STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
AFFILIATED COMPUTER SERVICES, ) INC., )
)
Petitioner, )
)
vs. )
)
AGENCY FOR HEALTH CARE )
ADMINISTRATION, )
)
Respondent, )
)
and )
)
EDS INFORMATION SERVICES, )
L.L.C. AND UNISYS CORPORATION, )
)
Intervenors. )
Case No. 05-3676BID
)
RECOMMENDED ORDER
Pursuant to notice, a final hearing was held in this case on November 7-11, 2005, in Tallahassee, Florida, before Administrative Law Judge Michael M. Parrish, of the Division of Administrative Hearings.
APPEARANCES
For Petitioner Affiliated Computer Services, Inc.:
E.A. "Seth" Mills, Jr., Esquire Quinn A. Henderson, Esquire Kelly M. Fitzgerald, Esquire Mills, Paskert, Divers, P.A.
100 North Tampa Street, Suite 2010 Tampa, Florida 33602
For Respondent Agency for Healthcare Administration:
Barbara Auger, Esquire Bryant, Miller & Olive, P.A
201 South Monroe Street, Suite 500 Tallahassee, Florida 32301
Andrew Byrne, Esquire Cooper & Byrne
3520 Thomasville Road, Suite 200
Tallahassee, Florida 32309 For Intervenor EDS Information Services, LLC:
John Radey, Esquire Jeffrey Frehn, Esquire
Radey, Thomas, Yon & Clark, P.A.
301 South Bronough Street, Suite 200 Post Office Box 10967
Tallahassee, Florida 32302 For Intervenor Unisys Corporation:
W. Robert Vezina, III, Esquire Mary Vance, Esquire
Vezina, Lawrence & Piscitelli, P.A.
318 North Calhoun Street Tallahassee, Florida 32301-7606
STATEMENT OF THE ISSUES
This is a bid protest proceeding pursuant to Section 120.57(3), Florida Statutes, in which the primary issue raised by the Petitioner (who is the second-ranked proposer) is that the subject contract should be awarded to the Petitioner because the first-ranked proposer submitted a non-responsive proposal. The Petitioner's alternative arguments challenge the manner in which the proposals were evaluated and assert, alternatively, that, if properly evaluated, the Petitioner would be the first-ranked
proposer, or that the evaluation was so flawed as to require that all bids be rejected and that the agency embark upon a new request for proposals.
The first-ranked proposer intervened to protect its substantial interests. The primary issues raised by the first- ranked proposer are that its own proposal is responsive, that any flaws in the evaluation process are insufficient in nature and number to warrant embarking on a new request for proposals, and that the second-ranked proposer lacks standing to challenge the proposed agency action because the proposal of the second-ranked proposer is asserted to be non-responsive.
The third-ranked proposer intervened primarily in a defensive posture to protect its interests from any adverse consequences that might flow from the issues raised by the other two proposers, as well as to benefit from any windfall that might result from the challenges to the sufficiency of the other two proposals.
PRELIMINARY STATEMENT
This is an administrative proceeding involving a public procurement protest filed by Affiliated Computer Services, Inc. ("ACS Parent") as it relates to the decision of Respondent, the Agency for Health Care Administration ("AHCA" or "Agency"), to award a contract to EDS Information Services, L.L.C. ("EDS Subsidiary") for the development and implementation of a new Medicaid Management Information System.
Respondent issued Request for Proposals 0514 ("RFP") on or about March 3, 2003, for the development and implementation of the Florida Medicaid Management Information System ("MMIS"), a new Decision Support System ("DSS"), and to provide Fiscal Agent Operations. ACS Parent, EDS Subsidiary and Unisys Corporation ("Unisys") all submitted proposals to AHCA in response to the RFP.1
On September 6, 2005, AHCA posted its Notice of Intent to award a contract pursuant to the RFP to EDS Subsidiary. On September 9, 2005, ACS Parent timely submitted its Notice of Intent to Protest to AHCA. ACS Parent filed its timely Petition for Formal Administrative Hearing with ACHA on September 19, 2005. AHCA referred the matter to the Division of Administrative Hearings on October 7, 2005.
On October 14, 2005, an Order on Several Motions was issued.
That order included the following:
Notwithstanding the denial of the specific relief sought in the subject motion, in view of the "fast-track" treatment of cases of this nature and in view of the statutory "particularity" requirements which apply to the filing of a formal written protest, it appears to the undersigned that it would "promote the just, speedy, and inexpensive determination" of the issues in this case to also impose a "particularity" requirement on an Intervenor in a bid protest proceeding to the extent to which the Intervenor seeks to challenge the standing of the Petitioner or the responsiveness of the Petitioner's bid or proposal. For the same reasons which underlie the Respondent's motion seeking to strike portions of the original petition, the
Petitioner should not have to guess in what regards the Intervenor thinks its standing may be lacking or its proposal may be non- responsive to the RFP. Accordingly, if the Intervenor seeks to offer evidence challenging the standing of the Petitioner or challenging the responsiveness of the Petitioner's proposal, the Intervenor shall promptly file a motion seeking leave to file an amendment to its petition in which it "shall state with particularity the facts and law upon which" the Intervenor's challenge to the Petitioner's standing and responsiveness is based. A copy of the proposed amendment should be filed with any such motion.
The above-quoted text was followed by an endnote reading as follows:
This imposition of a "particularity" requirement on the Intervenor is based not on anything required by Section 120.57(3), Florida Statutes, but on what is permitted by Florida Administrative Code Rule 28-106.211. The imposition of this "particularity" requirement on the Intervenor is for the purpose of implementing the portion of Florida Department of Transportation v. J.W.C. Company, Inc., 396 So. 2d 778 (Fla. 1st DCA 1981) which reads: "We totally agree with the sentiments expressed by amicus curiae . . . that no third party, 'merely by filing a petition,' should be permitted to require the applicant to 'completely prove anew' all items of a permit application [or RFP response] down to the last detail. The petitioner [or intervenor] must identify the areas of controversy and allege a factual basis for the contention that the facts relied upon by the applicant [or bid protestor] fall short. . .
."
After the issuance of the order containing the foregoing language, EDS Subsidiary filed an amended petition for leave to
intervene. The only allegations in that amended petition that challenge the standing of Unisys or the responsiveness of the Unisys proposal are in subparagraphs (e) and (f) of paragraph 7, which include the following as "disputed issues of material fact and law:"
Whether the Unisys Corporation ("Unisys") lacks standing to intervene in this proceeding.
Whether the Unisys proposal is non- responsive to the RFP. . . .
The petition of ACS Parent, as twice amended, does not contain any allegations at all challenging the standing of Unisys or the responsiveness of the Unisys proposal. And, of course, Unisys asserts that it has standing and that its proposal was responsive.
At the commencement of the Final Hearing, the parties stipulated to certain facts and to the admission of Joint Exhibits J1 through J5. Petitioner presented Exhibits P1 through P27, and offered the testimony of Angela Smith, John McCandlish, Donna Eldridge, Kay Aloi, John Clarkson, Keith Young, Julie Griffith, Peggy Hall, Ali Issa and Becky Knapp.
Respondent presented Exhibits R1 through R3, R5 and R6, and the oral testimony of Jay Ter Louw and Sally Morton-Crayton.
Intervenor EDS Subsidiary presented Exhibits EDS 1b, 2a-b, 3-5, 8, 10, 14, 15c-f, j, 16c-d, 17a, c, f, and g, 23-29, and the testimony of Lonna Peterson, Carolyn Neubauer, Angela Smith, Pat
King, and Marc Vandenbark. Intervenor Unisys presented no separate exhibits or witnesses.
