, Hoffman,

Lipoff, Rosen & Quentel, P.A.

515 East Las Olas Boulevard Suite 1500

Ft. Lauderdale, Florida 33301

For Respondent: Mary Beth Liberto

General Counsel Sherry G. Andrews

Associate General Counsel University of Central Florida

Post Office Box 160015 Orlando, Florida 32816-0015

Eli H. Subin, Esquire

Subin, Rosenbluth, Losey, Brennan, Bittman & Morse, P.A.

111 North Orange Avenue, Suite 900 Post Office Box 4950

Orlando, Florida 32802

For Intervenor: Roland A. Sutcliffe, Jr., Esquire

Charles B. Costar, III, Esquire Zimmerman, Shuffield, Kiser

& Sutcliffe, P.A. Post Office Box 3000

Orlando, Florida 32802 STATEMENT OF THE ISSUES

The issues in these cases are whether the University of Central Florida should reject all proposals for soft drink vending in response to its Request for Proposal No. 7028DCS or, if not, whether it should award the contract to the Florida CocaCola Bottling Company or to the National Beverages, Inc., d/b/a Pepsi-Cola.

PRELIMINARY STATEMENT

On or about July 31, 1996, the University of Central Florida (UCF) issued Request for Proposal (RFP) No. 7028DCS for soft drink vending services. The Florida Coca-Cola Bottling Company (Coke) and the National Beverages, Inc., d/b/a

Pepsi-Cola (Pepsi) responded. After disputed intermediate steps which are addressed more specifically in the Findings of Fact, infra, UCF gave notice of intent on October 24, 1996, to award the contract to Coke.

On November 1, 1996, Pepsi filed a Formal Written Protest and Request for Referral of Bid Protest to Division of Administrative Hearings (DOAH). On November 12, 1996, UCF referred the protest to DOAH, where it was assigned DOAH Case No. 96-5320BID. Coke intervened as a party respondent on November 27, 1996, and the matter was scheduled for final hearing on December 12, 1996.

At final hearing in Case No. 96-5320BID, UCF advised of its decision the previous day to reject all proposals for soft drink vending and moved to dismiss Case No. 96-5320BID in light of the rejection of all proposals. Pepsi countered that, rather than being dismissed, Case No. 96-5320BID should remain open and that

Pepsi's anticipated protest of the rejection of all proposals should be consolidated with it. Consideration of the motion to dismiss was deferred until after it was reduced to writing and briefed by the parties; in the meantime, final hearing was continued until further notice.

On December 18, 1996, UCF filed its Motion to Dismiss Case and Bid Protest (Dispositive Motion). Intervenor's Response to Motion to Dismiss (supporting dismissal) was filed on

December 27, 1996. Petitioner's Memorandum in Opposition to Respondent's Motion to Dismiss was filed on the same day.

Meanwhile, on December 23, 1996, Pepsi filed a Formal Written Protest of Rejection of All Proposals and a Motion to Consolidate it with Case No. 96-5320BID. On December 30, 1996, UCF referred those matters to DOAH, and they were assigned DOAH Case No. 96-6089BID.

At a telephone prehearing conference held in DOAH Case No. 96-6089BID on January 14, 1997, the parties were asked why their briefs on UCF's Motion to Dismiss Case and Bid Protest (Dispositive Motion) in Case No. 96-5320BID did not address the issue as to whether the statutes governing competitive bidding were applicable in this case. In response, UCF advised that it had not decided whether to seek dismissal on the ground that the statutes governing competitive bidding do not apply but would finalize and give notice of that decision by January 21, 1997.

On January 16, 1997, UCF filed a Supplement to Motion to Dismiss in Case No. 96-5320BID stating its intention to "initiate a public procurement process for soft drink vending subject to applicable statutes, regulations, and policies if its Motion to Dismiss should be granted." Subsequent correspondence and filings indicated that the Supplement to Motion to Dismiss was intended to give notice of UCF's decision not to seek dismissal on the ground that the statutes governing competitive bidding do not apply. Accordingly, for purposes of this proceeding and UCF's Motion to Dismiss Case and Bid Protest (Dispositive Motion), it was presumed that the statutes governing competitive bidding apply.

On January 24, 1997, an Order Denying Motion to Dismiss was entered in Case No. 96-5320BID based on the conclusion that, until UCF's rejection all proposals became final through entry of a final order in Case No. 96-6089BID, Case No. 96-5320BID would not be moot because, if Pepsi was successful in preventing the rejection of all proposals, Case No. 96-5320BID would have

to be resolved to determine whether UCF should award the contract to

Coke or to Pepsi.

On January 3, 1997, UCF filed its Motion to Dismiss Case

No.

96-6089BID primarily on the basis of language on pages 31-32 of its Request for Proposals giving notice that UCF:

RESERVES THE RIGHT TO REJECT ALL PROPOSALS AND TO AWARD THE CONTRACT BY NEGOTIATION WITH A VENDOR SELECTED AT THE UNIVERSITY'S DISCRETION.

After the parties filed briefs, an Order Denying Motion to Dismiss was entered on January 24, 1997, based upon the conclusion that, although UCF had wide discretion to reject all proposals, its rejection of all proposals could not be "illegal, arbitrary, dishonest, or fraudulent" and that, notwithstanding the quoted RFP language, Pepsi should not be precluded from attempting to prove in Case No. 96-6089BID that UCF's rejection of all proposals was "illegal, arbitrary, dishonest, or fraudulent." Section 120.57(3)(f), Fla. Stat. (Supp. 1996).

