STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
LIBERTY-CLARK, L.L.C.,
Petitioner,
vs.
CORRECTIONAL PRIVATIZATION COMMISSION AND DEPARTMENT OF CHILDREN AND FAMILY SERVICES,
Respondents,
and
ATLANTIC SHORES HEALTHCARE, INC.,
Intervenor.
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RECOMMENDED ORDER
Pursuant to Notice, this cause came on for formal hearing on June 6-7, 2001, in Tallahassee, Florida, before P. Michael Ruff, duly-designated Administrative Law Judge of the Division of Administrative Hearings.
APPEARANCES
For Petitioners Liberty-Clark, L.L.C.:
Cynthia S. Tunnicliff, Esquire Stephen Spector, Esquire
Brian A. Newman, Esquire Pennington, Moore, Wilkinson,
Bell & Dunbar, P.A.
215 South Monroe Street, Second Floor Post Office Box 10095
Tallahassee, Florida 32302
For Respondents Correctional Privatization Commission: John Alford, Esquire
542 East Park Avenue Tallahassee, Florida 32301
and
Earl Black, Jr., Esquire Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399-0950
For Intervenor Atlantic Shores Healthcare:
Martha Harrell Chumbler, Esquire Carlton, Fields, Ward, Emmanuel, Smith
and Cutler, P.A. Post Office Drawer 190
Tallahassee, Florida 32302 and
Douglas Moody, Esquire McFarlain & Cassedy, P.A.
215 South Monroe Street, Suite 600 Tallahassee, Florida 32302
STATEMENT OF THE ISSUES
The issues to be resolved in this proceeding concern whether the Correctional Privatization Commission (Commission) correctly evaluated, tabulated and ranked the scores of the proposals for designing, financing, acquiring, leasing, constructing and operating a 600-bed secure civil confinement and treatment facility for sexually violent predators. Embodied within this general issue are questions concerning:
Whether the proposal submitted by the Petitioner, Liberty-Clark, L.L.C. (Petitioner Liberty-Clark) is materially responsive to the RFP;
Whether the Commission's treatment of the alternate design costs of Liberty-Clark is clearly erroneous, contrary to competition, arbitrary or capricious;
Whether the Commission's interpretation of the cost- scoring provisions of the RFP is clearly erroneous, contrary to competition, arbitrary or capricious;
Whether the Commission's interpretation of the insurance requirements of the RFP is clearly erroneous, contrary to competition, arbitrary or capricious; and
Whether the Commission's scoring of the implementation schedule of the intervenor, Atlantic Shores Healthcare Inc., (ASH) is clearly erroneous, contrary to competition, arbitrary or capricious.
PRELIMINARY STATEMENT
This cause arose upon the filing of a formal protest and Petition for Formal Administrative Proceeding by Liberty-Clark on May 1, 2001. That petition challenged the publicly-noticed ranking of responses to the Request for Proposal (RFP) at issue. The protest petition was filed with the Commission and with the
Department of Children and Family Services (DCF). The Commission transmitted the Petition to the Division of Administrative Hearings, on or about May 15, 2001, and this proceeding ensued.
On May 8, 2001, prior to the transmittal of the proceeding to the Division, ASH filed a Petition to Intervene, which was granted by order entered May 18, 2001. Following written responses and oral argument, ASH subsequently filed a Motion for Leave to Amend, which was ultimately granted in part and denied in part. ASH also filed a request for official recognition which was granted.
The cause came on for formal hearing on June 6-7, 2001. The Petitioner called six witnesses at the hearing, Tom Boshell, Jerry L. Jennings, Herbert Cutler, George Kotridis, John Jennic, and Jim Strollo. Nine exhibits were introduced into evidence by the Petitioner, and the Petitioner filed the deposition of Richard Rosenvold, which was admitted into evidence. The Respondents called three witnesses, Marianne Edmonds, Stephanie Sanford and Mark Hodges. Additionally, the Respondents had two exhibits admitted into evidence. The Intervenor called Mark Hodges, Carlos A. Valdes-Fauli, and Joe Bosquez. The Intervenor introduced one exhibit into evidence. Three exhibits were introduced into evidence by the parties jointly. Upon concluding the proceeding, a transcript thereof was ordered and thereafter all parties availed themselves of the opportunity to submit
Proposed Recommended Orders. Those submittals have been considered in the rendition of this Recommended Order. On June 19, 2001, Liberty-Clark filed a Motion for Official
Recognition. Upon consideration, the motion is denied. The Life Safety Code Handbook does not meet the Standard for Official Recognition. See 90.202, Florida Statutes.
FINDINGS OF FACT
The Petitioner, Liberty-Clark is a limited liability company formed by Liberty Behavioral Health Corporation and Clark Construction Group, Inc. The Respondent, the Correctional Privatization Commission (Commission or CPC) is a state agency charged under Chapter 957, Florida Statutes, with the purpose of entering into contracts for the designing, financing, acquiring, leasing, construction and operation of private correctional facilities. See Section 957.03, Florida Statutes (2000). The Intervenor, Atlantic Shores Healthcare, Inc. (ASH) is a Florida corporation and wholly-owned subsidiary of Wackenhut Corrections Corporation.
In 1998 the Florida Legislature enacted the Involuntary Civil Commitment of Sexually Violent Predators Act, also known as the Jimmy Ryce Act. The Act became effective January 1, 1999, and is codified at Sections 394.910 through 394.931, Florida Statutes (2000).
Sexually violent predators (SVP's) are individuals who have been convicted of a sexually violent offense and who suffer from a mental abnormality or personality disorder that makes them likely to engage in acts of sexual violence if not confined in a secure facility. Section 394.912, Florida Statutes (2000). A detainee who has been convicted of a sexually violent offense is entitled to a trial, after completion of his or her criminal sentence, to determine whether he or she meets the criteria for long-term commitment under this Act. SVP's who have been committed remain in this program indefinitely, until a court determines that they no longer meet the criteria for commitment.
The Act directs the Department of Children and Family Services (Department) to implement the sexually violent program for the assessment, evaluation, custody and treatment of individuals detained pursuant to the Act. The Department is responsible for all costs incurred in performing its responsibilities under the Act. Section 394.929, Florida Statutes (2000).
The Act recognizes that the extant civil commitment and treatment procedures under the Baker Act are inadequate to address the public risks SVP's pose. The Department currently houses approximately 350 SVP's at a facility in Arcadia, Florida, in DeSoto County. That facility has been operated by Liberty Behavioral Health Corporation for the last two and one-half
years. Liberty Behavioral Health Corporation is a member of the Liberty-Clark, L.L.C., and was designated as the proposed operating entity in the Liberty-Clark proposal.
The current SVP facility was converted into an SVP facility based upon the design of Strollo Architects, Inc. Strollo Architects, Inc., produced the schematic concept design submitted by Liberty-Clark in response to this RFP.
Request for Proposal
On November 3, 2000, the Commission issued a Request for Proposals (RFP) for the designing, financing, acquiring, leasing, construction and operating of a new 600-bed secure civil confinement and treatment facility for sexually violent predators. The RFP was issued by the Commission in consultation with the Department. The RFP requests proposals for the 600-bed facility to be located on approximately 125 acres of state land in DeSoto County, Florida.
The project is a specialized treatment facility with high security requirements for a sex offender population. The RFP identifies the design challenge of providing a secure environment which promotes safety of staff and residents without negatively impacting treatment programs. It is the intent of the Commission that the RFP invite innovation and not require the use of prototype designs. The proposers were asked to submit conceptual/schematic design drawings.
The RFP requires that the facility design meet the following Codes: The Life Safety Code, the Florida Building Code, Chapter 59A-3, Florida Administrative Code, applicable to psychiatric hospitals, the Uniform Fire Safety Standards, the State Plumbing Code, the Handicap Accessibility Guidelines, the Florida Energy Efficient Code for Building Construction, the Florida Energy Conservation Standards and Threshold Building Structural Inspection.
The RFP also requested an alternative design which would meet all of these codes except Chapter 59A-3, Florida Administrative Code, relating to psychiatric hospitals. The RFP states that the Chapter 59A-3 compliant facility should be designed using the standards for psychiatric hospitals as a base line, but that the Department may permit or require modifications to adapt the design to meet the specific needs of an SVP facility. The RFP also states that specifications prefaced with the word "should" or "may" reflect recommendations that the Commission or Department believe will contribute to an effective proposal but which are not binding on the proposers.
The RFP also states that room and unit designs must be consistent with Rule 59A-3.081, Florida Administrative Code, but that unit design may vary in accordance with its intended use.
