vs. ) Case No. 98-3593BID
Respondent. )
Pursuant to notice, a hearing was held in Tallahassee, Florida, on September 8, 1998, by Stephen F. Dean, assigned Administrative Law Judge of the Division of Administrative Hearings.
For Petitioner: Robert A. Weinberg, Trustee
For Respondent: David J. Busch, Esquire
The issue in this proceeding is whether the Respondent, the Department of Insurance, acted illegally, arbitrarily, fraudulently, or dishonestly in rejecting all bids for lease #460:0119 and not awarding subject lease to Petitioner.
This is a proceeding in which the Petitioner has challenged the decision of the Department of Insurance to reject all bids received for the RFP for Lease #460:0119. Petitioner filed its formal protest with the Department of Insurance and the Department forwarded the matter to the Division of Administrative Hearings. An Administrative Law Judge was assigned and a formal administrative hearing was noticed in accordance with the time constraints imposed under Section 120.57(3)(e), Florida Statutes.
The hearing was conducted on September 8, 1998, in Tallahassee, Florida. Respondent called as witnesses Mr. Kip Wells, an employee of the Department of Insurance and Mr. Randall Baker, an employee of the Department of Management Services, who was qualified as an expert witness in matters relating to the State of Florida leasing practices and policies. Respondent's Exhibit 1 was admitted into evidence. Petitioner's Exhibits 1, 3, and 4, were admitted into evidence.
The Administrative Law Judge directed that the proposed recommended orders be filed within ten days of the filing of the transcript of the formal hearing. The transcript was filed October 1, 1998. Both parties filed proposed findings which were read and considered.
The Department of Insurance established a requirement to lease 5371 square feet of office space in Daytona Beach, Florida,
and a "Request for Space Need" was approved by the Department of
Management Services on February 11, 1998. The Department of Insurance subsequently issued a Request for Proposal (RFP) for lease #460:0119 (Respondent's Exhibit 1).
A non-mandatory pre-bid conference was held on June 1, 1998, in Daytona Beach and two prospective bidders, Petitioner and Nova Village Market partnership attended.
The RFP provided that proposals which did not meet all mandatory requirements of the RFP would be rejected as non- responsive. The RFP provided for evaluation criteria are awards factors. The awards factors totaled 100 points with no minimum point total required. Ten of the points were allotted for moving costs defined as the costs of relocating communications, networks, furniture and other equipment. This factor gave the current landlord an automatic 10-point advantage since there would be no relocation costs.
Moving costs provisions tend to discourage the presentation of bids because the bidders have to overcome an automatic 10-point advantage provided the current landlord.
The RFP also provided that all proposals could be rejected, however, such "rejection shall not be arbitrary, but be based on strong justification."
None of the conditions of the RFP were questioned or challenged by interested parties.
Two responses were received by the Department of Insurance in response to the RFP and these were opened in Respondent's Tallahassee office on July 8, 1998, by Mr. Kip Wells
of the Department. One was received from the current landlord, Nova Village Partnership, hereafter Nova, and the other from the Petitioner.
The Nova proposal was deemed non-responsive. Neither Nova nor Petitioner contested the determination that Nova's proposal was non-responsive. Only one responsive proposal, the Petitioner's proposal, remained.
On July 9, 1998, the Department representative, Mr. Kip Wells, called Petitioner to schedule an appointment for
9:00 a.m., on July 10, 1998, to visit and evaluate the proposed facility. No persons from the Department appeared at the scheduled appointment.
At 10:45 a.m., on July 10, 1998, Kip Wells called Petitioner to say that since Petitioner's proposal was the only responsive proposal received, and that "all bids" were being rejected.
Mr. Wells testified at hearing. His reason for rejecting the remaining bid was:
When I saw that it was obvious the current landlord was not going to be very cooperative, I decided that one choice was not enough. If we were going to have to make a move, we needed more than one thing to choose from. So, I immediately - - since I
had already set up with local people in Daytona to tell them that I was coming down to evaluate the bids, I sent them an E-mail and told them that I would not be meeting the following day to evaluate the bids.
Mr. Wells decided to reissue the RFP without any moving costs criteria, and redistribute those 10 points among the other award factors.
Petitioner filed a Notice of Intent to Protest and then a Formal Protest, both in a timely fashion.
There is no state policy prohibiting the award of a lease to a sole bidder on a RFP.
The "Leasing Policy" of the Department of Insurance states that "The Lease Administrator, with assistance from the Division employees, will establish bid or quote specifications. These specifications will include special needs for the Division(s) as well as the evaluation criteria upon which to evaluate the proposals."
Neither the Department's Lease Policy (Petitioner Exhibit 3) nor the State's Real Property Leasing Manual (Petitioner's Exhibit 4) give the Lease Administrator the authority to reject or evaluate bid responses. Neither does he have a vote in the bid evaluation process. His responsibility is to coordinate the process.
Randall Baker, Manager of Private Sector Leasing of the Bureau of Property Management of the Department of Management Services (hereinafter DMS), testified. The DMS prepares a manual
as a guideline for user agencies to assist in the leasing of property. The DMS manual is not binding on agencies and DMS has no review oversight; however, their comments on agencies' leases are reviewed by the state auditing authorities and failure to follow the guidelines can result in audit criticism. Baker confirmed that the agency's written procedures as outlined in the RFP were consistent with the DMS guidelines.
The DMS manual states as follows regarding the receipt of only one responsive proposal:
When only one responsive proposal is received it may be considered and accepted providing the following conditions are documented:
Adequate competition was solicited.
The rate is within established rental rate guidelines.
The proposal meets stated requirements.
The proposal was processed as though other proposals were received.