Also on January 24, 1997, Case Nos. 96-5320BID and 966089BID were consolidated and scheduled for final hearing in Orlando, Florida, on February 12-14, 1997. The issues to be resolved in these consolidated proceedings were set forth in the Notice of Final Hearing: "Whether the University should reject all proposals and, if not, whether the contract for soft drink vending should be awarded to Coca-Cola or to the petitioner."

At final hearing, the parties had the RFP and the Pepsi and Coke responses to it admitted in evidence as Joint Exhibits 1 through

1. (It was agreed at final hearing that Coke would furnish a complete version of Joint Exhibit 3--its response to the

   RFP--including pages 61 and 62. See Transcript Vol. I, pp. 41-42; Vol. II, pp.156-157; Vol. IV, p. 241. But the document

   submitted by Coke as Joint Exhibit 3 on March 4, 1997, did not include those pages. See also Finding of Fact 43, infra.) The Petitioner called five witnesses and had Petitioner's Exhibits 1 through 24 admitted in evidence. UCF called two witnesses. The Intervenor called three witnesses and had Intervenor Exhibits 1 through 3 admitted in evidence.

   
   

   After presentation of the evidence, the parties ordered the preparation of a transcript of the final hearing, and the transcript was filed on February 20, 1997. However, UCF's unopposed request to have until March 5, 1997, in which to file proposed recommended orders was granted.

   
   

   FINDINGS OF FACT

   
   

   The RFP

   
   

   1. On July 18, 1996, UCF issued RFP 7028DCS entitled "Soft Drink Vending Machine Services" to select a vendor to install, operate and maintain vending machines and to provide the syrup to be dispensed from soda fountains on the campus of the University of Central Florida in Orlando. National Beverages, Inc., d/b/a Pepsi-Cola (Pepsi) and Florida Coca-Cola Bottling Company (Coke) were parties to existing contracts set to expire September 30, 1996. UCF sought the selection of a single or

      "exclusive" soft drink vendor to increase the financial return to the University.

      
      

   2. UCF's Purchasing Procedures manual, in defining the term "Request for Proposal (RFP)," states that an RFP is intended to allow for proposal flexibility, as opposed to an Invitation to Bid (ITB). It provides that an RFP "is used when the agency is incapable of specifically defining the scope of work for which the contractual service is required, and when the agency is requesting that a qualified offeror propose a commodity, group of commodities, or contractual service to meet the specifications of the solicitation document."

      
      

   3. The cover sheet (front and back) of the RFP was from a standard form of the Department of Management Services, Division of Purchasing, that the UCF Division of Purchasing adapted for its use. UCF's 35 page attachment to the standard form set forth the scope of competition, terms and conditions, selection criteria, and financial considerations.

      
      

   4. Section 4.7 of the RFP, entitled "Contacts," provided:

      
      

      No negotiations, decisions or actions shall be initiated or executed by the proposer as a result of any discussion with any University employee. Proposers may not consider any verbal instructions as an official expression on the University's behalf. Only those communications that are in writing from the University~s Purchasing Department shall be considered as a duly authorized expression on behalf of the University. Also, only communications from proposers that are signed and in writing will be recognized by the University as duly authorized expressions on behalf of the proposer.

      
      

   5. Section 4.10 of the RFP, entitled "Point of Contact," gave notice to all proposers that "Donna Wagner, Purchasing Division," was each proposer's "point of contact for all matters relating to this Request for Proposal."

      
      

   6. Paragraph 13.2 of the RFP provided:

      
      

      All proposals will be evaluated by a committee. The Evaluation Committee will utilize a weighted point system to create a list of proposals in rank order. Committee members will individually review each proposal, assigning points according to the criteria in [RFP Section] 13.3.

   7. The evaluation criteria and point values in RFP Section

      13.3 were:

      
      

      15 points 1. Experience and service in comparable size operations, listing number of years service.

      
      

      20 points 2. List of products to be offered: include size and price.

      
      

      50 points 3. Financial return to the University.

      Commissions and other proposed contributions to the University. Creative options that may be proposed by vendor.

      05 points 4. Marketing and public relations plans.

      Presentation should include some marketing plans.

      
      

      10 points 5. Completeness of proposals, i.e., the degree to which it responds to all requirements and information contained herein.

      
      

      Pre-Proposal Conference and RFP Addendum

      
      

   8. On July 25, 1996 UCF Director of Business Services, Dr. Tim Carroll, convened a pre-proposal conference at which he received questions from proposers and provided answers on behalf of the University. The University's normal practice was to keep a record of questions asked and answered at a pre-proposal conference, and to keep a record of the proceedings, typically consisting of a staff member's notes.

      
      

   9. The July 25, 1996 pre-proposal conference was neither recorded on audio tape nor the subject of any UCF employee's notes of the questions asked and answered. UCF did, however, publish a one-page addendum to the RFP based upon occurrences at the preproposal conference. UCF issued the Addendum July 29, 1996.

      
      

   10. Paragraph 7.6 of the RFP stated:

       
       

       At the end of the Canteen contract (July 31, 1998), the University may consider, but is not obligated to approve, the addition to juice products to this Agreement.