A transcript of the hearing was filed with the Division of Administrative Hearings on November 29, 2005. Thereafter, all parties timely filed Proposed Recommended Orders, which have been considered during the preparation of this Recommended Order.
FINDINGS OF FACT
Preparation and issuance of the subject RFP
The state agency involved in this dispute is AHCA. AHCA's powers and duties include the administration of Florida's Medicaid program. The Medicaid program provides medical services to eligible Medicaid recipients under Chapter 409, Florida Statutes, the United States Code Title 19, which involves
Medicaid, and to children from birth until five years of age under United States Code Title 21, State Children's Health Insurance Program of the Social Security Act, through enrolled providers.
On or about March 3, 2005, AHCA issued the subject RFP, which solicited proposals to develop the MMIS/DSS and to provide fiscal agent operations. The RFP required proposers to separately submit a technical proposal and a cost proposal.
The RFP also required implementation of the new MMIS/DSS technical systems by July 1, 2007. However, the RFP permitted the implementation of some non-critical business functions after
July 1, 2007.
The RFP incorporated several separate addenda, numbered one through seven. Addendum Six, also had a separately issued Clarification Notice. Each addendum also included a list of questions asked by potential proposers concerning the RFP, and AHCA's answers to those questions. The questions and answers were part of the addenda in which they appeared and, therefore, became part of the RFP. Each proposer was required to include with its proposal a signed acknowledgement certifying its receipt of each addendum.
Section 20.2 of the RFP includes the following:
The State has established certain requirements with respect to responses submitted to competitive solicitations. The use of "shall", "must", or "will" (except to indicate futurity) in this solicitation, indicates a requirement or condition from which a material deviation may not be waived by the State. A deviation is material if, in the State's sole discretion, the deficient response is not in substantial accord with the solicitation requirements, provides an advantage to one respondent over another, or has a potentially significant effect on the quality of the response or on the cost to the State.
Material deviations cannot be waived. The words "should" or "may" in this solicitation indicate desirable attributes or conditions, but are permissive in nature. Deviation from, or omission of, such desirable feature will not in itself cause rejection of a response.
Sections 20.17 and 20.18 of the RFP read as follows:
Correction of Proposal Errors
If the Agency determines that a proposal contains a minor irregularity or an error,
such as a transposition, extension or footing error in figures that are presented, the Agency may provide the Vendor an opportunity to correct the error. Information that is required to be included in the proposal and is inadvertently omitted shall not be accepted under this error correction provision. All information required to be included in a proposal must be received by the date and time that proposals are due to the Agency. The Agency reserves the right to seek clarification from a Vendor of any information contained in the proposal.
Minor irregularities in proposals may be waived by the evaluators. A minor irregularity is a variation from the RFP terms and conditions that does not affect the price of the proposal or give one applicant an advantage or benefit not enjoyed by others or adversely affects the State's interest.
Rejection of Proposals
Proposals that do not conform to the mandatory requirements of this RFP shall be rejected by the Agency. Proposals may be rejected for reasons that are provided in Appendix M, Checklist of Mandatory Items; for failure to comply with any requirement of this RFP; when the proposal is conditional; or when in the Agency discretion, it is in the best interests of the Agency. The Agency reserves the right to reject any and all proposals.
The three proposers
ACS Parent, EDS Subsidiary, and Unisys each submitted a proposal in response to the subject RFP. EDS Parent did not submit a proposal in response to the RFP. A partnership or joint venture comprised of EDS Subsidiary and EDS Parent did not submit a proposal in response to the RFP. EDS Parent is not a party to
this proceeding. A partnership or joint venture comprised of EDS Subsidiary and EDS Parent is not a party to this proceeding.
In the MMIS area, EDS Parent and EDS Subsidiary frequently both sign the proposals and the contracts. EDS Parent and EDS Subsidiary as a matter of practice usually perform the EDS MMIS work together. As a general practice, EDS Parent stands behind the obligations of EDS Subsidiary as a guarantor of any unfulfilled liabilities of EDS Subsidiary, even when EDS Subsidiary is the only signer on a contract. And it may well be that EDS Parent and EDS Subsidiary intended to be co-proposers or joint adventurers on the subject RFP, but no such intention was set forth in the EDS Subsidiary proposal.2
EDS Parent and EDS Subsidiary are two separate legal entities. EDS Parent is a publicly traded Delaware corporation that was formed in the 1960s. EDS Subsidiary is a Delaware limited liability company that was formed in 1997. EDS Subsidiary is a wholly-owned subsidiary of EDS Parent. EDS Subsidiary was specifically established and has been operated as a separate business entity for the express purposes of obtaining the advantages of certain operational flexibilities, as well as certain tax advantages that may result from the operations of a separate business entity. During at least one period in its existence EDS Subsidiary owned assets valued at more than one billion dollars.3
Delivery of the proposals
The RFP originally called for proposals to be submitted to AHCA's "Issuing Officer" at 2727 Mahan Drive, Tallahassee, FL 32308. Angela Smith was designated as the "Issuing Officer" of the RFP. Addendum Two to the RFP, which was issued on April 1, 2005, changed the delivery address for all proposals to: 2308 Killearn Center Boulevard, Tallahassee, Florida 32309. Proposals were required to be submitted at this new address by no later than 5:00 p.m. on June 2, 2005. EDS Subsidiary acknowledged receipt of Addendum Two.
Section 20.08 of the RFP made it clear that it was each Proposer's responsibility "to obtain any issued addenda and to consider these materials in their response to the RFP." The RFP further expressly provided, "PROPOSALS RECEIVED AFTER THE SPECIFIED TIME AND DATE WILL NOT BE CONSIDERED AND RETURNED UNOPENED."
In accordance with the requirements of the RFP, as amended by Addendum Two, ACS Parent and Unisys properly delivered their proposals to 2308 Killearn Center Boulevard, Tallahassee, Florida 32309.
EDS Subsidiary's proposal consisted of 15 cartons. The proposal's cover letter and each carton were correctly addressed to 2308 Killearn Center Boulevard, Tallahassee, Florida 32309, but the proposal was never delivered to that address. Rather, EDS
Subsidiary's proposal was delivered to AHCA's offices at 2727 Mahan Drive, Tallahassee, Florida 32308. Pat King, Marc Vandenbark, and Milt Ashford, employees of EDS Parent, delivered EDS Subsidiary's proposal to AHCA's 2727 Mahan Drive address at approximately 12:35 p.m. on June 2, 2005.
Jason Kinchon, an AHCA employee, met Messers. King, Vandenbark, and Ashford outside of the AHCA office building and directed them to a second floor room in Building No. 2 where the EDS Subsidiary proposal was delivered. Mr. Kinchon brought a hand cart with him. Messrs. King, VanDenbark, Ashford, and Kinchon jointly loaded the proposal on a hand truck on multiple occasions near the rear entrance of the AHCA Contract Administration Office. It took three trips with the hand cart to move the proposal into AHCA Building Number 2 at 2727 Mahan Drive, Tallahassee, Florida. Messrs. Kinchon and King took the loaded hand cart into the AHCA Building Number 2 on the three trips into the building. Messrs. Kinchon and King placed the proposal in a room on the second floor of AHCA Building Number 2. Subsequent to delivery, AHCA secured the proposal to ensure that no unauthorized persons had access to the proposal. Messrs. King, VanDenbark, and Ashford attended the public proposal opening where they saw AHCA open the original proposal.