The RFP identified the Office of the State Fire Marshall, as the office with jurisdiction to determine whether the facility meets Uniform Fire Safety Standards.
The RFP contemplates review of design plans for the successful composer as follows:
Design development documents must be provided within 60 days of award posting. The Department shall then have 30 days to review the advanced schematic design and require modifications thereto. Fifty-percent of construction documents must be provided within 50 days of approval of the design development documents. The Department then has another 30 days to review these drawings and require modifications. One-hundred percent of construction documents must be provided within 50 days of approval of the fifty-percent of construction documents. The Department then has another 30 days to review these drawings and will require further modifications.
The RFP provides that the Commission or Department may waive minor irregularities in proposals where it is in the best interests of the state to do so. Minor irregularities are those which will not have a significant adverse effect on overall competition, cost and performance.
The Commission and Department reserve the right to negotiate adjustments in any and all elements of what proposers submit in their proposals, so long as such adjustments do not have the effect of increasing the total compensation paid over
the total proposed compensation set forth in the submitted proposals.
Four entities responded to the RFP. The companies submitting proposals were Atlantic Shores HealthCare, Inc.; Liberty-Clark L.L.C.; Cornell Companies; and Corrections Service Corporation.
Evaluation and Scoring of Proposals
Proposals were evaluated and points awarded based upon the following seven criteria:
Section | 3 | - Qualifications and Experience | - |
Section | 4 | 150 points. - Physical Plant Design and | |
Section | 5 | Construction - 200 points - Treatment program - | |
Section | 6 | 200 points - Facility Management - | |
Section | 7 | 100 points - Staffing and Security - | |
Section | 8 | 130 points - Implementation Schedule - | |
Section | 9 | 20 points - Cost and Financial Proposal - | |
200 points |
The maximum points possible thus were 1000 points. The costs bid for both construction and operation of the facility make up only fifteen-percent or (150 points) of the total possible highest points available. The cost evaluator for the Commission averaged the operating and construction costs for the compliant and alternative designs. The evaluation and scoring of such Sections 3-9 were to be completed by a team of people. Each team
member independently evaluated the materials and awarded scores for the applicable evaluation criterion. The assignment of evaluators was based upon the expertise of the evaluator. No communication was to be allowed between evaluators during the scoring process. After scoring was completed, the evaluator was to submit his or her scores to the procurement manager of the Commission at a debriefing session. A score of zero to be given to any proposer for any category for which it had no apparent capability or any section of the RFP which a proposer ignored.
The procurement manager was to total the scores received for each section and divide the total by the number of group or team members assigned to that section, in order to obtain an average score per proposal for that category.
Sections 3-8, of the proposals submitted, were scored independently by the evaluators. Thereafter, the evaluators for Sections 3-8 met with personnel of the Commission's office at a debriefing session. The evaluators' scores were discussed and some were changed after discussion.
Section 9 of the proposals, the costs and financial proposals, were to be scored after the scores for the other sections had been received and evaluated according to the terms of Section 13 of the RFP. This section was scored by Marianne Edmonds of Marianne Edmonds, Inc. She was the only evaluator for this section of the RFP. She evaluated the proposals based upon
their operating and construction costs, their financial statements, financing plan and proof of insurance.
Ms. Edmonds did not receive financial statements from the Cornell Companies. Thereafter she contacted the Commission and told the relevant personnel that she had not received Cornell Company's financial statements. The Commission found the financial statements and provided them to her. Cornell had submitted its financial statements in a manila envelope with the RFP. The envelope, however, was not attached to Cornell's Section 9 notebook (Section 9 proposal) and it was not labeled Section 9. Ms. Edmonds revised Cornell's score to reflect an additional 5 points for Cornell after the Commission provided her with the financial statements.
The Commission did not make any direct determination as to responsiveness, but rather, scored the various proposals. According to the RFP Section 13.1, page 77, proposals considered non-responsive by the Commission were ineligible for evaluation. Both Liberty-Clark and ASH were evaluated by the Commission's team of evaluators as were the other two above-named proposers. The Department, not the Commission, will determine the final award. The Secretary of the Department will determine the final award after reviewing the Commission's rankings and the proposals. According to the RFP, Section 13, page 76, the
Department will take into consideration the costs of the proposals and the evaluation criteria set forth in the RFP.
After the Commission's scoring was announced Liberty- Clark timely filed a Notice of Protest, followed by a formal written protest and Petition for Hearing. In its Petition it cited numerous errors in score tabulation, inappropriate application of the cost formula provided by the RFP and the failure to award it full point credit for providing proof of insurance.
Responsiveness
ASH alleged in its Petition to Intervene that Liberty- Clark's proposal was non-responsive because its Agency for Health Care Administration (AHCA) compliant or psychiatric hospital "design" did not incorporate elevators and other allegedly required elements and failed to identify certain required details in its drawings as shown by the list of items depicted on pages
11 and 12, of the Intervenor's Proposed Recommended Order. ASH had identified Richard C. Rosenvold during discovery as an expert witness to offer an opinion that Liberty-Clark's hospital compliant design did not meet the AHCA rule applicable to construction of psychiatric hospitals, Rule 59A-3.081, Florida Administrative Code. Mr. Rosenvold is an architect certified by the National Council of Architectural Registration for approximately 40 years and worked as an architect for the AHCA
from 1971 until 1993. He and his section were responsible for reviewing health care facility plans for compliance with the AHCA rules. He was not called as a witness at hearing by ASH, but rather his deposition was entered into evidence by Liberty-Clark during its case-in-chief.
He explained, during his deposition, that there are generally three phases of architectural drawings reviewed by AHCA for a particular project. The first phase is the schematic or concept design drawing. These drawings are a small-scale representation of what is intended to be built and are not detailed and cannot be used for construction specifications or as "as built" plans. Schematic drawings are reviewed by AHCA and commented on regarding code and rule deficiencies in response to the design architect. The drawing is then revised and re- submitted to AHCA for approval. Once the schematic design is approved the architect submits drawings for the next phase, the preliminary design phase. These drawings are far more detailed than the schematic drawings but still cannot be used for construction specifications. Again the drawings are reviewed but for code and rule compliance by AHCA and comments on the deficiencies are made to the drafting architect. The preliminary drawings are then revised to cure those deficiencies and resubmitted for approval.
Once the preliminary drawings are approved, the architect next submits construction drawings for approval. Again AHCA comments on deficiencies and these deficiencies are addressed through the provision of the design drawings until approval from AHCA is obtained. Mr. Rosenvold found deficiencies with Liberty-Clark's schematic/conceptual drawings but testified, as well, that there were no deficiencies he observed that cannot be resolved through the typical design revision-planning process, before the final "as-built" plans are arrived upon.
ASH alleged in its Petition to Intervene that Liberty- Clark's design was non-responsive because it failed to incorporate elevators and other requirements for licensure of psychiatric hospitals in its hospital-compliant design, in accordance with Rule 59A-3.081, Florida Administrative Code.
Mr. Rosenvold testified in his deposition, admitted into evidence by Liberty-Clark, that the design did not meet Rule 59A- 3.081(37), Florida Administrative Code, because there were no elevators in areas of the design that were multi-level. He also testified that the multi-level area on ASH's design also violated that same rule.
Rule 59A-3.081(30)(n), Florida Administrative Code, states that: "Multi-storied psychiatric hospitals shall have elevators." Rule 59A-3.081(37), Florida Administrative Code, states that: "All hospitals where either patient beds or a
critical care service facility such as operating, delivery, diagnostic, recreation, patient dining or therapy rooms are located on more than one floor, shall have electric or electro- hydraulic elevators . . .". The terms "multi-story" or "floor" are not defined by Rule 59A, Florida Administrative Code.
Liberty-Clark presented the expert testimony of Jim Strollo at the hearing. He is an architect licensed in Florida, Virginia and Alabama and by the National Council of Architectural and Restoration Boards. He is the president of Strollo Architects, Inc., who produced the schematic/conceptual drawings that Liberty-Clark submitted with its proposal. He explained that the terms "multi-story" and "multi-level" have different meanings to architects and contractors. He stated that Liberty- Clark's design, which is a multi-level design as pertinent hereto (as well as ASH's compliant design) can be considered a one-story structure according to the Life Safety Code handbook in the annotation section at A-14-2.41 of that handbook. Mr. Strollo therefore believed that elevators were not required by the AHCA rules because their design was not multi-story. If, however, AHCA and the Department insisted that elevators are required for the design they could easily be added, according to Mr. Strollo, in both the Liberty-Clark and the ASH designs. Mr. Strollo, like Mr. Rosenvold, agreed that design modifications such as this
commonly occur during the design approval process, with various code officials, before final construction plans are created.