       
       

       The RFP Addendum specified that juice and cup-drink vending fell within the scope of the existing contract of Canteen, Inc.

       Pepsi understood this to mean that vending of juice and

       cup-drinks was beyond the scope of the RFP; Coke understood this to mean that its RFP could include a proposal to sell juice and cup-drinks upon termination of the Canteen contract.

       
       

   11. Pepsi representative Debbie Fekany attended the pre- proposal conference and, knowing that there were 76 vending machines currently on campus (38 Pepsi's and 38 Coke's), asked about the need for additional machines. Her contemporaneous notes indicate that, in response to her question, Dr. Carroll told the participants that proposers should anticipate that the subject of new machines would be addressed during the negotiation of a contract after the award. The Addendum simply

       set forth the number of cases (28,911) sold at the University during the preceding fiscal year. Although Pepsi did not prove that proposers were told that the number 76 would be used as the baseline for proposal evaluation, Pepsi was given to understand from Carroll and the Addendum that responses to the RFP could not

       include proposals for more than 76 machines. Meanwhile, Coke understand that proposals for more than 76 machines would be acceptable.

       
       

   12. The RFP Addendum also clarified that the RFP required proposals for both a commission rate and a "minimum guarantee." Without the Addendum, the REP included the following pertinent provisions:

       
       

       11.1 Commissions

       
       

       . . . The University shall receive the larger of the earned commissions or a guaranteed amount of annual revenues.

       
       

       11.7 Annual Commission

       
       

       . . . the vendor shall pay the University the additional payments due, if any, to equal the guaranteed annual commission required in this contract. . . . On expiration or termination of this contract, partial year guaranteed minimum commissions due, if any, shall be calculated on a pro rata basis.

       
       

       1. Commission on Sales

          
          

          The proposer proposes to pay to the University the following percentage-based commission on the net sales of beverage vending items:

          
          

          % and/or;

          
          

          The University will estimate its potential revenue from the proposed percentage commission by using data from prior experience which indicates total annual volume of sales in dollars.

          
          

       2. Annual Payment

       
       

       The proposer proposes to guarantee to the University as revenues from beverage vending sales an annual payment of the larder of: the aggregate

       percentage-based commissions earned from beverage vending sales over each contract year or the following fixed dollar amount:

       $

       
       

       7.3 Adjustment of Commissions or Guarantees

       
       

       After the initial contract year, the parties, by mutual agreement, may adjust the commissions or guarantees of this contract where circumstances beyond the control of either party require adjustments . . . .

       
       

       It is clear from the REP, with Addendum, that UCF was seeking proposals for a guaranteed minimum annual revenue, subject to the possibility of more revenue to the University on a commission basis. Any proposer, in the course of describing how it would generate the sums proposed to be paid in the proposed venture, would naturally describe manner in which the funds would be generated. But such a description could not condition the proposal so as to defeat the requirement of a minimum guarantee, or the proposal would not be responsive.

       
       

       The Evaluation Committee

       
       

   13. On July 31, 1996, Dr. Tim Carroll finalized the selection of Evaluation Committee members. Those members were Jack Winstead (Purchasing Director); Marty Rouse (Dr. Tim Carroll's Assistant); Philip Goree (a retired University Vice President); David Finnerty (Director of University Publications); Tom Messina (Director of Alumni Affairs) and Art Zeleznick (of the Athletic Department.

       
       

   14. On August 8, 1996, Pepsi and Coke submitted proposals. No other companies submitted proposals. Copies of the proposals, along with copies of the REP, immediately were circulated to all members of the Evaluation Committee.

       
       

   15. On August 15, 1996, at 9:00 a.m., the Evaluation Committee convened to consider the proposals submitted by Pepsi and Coke. All members had adequate time to review the proposals before the meeting. In addition, at the meeting, Committee members were given a financial summary prepared by Philip Goree for their consideration.

       
       

   16. The Evaluation Committee meeting lasted an hour. During the meeting, Committee members asked questions, raised concerns, listened to information provided by other Committee members, as well as by representatives of the University's Department of Business Services who would be administering the

       contract. Based on these discussions, it was decided that the dollar values attributed to marketing proposals by each proposer should not be considered in the financial analysis of the proposals because these dollar values were "soft," and their actual value to the University could not be measured. (Pepsi had assigned $75,000 as the value of its marketing

       proposal--including product donations-while Coke had assigned a value of $28,000 to its marketing proposal.)

       
       

   17. The Committee also discussed deducting the bonuses proposed by each proposer because the proposers could not guarantee the conditions upon which they were offered. But it was decided that the bonuses could be considered as a "creative option" offered under REP Section 13.3. Pepsi's bonus was a onetime payment of $50,000 if, within the first three years of the five-year term of the contract, UCF extended Pepsi's contract to ten years. Coke's bonus was a $50,000 per year payment for each of the five years of the contract if UCF awarded Coke the bottle/can juice vending business upon the expiration of the Canteen contract on July 31, 1998, and if UCF awarded Coke the bottle/can and post-mix business at the proposed new Student Union Food Court when it was built and put in operation.

       
       

   18. At the end of the meeting, each Evaluation Committee member separately assigned points to the proposals in accordance with the criteria, and all six members gave Coke a higher score. The Posting Un-Postinq and Re-Postinq

       
       

   19. At approximately 10:00 a.m. on August 15, 1996, the Purchasing Department posted a notice of the University's intention to award the contract to Coke.