At Mr. King's request, Mr. Kinchon provided a receipt for the EDS Subsidiary proposal bearing a date-time stamp and Mr. Kinchon's signature.
After 5:00 p.m. on June 2, 2005, Angela Smith, AHCA's Issuing Officer for the RFP, called Mr. King to inquire about the status of EDS Subsidiary's proposal. Mr. King explained that he had delivered EDS Subsidiary's proposal to the incorrect Mahan Drive address and then faxed Ms. Smith a copy of Mr. Kinchon's receipt. After first conferring with legal counsel, Ms. Smith later informed Mr. King that AHCA would nevertheless accept the EDS Subsidiary proposal.
The next day, at Ms. Smith's direction, other AHCA employees retrieved the EDS Subsidiary proposal from 2727 Mahan Drive, Tallahassee, Florida 32308, and delivered it to the AHCA office located at 1669 Mahan Center Boulevard, which was the address where AHCA planned to open, and in fact did open, all three of the proposals. On that same day, AHCA employees retrieved the ACS Parent proposal and the Unisys proposal from 2308 Killearn Center Boulevard and delivered those two proposals to the AHCA office located at 1669 Mahan Center Boulevard, at which address all three proposals were eventually opened.
The delivery of the EDS Subsidiary proposal to an incorrect address did not confer any advantage to EDS Subsidiary, nor did it result in any detriment to either of the other
proposers. EDS Subsidiary had no more time to prepare its proposal than its competitors and had no opportunity to see the bids of its competitors before submitting its own. The delivery to an incorrect address also did not result in any detriment to AHCA. On the day of the opening of the proposals, AHCA had to move each of the three proposals from the place where each proposal was received to the place where all of the proposals would be opened. It was no significant burden for AHCA to retrieve two proposals from one location and to retrieve the third from another location.
The bid bond submitted by EDS Subsidiary
On June 3, 2005, AHCA opened the technical proposals that were submitted by ACS Parent, EDS Subsidiary, and Unisys. Two AHCA employees, Angela Smith and Sally Morton-Crayton, presided over the opening. At the opening, Ms. Smith and Ms.
Crayton reviewed each proposal to ensure the presence of those items required by the mandatory checklist located in Appendix M to the RFP.
Section 70.4 of the RFP reads as follows:
Each proposal will be reviewed for responsiveness to the mandatory requirements set forth in this RFP. This will be a yes/no evaluation. The purpose of this phase is to determine if the Technical Proposal is sufficiently responsive to the RFP to permit a complete evaluation.
Mandatory requirements for the Technical Proposal are presented in a checklist in Appendix M.
Failure to comply with the instructions or to submit a complete proposal will deem a proposal non-responsive, and will cause the proposal to be rejected with no further evaluation. The state reserves the right to waive minor irregularities.
No points will be awarded for passing the mandatory requirements.
As part of their review, Ms. Smith and Ms. Crayton did not actually read or analyze the mandatory items to determine whether the proposals complied with the RFP's requirements, but only looked to see if the items were present.
The RFP required each proposer to submit a Proposal Guarantee with its proposal. In this regard, Section 20.12 of the RFP states:
20.12 Proposal Guarantee
One proposal guarantee must be included in the sealed package with the original Technical Proposal.
The original Technical Proposal shall be accompanied by a proposal guarantee payable to the State of Florida in the amount of
$500,000.00. The form of the proposal guarantee shall be a bond, cashier's check, treasurer's check, bank draft, or certified check. If the proposal guarantee is a bond, the bond shall be written by a surety company authorized to do business in the State of Florida and signed by a Florida Licensed Agent. If a non-resident Florida Licensed Agent signs the bond, the bond shall be considered to have been made and executed in
the State of Florida. All proposal guarantees shall be returned upon execution of a legal contract with the successful Vendor. If the successful Vendor fails to execute a contract within ten (10) consecutive calendar days after a contract has been presented to the Vendor for signature, the proposal guarantee shall be forfeited to the State. The proposal guarantee from the successful Vendor shall be returned only after the Agency has received the performance bond required under Section
30.24 of this RFP.
The Proposal Guarantee submitted with the EDS Subsidiary proposal did not refer to any proposal submitted by EDS Subsidiary and did not name EDS Subsidiary as principal on the Proposal Guarantee.
Fidelity and Deposit Company of Maryland is the surety that issued the Proposal Guarantee. The Proposal Guarantee named EDS Parent as the principal and the State of Florida as the obligee. On its face, the Proposal Guarantee provided security for a proposal submitted by EDS Parent (which proposal never existed), but not for a proposal submitted by EDS Subsidiary.
The Proposal Guarantee does not indicate that EDS Parent, as the principal on the bond, is involved in a partnership or joint venture with any other entity, including EDS Subsidiary. Specifically, on its face, the Proposal Guarantee does not reference any entity, partnership, or venture other than EDS Parent as the principal.
The Proposal Guarantee included in EDS Subsidiary's proposal does not guarantee EDS Subsidiary's proposal, but rather specifically references a proposal by EDS Parent; a proposal which never existed.4
Financial statements submitted by EDS Subsidiary
Section 60.2.4(2) of the RFP required proposers to submit the following financial information:
Corporate Financial Statements
Audited financial statements for the legal contracting entity (and parent company if applicable) and subcontractors, sufficient to demonstrate the capability to perform this contract, shall be provided for each of the last three fiscal years.
These shall include:
Balance sheets;
Statement of income;
Statements of changes in financial position;
Auditor's reports;
Notes to financial statements; and
Summary of significant accounting policies.
If all of these are not provided, please explain why.
The requirement quoted immediately above was amended by Addendum One, which included the following question and answer which became part of the RFP:
Question: Audited financial statements are required in this section. However, many subcontracting firms may not be publicly held with the required forms available. What will
the Agency accept for these financial requirements for non-public firms?
Answer: If audited financial statements exist they are to be submitted. If audited financial statements do not exist, unaudited statements or financial information of the type that is contained in financial statements may be submitted with an appropriate explanation. (Emphasis added.)
EDS Subsidiary's proposal did not include any financial information, audited or otherwise, from which the financial condition of EDS Subsidiary could be determined. Rather, the proposal only included consolidated audited financial statements for EDS Parent.
In its proposal, under Tab 4, EDS Subsidiary explained: "EDS Information Systems (sic), L.L.C., will be the contract signing authority for the Florida Medicaid project. As a wholly owned subsidiary of EDS, EDS Information Systems (sic), L.L.C., is not a separate corporation and, as such, does not have separate financial statements. Throughout this RFP response, we will use the term ‘EDS’ to refer to this organization." While EDS Subsidiary may not have had audited separate financial statements, it certainly had "financial information of the type that is contained in financial statements." Without receiving any "financial information of the type that is contained in financial statements," AHCA has no information at all about the financial circumstances of EDS Subsidiary.5
In its proposal, on the title page under Tab 2, EDS Subsidiary stated that the vendor's name was "EDS Information Services, L.L.C." And in the transmittal letter under Tab 2 of the proposal, EDS Subsidiary states: "EDS Information Services, L.L.C., a subsidiary of the of Electronic Data Systems, (hereafter EDS), is pleased to submit our response to the Request for Proposal (RFP) 0514 issued by the Agency for Healthcare Administration." The transmittal letter also states: "EDS' federal tax identification number is 75-2714824." Tax identification number 75-2714824 is the tax identification number of EDS Subsidiary. The transmittal letter also lists "EDS Information Services, L.L.C." as the "Prime Contractor" and states that its "Corporate Charter Number" is M97000000533. That number is the document number assigned by the Florida Department of State to EDS Subsidiary. (The document number assigned by the Florida Department of State to EDS Parent is F96000001705.)