ASH presented the testimony of Carlos Valdes-Fauli, an architect employed by Wackenhut Correctional Corporation. He testified that both ASH's and Liberty-Clark's multi-level designs did not entirely meet AHCA's standards and that neither proposal was one-hundred-percent AHCA compliant as to the requirements referenced in the above-cited rule for licensed psychiatric hospitals. It is also true that, although the RFP states that AHCA's standards for psychiatric hospitals are to be used, this appears to be a basic requirement and the overall import of the RFP shows that the Department intends that the use of the resultant facility, and therefore its design, might differ somewhat from that of a traditional psychiatric hospital.
Mr. Valdes-Fauli, for instance, testified that Section 4.9 of the RFP implied that AHCA standards for psychiatric hospitals would not entirely apply to the high risk unit because of the increased security needs attendant to that unit and that therefore the high risk unit design did not necessarily have to meet the AHCA psychiatric hospital standards.
Section 4.9 of the RFP concerning the high risk unit, states that this unit should be designed to house residents who are either considered escape risks or who have committed serious violations of resident conduct standards. Although the high risk
unit is intended to be the housing area with the highest level of security, other areas of the facility must also meet heightened security standards. RFP, Section 4.9, page 38.
The standards in the RFP, Section 4.7, for intermediate units states that the proposer should consider the need for "heightened security" within that unit. Thus, both the intermediate and high-risk units are required by Section 4.7 of the RFP to have "line of sight" coverage or visibility from a secure central room.
Mr. Strollo explained that various modifications to Liberty-Clark's design could be made to clear any objections posed by the AHCA rules such as designation of more nurses' stations, revisions of the infirmary area, etc. He testified that Liberty-Clark has enough square footage in its design to accommodate many revisions that might be requested by code officials, AHCA, or the Department. Moreover, while many of the purported deficiencies or alterations listed on pages 11 and 12 of the Proposed Recommended Order of the Intervenor, might need to be made in order to strictly comply with a licensed psychiatric hospital design, according to the above-referenced rule, it cannot be found, based on the evidence and the terms of the RFP, considered as a whole, that the Commission upon issuing the RFP, intended for the requirements for a psychiatric hospital to be strictly adhered to.
ASH's compliant design would also have to be modified somewhat to conform to requirements for adequate areas of refuge from fire, to add perimeter guard towers and to provide a second means of egress. Its design did not comply with AHCA Rule 59A- 3.081(3)(a)1, for instance, which requires a minimum of three feet between the bed and side wall in patient rooms. ASH's rooms would have to be re-configured to accommodate this rule so that adequate distance would be present on both sides of residential beds, if the AHCA standards for psychiatric hospitals are thus to be adhered to. Although the RFP states that AHCA standards are to be used at least as a base-line, it is clear that the Department intends to use this facility, and therefore the design, somewhat differently than would be the case with a traditional psychiatric hospital. It is not clear from the RFP, however, to what extent the design is intended to and will ultimately differ from a traditional hospital design.
Liberty-Clark received the highest evaluation score for residential areas of the physical plant design. This criterion evaluated how well the schematic design conformed with the design specification set forth in Sections 4.5 through 4.9 (the trustee, intermediate, reception/detainee, high risk, and special needs resident units). Liberty-Clark received an average score of 4.5 of a possible 5 points. ASH received a 4.0 in this section. Accordingly, it is apparent that the independent Commission
design evaluators believe that Liberty-Clark's design best achieved the RFP objectives as to the residential unit design.
ASH also alleges that Liberty-Clark's compliant hospital design is non-responsive because the residential areas of the design did not meet Chapter 12, of the 1994 edition of the Life Safety Code, the portion of the Life Safety Code applicable to hospitals.
Liberty-Clark's residential housing units were not designed to meet Chapter 12 but rather Chapter 14 of the Life Safety Code. That Chapter is applicable to detention and correctional occupancies.
Mr. Strollo's testimony shows that the office of the State Fire Marshall will apply Chapter 14 of the State Fire Code to the residential units and the Liberty-Clark design because the State Fire Marshall considers the facility to be more of a civil confinement facility than a true hospital. The RFP designates the State Fire Marshall as the official with jurisdiction to determine compliance with the Life Safety Code.
Mr. Strollo explained that the Fire Marshall was correct in applying Chapter 14 instead of Chapter 12 (the Chapter applicable to hospitals) because a confined population has different needs than hospital patients do in an emergency situation.
The security features necessary to house the SVP population differ from the housing needs of patients in a traditional psychiatric hospital. The differences in the needs of the SVP and traditional Baker Act patients are set forth in Section 394.910, Florida Statutes (2001), where it states in pertinent part:
The existing involuntary commitment procedures under the Baker Act for the treatment and care of mentally ill persons are inadequate to address the risk these sexually violent predators pose to society. The Legislature further finds that the prognosis for rehabilitating sexually violent predators in a prison setting is poor, the treatment needs of this population are very long term, and the treatment modalities for this population are very different from the traditional treatment modalities for people appropriate for commitment under the Baker Act.
The RFP thus states that the office of the State Fire Marshall is the agency with jurisdiction to review the facility for compliance with the Life Safety Code. Moreover, the RFP does not state that Chapter 12 of the Life Safety Code, rather than Chapter 14, should govern the design of the residential units.
Even if the Department or the State Fire Marshall later held that Chapter 12 of the Life Safety Code was applicable to residential areas of the facility, the design changes could be made to the schematic drawings that would conform the residential areas to Chapter 12 which actually might result in a savings in
construction costs to Liberty-Clark. Mr. Rosenvold, as well, testified that there were no Life Safety Code violations in Liberty-Clark's design that could not be cured through normal design alterations.
Finally, it should be pointed out that the Commission, in evaluating the proposals, did not determine that either Liberty-Clark or ASH's proposals were so non-responsive as to be materially deficient and therefore, appropriate for disqualification. Even CSC's proposal, which omitted one section on its costs entirely, was not disqualified. Accordingly, any deficiencies with Liberty-Clark's or ASH's schematic designs do not rise to such a level of materiality under all of the circumstances of the RFP, as to render either proposal non- responsive.
Financial Statements
Section 13.9 of the RFP requires the submission of audited financial statements prepared in accordance with generally accepted accounting principals for the previous five years. The RFP further states that only the financial statements of the company that will be operating the facility will be evaluated.
The Liberty-Clark proposal contains five years of audited financial statements for Liberty Behavioral Health, Inc., the operating company and Clark Construction, the construction
company. Liberty-Clark's proposal is responsive to the RFP because it includes five years of audited financial statements for Liberty Behavioral Health, Inc., the company that will actually operate the facility should Liberty-Clark receive the contract. That is sufficient compliance with the relevant provisions of the RFP and shows sufficient assurance of financial resources to the agency to find the Liberty-Clark proposal responsive in this regard.
The Score
Stipulated Errors:
The Commission acknowledges and the parties agree, that the scores posted for all four proposals are erroneous in part. Errors made in CSC's and Cornell's proposals did not affect their third and fourth ranking and therefore are not addressed here. However, when Liberty-Clark's scores for facility management were recorded on the final spreadsheet the scores for two particular items were incorrectly recorded as 3.33, rather than 4.33. Due to the weighting of scores, the correction of these errors resulted in an additional seven points for Liberty-Clark. This change is undisputed.
Secondly, ASH's final score, according to the Commission, for implementation which was supposed to reflect the average of the scores assigned by the four evaluators who scored that Section, was incorrectly recorded as 1, rather than as 1.25.
Again, due to the weighting assigned to this Section the correction of this error alone adds one additional point to ASH's score. Thus with these corrections alone, without considering the findings made infra., concerning the implementation schedules, the scores assigned to ASH and Liberty-Clark, apart from their scores for costs, at this point would be 737.52 and 705.30, respectively.
The two other errors admitted to by the Commission both relate to scoring of costs. The ASH cost information reviewed by the Commission's cost evaluator, Marianne Edmonds, was erroneous. Ms. Edmonds based her calculations upon the Form A contained in the copy of ASH's proposal provided to her by the Commission. However, the original and five of the six copies of the ASH proposal that were maintained in the Commission's offices reflected higher costs. In addition, the Form B in all of ASH's proposals, which provided the itemized costs supposedly then presented in summary form on Form A, is consistent with the higher summary costs reflected on all Form A's, other than the one received by Ms. Edmonds for evaluation.