       
       

   20. The language of the tabulation sheet signed by Purchasing Director Winstead found that "the low proposer meets minimum REP specifications" and, in the space provided, identified no proposers that "do not meet minimum REP specifications."

       
       

   21. On August 15, 1996, at 10:56 a.m., Business Services Director Carroll sent an electronic mail message to his (and Winstead's) boss, Dr. Joyce Clampitt. That message stated: "By unanimous vote, the [Evaluation] committee has selected the Coke proposal. Based on that vote, I recommend that you and Mr. Merck approve the selection and give me notice to proceed to draft a contract for service."

   22. At or about noon on August 15, 1996, the Purchasing Department took down the notice that had been posted at 10:00

       a.m. to afford the University President and Vice President time to review the matter and make the final decision.

       
       

   23. Word of the August 15 posting had made its way to the Athletic Department and, from there, to Pepsi account representative for UCF, Debbie Fekany. When she called on August 15 or 16 to get information, Winstead told her that the award decision was not posted at the time but that he would notify her when it was posted.

       
       

   24. On August 23, 1996, at 10:00 a.m., the University's notice of intention to award the contract to Coke was posted for the second time. No alteration was made to the initial determinations respecting the responsiveness of the Pepsi and Coke proposals.

   25. On August 23, 1996, Winstead notified Fekany of that day's posting, and Pepsi filed its Notice of Protest. Fekany began to review the Coke proposal in light of the terms of the REP and to seek information about what had occurred in the review process.

       
       

       Pepsi's Reaction

       
       

   26. On August 26, 1996, Winstead wrote a letter inviting Pepsi representatives to attend an informal meeting "to afford you every opportunity to become aware of the evaluation process used by the reviewing committee, which, after careful deliberation, decided upon the proposed award to Coca-Cola." That meeting took place August 29, 1996, and at that time Debbie Fekany and a person to whom she reports, Ronaldo Swilley, identified Pepsi's concerns to the University representatives in attendance---Winstead, Dr. Tim Carroll, and Marty Rouse.

       
       

   27. The concerns raised by Pepsi's representatives in the August 29, 1996, informal meeting were as follows: (1) the inclusion of $250,000 that Coke proposed to provide if UCF were to make a present commitment to allow Coke to vend juices upon the 1998 conclusion of the Canteen, Inc. contract and if Coke received a present commitment that it would be allowed to make sales in the yet-to-be-constructed Student Union; (2) deletion of the $75,000 in benefits to UCF that Pepsi had proposed to provide in response to the marketing criterion; (3) the consideration of comments by Evaluation Committee member Marty Rouse to the effect that Pepsi's service was deficient and that its proposal incomplete because it did not mention a full-time route person as required by the RFP; and (4) the evaluation of the Coke proposal on the basis that it would generate revenues using 120 vending machines, rather than the existing number of 76.

       
       

   28. In the August 29 informal meeting, Tim Carroll reiterated a point he had made at the pre-proposal conference: UCF was not at the time of the competition willing to put 120 vending machines on campus and that a decision regarding increasing the number of vending machines would be made after the contract award was announced. On August 29, Pepsi informed UCF that the University's consideration of Coke's $250,000 juice sale/student union bonus had enabled Coke to receive not only a higher evaluation in the point-intensive category of "financial return to the university," but a higher evaluation overall.

   29. The Coke proposal acknowledged that its $250,000 juice sale/student union bonus was outside the scope of RFP terms:

       
       

       Coca-Cola would like to make an additional proposal that goes outside the requirements of the University of Central Florida's RFP. Coca-Cola would like to invest an additional $50,000 per year in unrestricted funds in return for the following additional rights on campus:

       
       

       Coca-Cola automatically secures the bottle/can juice vending business on August 1, 1998 with the appropriate competitive commissions.

       
       

       Coca-Cola secures the bottle/can and post-mix business in the student union food court (current and future brand concepts) on an exclusive basis.

       
       

       Coca-Cola will provide the necessary beverage equipment needed to fully equip the student union food court.

       
       

   30. In response to Pepsi's persistent efforts to communicate its concerns about the evaluation process, UCF scheduled a session on September 17, 1996, at which Pepsi and Coke could make presentations to the Evaluation Committee. (No such opportunity had been provided in connection with the August 15, 1996, meeting.) By letter dated August 30, 1996, Winstead notified Pepsi that the deadline for filing a formal protest was being suspended beyond September 3, 1996, pending the presentations.

       
       

       Pepsi Lobbies Evaluation Committee Members

       
       

   31. Between August 29 and September 17, 1996, Debbie Fekany telephoned two Evaluation Committee members, Tom Messina and David Finnerty, and arranged a meeting with the two of them on September 13, 1996. By the time of the meeting, all three knew of the scheduled September 17 presentation meeting. At the September 13 meeting, Fekany inquired as to the participation of Messina and Finnerty in the Evaluation Committee's work and discussed essentially the same matters she and Swilley had discussed with Winstead, Carroll and Rouse on August 29. She concluded by asking Messina and Finnerty to reconsider the Pepsi proposal.

       
       

   32. Fekany also met with another Evaluation Committee member, Art Zeleznik, on September 13, 1996. There is no explicit evidence concerning Fekany's discussions with

       Zeleznick, but it can be inferred that they were similar to her discussions with Messina and Finnerty.