The transmittal letter under Tab 2 of the EDS Subsidiary proposal also states:
The following table reflects the exact amount of work in percentages to be completed by the Prime Contractor and each subcontractor.
Company Percent of Work
EDS Information Services, L.L.C. 76.5% First Health Services Corporation 21.8% APS Healthcare, Inc. 1.3%
ProviderLink, Inc. .4%
Cost proposal submitted with EDS Subsidiary's proposal
Section 60.3 of the RFP required proposers to include in their Cost Proposal "a firm fixed price for each of the requirements contained on the pricing schedules within this section."
Additionally, the mandatory checklist contained in Appendix M of the RFP required proposers to submit a "firm, fixed price without any additional stipulations or limitations."
ACS Parent's Cost Proposal was $38 million less than the next least expensive Cost Proposal. ACS Parent submitted the lowest Cost Proposal and was awarded 600 points, consistent with the language of the RFP.
The Cost Proposals for EDS Subsidiary and Unisys were awarded scores of 508 and 523, respectively, based on the application of a specified formula in the RFP and the ratio their prices bore to ACS Parent's price.
Ms. Smith and Ms. Crayton oversaw the review and scoring of the proposers' Cost Proposals. During their opening of the Cost Proposals, Ms. Smith and Ms. Crayton did not analyze the Cost Proposal submitted with EDS Subsidiary's proposal to determine if it was submitted by the same legal entity. Ms. Smith and Ms. Crayton did not analyze EDS Subsidiary's Cost Proposal to determine whether it proposed a firm fixed price without additional stipulations or limitations.
The Cost Proposal submitted with the EDS Subsidiary proposal identified a different legal entity, Electronic Data Systems, LLC, as the proposer.
The Cost Proposal submitted with EDS Subsidiary's proposal included a firm, fixed price. The language in that proposal that described the "Cost Assumptions" underlying the Cost Proposal did not change the character of the Cost Proposal; it remained firm and fixed.
Proposed EDS Subsidiary local operations facility
Section 50.3.2.1 of the RFP reads as follows:
50.3.2.1 Location of Operations Facilities
The Contractor's local facility shall be located within a five (5) mile radius of the State offices located at 2727 Mahan Drive, Tallahassee, Florida. The Agency prefers a location convenient to the Agency and will consider the location in the evaluation process. Consideration of potential expansion of operations should be given in choosing a site for the facility.
The language quoted immediately above is rather ambiguous as to what must be included in the proposal regarding the proposer's local facility. It does not clearly state that a specific location must be identified in the proposal. The specific instructions in the RFP about what must be included under each tab of the proposals do not clearly require the inclusion of a specific address for the proposer's local facility. Further,
the instructions in the Evaluation Manual do not appear to require the inclusion of a specific address.
ACS Parent's proposal included a specific facility and address for its proposed operations facility location in Tallahassee.
Unisys' proposal included the addresses for two possible locations, but did not include a specific proposed facility in Tallahassee.
EDS Subsidiary's proposal did not include a proposed facility or an address for its operations facility in Tallahassee. EDS Subsidiary simply agreed to meet AHCA's requirements for a local facility.
At its oral presentation, which occurred approximately six weeks after submission of the proposals, EDS Subsidiary first provided AHCA with a possible address for its local operations facility, at 325 John Knox Road in Tallahassee.
Staffing information submitted by EDS Subsidiary
The RFP required proposers to identify within their proposals certain individuals to fill various Named Staff positions. The Named Staff positions carried certain educational qualification requirements based on the type of work expected from each position. The Named Staff positions were separately identified because they were important positions and AHCA considered them critical to the success of the project.
Addendum One to the RFP contained the following question and answer which became part of the RFP:
Question: Will the State allow equivalent work experience in lieu of a bachelor's degree?
Answer: The State will allow equivalent work experience, non-degree training and alternate certification in lieu of a required bachelors degree, provided the Vendor clearly identifies and explains the equivalence. Qualifications of proposed staff are an important consideration in the scoring of proposals.
Several of the individuals that EDS Subsidiary and Unisys proposed to fill the Named Staff positions did not facially meet the minimal educational requirements as stated in the RFP. However, from resumes and other information submitted with the EDS Subsidiary and the Unisys proposals, AHCA could determine that the proposed staff at issue possessed degrees in related fields and/or had sufficient qualifications through extensive experience in the areas in which they would be working.
Technical solutions proposed by EDS Subsidiary
At paragraph 24 of the ACS Parent's amended petition, it asserts that EDS Subsidiary "failed to meet many of the mandatory technical requirements concerning the new FMMIS/DSS. . . ." In seven following subparagraphs the petition asserts seven specific alleged technical deficiencies in the EDS Subsidiary proposal. In view of the disposition of certain other issues in this case, it seems neither useful nor necessary to make detailed findings of
fact (or conclusions of law) regarding these alleged technical deficiencies in the EDS Subsidiary proposal. In this regard it is sufficient to find that the technical solutions proposed in the EDS Subsidiary proposal were in compliance with the technical requirements of the RFP in all material matters. There are perhaps a few minor irregularities in a few minor details, but there is nothing in the technical solution proposed by EDS Subsidiary that deviates materially from the requirements of the RFP.6
The evaluation of the proposals
In paragraph 26 of ACS Parent's amended petition, it is asserted that there were numerous irregularities in the manner in which the proposals were evaluated. The following paragraphs contain findings of fact related to those assertions.
Gartner Report and Presentation
AHCA hired Gartner, Inc. ("Gartner"), a third party company with technology expertise, to analyze the risk found in each of the technical proposals, and then produce a written report. The evaluators received and read the Gartner report before completing their final scores.
The RFP did not disclose, and the proposers were never informed until after the proposed award was announced, that Gartner would conduct an analysis of the Technical Proposals.
Gartner's written report visually displayed its final analysis through color coded comments (green, yellow, and orange). Gartner created its own criteria and sub-criteria to evaluate the proposals.
The evaluators attended a presentation where the Gartner report's results were presented by Mr. Flowerree. The evaluators discussed these results at the presentation. This presentation on the Gartner report was neither publicly noticed or recorded, nor were any minutes taken at the meeting. AHCA did not give the proposers an opportunity to address the concerns and comments contained in the Gartner report and/or discussed at the presentation with the evaluators. The evaluators had the benefit of Gartner's analysis and conclusions when completing their scoring of the proposals. The evidence in this case is insufficient to determine whether the information in the Gartner presentation and report had any significant effect on the scoring of any of the proposals.7
ACS Parent's Corporate References
Donna Eldridge. an AHCA employee, provided a corporate reference for ACS Parent which contained some errors, primarily errors of omission about matters of which Ms. Eldridge had no personal knowledge. There was also a corporate reference form from a Georgia official which contained a number of responses that were remarkably similar to the responses provided by Ms. Eldridge.
The evidence in this case does not explain why the two responses were so similar. The evidence in this case is also insufficient to show that the information in either of the corporate references mentioned above had any material adverse impact on the evaluation scores of ACS Parent.8
Evenhanded evaluations
During the course of their evaluation, to the best of their ability the evaluators applied the evaluation criteria in the same manner to all proposers. There is no persuasive evidence that the evaluators applied different criteria or different standards to different proposers. With regard to a related issue, the RFP required a critical path diagram for each phase. The proposal submitted by EDS Subsidiary had a critical path diagram for each of the phases.
