vs. ) Case No. 98-1641BID
Intervenor. )
A formal hearing was held by the Division of Administrative Hearings, before Administrative Law Judge, Daniel M. Kilbride, in Tallahassee, Florida, on May 7, 1998. The following appearances were entered:
For Petitioners: David A. Theriaque, Esquire
For Respondent: Scott C. Wright, Esquire
For Intervenor: Theodore E. Mack, Esquire
Whether the Department of Juvenile Justice's (Respondent) decision to reject all bids is illegal, arbitrary, dishonest or fraudulent and should be rejected.
This case involves a challenge by the Petitioners to the Respondent's decision to reject all bids, on March 12, 1998, after the Petitioners initiated a bid protest to the Respondent's issuance of an award letter to 11 Riverside Corp. (Intervenor) for Lease Number: 800:0176-COCOA ("Lease"). On March 17, 1998, Petitioners filed a second written Notice of Protest. The Petition for Formal Hearing and Formal Bid Protest was filed on March 27, 1998. This matter was referred to the Division of Administrative Hearings on April 9, 1998, and an expedited discovery schedule was initiated. The 11 Riverside Corporation's Motion to Intervene was granted on April 30, 1998.
This case was heard on May 7, 1998, in Tallahassee, Florida.
The Petitioners called four witnesses: Sandy Veal, Randall Baker, Alan Taylor, and Keith Brockhouse. Twenty-five exhibits were admitted in evidence. The Department called one witness: Fran Lyles, and one exhibit was offered. Intervenor 11 Riverside Corp. did not call any witnesses or offer any exhibits.
The transcript of the hearing was filed on May 26, 1998.
After the granting of a motion for extension of time to file proposals, the parties' proposed findings of fact and conclusions of law were due no later than June 10, 1998. The same were timely filed by the parties. On June 15, 1998, Petitioner filed a motion to Reopen Evidentiary Hearing. Respondent and Intervenor filed a Joint Response to Motion on June 19, 1988.
Upon review of the parties' positions, the Motion to Reopen Evidence is DENIED. Each of the parties' proposals have been given careful consideration in the preparation of this order.
Based upon all of the evidence, the following findings of fact and conclusions of law have been determined.
Petitioners Robert and Sara Cook own a building located at 205 Gus Hipp Boulevard, Rockledge, Florida. The address for Petitioners Robert and Sara Cook is 1950 Murrell Road, Rockledge, Florida.
Petitioner Alan Taylor is an agent for Petitioners Robert and Sara Cook, and assisted the Cooks in the preparation and submittal of their Response to the Department's Request for Proposals for Lease Number: 800:0176-COCOA.
Respondent, Florida Department of Juvenile Justice, is the state agency that issued the Request for Proposals for Lease Number: 800:0176-COCOA.
Intervenor, 11 Riverside Corp., is the bidder to whom the Respondent issued an award letter for the Lease prior to the
Respondent's decision to reject all bids.
On or about January 12, 1998, the Respondent advertised Request for Proposals ("RFP") for Lease No. 800:0176-COCOA.
This was the second RFP issued by the Respondent for the Cocoa Lease. The Respondent did not receive any bids in response to the first RFP.
Draft versions of both RFPs were prepared by Respondent's staff. There were only very "minor changes" in the contents of the first and second RFPs, such as revisions to the issuing and advertising dates.
The Respondent received proposals from three entities: Robert and Sara Cook, 11 Riverside Corp., and James E. and Jacie Stivers. All three proposals were timely submitted.
Respondent's General Services Manager, Fran Lyles, reviewed the three proposals and completed a responsiveness checklist for each proposal. When Ms. Lyles provided the three responsiveness checklists to Ms. Sandy Veal, the checklists for the proposals submitted by the Cooks and 11 Riverside Corp. did not contain any notations that said proposals were non- responsive. Ms. Lyles also informed Ms. Veal that the proposals submitted by the Cooks and 11 Riverside Corp. were responsive.
On or about February 19, 1998, Sandy Veal traveled to Cocoa to perform site visits for the two responsive properties.
On February 23, 1998, the Respondent issued a written
letter of intent to award the Cocoa Lease to 11 Riverside Corp. The letter was prepared by Ms. Veal and signed by Ms. Lyles.
The Petitioners timely filed a written Notice of Protest with the Respondent on March 2, 1998, in which the
Petitioners challenged the Respondent's February 23, 1988, decision to award the Cocoa Lease to 11 Riverside Corp.
In subsequent correspondent and telephone calls to the Respondent, Petitioners' agent provided a detailed analysis regarding the basis for the Petitioners' Notice of Protest. The primary basis was that the other two proposals were not responsive, and that, as the remaining responsive bidder, the Respondent should award the Lease to the Petitioners.
Prior to the deadline for the filing of the Petitioners' Formal Written Bid Protest of the Respondent's February 23, 1988, decision to award the Cocoa Lease to 11 Riverside Corp., the Respondent informed the Petitioners that the Respondent had decided to reject all three proposals that the Respondent had received for the Cocoa Lease.