The evidence adduced at the hearing provides no explanation of why a single copy of ASH's proposal contained erroneous lower costs information. However, the parties' reached a stipulation that the higher costs included in the other six copies of the proposal are correct. The calculation of ASH's
cost scores using these higher costs does not change the ranking of the proposals in any event. Consequently, correction of this error adversely affects ASH's numerical score but does not impact the overall ranking.
The final error relating to the scoring involved the application of the cost scoring formula. The RFP establishes the following formula for computing cost scores:
15 - [Evaluating Bid - Base Cost) x 15] Base Cost
Where:
Evaluating Bid = the combined per diem construction and
operating cost of the proposal being evaluated.
Base Cost = the lowest per diem construction and
operating cost proposed.
The hospital and non-hospital designs submitted by each proposer were to be evaluated using the same criteria. RFP Section J-1, Addendum 2, Answers at 11 (#8). Thus, it was necessary for Ms. Edmonds to separately apply this formula to each set of costs included in a proposer's cost and financial proposal, Book 9, and then average the two scores. Since the RFP further stated that the maximum possible score for cost was 150 points, the points derived from this calculation were then to be multiplied by a weight factor of 10 in order to ascertain a proposer's final score.
In her calculation of each of the four proposals' scores, Ms. Edmonds inadvertently substituted the "evaluating bid" as the divisor in this formula, rather than the "base cost." See Stipulation at E16; T197. This calculation error was consistently made in her scoring of all four proposals.
Liberty-Clark's Cost Score
ASH maintains that Liberty-Clark's proposal materially deviates from the RFP and should have been rejected from consideration all together. However, even if it were responsive, ASH contends that its proposal should not be awarded the highest ranking.
When the error by Ms. Edmonds, involving substituting the "evaluating bid" as the divisor in the formula rather than the "base cost" is corrected, Liberty-Clark's unweighted score for its hospital-compliant design is 5.13. However, because it failed to include the costs for its non-hospital design in its costs proposal in Section 9, as required by the RFP, Ms. Edmonds gave Liberty-Clark a score for the alternative design of 0 since she did not have the cost information to evaluate. That left Liberty-Clark, at that point, with a combined, weighted cost score of 25.65. (5.13+0)÷2[x10=25.65].
In this connection, the RFP provided that proposals were to be submitted in nine separate sections, with each section
in clearly labeled packages (notebooks). The sections were to be separated as follows:
Section 1: Mandatory Requirements. Section 2: Executive Summary.
Section 3: Qualifications and experience.
Section 4: Physical plant design and construction.
Section 5: Treatment Program. Section 6: Facility Management. Section 7: Staffing and security. Section 8: Implementation schedule.
Section 9: Cost and Financial Proposal.
J-1 at 75 (Section 13.0).
The RFP stated that:
[t]he proposal shall be submitted by section with each section in separate, clearly identified packages with the dated to be opened and the proposer name printed on the package. There shall be seven (7) copies of each section, and each section shall be packed separately.
. . .
. . . . It is the proposers' responsibility to ensure that the required information is submitted in the correct sections and that there are seven (7) separately packaged and identified copies of each section for distribution to the evaluators.
J-1 at 73 (Section 12.0).
Failure to comply with all mandatory requirements may render a proposal non- responsive and ineligible for further evaluation. Compliance with these criteria is considered to be the minimum level of acceptable responsiveness; therefore, no points will be awarded for completing all
mandatory requirements. The mandatory requirements are:
. . .
3. Was the proposal submitted in the separate sections as specified in Section 12.0 of this RFP?
Id. at 77 (Section 13.1)(underlining in original).
These instructions were again emphasized with further explanation in Addendum 2 to the RFP, where potential proposers were informed that "an evaluator will only receive that section of the proposal that he or she is evaluating". This requirement was imposed to ensure that evaluators only reviewed the materials relevant to the area they were to evaluate and to prevent any unfairness that might otherwise occur.
With respect to the non-hospital design, the RFP instructed proposers to "detail in all sections the design changes attributable to this alternative plan. All forms (i.e.: Forms A, B, D, E, F, and G) shall be included in the appropriate sections for the alternate plan". J-1 at 34 (Section 4.1). Forms A and B relate to costs. In response to questions received by a potential proposer, the Commission reiterated that each section would be separately evaluated. See J-1 at Addendum 2 (CiviGenics Questions #1 and 26, Commission Answers at 11 and 13).
Notwithstanding these instructions, Liberty-Clark did not include its cost information regarding its non-hospital design in Section 9 of its proposal. Rather, it placed that information in Section 4, entitled Physical Plant Design and Construction, based upon the mistaken belief that the non- hospital design would only be evaluated on a "pass/fail" basis. Liberty-Clark assumed that its non-hospital design costs would not be factored into its score.
Since Ms. Edmonds was only assigned to score and evaluate Section 9 of each proposal, she did not receive Liberty- Clark's non-hospital costs. Ms. Edmonds also found that the Section 9 submitted by CSC did not include any non-hospital costs. In fact, CSC did not submit a non-hospital design proposal at all. She consulted with the Commission's procurement manager, Mark Hodges, when she discovered these omissions and advised him of her intent to award both proposers no points for their non-hospital design. She also noted that the materials initially sent to her did not include financial statements for Cornell. However, those materials were merely in a separate, clearly labeled folder and had been inadvertently omitted by an employee of the Commission. The materials were supplied to her and she evaluated them in considering Cornell's proposal. In any event she decided to award both CSC and Liberty-Clark no points for their non-hospital design and that remains the Commission's
position. Thus, if that decision is adhered to, Liberty-Clark's total, unweighted cost score-calculated by averaging the 5.1347 unweighted points for its hospital design with the zero received for its non-hospital design is 2.565. Once multiplied by the weighting factor of 10, Liberty-Clark's final cost score is 25.65 points, if its non-hospital cost proposal receives no points.
The Commission had informed potential proposers that both the hospital and non-hospital design would be scored, with the same criteria being applied to both. See the RFP at J-1,
Addendum 2, at CiviGenics questions 7 and 8, Commission Answers numbers 7 and 8 at 11. Thus, in the scoring of costs,
Ms. Edmonds separately calculated the costs scores for ASH's hospital and non-hospital designs and then averaged those individual scores in order to determine the proposal's unweighted cost score.
Liberty-Clark contends that its non-hospital cost must be included in the calculation of its score. It argued in its Petition that the costs should have been placed in the design section of its proposal. The provisions of the RFP referenced above and discussed above, however, do not support that contention. Thereafter, Liberty-Clark has contended that because its non-hospital costs were included within the four corners of its proposal, albeit not in the Section 9 Cost and Financial
Portion, then the Commission had a duty to find and extract that information for purposes of scoring the involved costs.
There is no question that Liberty-Clark submitted its alternate design Form A and B as to alternate design and prices in its proposal, it just did it in Section 4 rather than
Section 9, apparently through a mistaken impression as to the RFP requirements. Even if mistaken, Liberty-Clark's placement of its alternative design in Form A and B with associated costs in Section 4 rather than Section 9, contrary to the exact requirements of the RFP, is of no material consequence in these proceedings.
Using Liberty-Clark's non-hospital or alternate costs in the weighing and scoring process would accord it no additional favorable treatment or advantage over the other bidders whose non-hospital or alternative design costs were weighed and counted in the scoring and evaluation process. The record shows no evidence which would establish that Liberty-Clark would receive a competitive advantage or that other proposers would be competitively disadvantaged by Liberty-Clark's placement of its alternate design and costs in Section 4 rather than in Section 9. The alleged error is at most a minor irregularity because it has no significant adverse effect on overall competition, costs or performance. The fact of its inclusion in the proposal and the agency scoring and evaluating its costs, in spite of the fact
that they were in Section 4 rather than Section 9, would afford Liberty-Clark no treatment more favorable than other proposers who happened to file their alternative design costs in the precise category called for by the RFP. Indeed, the only advantage gained by Liberty-Clark by counting its alternative design costs, although filed in a different section of the RFP, is whatever reasonable advantage is afforded it in the evaluation-scoring process by the fact that its alternative design costs are the lowest. This, however, would be the result of the manner in which it prepared, filed and arrived at its proposal and not due to any special favored treatment by the agency in considering its alternative design costs. If the agency did not consider these costs in the scoring and evaluation process, merely as a result of this non-material deviation from the RFP which has no real competitive effect in and of itself, the agency would be arbitrarily failing to consider Liberty- Clark's alternative design costs, which are the lowest such costs. The agency should consider them so as to adequately protect the public interest in securing the lowest possible costs for suitable procurement of goods, plant and services.1
Thus, if the Commission were to factor in Liberty- Clark's misfiled, non-hospital cost proposal, Liberty-Clark's cost would be the lowest of the non-hospital cost proposed. Thus, Liberty-Clark's unweighted, non-hospital cost score would
be 15. When averaged with its hospital cost score and multiplied by the weighting factor, this would give Liberty-Clark a total costscore of 100.67. As found below, however, this cost score when added to Liberty-Clark's other scores would still leave Liberty-Clark a second-ranked proposer.