       
       

   33. Fekany made it clear that she had a dual purpose in all of her contacts with University personnel involved in the RFP after the opening of the proposals. One was to discover why the Coke proposal was selected over the Pepsi proposal. The other was to persuade the University to reconsider and to select the Pepsi proposal.

       
       

   34. Neither Fekany, Zeleznick, Messina, nor Finnerty informed the other members of the Evaluation Committee, any other UCF personnel or any Coke representatives that Fekany had met with them on September 13, 1996, on the subjects of the RFP, the responsive proposals and the Evaluation Committee's deliberations.

       
       

       The Presentation Meeting

       
       

   35. At the September 17 presentation meeting, Debbie Fekany again outlined the points that she had raised with Winstead, Carroll, and Rouse at the August 29 informal meeting. At one point in the meeting, Winstead expressly declared to the Pepsi and Coke representatives, and to the Evaluation Committee members, that both proposals met all of the requirements of the RFP.

       
       

   36. Discussion among committee members was not facilitated at the September 17 presentation session. The meeting was adjourned, and no date was set for the Committee to convene.

       
       

       Evaluation Committee Polling

       
       

   37. On September 24, 1996, the University's General Counsel, Beth Liberto, wrote a memorandum and caused it to be circulated among the Evaluation Committee members. The memorandum contained places for Committee members to sign to indicate whether or not they would either "agree to make no change to original recommended award" or, alternatively, "agree that original recommended award needs to be reconsidered by the Committee." The memorandum was circulated first to Philip Goree, Marty Rouse, and Jack Winstead, who had job responsibilities in the Purchasing or Business Affairs Divisions. They signed indicating that they agreed "to make no change to original recommended award." After they had signed the memorandum, it was circulated to the three Committee members who did not have administrative responsibilities inside the

       Purchasing or Business Affairs Divisions: David Finnerty, Tom Messina and Art Zeleznick. They signed indicating their agreement "that original recommended award needs to be reconsidered by the Committee." The Evaluation Committee was deadlocked.

       
       

   38. UCF never provided notification to the public or to the proposers of the August 15 Evaluation Committee meeting or the circulation of Liberto's September 24 vote-by-signature memorandum. UCF never reconvened the Committee. Instead, the matter was referred to UCF Vice President for Business and Financial Affairs, William F. Merck II.

       
       

       Merck/Coleman Evaluation

       
       

   39. Merck drafted a document entitled "Notes on Evaluation Criteria." In that document, Mr. Merck graded the Coke proposal higher than the Pepsi proposal. He gave Coke additional points for including the $250,000 juice sale/student union bonus and Pepsi fewer points based upon his assessments of the prices of Pepsi drinks and his inference that Pepsi had not provided for an on-site route person. His memorandum did not refer to REP provisions that pertained to such provisions.

       
       

   40. Merck showed his draft to Dr. Daniel R. Coleman, Director of Institutional Research and Planning Support at UCF, and asked him to review it and comment. The evidence showed that it was not unusual for Merck to rely on Coleman for

       in-depth analyses of this sort in aid of the University's decision-making process.

       
       

   41. After reviewing Merck's draft, Coleman told Merck that he agreed with Merck's overall approach but recommended an in- depth analysis of the financial considerations to buttress Merck's document (so that it would "stand up in court.") Merck agreed and assigned the task to Coleman.

       
       

   42. Coleman also raised the question whether the Coke proposal included an unconditional minimum guarantee of revenue to the University. Merck advised him to ask Carroll about it. Carroll assured Coleman that both proposers had guaranteed their minimum revenue figures unconditionally. Coleman accepted Carroll's assurance, thinking that there was a separate written guarantee but not asking to see it--a failure Coleman later called a mistake on his part. As a result, neither Carroll, Merck, nor Coleman gave any further consideration to the

       question whether the proposals were responsive on the minimum guarantee.

       
       

   43. During his financial analysis, Dr. Coleman had a question as to the monetary value of the marketing efforts being proposed. He contacted Carroll and asked him for some additional information. Carroll contacted the proposers and asked them to provide more detail. Pepsi and Coke both responded to Carroll. Pepsi's response was in the form of a report to Carroll; Coke's response was in the form of the addition of pages 61 and 62 to its proposal. (These pages should have been included in the complete version of Joint Exhibit 3 furnished by Coke after the conclusion of the final hearing, but they were not.) Carroll passed the responses along to Coleman, who incorporated the information in his financial analysis. As a result, Pepsi received credit for an additional

       $10,000 of marketing dollars over what was contained in its proposal, and Coca-Cola received credit for over $70,000 additional marketing dollars over what was contained in its original proposal.

       
       

   44. Coleman's analysis also included consideration of other information that he solicited and received in October, 1996, from individuals not involved in the evaluation process. He conferred with University officials to verify dollar values of certain items included in the proposals and to convert the dollar figures to constant dollars.

       
       

   45. Coleman completed his financial analysis and provided it to Merck on October 23, 1996. According to the analysis, the two proposals were very close in terms of financial consideration to the University. It valued the Coke proposal at

       $2,448,432 cash over five years, compared to $2,428,604 for Pepsi. Overall (including marketing dollars), it valued the Coke proposal at $2,920,932 over five years, compared to

       $2,889,479 for Pepsi. Merck accepted the analysis as support for the final version of his "Notes on Evaluation Criteria," which was dated October 17, 1996.