Organizational Conflicts of Interest
Unbeknownst to the proposers, AHCA engaged Gartner to conduct an analysis of the proposals submitted in response to the RFP. As part of an earlier proposal submitted to the State of Texas, EDS Subsidiary proposed to hire Gartner as an "optional" subcontractor for the purpose of [I]ndependent assessment of governance processes." In that proposal, EDS Subsidiary described Gartner as having "[t]otal independence and objectivity--no ties to any one vendor or technology solution." EDS Subsidiary was not
awarded the Texas contract, so the proposed use of Gartner as a subcontractor never happened.
Site Visit Debriefing
During the evaluation period, the evaluators attended multiple presentations and debriefings that covered different topics. AHCA did not publicly notice any of these meetings, and only one type of presentation, the proposers' oral presentations, was recorded or had any minutes taken. During their oral presentations, each proposer discussed its proposed solution and then answered questions posed by the evaluators. Evaluators also attended a briefing where they were presented with information gathered during AHCA's site visits to the proposers' operations in other states. This information included a presentation and a written site visit report compiling all of the site visit information into one document. Mr. Jay Ter Louw, an AHCA consultant, prepared the final site visit report. However, none of the evaluators attended any of the site visits. The evaluators relied upon the information presented during the site visit presentation and information contained in the site visit report to complete their assigned evaluations. The manner in which the site visits were conducted and reported was consistent with the provisions of the RFP.
AHCA's Score Debriefings
Section 70.3 of the RFP reads as follows:
Evaluators will conduct a strictly controlled evaluation of the Technical Proposals submitted in response to this RFP. The evaluators will use prescribed evaluation criteria to score each proposal on its own merit regarding the Vendor's response to the requirements and adherence to the instructions in this RFP. The evaluators will not discuss the contents of the proposals with each other or anyone else during the evaluation process. The evaluators will be closely proctored to ensure that they follow the established rules of the evaluation.
The evaluators attended numerous debriefings concerning their preliminary scoring. The stated purpose behind these debriefings was to give the evaluators an opportunity to discuss the reasons for their scores and where relevant information was located in the various proposals. The debriefing sessions were neither publicly noticed, recorded, nor were any minutes taken of these numerous sessions. While the evaluators did not discuss their scores with each other, they did discuss their evaluations and the contents of the proposals.
All evaluators had the opportunity to change their scores based upon these discussions. At least one evaluator changed her scores after a debriefing session because of information she learned from other evaluators.
Scoring
After AHCA opened the proposals, it assigned various individuals to evaluate specific portions of the proposals. Some of the evaluators read the RFP and each proposal in its entirety, while others did not. The evaluators also reviewed an Evaluation Manual, an instruction manual produced by AHCA to guide agency staff and the evaluators through the evaluation process. After reading a proposal, an evaluator would generally assign preliminary scores for each of his or her assigned sections. The evaluators' scores were numeric and ranged from zero (worst) to ten (best).
AHCA never gave the evaluators any instruction authorizing them to reject a proposal if it did not comply with the RFP's requirements. Rather, they were instructed to "score every section."
Concerning the scoring of the Technical Proposals, Section 70.5.14 of the RFP provided, "[a] maximum of one thousand four hundred (1,400) points will be assigned to the highest passing Technical Proposal." The quoted provision is followed by a formula to be used to determine the number of points to be assigned to the other proposers for their Technical Proposals. It is clear from the formula that the formula only works if the highest passing Technical Proposal is awarded the full 1,400 points.
Financial statements submitted by ACS Parent
EDS Subsidiary asserts that the financial statements submitted with the ACS Parent proposal are deficient. The transmittal letter in the ACS Parent proposal contains a table reflecting the amount of work to be performed by the prime contractor and each subcontractor, as follows:
Company Percent of Work
ACS | 97% | |
Deloitte | Consulting, LLP | 1% |
FourThought Group, Inc. | 0.2% | |
Sun Microsystems, Inc. | 1% | |
Florida Pharmacy Association | 0.4% | |
KePRO, Inc. | 0.4% | |
There is no dispute about the sufficiency of the financial information submitted regarding ACS Parent, Deloitte Consulting, LLP, and KePRO, Inc.
At page 4.4-5 of the proposal submitted by ACS Parent, Sun Microsystems includes the following:
Per RFP Reference 60.2.4.2, we include our FY2004 Annual Report. The FY2004 Annual Report contains audited financial statements for fiscal years 2002 through 2004. These financial statements include information on the financial strength and stability of Sun including:
Balance sheets
Statement of income
Statements of Changes in Financial Position
Auditor's Reports
Notes to Financial Statements
Summary of Significant Accounting Policies
The proposal submitted by ACS Parent also included information about both company and government web sites where additional financial information about Sun Microsystems could be found.
With regard to the financial statements of the Florida Pharmacy Association, the proposal submitted by ACS Parent included the following:
The Florida Pharmacy Association has not provided the above items [financial documents requested in the RFP] for submission with this proposal. Being a not-for-profit corporation we file an annual report with the Secretary of State and have enclosed a copy of our 2005 report in this section. We would be pleased to discuss additional details regarding our status with the Agency.
The annual report included with the proposal did not contain any financial information regarding the Florida Pharmacy Association.
FourThought Group, Inc., is a privately held corporation organized as an "S-Corporation." With regard to the financial statements of FourThought Group, Inc., the proposal submitted by ACS Parent included the following:
FourThought Group has not provided the above items [financial documents requested in the RFP] for submission with this proposal. Being a privately held corporation, we do not routinely disclose our financials. We would be pleased to provide an overview of FourThought Group's financials to the agency.
The information regarding FourThought Group, Inc., did not include any financial information.
The ACS Parent cost proposal forms
With respect to the cost proposal forms, RFP Section
60.4.3 states that "[w]here a signature block is indicated, pricing schedules must be signed and dated by an authorized corporate official." The pricing forms included in the RFP further state in all capital letters: "AN AUTHORIZED CORPORATE OFFICIAL OF THE VENDOR MUST SIGN THIS FORM. THE OFFICIAL'S TITLE AND THE DATE THIS FORM WAS SIGNED MUST BE ENTERED."
The ACS Parent pricing schedules were all signed by John Crysler, who indicated that he was signing under the title and in the capacity of "Managing Director." When John Crysler signed the pricing schedules he was, and still is, a Senior Vice President and Assistant Secretary of ACS Parent. As such, when he signed the pricing schedules, Mr. Crysler was "an authorized corporate official of the vendor."
The Unisys proposal
The proposal submitted by Unisys (which was ranked third by AHCA) was responsive to the RFP in all material ways. No specific challenge to the responsiveness of the Unisys proposal was raised as an issue in the pleadings filed by either of the other two proposers. Similarly, AHCA did not file any pleading challenging the responsiveness of the Unisys proposal.
CONCLUSIONS OF LAW
The Division of Administrative Hearings ("DOAH") has jurisdiction over the parties and the subject matter, pursuant to Sections 120.569 and 120.57(3), Florida Statutes.