ASH's Cost Score
ASH received a score of zero for its hospital design costs. ASH's hospital costs were more than twice that of the base bid (CSC's costs), therefore, under the formula, a negative number resulted. The Commission, instead of entering a negative
1.50 for the hospital design cost category for ASH, determined that the score should not be below zero and accorded ASH a zero for this category. Liberty-Clark, however, contends that ASH's unweighted score for hospital design cost should be a negative
1.50 (below zero).
Liberty-Clark contends that this negative number, when added to the score of 14.17 for ASH's non-hospital costs results in 12.67. Dividing that number by 2, gives an average score of
6.34. That must then be multiplied by the weighting factor of 10 to determine ASH's total points to be 63.4 for the cost evaluation section, according to Liberty-Clark.
The Commission, through its evaluator, elected not to use the cost formula to derive a negative number for either the hospital or non-hospital costs. Mr. Hodges, the Executive
Director of the Commission and the Procurement Manager under the RFP, drafted the cost formula. He never intended for the formula to result in a negative number and this formula had been used in previous RFPs by the Commission and had never before resulted in a negative number.
Although the RFP did not specifically state that the cost formula should not result in a negative number, it did not need to. Since the cost evaluation was 15% of the total 1000 points to be awarded, and since 150 points were expressly stated as the maximum points allowed in this section, then zero is obviously the lowest number allowed to ensure that no proposer will receive more than a 15% benefit or disadvantage from this section. Each section of the RFP was given its own percentage value, meaning that the value to be awarded a proposer was between zero and the upper limit identified by that percentage. No other section in the RFP allowed for a score less than zero.
Both the cost evaluator and procurement manager agree that the cost scores for the hospital and non-hospital designs were to be weighted equally, particularly since it is not known whether the Commission or the Department will desire a hospital or non-hospital design in the final analysis. Liberty-Clark's accounting expert witness agreed that the hospital and non- hospital sections should have equal weighting.
This equal weighting means that the maximum number of points the proposer can obtain for the hospital costs section of its proposal is 7 1/2% of the total points (75 points). Likewise, the maximum number of points a proposer can receive for the non-hospital cost section of its proposal is 7 1/2% of the total points (75 points). The maximum spread of points for costs between the highest and lowest proposer for each of the two design sections, therefore, must be 7 1/2% or 75 points.
Unless the cost evaluator adjusts a negative number to zero at the time the formula calculates a negative number and scores the proposer with zero points for that design, then a score for one design can actually take away from points scored on the other design. In other words, if either the hospital or non- hospital proposal were given a negative cost score, that negative score would actually deduct from the score awarded for the other design when the two scores were averaged by the cost evaluator. This is precisely the result that would occur if Liberty-Clark's proposed evaluation of ASH costs were performed.
Allowing a negative number thus would have the effect of giving one design more weight than the other design, which is contrary to the terms of the RFP. Allowing a negative number would thus create an unfair result.
When the cost evaluator calculated the scores that were posted by the Commission, the possibility of deriving a negative
number was not an issue because she used an incorrect denominator for all four vendors. The issue of a negative number only arises when a proposer's costs are more than twice as high as the base costs to be used in the denominator.
When the cost evaluator discovered her inadvertent error after the Commission had ranked the proposals, she informally re-calculated the costs using the proper denominator in the formula. It was at this time that the issue of the negative number arose. At this time, the only proposer potentially receiving a negative number by use of the cost formula was Cornell, one of the four vendors.
The cost evaluator then spoke to the procurement manager and told him that application of the cost formula to Cornell scores should be adjusted to zero, as opposed to preserving a negative number. She determined that a negative number was not contemplated by the RFP and that nowhere else in the entire RFP was a section given less than zero points. She also determined that use of a negative number simply was not logical. Given the 15% point spread in this section of the RFP, awarding a score of zero to 15 for a maximum of 150 points when multiplied by 10, was consistent with the RFP. The cost evaluator determined and the procurement manager concurred, that she should adjust Cornell's scores to zero at the time they become negative, instead of allowing a negative number.
After the decision had been made by a cost evaluator and agreed to by the procurement manager under the RFP that any re-calculation of Cornell's costs should not include a negative number and instead be adjusted to zero, it was discovered that cost information contained in Form A of the ASH proposal reviewed by the cost evaluator was incorrect. Prior to that time, the cost information reviewed by the cost evaluator for ASH had not resulted in a negative number. However, the correct ASH costs contained in Form A in its original proposal, and in all other copies, contained the higher costs that were ultimately stipulated by all parties as being the appropriate costs to use as the ASH per diem costs, as found above.
When the cost evaluator, for informational purposes, calculated the cost formula using the higher stipulated ASH costs, the issue of a negative number once again occurred as the ASH hospital costs were more than twice the "base bid" being used. When this issue involving ASH arose, the cost evaluator and procurement manager had already determined that the formula should not be used to reach a negative number, but instead should be adjusted to zero. Thus the lowest score ASH should receive for its hospital design costs was zero, resulting in zero points for that design.
The cost evaluator and the procurement manager, who drafted the cost formula, agree that whenever the costs used in
the cost formula can potentially result in a negative number, the negative number must be adjusted to zero. This protects the percentage spread for each section that was provided by the RFP. Furthermore, it prevents one section from deducting points from another section. It also ensures that each design- hospital and non-hospital - is weighted equally as intended in the RFP. Finally, it ensures that a vendor who submits high cost information is not penalized more than a vendor, such as CSC, who failed to submit any cost information for a non-hospital design and received zero points.
Liberty-Clark's expert witness acknowledged that at some point a negative number must be adjusted to zero. He agreed that the RFP did not contemplate negative points. Originally, he determined that the negative number should not be adjusted to zero until after the cost evaluation section had been added to the financial statement/insurance section and the financing plan section of Section 9. However, he acknowledged at hearing that it was erroneous to treat the formula this way, as he acknowledged it unfairly allowed the cost section to take away points earned in other sections contained within Section 9. The Liberty-Clark witness at the hearing did not adjust the ASH hospital cost negative number to zero and the negative number in averaging the scores. However, unless a negative number is adjusted to zero, once it potentially occurs, the score for one
section, whether it be the hospital or non-hospital proposal section, will deduct points from the other design section. A negative score creates an unfair and unintended result that is contrary to the RFP.
The cost evaluator further testified that even if Liberty-Clark's non-hospital costs are evaluated, even though they were not properly included in Section 9 of its proposal (see above Findings and discussion), then she would score ASH with a zero for the hospital section (as opposed to the negative 1.50 advocated by Liberty-Clark). This, when averaged with the non- hospital score, will result in a score of 7.087. This is then multiplied by 10 to provide ASH with a score of 70.87 points for the ASH cost section.
The Commission's decision to replace any negative value with a zero as soon as the negative number appears has not been shown to be clearly erroneous. It would not cause an anti- competitive result, unfairly favoring one vendor and is rational and logical. It is thus not arbitrary or capricious and should be accepted.
Liberty-Clark has disputed the Commission's scoring of ASH's non-hospital design costs which hinges upon whether ASH's costs of $220.71 or Liberty-Clark's costs of $209.20 (per diem) should be used as the Base Costs for purposes of the formula. ASH maintains that since Liberty-Clark's proposal is non-
responsive, because its non-hospital costs were not filed in Section 9 of the RFP but in Section 4 instead, that they are not eligible for award, therefore, the lowest non-hospital costs to be used as the Base Costs would be ASH's. This would result in an unweighted score for ASH of 15 for its non-hospital design which, when averaged with its zero for hospital design and multiplied by the weighting factor of 10, would give ASH a total weighted cost score for its proposal of 75.00.
As found above, however, it is appropriate that the Commission evaluate the non-hospital costs submitted by Liberty- Clark. If Liberty-Clark's non-hospital costs are factored into the scoring and used as the Base Cost, as indicated by the evaluator witness for the Commission, ASH's unweighted, non- hospital score would be 14.1747. Once that is averaged with ASH's hospital score of zero and then weighted by the factor of 10, ASH would have the combined weighted cost score of 70.87. The Insurance Requirement
The Commission deducted 2 points from Liberty-Clark's proposal for purported failure to provide adequate proof of its ability to obtain insurance.