       
       

   46. On October 24, 1996, Purchasing Department Director Jack Winstead informed Pepsi that UCF had decided to adhere to its earlier determination to award the contract to Coke. Winstead's notification included copies of Merck's "Notes on Evaluation Criteria," dated October 17, 1996, and Coleman's financial analysis.

       
       

       Pepsi's First Protest

       
       

   47. Winstead's notification also gave Pepsi ten days to file its formal protest. On November 1, 1996, Pepsi filed its Formal Written Protest. Final hearing was scheduled for December 12, 1996.

       
       

       Rejection of All Proposals

       
       

   48. During the course of his conference with UCF General Counsel on December 11, 1996, in preparation for final hearing, Coleman mentioned what he remembered to be his earlier concern that Pepsi's guarantee was conditional in nature. Liberto was concerned and interested, and they examined the proposals. When they did, Coleman recalled that his concern had been with Coke's guarantee, not Pepsi's.

       
       

   49. Pepsi's response to Section 14.2 of the REP stated that its guarantee was:

       
       

       conditional upon 50` of the vendors on campus being

       20 oz. or variety vendors. Additionally, this guarantee is conditional upon vendors not being removed, mech rates not being changed and product and/or packages not being changed without the agreement of Pepsi.

       
       

   50. The Coke response to Section 14.2 of the REP stated:

       
       

       Guarantee is based and will be paid with the stipulation that all recommended vendors are placed at desirable locations.

       
       

       * * *

       
       

       Commission guarantee is submitted based on volume projections at the number of vendor placements shown.

       
       

   51. UCF General Counsel Beth Liberto thought both proposers' guarantees were conditional. (She had never before examined the proposals.)

       
       

   52. Coleman told Liberto that he had talked to Carroll to assure himself that Coke's guarantee was not conditional and that Carroll had assured him that the minimum guarantees of both proposers were unconditional. However, Coleman told her, he had not seen the guarantees in writing. They called Carroll in, and

       Liberto asked Carroll to see the written guarantees. Carroll told her that he had no writing other than the proposals themselves. At this point, Liberto "went ballistic" and told Carroll, "then you have nothing."

       
       

   53. Section 5.15 of the REP reserved the right to waive "minor irregularities in proposals" but defined such minor irregularities to include only those "that have no adverse effect on the University's interest, will not affect the amount of the proposal and will not give a proposer an advantage or benefit not enjoyed by another proposer."

       
       

   54. Liberto saw no reason to consult with other sources or do further research on the question whether the failure to unconditionally guarantee minimum revenues to UCF was material. She based her decision in this regard on her "legal experience of what material terms in contracts are . . . [b]ecause what the RFP was was the model for a contract." As the person responsible for approving all University contracts for legal sufficiency, Liberto was concerned that the minimum guarantee as proposed could not be enforced under the conditions set out in the proposals and that the loss in substantial dollars to UCF was material.

       
       

   55. Liberto next conferred with outside counsel for UCF concerning her discovery, and outside counsel concurred with Liberto's opinion.

       
       

   56. UCF reserved the right in Section 13.1 of the RFP to reject any and all proposals and to make the award in the best interest of the University. The RFP also gave notice:

       
       

       WHILE IT IS THE INTENTION OF THE UNIVERSITY TO ISSUE AN AWARD BASED ON THE PROPOSAL SUBMITTED IN RESPONSE TO THIS REQUEST FOR PROPOSAL, PLEASE TARE NOTICE THAT THE UNIVERSITY RESERVES THE RIGHT TO REJECT ALL PROPOSALS AND TO AWARD THE CONTRACT BY NEGOTIATION WITH A VENDOR SELECTED AT THE UNIVERSITY'S DISCRETION. THE

       UNIVERSITY IS NOT OBLIGATED TO AWARD A LICENSE SUCH AS THIS PURSUANT TO COMPETITIVE PROPOSALS. THE UNIVERSITY HAS NO OBLIGATION TO REISSUE ANY REQUEST FOR PROPOSALS AFTER ALL PROPOSAL [SIC] HAVE BEEN REJECTED.

       
       

   57. Later on December 11, 1996, Liberto authored a letter for the signature of UCF President rejecting both proposals as being non-responsive for failing to unconditionally guarantee minimum revenues to UCF and giving notice that UCF intended to

       reinitiate the RFP process. Final hearing on Pepsi's protest was continued.

       
       

       Pepsi's Second Protest

       
       

   58. Pepsi protested the intended rejection of both proposals, contending that its proposal should not be rejected and that the award should go to Pepsi. Coke did not protest, but it intervened in Pepsi's protest and has taken the position that its proposal should not be rejected and that the award should go to Coke.

       
       

   59. It is found that the University's intended action to reject all proposals was not, as alleged by Pepsi, a dishonest and fraudulent concoction of its attorneys for purposes of avoiding the risk of losing if the case went to final hearing on December 12, 1996. Rather, it is found that Coleman revealed to UCF's attorneys and President Hitt the facts upon which they took action for the first time on December 11, 1996, and that the reactions of UCF's attorneys and its President were genuine reactions to those facts. Finally, it is found that their intended action to reject all proposals was not arbitrary but rather was based on the facts and the law.