The basic principles governing the disposition of protests in cases involving agency invitations to bid or requests for proposals are described as follows by Administrative Law Judge Stuart M. Lerner in his Recommended Order in SBR Joint Venture vs. Miami-Dade County School Board, DOAH Case No. 03-1102BID (Recommended Order issued August 1, 2003):
70. Section 120.57(3), Florida Statutes, sets forth the "procedures applicable to protests to contract bidding or award[s]" by "agencies," such as the School Board, that are subject to the provisions of Chapter 120, Florida Statutes. See Sublett v. District School Board of Sumter County, 617 So. 2d 374,
377 (Fla. 5th DCA 1993)("A county school board is a state agency falling within Chapter 120 for purposes of quasi-judicial administrative orders."); Davis v. School Board of Gadsden County, 646 So. 2d 766, 768 (Fla. 1st DCA 1994)("[T]he Administrative Procedure Act of 1974, section 120.50 et seq., Florida Statutes (1993) [APA] governs school boards and other state agencies alike."); and Mitchell v. Leon County School Board, 591 So. 2d 1032, 1033 (Fla. 1st DCA 1991)("Petitioner is correct that the [Leon County School] Board is an agency for purposes of Florida's Administrative Procedure Act, chapter 120, Florida Statutes.").
* * *
73. The "de novo proceeding" that, pursuant to the mandate of Section 120.57(3), Florida
Statutes, must be conducted by an Administrative Law Judge when an "adversely affected" person has filed a "competitive- procurement protest, other than [one involving] a rejection of all bids," and there are disputed issues of material fact, is "a form of intra-agency review. The Judge may receive evidence, as with any formal hearing under section 120.57(1), but the object of the proceeding is to evaluate the action taken by the agency" based upon the information that was available to the agency at the time it took such action. State Contracting and Engineering Corporation v. Department of Transportation, 709 So. 2d 607, 609 (Fla. 1st DCA 1998); Cf. Fairbanks North Star Borough School District v. Bowers Office Products, Inc., 851 P.2d 56, 60 (Alaska 1992)("The
determination of whether the school district had a reasonable basis for its decision should be made based on the information the school district had at the time it awarded the contracts."). The standard of review the Administrative Law Judge is required to employ in evaluating the "protested" agency action is a deferential one. If the Administrative Law Judge concludes that the agency's procurement action had a reasonable basis in fact and law, the Judge may not recommend that the agency reverse its action, even if the Judge, had he or she been in the agency's position, would have taken a different course of action.
Compare with Latecoere International, Inc. v. Department of the Navy, 19 F.3d 1342, 1355-56 (11th Cir. 1994)(" The APA provides in pertinent part: "The reviewing court shall .
. . (2) hold unlawful and set aside agency action, findings, and conclusions found to be-
-(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. . . ." This standard requires a disappointed bidder to show 'either that (1) the procurement official's decisions on matters committed primarily to his own discretion had no rational basis, or (2) the procurement procedure involved a clear and prejudicial violation of applicable statutes
or regulations.' This deferential standard reflects the respect that reviewing courts are required to accord to agencies in their evaluation of bids and in their interpretation and application of procurement regulations. 'While contracting officers may not opt to act illegally, they are entitled to exercise discretion upon a broad range of issues confronting them, including considerations of price, judgment, skill, ability, capacity, and integrity in the selection of businesses with whom the government will enter into contracts.' Accordingly, reviewing courts should be concerned with whether the contracting agency provided a coherent and reasonable explanation of its exercise of discretion. Proof that the award lacked a reasonable basis generally establishes arbitrary and capricious action. Thus, if a reviewing court finds a reasonable basis for the agency's action, the court should stay its hand even though it might, as an original proposition, have reached a different conclusion as to the proper administration and application of the procurement regulations.
Only when the court concludes that there has been a clear violation of duty by the procurement officials should it intervene in the procurement process and proceed to a determination of the controversy on the merits.")(citations omitted); Cincom Systems, Inc. v. United States, 37 Fed. Cl. 663, 671-72 (1997)("Contracting officials may properly exercise wide discretion in their evaluation of bids and the application of procurement regulations. . . . It is well-settled that courts should respect acts of procuring officials when they exercise their discretionary functions. The court should not substitute its judgment for that of a procuring agency and should intervene only when it is clear that the agency's determinations were irrational or unreasonable. It is the burden of the aggrieved bidder to demonstrate that there is no rational basis for the agency's determination.")(citations omitted); and
Herbert F. Darling, Inc. v. Beck, 442 F. Supp. 978, 981 (W.D. N.Y. 1977)("The question before the court on the defendants' motion for summary judgment is whether the Regional Administrator's decision disapproving the proposed award to Darling had a rational basis. This standard of review is designed to ensure that judicial deference is given to the well-reasoned decisions of E.P.A. officials in interpreting the agency's own procurement and contracting regulations. A court may not set aside agency action solely because it would have interpreted the bidding procedures or the regulations differently had it made the initial determination.")(citations omitted).
The Recommended Order in SBR Joint Venture also contains the following observations in endnotes 27 through 29:
27/ An agency's decision or intended decision will be found to be "clearly erroneous" if it is without rational support and, consequently, the Administrative Law Judge has a "definite and firm conviction that a mistake has been committed." U.S. v. U.S. Gypsum Co., 68 S. Ct. 525, 542 (1948); see also Pershing Industries, Inc. v. Department of Banking and Finance, 591 So. 2d 991, 993 (Fla. 1st DCA 1991)("It is axiomatic that an agency's construction of its governing statutes and rules will be upheld unless clearly erroneous. If an agency's interpretation is one of several permissible interpretations, it must be upheld despite the existence of reasonable alternatives.")(citations omitted); Motel 6, Operating L.P. v. Department of Business Regulation, Division of Hotels and Restaurants, 560 So. 2d 1322, 1323 (Fla. 1st DCA 1990)("It is axiomatic that an agency's construction of its governing statutes and rules will be upheld unless clearly erroneous; if an agency's interpretation is one of several permissible interpretations, it must stand despite the existence of other reasonable alternatives."); and Hinton v.
Judicial Retirement and Removal Commission,
854 S.W.2d 756, 758 (Ky. 1993)("The standard of review on appeals from the Judicial Retirement and Removal Commission is that the Supreme Court must accept the findings and conclusions of the commission unless they are clearly erroneous; that is to say, unreasonable.").
28/ An act is "contrary to competition" if it unreasonably interferes with the objectives of competitive bidding, which, it has been said, are:
[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 an exact comparison of bids.
Wester v. Belote, 138 So. 721, 723-24 (Fla. 1931); and Harry Pepper & Associates, Inc. v. City of Cape Coral, 352 So. 2d 1190, 1192 (Fla. 2d DCA 1977).
29/ An "arbitrary" action is "one not supported by facts or logic, or [is] despotic." A "capricious" action is "one which is taken without thought or reason or [is] irrational[]." Agrico Chemical Co. v. Department of Environmental Regulation, 365 So. 2d 759, 763 (Fla. 1st DCA 1978); see also Board of Clinical Laboratory Personnel, v.
Florida Association of Blood Banks, 721 So. 2d 317, 318 (Fla. 1st DCA 1998)("An 'arbitrary' decision is one not supported by facts or logic. A 'capricious' action is one taken irrationally, without thought or reason."); and Dravo Basic Materials Company, Inc. v.
Department of Transportation, 602 So. 2d 632,
634 n.3 (Fla. 2d DCA 1992)("If an
administrative decision is justifiable under any analysis that a reasonable person would use to reach a decision of similar importance, it would seem that the decision is [not] arbitrary.").