The selected proposer for the contract will be responsible for obtaining comprehensive insurance coverage for general liability, automobile and workers compensation. The proposers responding to the RFP were not required to actually
purchase coverage but were required to show the ability to do so if selected.
Liberty-Clark presented the testimony of Herbert Cutler to establish its ability to provide insurance for the project. Mr. Cutler has a major in insurance and a degree in business administration and has worked in the insurance industry since 1962. He has worked as an insurance broker since 1971. His primary professional responsibilities have involved obtaining and binding insurance for commercial customers and then managing the accounts. He has experience in procuring comprehensive insurance for the operation of health care facilities. He also has experience in procuring comprehensive insurance for construction projects. He was qualified as an expert on the subject of insurance procurement and management of commercial insurance accounts.
Mr. Cutler was retained to acquire all necessary insurance coverages for Liberty-Clark in the event that it was the selected proposer for the contract. In furtherance of this task, he reviewed all of the insurance requirements for the project and contacted insurance carriers regarding the procurement of insurance. He determined that he would be in a position to bind all coverages as required in the RFP, for Liberty-Clark.
As proof of Liberty-Clark's ability to obtain insurance for the project, its proposal contained a letter signed by
Mr. Cutler stating that he would be in a position to bind all coverages as required for the RFP on behalf of Liberty-Clark. The proposal also contains a Certificate of Insurance on behalf of Clark Construction, indicating that applicable insurance was in place at the time the Certificate was issued.
ASH submitted a letter from an insurance broker, as proof of insurability, stating that all of the coverage required by the RFP was available to ASH. Attached to the letter is a "Specimen Certificate of Insurance," which apparently indicates the insurance in force for ASH on the date the specimen certificate was issued, February 14, 2001. The specimen certificate also reflects that the referenced coverage expired on July 1, 2001. The certificate does not contain any evidence that the referenced coverages were renewed at expiration or replaced by another insurance policy. There is no other evidence in the record of ASH's ability to obtain insurance for construction and operation of the subject facility provided for in the RFP.
Proposer CSC and Cornell also submitted letters from insurance brokers stating the ability to obtain the required insurance along with sample certificates of insurance indicating insurance presently in place. Similar to the certificate submitted by ASH, the CSC and Cornell certificates do not
evidence an ability to obtain insurance beyond the referenced expiration dates.
The sample certificates of insurance provide the only distinction between Liberty-Clark's proof of ability to obtain insurance and the other proposers. These certificates of insurance, however, merely provide a snapshot view of insurance presently in place as of the dates of the certificate and show nothing about insurance to be in place in the future. They provide no competent evidence of ability to obtain insurance in the future for the construction and operation of the subject facility.
Thus, for purposes of establishing the ability to obtain insurance as required by the RFP the documentation of ASH, CSC, Cornell and Liberty-Clark are substantially equivalent. The documentation submitted by Liberty-Clark is not more or less reliable evidence of insurability than that submitted by the other proposes. Accordingly, each proposer is entitled to an equal amount of credit for submitting proof of ability to obtain insurance under RFP Section 13.9, and no point deduction should be ascribed to Liberty-Clark. Thus it should receive the full 5 points in showing ability to obtain insurance.
Implementation Schedules
ASH contends that the Liberty-Clark implementation schedule is not responsive in its proposal as to Section 8 of the
RFP because it makes its proposed implementation schedule and its willingness to undertake the contract contingent upon a financial commitment from the Commission to reimburse it for design costs, regardless of whether the construction continues beyond the design stage or not. It cites the proposed project schedule summary submitted by Liberty-Clark which identifies an "agency commitment for design costs" as being an event that must occur on the same day of the contract award posting-months prior to the execution of the contract. ASH, on the other hand, contends that rather than conditioning timely completion of construction upon a commitment to reimbursement of design costs, that ASH merely "recommended that contract execution and project funding be completed prior to any major design/development milestones being completed." ASH contends that by purportedly requiring the Commission to guarantee payment for design costs Liberty-Clark avoided the necessity of self-funding these costs and the risk that they might never be reimbursed. ASH argues that other proposers who did not make implementation of the contract contingent upon such guarantees enjoyed no such alleged competitive advantage.
It does not appear, however, that the language cited by ASH, from Liberty-Clark's proposal, clearly means an actual binding commitment by the agency to pay design costs whether construction continues or not. The proposal language states that
"since design is critical to the schedule and involves significant up-front costs, we anticipate early release and assurances from the Department that Liberty-Clark will be reimbursed for the design costs incurred, regardless of whether the construction continues or not." The above-quoted language, especially the use of the word "anticipate" would not seem to amount to a mandatory contingency upon Liberty-Clark's entering into a contractual relationship with the state. In fact, it logically and reasonably would seem to be no more of a binding contingency than the recommendation language submitted by ASH. See J-3, book 8 at Tab A and Tab B. This has not been shown by any persuasive, preponderant evidence to be a material deviation from the relevant terms of the RFP as to Section 8, and the agency and its evaluators did not find it so because there was no explicit or implicit decision made that Liberty-Clark was non- responsive as to this portion of the RFP.
The proposer's commitments to design and build the proposed facility are described, in part, in the implementation schedules submitted with their proposals as Form F. The Commission's evaluators for this section, Section 8, of the RFP, awarded ASH an average unweighted score of 1.25 out of a possible
5 for its proposed implementation schedule. They awarded Liberty-Clark an unweighted score of 3.75. Once the weighting was applied these scores were converted to 5.0 and 15.0
respectively. No testimony was offered by the Commission or any party, explaining this differential. According to the Procurement Manager, Mr. Hodges, the evaluators for this section of the RFP were to have based their scores on each proposer's Form F, entitled "Bid for the Sexually Violent Predator Treatment Facility; Proposed Implementation Schedule." In fact, the RFP describes the evaluators' responsibilities with respect to this section as follows:
Evaluators' consideration of this section of the proposals will be guided by the criteria set forth below.
How well does the proposal demonstrate the proposer's commitment to design-build the proposed facility within . . . [24] months of contract execution (RFP Form F; RFP Sections 3.3 - 3.4)?
Consider:
Does the proposed time schedule Form F bring the facility to occupancy within the required time period?
Does the proposed time schedule include adequate time for review, comment and approval by the Department as per RFP Section 3.3?
Is the proposed time schedule realistic given the size and complexity of the project?
J-1 at 105 (Section 13.8). See J-1 at Addendum 2, Answers at 3
(#20) and 11-12 (#12).
In comparing the Form F submitted by ASH to that submitted by Liberty-Clark, Mr. Hodges was able to discern no
difference in the merits of the two proposed schedules. Both proposed to perform some tasks before a contract is executed; both proposed to complete the project within 24 months after a contract is executed. Indeed, ASH's Form F indicates a proposed completion in just under 21 months after the contract is executed for its hospital design and 18 1/2 months for its non-hospital design. Liberty-Clark's Form F indicates a proposed completion in 24 months for both design alternatives.
Thus there is no evidence in the record that establishes any significant distinction between the Liberty-Clark and ASH implementation schedules that would provide any basis for a differential in their scores. Absent some factual basis for the scoring differential it would be both arbitrary and capricious for the Commission to elect to award ASH a lower score for implementation than the score awarded to Liberty-Clark. Therefore, ASH's implementation schedule weighted score must be changed from 5 to 15.
Accordingly, in consideration of the above Findings of Fact, if Liberty-Clark's cost information for its non-hospital design is considered by the Commission (with concomitant use of its lower cost as the Base Cost in the subject formula); when Liberty-Clark's computational errors are corrected; when the proper denominator in the formula is used; the higher stipulated ASH costs are used in the cost formula; and the two-point
reduction in the score for proof of insurance coverage is added back in for Liberty-Clark, the rankings originally posted by the Commission do not change, although the scores are altered. The appropriate scoring, based upon the preponderant evidence of record, culminating in the above Findings of Fact is determined to be as follows:
ASH: 818.39
LIBERTY-CLARK: 807.97
Thus the rankings remain as follows, from highest to lowest: ASH, Liberty-Clark, CSC and Cornell.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction of the subject matter of and the parties hereto. Sections 120.569 and 120.57, Florida Statutes. This proceeding is a competitive procurement protest brought pursuant to Sections 120.569, 120.57(1) and 120.57(3), Florida Statutes. The proceeding is designed 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 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.
Section 120.57(3)(f), Florida Statutes.
While Section 120.57(3)(f), Florida Statutes, describes these proceedings as de novo, the courts have defined "de novo", for purposes of competitive procurement protests, as "a form of intra-agency review. The judge may receive evidence, as with any formal hearing under Section 120.57(1), Florida Statutes, but the object of the proceeding is to evaluate the action taken by the agency". State Contracting & Engineering Corporation v. Department of Transportation, 709 So. 2d 607, 609 (Fla. 1st DCA 1998), citing Intercontinental Properties, Inc. v.