On March 12, 1998, the Respondent provided written notification to the Petitioners that the Respondent had rejected all proposals and would "re issue [sic] at a later date." This date coincided with the deadline for the Petitioners to file their Formal Petition in support of their Notice of Protest pursuant to Florida law.
On March 17, 1998, the Petitioners timely filed a second written Notice of Protest with the Respondent, in which the Petitioners challenged the Respondent's March 12 decision.
No entity other than the Petitioners timely filed a Notice of Intent to Protest.
The Respondent's contention that General Services Manager, Fran Lyles, did not review the RFP prior to its issuance is not credible.
Ms. Lyles' testimony that she informed Ms. Veal that all three proposals were not responsive prior to Ms. Veal's trip to Cocoa for a site visit is also not credible.
Ms. Lyles signed the award letter to 11 Riverside Corp., even though she had allegedly informed Ms. Veal that all three proposals were non-responsive. Ms. Lyles' explanation that she was very busy and simply didn't ask how an award could be made to a bidder that she had determined was non-responsive is also not credible.
Ms. Lyles altered the responsiveness determination checklists after the Petitioners filed their Notice of Protest of the Respondent's award to 11 Riverside Corp. Words were added and white-out was used to cover up Ms. Lyles' initial responsiveness determination which was made prior to the filing of the Petitioner's first Notice of Intent.
It appears that such alterations were made by Ms. Lyles
in an attempt to shift the responsibility for errors made in the bidding process.
The sole basis for the Respondent's contention that the proposals submitted by the Petitioners is non-responsive is that the site plan allegedly failed to show parking spaces. The evidence established that the site plan adequately showed the
parking spaces, and that the proposal submitted by the Petitioners was responsive.
The Respondent erroneously determined that the proposal submitted by the Petitioners was non-responsive.
The proposal submitted by 11 Riverside Corp. failed to include the public entity crime statement as required by the Respondent's RFP, and also failed to include proof of zoning.
The floor plan included in the proposals submitted by
11 Riverside Corp. failed to include the calculations as required by the Respondent's RFP.
The proposal submitted by 11 Riverside Corp. also failed to include the documentation necessary to establish bidder control of the property as required by the Respondent's RFP.
Any one of the aforementioned flaws in the proposal submitted by 11 Riverside Corp. rendered the proposal non- responsive.
The building included in the proposal submitted by James E. and Jacie Stivers failed to provide the square footage
calculations and failed to provide a scaled floor plan with square footage calculations, as required by the Respondent's RFP.
The proposal submitted by the Stivers consisted of two separate facilities. However, the proposal submitted by the Stivers only included the items required by the Respondent's RFP for one of the two separate facilities.
The proposal submitted by the Stivers failed to include a letter of authority from the owners of both facilities as required by the Respondent's RFP.
Any one of the aforementioned flaws in the proposal submitted by the Stivers rendered the proposal non-responsive.
It is not arbitrary for Respondent to reject all bids if there is only one responsive bidder. The state has discretion to award, or not award, in the event of a single responsive bidder, so long as the basis for the rejection is not improper.
Whether such rejection is in the best interests of the state may be based on several criteria to be taken into account by the Respondent. One of the criteria is the absence of competition for state business and the lack of offerings.
Rejection of all bids can be premised on an omission from the RFP or change in the Respondent's needs that would affect the ability of the Respondent to perform the duties prescribed by the Respondent.
The Respondent provided evidence of the importance of correct specifications in the RFP. The Respondent made a decision before January 1, 1998, to develop new specifications for use in lease RFPs. The new specifications were used in the "Bradenton" RFP (issued after the Cocoa lease).
The new specifications in the Bradenton RFP include a three percent cap on increases in the lease rate. This specification was material because it is an important part of the
Respondent's budget evaluation. It was the Respondent's intent to use this new specification in the Cocoa RFP.
Another specification omitted from the Cocoa RFP, that was in the Bradenton RFP, was the specification requiring proposer to provide copies of licenses of contractors. The Respondent intended to use that specification in the Cocoa RFP. The absence of this specification in the part has caused delays in occupancy of the leased space by the Respondent.
Another specification omitted from the Cocoa RFP, that was in the Bradenton RFP, was the specification requiring the proposer to provide a construction schedule. The Respondent intended to use that specification in the Cocoa RFP. The absence of this specification was deemed by the Respondent to impede the Respondent's ability to assess liquidated damages. The Respondent identified a lease in Sarasota that was negatively affected by the absence of this specification.
Another specification omitted from the Cocoa RFP, that was in the Bradenton RFP, was the specification requiring proposer to pay all renovation costs and that there be no outstanding liens on the property. The Respondent intended to use that specification in the Cocoa RFP. The absence of this specification has resulted in liens imposed on office space the Respondent was procuring.
Another specification omitted from the Cocoa RFP, that was in the Bradenton RFP, was the specification clarifying whether the proposed space had to be in a single building. The absence of this specification was a concern to the Respondent and has created problems for other state agencies.