Delivery to the wrong address
The delivery of the EDS Subsidiary proposal to an incorrect AHCA address, where it was received without complaint or criticism by AHCA, is a text-book example of a "minor irregularity" that may, and should be, waived by the Agency. Although the misdelivery was a variation from the terms and conditions of the RFP, that variation did not affect the price, did not give one proposer an advantage or benefit not enjoyed by others, and did not adversely affect AHCA's interests. Under these circumstances the misdelivery should be waived.9 Responsiveness of the Unisys proposal
In their pleadings in this case, ACS Parent and EDS Subsidiary have each challenged, on several grounds, the responsiveness of each other's proposals. The proposed recommended order submitted by ACS Parent also contains proposed findings of fact and conclusions of law to the effect that the Unisys proposal is also non-responsive. EDS Subsidiary appears to have abandoned its challenge to the responsiveness of the Unisys proposal. (See paragraph 225 of the EDS Subsidiary proposed recommended order.) Issues concerning the responsiveness of the
Unisys proposal will be addressed first, because they are more easily and quickly disposed of than issues concerning the responsiveness of the other two proposals.
The first thing that needs to be noted is that the issue of the responsiveness of the Unisys proposal was never fairly and squarely raised. As noted in the Preliminary Statement near the beginning of this Recommended Order, the parties were clearly instructed that if they intend to challenge the sufficiency of another proposal, they "shall state with particularity the facts and law upon which" the challenge is based. Their attention was also directed to the requirement set forth in Florida Department of Transportation v J.W.C. Company, Inc, 396 So. 2d 778 (Fla. 1st DCA 1981), to the effect that a party contending there is some flaw in the proposal or application of another party "must identify the areas of controversy and allege a factual basis for the contention. "
The twice-amended petition of ACS Parent does not contain any challenges to the standing of Unisys or to the responsiveness of the Unisys proposal. And all that is contained on this subject in the amended EDS Subsidiary petition is a statement that the "disputed issues of material fact and law" include "whether the Unisys Corporation ("Unisys") lacks standing to intervene in this proceeding" and "whether the Unisys proposal is non-responsive to the RFP. . . ." The quoted passages are
insufficient to place Unisys on notice that it must prepare to defend any specific alleged shortcoming in its proposal.
There is sufficient competent substantial evidence in the record to demonstrate that the Unisys proposal was responsive to the RFP in all material ways. Neither of the other proposers pled a sufficient challenge to the responsiveness of the Unisys proposal. The evidence supporting the responsiveness of the Unisys proposal not having been sufficiently challenged, such evidence supports a conclusion that the Unisys proposal was responsive in all material ways.10
The responsiveness of the ACS Parent proposal
EDS Subsidiary asserts that the ACS Parent proposal fails to meet mandatory RFP requirements regarding financial statements. The proposal submitted by ACS Parent appears to contain sufficient financial information regarding the prime contractor and three of the subcontractors. With regard to the other two subcontractors, FourThought Group, Inc., and Florida Pharmacy Association, there is no financial information, but there are at least bare-bones explanations of why the financial information was not provided. The explanations, while not very informative, appear to comply with the letter of the requirements of Section 60.2.4(2) of the RFP. Further, even if it were to be concluded that the explanations were insufficient, such a deviation would be a de minimus deviation from the requirements of
the RFP because these two last-mentioned subcontractors will be providing only 0.6% of the work under the contract. Under these circumstances, any infufficiency in the corporate financial information submitted by ACS Parent is a minor irregularity which can, and should be, waived.
The ACS Parent cost proposal forms
EDS Subsidiary also challenges the sufficiency of the cost proposal forms submitted by ACS Parent that were signed by an authorized corporate official. There is no persuasive competent substantial evidence that Mr. Crysler was not an authorized corporate official when he signed the cost proposal forms.
On the basis of the foregoing findings of fact, and for the reasons discussed above, it is concluded that the proposal submitted by ACS Parent is responsive in all material respects. Any minor irregularity in the ACS Parent proposal can, and should be, waived.
The responsiveness of the EDS Subsidiary proposal
The RFP required that each proposer include a Proposal Guarantee in the sealed package with the original Technical Proposal. Under the terms of the RFP, a Proposal Guarantee was a mandatory requirement. EDS Subsidiary failed to submit a Proposal Guarantee that would protect AHCA in the event EDS Subsidiary failed to execute the contract. Instead, EDS Subsidiary submitted with its Technical Proposal a Proposal Guarantee naming a
different legal entity, EDS Parent, as the principal, and providing assurances to AHCA in the event that EDS Parent, an entity that did not submit a proposal, was selected as the Contractor. That deviation deprived AHCA of assurance that the contract would be entered into. That deviation therefore had a substantial adverse impact on an important AHCA interest. The significance of a proposal guarantee was described as follows in Robinson Electrical Co., Inc. v. Dade County, 417 So. 2d 1032, 1034 (Fla. 3d DCA 1982):
In determining whether a specific noncompliance constitutes a substantial and hence nonwaivable irregularity, the courts have applied two criteria - - first, whether the effect of a waiver would be to deprive the [agency] of its assurance that the contract will be entered into, performed and guaranteed according to its specified requirements, and second, whether it is of such a nature that its waiver would adversely affect competitive bidding by placing a bidder in a position of advantage over other bidders or by otherwise undermining the common standard of competition.
A Proposal Guarantee is a crucial component of a proposal, and its omission from a proposal confers, as a matter of law, a competitive advantage upon a proposer. Florida Blacktop, Inc. v. Department of Transportation, Case No. 02-2187BID, ¶ 16 (DOAH August 6, 2002) (Final Order September 13, 2002, adopting Recommended Order); Phoenix Mowing and Landscaping, Inc. v. Department of Transportation, Case No. 01-0371BID, (DOAH April 25,
2001)(Final Order May 21, 2001, adopting Recommended Order); Linder-Funk-Fregley-Oertel Interest v. Department of Corrections, Case No. 93-0875BID (DOAH June 28, 1993). Linder, et al. is especially pertinent to this issue because the facts regarding the proposal guarantee issue in Linder, et al. are, in all material details, identical to the facts concerning the proposal guarantee in this case.11
The EDS Subsidiary cost proposal
The cost proposal submitted with the EDS proposal was firm and fixed. However, because the cost proposal was submitted in the name of a business entity that does not exist, it did not comply with the mandatory requirement that each proposer submit both a technical proposal and a cost proposal. EDS Subsidiary argues that the incorrect name in the cost proposal is obviously a typographical error or minor mistake that can properly be corrected. In many circumstances such an argument might be viable, but in this case, where there are already several different names used in different places in the subject proposal, AHCA cannot, by considering the language of the proposal, determine with any certainty what name EDS Subsidiary would have placed on the cost proposal if it had not placed a mistaken name on the cost proposal. Because it cannot be determined with any certainty which entity submitted the cost proposal, the cost proposal fails to comply with a mandatory requirement of the RFP.
The EDS Subsidiary financial statements
EDS Subsidiary also failed to comply with the RFP's requirements for the submission of audited financial statements when it only provided the financial statements for its parent, EDS Parent. The RFP required proposers to submit their audited financial statements. That requirement was amended by Addendum One, which provided that if audited financial statements did not exist, "unaudited statements or financial information of the type that is contained in financial statements may be submitted. "
EDS Subsidiary has "financial information of the type that is contained in financial statements," but it did not include any such information in its proposal. Without such financial information, AHCA has no information at all about the true financial status of EDS Subsidiary. Therefore, AHCA's reliance on the submitted financial information to determine the financial condition of EDS Subsidiary was clearly erroneous. This deficiency in the EDS Subsidiary proposal is not a minor waivable irregularity because it concerns the financial condition of the prime contractor that proposes to perform three-quarters of the work under the contract.