State Department of health and Rehabilitative Services, 606 So. 2d 380 (Fla. 3rd DCA 1992).
The party initiating a competitive procurement protest bears the burden of proof. Section 120.57(3)(f), Florida Statutes. Findings of Fact must be based upon the preponderance of the evidence. Section 120.57(1)(j), Florida Statutes.
The procurement that gave rise to this protest is authorized by 2000-171, Laws of Florida, which charged the Commission with the responsibility, in consultation with the Department of Children and Family Services, to:
develop and issue a request for proposals on or before September 1, 2001, for the financing, design, construction, acquisition, ownership, leasing, and operation of a secure facility of at least 600 beds to house and rehabilitate sexual predators committed under Part V of Chapter 394, Florida Statutes, the Jimmy Ryce Act of 1998.
Id. at Section 28(2)(a). The Commission is specifically
authorized to enter into a contract for these services, with the Department having final approval authority over the choice of the successful proposer. Id.
The standard of proof in proceedings such as this is whether the proposed agency action was clearly erroneous, contrary to competition, arbitrary or capricious.
A capricious action is one taken without thought or reason or irrationally. An arbitrary decision is one not supported by facts or logic. Agrico Chemical Co. v. Department of Environmental Regulation, 365 So. 2d 759, 763 (Fla. 1st DCA 1978). A decision is clearly erroneous when unsupported by substantial evidence or contrary to the clear weight of the evidence or induced by an erroneous view of the law. Blacks Law Dictionary, Revised Fourth Edition (1968).
An act is contrary to competition when it offends the purpose of competitive bidding. That purpose has been articulated as follows:
[T]o protect the public against collusive contracts; to secure fair competition upon equal terms to all bidders; to remove not only collusion but temptation for collusion and opportunity for gain at public expense; to close all avenues to favoritism and fraud in various forms; to secure the best values for the [public] at the lowest possible expense; and to afford an equal advantage to all desiring to do business with the
[government], by affording an opportunity for exact comparison of bids.
Wester v. Belote, 103 Fla. 976, 138 So. 721, 723-24 (Fla. 1931); Harry Pepper and Associates, Inc. v. City of Cape Coral, 352 So. 2d 1190, 1192 (Fla. 2d DCA 1977).
The Petitioner, Liberty-Clark, must first establish its standing to protest the intended agency action. The intended agency action in this case differs somewhat from the agency action in a typical bid protest. Typically, the protestor is challenging the intended agency decision to award the contract to another bidder, or no bidder at all. In this procurement, however, the process of awarding a contract is bifurcated into two parts. The first step involves the Respondent Commission evaluating and scoring the respective proposals for submittal to the Department of Children and Family Services. In the second step the Department reviews the scores and supporting materials and may also conduct any additional fact finding or evaluations consistent with applicable law in order to make a final award of the contract. Liberty-Clark is thus protesting the Commission's intended decision to finalize bid scoring for submittal to the Department. Liberty-Clark must show that it is a responsive bidder in order to establish standing. Intercontinental
Properties, Inc. v. Department of Health and Rehabilitative Services, 606 So. 2d 381, 384 (Fla. 3d DCA 1992).
A "responsive bidder" and "responsive bid" are statutorily defined terms. "Responsive bidder" or "responsive offeror" is a person who has submitted a bid or proposal which conforms in all material respects to the invitation to bid or request for proposal. Section 287.012(17), Florida Statutes (2000). A "responsive bid" or "responsive proposal" is a bid or proposal submitted by a responsive and responsible or qualified bidder or offeror which conforms in all material respects to the invitation to bid or request for proposals. Section 287.012(16), Florida Statutes (2000).
Not every deviation from a request for proposal will invalidate a bid. The agency may wave any minor irregularities in an otherwise valid bid or proposal or offer to negotiate. Rule 60A-1.002(10), Florida Administrative Code. A minor irregularity is a variation from the invitation to bid or invitation to negotiate or request for proposal terms and conditions which does not affect the price of the commodities or services; or give the bidder or offeror an advantage or benefit not enjoyed by other bidders or offerors; and does not adversely impact the interest of the agency. Rule 60A-1.002(17), Florida Administrative Code. See also Harry Pepper & Associates, Inc.
vs. City of Cape Coral, supra. The test for measuring whether a deviation in a bid is sufficiently material to destroy its competitive character is whether the variation affects the amount
of the bid by giving the bidder an advantage or benefit not enjoyed by the other bidders. Tropabest Foods, Inc. v. state of Florida, Department of General Services, 493 so. 2d 50 (Fla. 1st DCA 1986), a variation in a bid is only material if it gives the bidder a substantial advantage over the other bidders and thereby restricts or stifles competition.
Moreover, there is a strong public interest in favor of saving tax dollars in awarding public contracts. There is no public interest in disqualifying a low bidder for technical deficiencies in form, if the low bidder did not derive any unfair competitive advantage by reason of the technical omission. Intercontinental Properties, supra, at 386.
The RFP expressly incorporates a waiver of minor irregularities principle into Section 2.3 which states, "[t]he Commission/Department may waive minor irregularities in proposals where it is in the best interest of the State to do so. Minor irregularities are those which will not have a significant adverse effect on overall competition, cost or performance".
ASH contends that Liberty-Clark's proposal is non- responsive for various grounds. These are treated in the above Findings of Fact and addressed below. None of the irregularities, given the above Findings of Fact based upon preponderant evidence, constitute a sufficiently material
variation so as to give Liberty-Clark a substantial non- competitive advantage over other proposers.
Liberty-Clark's submission of its alternate design Form A and B in Section 4, instead of Section 9, does not violate a strictly mandatory requirement of the RFP. Liberty-Clark submitted two different design and cost proposals as required by the RFP. The error in submitting it in Section 4 instead of Section 9 of the RFP really constitutes a technical deficiency as to the form of the proposal because no bidder would receive a competitive advantage or disadvantage by Liberty-Clark's non- hospital cost submission being considered even, though filed in the wrong section of the response to the RFP, had the Commission considered that design and cost proposal.
The agency scored Liberty-Clark's proposal in Section 8, concerning its implementation schedule, with a score
of 3.75 out of a possible 5 points. It thus did not consider the proposal as to Section 8 to be non-responsive to the RFP. ASH contends that the Liberty-Clark implementation schedule is not responsive in its proposal as to Section 8 of the RFP because it makes its proposed implementation schedule and its willingness to undertake the contract contingent upon a financial commitment from the Commission to reimburse it for design costs regardless of whether the construction continues beyond the design stage or not. It cites the proposed project schedule summary submitted by
Liberty-Clark which identifies an "agency commitment for design costs" as being an event that must occur on the same day of the contract award posting--months prior to the execution of the contract. ASH, on the other hand, contends that rather than conditioning timely completion of construction upon a commitment to reimbursement of design costs, that ASH merely "recommended that contract execution and project funding be completed prior to any major design/development milestones being completed." ASH contends that by purportedly requiring the Commission to guarantee payment for design costs Liberty-Clark avoided the necessity of self-funding these costs and the risks that they might never be reimbursed. ASH argues that other proposers who did not make implementation of the contract contingent upon such guarantees enjoyed no such alleged competitive advantage.
It does not appear, however, that the language cited by ASH, from Liberty-Clark's proposal, clearly means an actual binding commitment by the agency to pay design costs whether construction continues or not. The proposal language states that "since design is critical to the schedule and involves significant up-front costs, we anticipate early release and assurances from the Department that Liberty-Clark will be reimbursed for the design costs incurred, regardless of whether the construction continues or not." Mr. Janic testifying for Liberty-Clark, explaining this language, stated that what the
proposer wanted was assurance that if the state wanted to cancel the contracting after Liberty-Clark had performed the design development work prior to entering the final contract, that Liberty-Clark could be reimbursed for work completed to that date. The above-quoted language, especially the use of the word "anticipate" would not seem to amount to a mandatory contingency upon Liberty-Clark's entering into a contractual relationship with the state. In fact, it logically would seem to be no more of a binding contingency than the recommendation language submitted by ASH. See J-3, book 8 at Tab A and Tab B. This has not been shown by any persuasive, preponderant evidence to be a material deviation from the relevant terms of the RFP as to Section 8 and the Agency and its evaluators did not find it so, especially in light of the fact that the Agency accorded Liberty- Clark a score of 3.75 out of a possible 5 points for this category. There is no persuasive, preponderant evidence to support a conclusion that the alleged irregularities in Liberty- Clark's Section 8 implementation schedule proposal conferred any competitive advantage to Liberty-Clark or disadvantage to any other bidder. It did not have a significant adverse effect on overall competition, cost or performance.