The Department did not reject all proposals with the intent of avoiding a protest.
The terms of the RFP do not specify when or how the Respondent is to notify proposers of the basis for the rejection of all bids.
The evidence is insufficient to show that the Respondent's rejecting all proposals was illegal, arbitrary, dishonest or fraudulent.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties and subject matter of this cause, pursuant to Section 120.57(1), Florida Statutes.
Petitioners, as rejected bidders, have standing to
challenge the rejection of all bids.
Intervenor, as a rejected bidder, has standing to participate in this proceeding.
Section 120.57(3)(f), Florida Statutes, provides, in pertinent 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 novo 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. 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.
This standard of review was first set forth by the Florida Supreme Court in Department of Transportation v. Groves- Watkins Constructors, 530 So. 2d 912 (Fla. 1988), wherein the Court noted that, "the scope of the inquiry is limited to whether the purpose of competitive bidding has been subverted." In Groves-Watkins, the Court overturned a decision of the district court which was in conflict with its earlier decision in Liberty County v. Baxter's Asphalt & Concrete, Inc., 421 So. 2d 505 (Fla. 1982). The Court noted that in Liberty County it had recognized the broad discretion legislatively accorded public agencies and
held that an agency's decision based upon an honest exercise of this discretion will not be overturned by a court even if it may appear erroneous and even if reasonable persons may disagree.
In the recent case of Gulf Real Properties, Inc. v. Department of Health and Rehabilitative Services, 687 So. 2d 1336 (Fla. 1st DCA 1997), the Department of Health and Rehabilitative Services (HRS) had solicited bids for a facility to house a clinic and, after competitive bidding, had notified Gulf Real Properties (Gulf) that it was the approved bidder. Another bidder filed a protest of the agency decision, which it later withdrew, but while that protest was pending HRS found a location for the clinic in a publicly-owned facility and notified Gulf that it had decided to reject all bids. The First District Court, in affirming the agency decision, noted that there was no showing that the "purpose or effect of rejection is to defeat the object and integrity of competitive bidding."
Likewise, in the instant case, the Petitioners have failed to show that the purpose or effect of the rejection of all bids is to defeat the object and integrity of competitive bidding. Petitioners would urge that by rejecting all bids, the Respondent is protecting its favored bidder whose bid was nonresponsive due to certain omissions identified by Petitioner. Indeed, Petitioners would argue that both of the other bidders submitted nonresponsive bids, leaving Petitioners as the only approvable bidder. Although Petitioners' premise is correct, the
agency would be left with only one responsive bidder. Regardless of the fact that Petitioners were the lowest scoring of the three bidders submitting proposals, the award of a contract to the only responsive bidder cannot be said to foster the object of competitive bidding.
Furthermore, Petitioners have failed to demonstrate that the Respondent acted fraudulently, arbitrarily, illegally, or dishonestly when it advised Petitioner that it was rejecting all bids. Given the facts of this case, the Respondent had no choice but to reject all bids in order to assure that any bid award would be based on the quality and competitive nature of the bids rather than on the ability of the bidders to meet the technical requirements. Faced with the possibility of being left with no more than one responsive bidder, the Respondent has good reason to start the bidding process anew in order to assure that the public received the best contract available in a competitive market.
In addition, the Respondent is not acting arbitrarily in the rejection of all bids when the rejection is based on omissions from the RFP or a change in the Respondent's needs that would affect the ability of the Respondent to perform its prescribed duties. The omissions in the RFP specifications cited by the Respondent were sufficient to justify the rejection of all bids.
The fact that Respondent's chief witness' testimony was
not credible does not make the bidding process itself dishonest or illegal. It appeared to be an attempt to shift responsibility for the failure to include important new provisions in the RFP and to properly evaluate the bids that were submitted.
With several independent bases for the rejection of all bids, it is not necessary to explore what may be an invalid basis for the rejection of all bids. This is particularly true when the alleged invalid reasons are focused on a determination of who is entitled to the award, since that determination is not before the Administrative Law Judge in this proceeding. It is also not necessary to explore whether there was any departmental bias regarding whether the bids were non-responsive. Responsiveness was not an element of the posting by the Respondent and
accordingly is not an issue before the Administrative Law Judge in this proceeding.
Petitioners failed to demonstrate that the Respondent acted in a manner that was illegal, arbitrary, dishonest or fraudulent.
RECOMMENDED that the formal bid protest filed by Petitioners be DISMISSED.
Tallahassee, Leon County, Florida.
DANIEL M. KILBRIDE
Filed with the Clerk of the Division of Administrative Hearings this 24th day of June, 1998.
David A. Theriaque, Esquire 909 East Park Avenue Tallahassee, Florida 32301
Scott C. Wright, Esquire Department of Juvenile Justice 2737 Centerview Drive
Theodore E. Mack, Esquire Powell & Mack
Janet Ferris, General Counsel Department of Juvenile Justice 2737 Centerview Drive
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.