       
       

       CONCLUSIONS OF LAW

       
       

       Intent to Reject All Proposals

       
       

   60. Section 120.57(3)(f), Florida Statutes (Supp. 1996), provides in part:

       
       

       . . . In any bid-protest proceeding contesting

       an

       intended agency action to reject all bids, the standard of review by an administrative law judge shall be whether the agency's intended action is illegal, arbitrary, dishonest, or fraudulent.

       
       

       See also Dept. of Transp. v. Groves-Watkins Constructors, 530 So. 2d 912, 914 (Flat 1988); Gulf Real Properties, Incv. Dept. of Health, etc., 22 Fla. L. Weekly D369 (Flat 19t DCA Feb. 4, 1997)

       
       

   61. Based on the findings of fact in this case, it is concluded that UCF's decision to reject all proposals was neither

       illegal, arbitrary, dishonest nor fraudulent.

       
       

   62. It also is concluded that UCF did not waive the right to declare the proposals non-responsive and to reject all proposals. As in Caber Systems v. Dept. of Gen. Services, 530 So. 2d 325 (Flat 1St DCA 1988), the University in this case acted

       promptly when it came to its attorneys attention for the first time that the guarantees were conditional.

       
       

       De Novo Relection of All Proposals

       
       

   63. Even if the University had not given notice of intent to reject all proposals on December 11, 1996, it would not have been too late to reject all proposals on the basis of the evidence presented at the final hearing in this case. Section 120.57(3)(f), Fla. Stat. (Supp. 1996), provides in part:

       
       

       . . . Unless otherwise provided by statute, the burden of proof shall rest with the party protesting the proposed agency action. In a competitive procurement protest, other than a rejection of all bids, the administrative law judge shall conduct a de nave proceeding to determine whether the agency's proposed action is contrary to the agency's governing statutes, the agency's rules or policies, or the bid or proposal specifications. The standard of proof for such proceedings shall be whether the proposed agency action was clearly erroneous, contrary to competition, arbitrary, or capricious.

       
       

       (Underlining added for emphasis.) As in Caber Systems, the findings in this case lead to the conclusion that all proposals should be rejected and that the REP process should begin anew.

       
       

       1. Prohibited Proposed Submissions.--

          
          

   64. Section 120.57(3)(f), Fla. Stat. (Supp. 1996), also provides in part:

       
       

       In a competitive-procurement protest, no submissions made after the bid or proposal opening amending or supplementing the bid or proposal shall be considered.

       
       

       In this case, the evidence was clear that UCF violated this governing statute.

       
       

   65. The August 29, 1996, meeting among Fekany and Swilley for Pepsi and Winstead, Carroll and Rouse arguably constituted a

       "submission . . . supplementing" the Pepsi proposal. (Fekany made clear that one purpose of all of Pepsi's contacts with University personnel involved in the REP after the opening of the proposals was to persuade the University to reconsider and to select the Pepsi proposal.) Clearly, the September 17, 1996, presentation meeting gave both Pepsi and Coke an opportunity to make "submissions . . . supplementing" their proposals. In addition, Fekany contacted three of the six Evaluation Committee members on September 13, before the presentation meeting, and imparted information designed to persuade them to give favorable consideration to the Pepsi proposal. Like the August 29, 1996, contacts, the September 13 contacts also can be considered "submissions . . . supplementing" the Pepsi proposal. Finally, in October, 1996, Dr. Coleman solicited additional information from the proposers (through Dr. Carroll) regarding the monetary value of the marketing efforts being proposed and utilized the information delivered in response in his financial analysis, which in turn was relied upon by Mr. Merck. The delivery of this information clearly constituted "submissions . . . supplementing" the proposals. (Coke's was actually presented in the form of information "amending" its proposal.)

       
       

       1. Sunshine Law Violations.--

          
          

   66. All parties now seem to concur that the Evaluation Committee's August 15, 1996, meeting violated Section 286.011(1), Fla. Stat. (1995) (the "Sunshine Law"). See Wood v. Marston, 442 So.2d 934 (Flat 1983). Section 287.057(15), Fla. Stat. (Supp. 1996), required the University to appoint at least three employees who have experience and knowledge in the program areas "to aid in the selection" of the best proposal in response to the REP. In this case, the University appointed the Evaluation Committee and charged it with responsibility to evaluate the proposals and make a recommendation for final action. As such, its meetings should have complied with the Sunshine Law. Contrast Cape Publications, Inc., v. City of Palm Bay, 473 So.2d 222 (Flat 5th DCA 1985)(committee merely assisted a member of the administrative governing body and had no decision-making responsibility).

       
       

   67. It is concluded that, contrary to the contentions of UCF and Coke, the September 17, 1996, presentation meeting did not "cure" the Sunshine Law violation of August 15, 1996. First, it clearly did not cure the Sunshine Law violation that occurred when Fekany met with Messina and Finnerty on September

       13, 1996. Except for those three, no other person knew about the September 13 meeting at the time of the supposed "cure" on

       September 17, 1996. Second, the Evaluation Committee never reconsidered the proposals as a result of the September 17, 1996, presentation meeting. There was no discussion by the Committee on that date, and the Committee never reconvened. When the Committee was polled on September 24, 1996 (arguably, another Sunshine Law violation, since a single polling form was used, and the "votes" those already polled were there for subsequent Revoters" to see), it voted not to reconsider the proposals. Contrast Tolar v. School Board of Libertv County, 398 So.2d 427 (Flat 1981); Port Everglades Authoritv v. Int'l Lonqshoresmen Assoc., 652 So.2d 1169 (Flat 4th DCA

       1995)(committees reconvened "in the sunshine" and took action to "cure" a previous violation). It also is concluded that, at this point in time, the best remedy would be for the University to reject all proposals and reinitiate the REP process.