The Petitioner's bid was responsive to the RFP and the lease rate bid by the Petitioner was less than the average rate for state leases in the Daytona area and less than the amount budgeted by the Department for this lease. The lease rate by the Petitioner was reasonably priced and competitive. Although the agency failed to complete the process as envisioned, see paragraph 20 below, this was in no way the fault of Petitioner.
The Department's leasing policy requires that the lowest and best response to an RFP be determined through cost
analysis and evaluation by an evaluation committee.
Mr. Wells did not forward Petitioner's bid to or discuss with the evaluation committee Petitioner's bid, but unilaterally rejected it. It was clear from Mr. Wells' testimony that this was his individual decision and was based upon his personal belief that it was the best thing to do.1
At hearing, the stated justification for rejecting "all bids" was that it gave the Department the opportunity to delete the requirement of moving costs from the awards factors; however, the evidence does not indicate that the moving cost provision result in non-competitive bids. The sole responsive bidder was within the local lease price range and within budget.
Neither the Respondent nor DMS has established a policy prohibiting the acceptance of a sole responsive bid if there is competition solicited. The Department of Insurance has accepted a sole bid on at least one project in the past.
There was no evidence that the RFP was not an open and fair competition. The evidence shows that it was properly advertised, that all conditions were known, and that all interested parties had an equal opportunity to participate. In sum, there was adequate competition in submitting the bids.
Mr. Baker testified regarding the policy of DMS. The DMS policy is that if there is one responsive bidder, there has been competitive bidding.
The RFP provides that the Respondent may reject all bids if it has strong justification. See paragraph 5 above.
Mr. Baker also provided examples of "strong justification for rejecting proposals." His examples include facilities which are proposed outside the required geographic area, prices considerably in excess of state guidelines and agency budgets, specification changes due to modification of the agency's program requirements, and "intervening external forces."
No evidence establishing a strong justification for rejecting the Petitioner's bid was presented.
Without completing the process and evaluating the Petitioner's bid, the agency never considered whether the bid was in the state's best interest. However, this was not the fault of the Respondent, and the agency's failure to follow its procedures should not inure to its benefits.
Further, Because there was no minimum score required on the evaluation criteria of the RFP, there is no need to evaluate Petitioner's proposal because it is the only responsive proposal.
For all the reasons stated above, the rejection of Petitioner's bid was contrary to the terms of the RFP, contrary to state policy, and arbitrary.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has
jurisdiction over the parties and the subject matter presented herein, pursuant to Section 120.57(1), Florida Statutes.
The Administrative Procedure Act, Chapter 120.57(3)(f), Florida Statutes, applies in this case and states in part that "In any bid protest proceeding contesting an 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."
Chapter 255.249 and 255.25, Florida Statutes, provide that the Department of Management Services will have the responsibility for promulgating rules, procedures, and standards for soliciting and accepting competitive proposals for leased space over 3000 square feet in privately owned buildings.
Counsel for Respondent alluded to the applicability of Chapter 287, Procurement of Personal Property and Services, Florida Statutes, in closing comments. Chapter 287, Florida Statutes, does not apply to the leasing of space over 3000 square feet. As might be expected, it addresses procurement of personal property, commodities, and contractual services. Chapter 287, Florida Statutes, does not apply to this case.
Testimony and evidence has shown that competitive bidding did take place in this case, and Petitioner is entitled to "fair consideration of his offer, and is guaranteed the contract if his is the lowest and best bid received."
Hotel China and Glassware Co. v. Board of Public Instruction of Alachua County, Fla. 130 So. 2d 78 (1st DCA 1961). In this case, Respondent confirmed that Petitioner's bid was responsive, and was the only responsive bid. The Department had no strong justification for its rejecting "all bids." The record shows Respondent wrongfully rejected Petitioner's bid in contravention of Respondent's own requirements and policies.
By rejecting "all bids," the Department rejected only Petitioner's bid. Re-biding gives the current lessor a benefit by allowing him to get back into the process. Changing the evaluation criteria to encourage another party to enter the process will provide little benefit to the state, but places Petitioner at a great disadvantage because Petitioner now will be bidding against his prior bid which is public knowledge.
The reason initially stated by Mr. Wells for rejecting the bid is insufficient justification. The argument that the cost of moving provision was detrimental to competition is not substantiated by the facts. The Petitioner's bid is within the range of lease rates for the locality and within the agency's guidelines and budget. There was no change in program or need.
Testimony and evidence has established that Respondent acted in an arbitrary and capricious manner, as defined in Agrico Chemical Co. v. Department of Environmental Regulation, 365 So.
2d 759 (Fla. 1st DCA 1979):
A capricious action is one which is taken without thought or reason or irrationally.
An arbitrary decision is one not supported by facts or logic or despotic. Administrative discretion must be reasoned and based upon competent substantial evidence. Competent substantial evidence has been described as such evidence as a reasonable person would accept as adequate to support a conclusion.
Respondent Department did not follow requirements set forth in the RFP, the Department of Insurance Leasing Manual, or Department of Management Services Real Property Leasing Manual.
For the reasons stated above the agency's decision was arbitrary, and the Petitioner's bids meet the criteria of the RFP.
Based upon the foregoing Findings of Fact and Conclusions of Law set forth herein, it is,
DONE AND ENTERED this 30th day of October, 1998, in Tallahassee, Leon County, Florida.
STEPHEN F. DEAN
Filed with the Clerk of the Division of Administrative Hearings this 30th day of October, 1998.
1/ Mr. Wells testified that there was an evaluation committee and also testified that there was not an evaluation committee. In resolving this matter, I have determined that there was an evaluation committee.
Robert A. Weinberg, Trustee
David J. Busch, Esquire Department of Insurance
Daniel Y. Sumner, General Counsel Department of Insurance
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.