Liberty-Clark has also demonstrated that its financial statements submitted for this proposal comply with the RFP. The RFP expressly states that only the financial statements of the
company that will be operating the facility will be evaluated. In accordance with this provision the responsive bid must include five years of audited financial statements for the company that will operate the facility. Liberty-Clark provided five years of audited financial statements for Liberty Healthcare Corporation & Affiliates, the company that will operate the SVP facility. It is therefore responsive as to this provision of the RFP.
The designs of both Liberty-Clark and ASH are responsive to the RFP. The RFP called for each proposer to submit a conceptual/schematic design of the facility. As stated in the above Findings of Fact, in essence, a schematic/conceptual design represents the first step in the design process, not the end product. Although at hearing much testimony and argument were adduced concerning the question of the facility design complying with Chapter 59A-3, Florida Administrative Code, concerning psychiatric hospital design, it is clear from the language of the RFP that the standards concerning psychiatric hospital design were, in essence, a RFP guideline or recommendation and not an absolute requirement for the final design. Section 4.0 of the RFP contemplates an on-going design process involving department oversight. Although both designs suffer from various technical deficiencies, the preponderant testimony shows that these deficiencies can be corrected during the design process and both proposers will be bound by their cost
response to the RFP during the design correction process. Moreover, the Commission, in evaluating both proposals did not determine that either Liberty-Clark or ASH's design proposals were so non-responsive as to be materially deficient and therefore inappropriate for consideration. Even CSC's proposal, which omitted one section on its costs entirely, was not disqualified. Accordingly, any deficiencies with Liberty-Clark's or ASH's schematic designs do not rise to such a level of materiality under all of the circumstances of the RFP as to render either proposal non-responsive in this regard, as iterated in the above Findings of Fact.
Further, it is undisputed that Liberty-Clark submitted alternative design Form A and B in its proposal but that the Commission failed to score its alternate design because it was included in Section 4 instead of Section 9 of the RFP response. This was, at worse, a minor irregularity for the reasons and in the manner stated in the above Findings of Fact. Accordingly, Liberty-Clark's final score should be re-calculated to reflect credit for its alternate design for the reasons and in the manner delineated in the above Findings of Fact.
Liberty-Clark also demonstrated, by preponderance of the evidence, that it is entitled to receive additional credit for its proof of insurance. In accordance with the RFP it provided proof of ability to obtain insurance equally as reliable
as the means shown by the other proposers. It was, therefore, clearly erroneous for the Commission evaluator to give the other proposal full credit and Liberty-Clark only partial credit. The final score should be adjusted to reflect the full credit of 5 points for Liberty-Clark's proof of the ability to obtain insurance. Because its means of proving ability to obtain insurance is just as credible as that shown by the other proposers accorded 5 points by the Commission, any variance from the precise method delineated in the RFP is a minor technical deviation and immaterial.
The Scoring
The Petitioners failed to establish by preponderant persuasive evidence that, after correction of the stipulated scoring errors referenced in the above Findings of Fact, and after putting on preponderant persuasive evidence that 2 points should be added for the proof of insurance category of the RFP, that the Commission's ranking for ASH is contrary to governing statutes, commission rules or policies or the RFP itself. Even though Liberty-Clark has not been determined to be non-responsive in its proposals submitted in response to the requirements of the RFP and even though it should have its non-hospital cost submittal scored, so as to give it a total cost score of 100.67 instead of 25.65, the preponderant evidence of record establishes that the Commission's ranking of ASH (if not the actual score) is
consistent with applicable statutes, rules, policies and the RFP provisions. It is not clearly erroneous, contrary to competition, arbitrary or capricious. Although the Commission's scoring as to the number score awarded to ASH and to Liberty- Clark has been shown to be inaccurate in several particulars and should be re-scored in the manner and amount referenced in the above Findings of Fact and Conclusions of Law, the ranking of ASH as the top scoring proposer remains intact.
"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". Agrico Chemical Company v. Department of Environmental Regulation, supra. The determination of whether an agency action is arbitrary or capricious hinges
upon:
Whether the agency:
has considered all relevant factors;
has given actual, good faith consideration to those factors; and
has used reason rather than whim to progress from consideration of these factors to its final decision.
Adam-Smith Enterprises, Inc. v. State Department of Environmental Regulation, 553 So. 2d 1260, 1273 (Fla. 1st DCA 1989). Clearly the Commission's scoring of the parties' proposals, as modified and corrected herein, based upon the preponderant, persuasive evidence of record would satisfy these criteria and therefore be
neither arbitrary not capricious if carried out as found, concluded and recommended herein. Moreover, with the correction, as well, of ASH's proposed implementation schedule scoring, as found and concluded to be appropriate herein the scoring as corrected and modified herein cannot be said to be clearly erroneous. To the extent that the Commission deemed it necessary to make adjustments to the scoring of costs (the elimination of negative numbers produced by the formula), the Petitioner itself concedes that adjustments were necessary to preserve the rationale of the scoring process. The Petitioner simply disagreed with the Commission's exercise of its discretion in determining the appropriate stage of the scoring calculation to make such adjustments. The Petitioner did not present any evidence that the Commission's ranking was contrary to competition.
Substantial, preponderant evidence admitted at hearing establishes that there is no apparent factual basis for the score given ASH for its proposed implementation schedule by the Commission. A comparison of the ASH proposal with that submitted by Liberty-Clark reveals no basis for the former receiving a score of 5 while the later received a score of 15. Indeed the Commission's own executive director could testify to no basis for the differential. In the absence of contradictory evidence presented by either the Commission or Liberty-Clark, it must be
concluded that the scoring differential is arbitrary and capricious in this regard.
In light of ASH's higher score, even without a correction of its score for the implementation schedule, this error in the scoring does not negate the overall correctness of the decision to award ASH the highest ranking.
In consideration of the above Findings of Fact and Conclusions of Law, it is determined that the Petitioner has not established by a preponderant evidence that the Commission's decision to award ASH's proposal the highest ranking is contrary to governing statutes, the Commission's rules or policies, or the RFP specifications.
Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record and the pleadings and arguments of the parties, it is
RECOMMENDED:
That a Final Order be entered finding that the Petitioner has failed to establish that the decision to award ASH the highest ranking in its response to the Request for Proposals, was contrary to the governing statutes, the Commission's rules or policies, or the RFP specifications; that the scoring be corrected as delineated herein, and that the formal protest be dismissed.
DONE AND ENTERED this 14th day of August, 2001, in Tallahassee, Leon County, Florida.
MICHAEL RUFF Administrative Law Judge
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, Florida 32399-3060
(850) 488-9675 SUNCOM 278-9675
Fax Filing (850) 921-6847 www.doah.state.fl.us
Filed with the Clerk of the Division of Administrative Hearings this 14th day of August, 2001.
ENDNOTE
1/ See Harry Pepper and Associates, Inc. v. City of Cape Coral, 352 So. 2d 1190, 1192 (Fla. 2nd DCA 1977).
COPIES FURNISHED:
John Alford, Esquire
542 East Park Avenue Tallahassee, Florida 32301
O. Earl Black, Jr., Esquire Department of Management Services 4050 Esplanade Way, Suite 260 Tallahassee, Florida 32399-0950
Martha Harrell Chumbler, Esquire Carlton, Fields, Ward, Emmanuel,
Smith & Cutler, P.A. Post Office Box 190 Tallahassee, Florida 32302
Douglas Moody, Esquire McFarlain & Cassedy, P.A.
215 South Monroe Street, Suite 600 Tallahassee, Florida 32302
Cynthia S. Tunnicliff, Esquire Stephen Spector, Esquire Brian A. Newman, Esquire Pennington, Moore, Wilkinson,
Bell & Dunbar, P.A.
215 South Monroe Street, Second Floor Post Office Box 10095
Tallahassee, Florida 32302-2095
C. Mark Hodges, Executive Director Correctional Privatization Commission Pepper Building, Suite 680
4070 Esplanade Way
Tallahassee, Florida 32399-0950
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS
All parties have the right to submit written exceptions within
10 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.
| Issue Date | Document | Summary |
|---|---|---|
| Aug. 14, 2001 | Recommended Order | Petitioner failed to show its score and evaluation was sufficiently erroneous as to entitle it to highest ranking in Request for Proposal response evaluation. Score should be higher, but Intervenor entitled to more score also to preserve agency`s ranking. |