       
       

   68. Coke argues in its proposed recommended order that Pepsi waived its Sunshine Law argument by not raising it explicitly during the final hearing. Clearly, by opposing UCF's attempt to reject all proposals, Pepsi abandoned the primary thrust of its original Formal Written Protest---to "commence the selection process anew." But it is clear from Pepsi's proposed recommended order that it has not completely abandoned the Sunshine Law violation argument. Besides, even if Pepsi had completely abandoned the Sunshine Law violation argument, UCF would be within its rights to accept the conclusions in this Recommended Order that the August 15, 1996, was not cured and that the best remedy at this point in time would be to reject all proposals and reinitiate the REP process.

       
       

       1. RFP Ambiguities "Contrary to Competition."--

       
       

   69. Besides being contrary to the statutes governing UCF, the the award to either Coke or to Pepsi would be "contrary to competition," based on this record. It is clear from the evidence that the RFP was ambiguous in several important respects, in addition to the apparent misunderstanding as to the minimum revenue guarantee. First, it was not clear whether the RFP was soliciting proposals to assume juice and cup-drink vending upon expiration of the Canteen contract on July 31, 1998. Second, the evaluation criteria in the RFP were not clear as to how "soft" marketing dollars should be treated. Third, it was not clear whether the RFP was soliciting proposals to increase the number of vending machines from the existing 76. Fourth, if so, it was not clear from the evaluation criteria in the RFP how to compare a proposal to increase the number of vending machines with one that did not propose an increase.

       Finally, the meaning of the provisions in the RFP limiting contacts to Donna Wagner was not clear. (If they were meant to prohibit any other contacts after the opening of the proposals, as UCF and Coke contend, they were violated not only by Pepsi but also by UCF and Coke. Indeed, there is no evidence that anyone contacted Donna Wagner for anything at anv time. All contacts between the proposers and the University, and vice versa, involved other University personnel.)

       
       

   70. It is concluded that these ambiguities, taken together, would be enough to warrant rejecting all proposals and reinitiating the RFP process.

       
       

       No Sunshine Law Attorney Fees

       
       

   71. Pepsi seeks attorney fees for UCF's Sunshine Law violations under Section 286.011(4), Fla. Stat. (1995). But that statute authorizes attorney fees for "an action . . . filed against [the University] to enforce the provisions of this section or to invalidate the actions of [the University], which action was taken in violation of this section . . .." It is concluded that an administrative bid protest proceeding is not the kind of "action" for which this statute authorizes the award of attorney fees.

       
       

   72. In addition, since at least December 11, 1996, Pepsi has been opposing UCF's attempt to take action which would remedy the Sunshine Law violations---rejection of all proposals and issuance of another REP. Section 286.011(4) clearly should not be construed to reward Pepsi for opposing the remedy of Sunshine Law violations.

       
       

   73. Finally, Pepsi would not be entitled to an award of attorney fees under Section 286.011(4) because it does not have "clean hands." As found, Pepsi itself initiated and participated in violations of the Sunshine Law on September 13, 1996.

RECOMMENDATION

Based upon the foregoing Findings of Fact and Conclusions of Law, it is

RECOMMENDED that the University of Central Florida enter a final order rejecting all proposals.

RECOMMENDED this 19th day of March, 1997, at Tallahassee, Florida.

_

ARNOLD H. POLLOCK

Administrative Law Judge Division of Administrative Hearings

The DeSoto Building 1230 Apalachee Parkway

Tallahassee, Florida 32399-3060

(904) 488-9675 SUNCOM 278-9675

Fax Filing (904) 921-6847

Filed with the Clerk of the Division of Administrative Hearings this 19th day of March, 1997.

COPIES FURNISHED:

Frank Scruggs, Esquire David Oliver, Esquire

Greenberg, Traurig, Hoffman, Lipoff, Rosen & Quentel, P.A.

515 East Las Olas Boulevard, Suite 1500 Ft. Lauderdale, Florida 33301

Mary Beth Liberto General Counsel Sherry G. Andrews

Associate General Counsel University of Central Florida Post Office Box 160015 Orlando, Florida 32816-0015

Eli H. Subin, Esquire

Subin, Rosenbluth, Losey, Brennan, Bittman & Morse, P.A.

111 North Orange Avenue, Suite 900 Post Office Box 4950

Orlando, Florida 32802

Gregg A. Gleason General Counsel Board of Regents

325 West Gaines Street, Suite 1522 Tallahassee, Florida 32399-1950

Roland A. Sutcliffe, Jr., Esquire Charles B. Costar, III, Esquire

Zimmerman, Shuffield, Kiser & Sutcliffe, P.A. Post Office Box 3000

Orlando, Florida 32802

NOTICE OF RIGHT TO SUBMIT EXCEPTIONS

All parties have the right to submit written exceptions within

15 days from the date of 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: 96-005320

Orders for Case No: 96-005320