The local address requirement
The RFP did not clearly require identification of a specific address for the proposer's local facility, and it is within the State's discretion to interpret the requirements of the
RFP as not requiring a specific address. Such being the case, the proposals submitted by EDS Subsidiary and by Unisys both satisfied the RFP requirements regarding the location of a local facility.
The named staff requirement
All three proposers included in their respective proposals, proposed staff that did not facially meet the educational requirements set forth in the RFP. All three proposers contend that their proposed staffing is sufficient on the basis of the experience of the proposed staff members. There is no persuasive evidence that any of the three proposers has proposed the use of incompetent staff members. There has been no showing of any material deviation from the RFP staffing requirements. There has been no showing that any proposer received an advantage over the others regarding proposed staffing. Thus, there is no basis upon which to declare any of the proposals nonresponsive based on the proposed staffing.
Evaluation issues
Turning now to the issues concerning various aspects of the manner in which the proposals were evaluated, it is first noted that some of the evidence in this case as well as some of the issues to be addressed in this case, are reminiscent of the evidence and issues presented in Optiplan, Inc. v. School Board of
Broward County, Florida, DOAH Case No. 95-4560BID (Recommended Order issued December 22, 1995); reversed on other grounds, 710
So. 2d 569 (Fla. 4th DCA 1998). The Recommended Order in the Optiplan case included the following observations, which are also relevant to some of the issues here:
107. There were some scores by some members of the Insurance Committee that, on the record in this case, appear to be what can best be described as unexplained aberrations. Because they are unexplained, the evidence is insufficient to establish that these apparent aberrations were based on arbitrary considerations. It is possible they were merely honest mistakes. It is possible there is some logical explanation for some or all of the apparent aberrations, which explanation is not part of the record in this case because the members who made those scores were not called as witnesses or, if called, were not asked about those scores. Unexplained aberrations are an insufficient basis upon which to conclude that bidding process is arbitrary.
* * *
While it is possible that some of the scoring decisions about which Optiplan complains may have been arbitrary, there is no persuasive competent substantial evidence in the record of this case to establish that such is the case. Further, on the record in this case there is no way in which the impact of any such possible arbitrary scoring can be quantified. Absent quantification it cannot be shown that any such possible arbitrary scoring resulted in any substantial injury to the Petitioner's interests.
A great deal of the Petitioner's argument appears to be based on the notion that an unexplained deviation from an expected scoring result constitutes proof that the unexpected result was the result of some arbitrary action by one or more Committee members. Such is not the case. Deviations
from expectations can result from any number of different reasons. In order to demonstrate entitlement to relief from unexpected results, the Petitioner must present evidence of the reason from the results and must prove that the reason constituted an arbitrary, illegal, fraudulent, or dishonest act. Absent such proof, relief must be denied.
* * *
135. In brief conclusion, the evidence in this case is an insufficient basis for granting the relief sought by the Petitioner. The few instances of mistaken scoring that were actually proved were too few in number to have any material impact on the average scores. Unexplained aberrations are an insufficient basis upon which to conclude that a bidding process is arbitrary. Accordingly, the Petition and Formal Protest should be dismissed and all relief requested in the Petition should be denied.
As noted in the language quoted above, not every agency deviation for the RFP during the evaluation of proposals provides a basis for relief. In addition to proving that there was a deviation, there must also be some quantifiable proof that, absent the deviation, the outcome of the evaluation would have been materially different. Absent proof of some measurable harm that would have changed the outcome, there is no basis for setting aside the proposed agency action.
In this case no useful purpose would be served by a lengthy discussion of the several asserted irregularities in the evaluation process, because the evidence in this case is insufficient to demonstrate that during the evaluation process any
deviations by AHCA from the provisions of the RFP resulted in any adverse consequences to any proposer that would have changed the outcome of the evaluation process. Such being the case, none of the proposers is entitled to any relief by reason of any irregularities in the evaluation process.
A few general comments about the evaluation process may be useful. The greater weight of the evidence is to the effect that, to the best of their ability, the evaluators applied all of the evaluation criteria evenhandedly to all three proposers. The greater weight of the evidence is to the effect that there was no conflict of interest or appearance of conflict of interest with regard to Gartner, nor is there any persuasive evidence that Gartner's actions had any material effect on the outcome of the evaluations. The 1400-point formula for scoring the technical proposals was correctly applied.
Sunshine Law issues
The conclusions of law in the recommended order in Just for Kids, Inc. v. Palm Beach County School Board, DOAH Case No. 03-2168BID (Recommended Order issued November 7, 2003), include the following:
78. Petitioner contends that certain meetings between the representative of the Purchasing Department and Dr. Sargeant violated Florida’s Sunshine Law, Section 286.011, Florida Statutes, thereby making the award void ab initio. Disputes about alleged violations of Section 286.011 are normally
resolved in civil actions in the courts of this state. There does not appear to be any jurisdiction for the judges of the Division of Administrative Hearings to dispose of such disputes. Accordingly, the Petitioner must seek relief related to Section 286.11 in another forum.
The Administrative Law Judges of the Division of Administrative Hearings continue to lack jurisdiction to dispose of disputes involving allegations of violations of Florida's Sunshine Law. Relief for any such violations must be sought elsewhere.12
Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED:
That the Agency for Health Care Administration enter a Final Order in this case rejecting the proposal of EDS Information Services, L.L.C., as non-responsive, and awarding the contract at issue in this case to Affiliated Computer Services, Inc.
DONE AND ENTERED this 17th day of January, 2006, in Tallahassee, Leon County, Florida.
S
MICHAEL M. PARRISH
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 17th day of January, 2006.
ENDNOTES
1/ The three business entities that submitted proposals for the subject procurement are, in alphabetical order, Affiliated Computer Services, Inc., EDS Information Services, L.L.C., and Unisys Corporation.The first two businesses named above have names that could be confused with or mistaken for the names of other business entities. In an effort to minimize confusion or misidentification, it was agreed that during this proceeding certain business entities would be referred to by description, rather than by name. The agreed-upon references are as follows:
Full name Descriptive name
Affiliated Computer Services, Inc. ACS Parent ACS State Healthcare, L.L.C. ACS Subsidiary Electronic Data Systems Corporation EDS Parent EDS Information Services, L.L.C. EDS Subsidiary
EDS Information Systems, L.L.C. (None--use entire name) Electronic Data Systems, L.L.C. (None--use entire name)
2/ EDS Subsidiary argues at paragraph 20 of its proposed recommended order that "the thousands of references to EDS throughout the EDS proposal are references to the organization consisting of both EDS Parent and EDS Subsidiary." The quoted argument lacks evidentiary support in the record in this case. In the multitude of times that the term "EDS" is used in the EDS Subsidiary proposal, it is sometimes clear that the term refers to EDS Subsidiary only, it is sometimes clear that the term refers to EDS Parent only, it is sometimes clear that the term refers to something that might be described as "the entire EDS family of companies," including EDS Parent and all of its subsidiaries, and it is sometimes quite unclear what the term "EDS" is intended to mean in some portions of the EDS Subsidiary proposal. But nowhere in the EDS Subsidiary proposal did the undersigned find a use of the term "EDS" that could fairly and reasonably be described as an "organization consisting of both EDS Parent and EDS Subsidiary." Further, no evidence has been brought to the attention of the undersigned that would constitute persuasive competent substantial evidence that there presently exists an "organization consisting of both EDS Parent and EDS Subsidiary," nor has the undersigned seen any competent substantial evidence that an organization so
comprised submitted a proposal for the subject RFP, submitted a proposal guarantee, and/or submitted a cost proposal. And to further confuse matters, in a few places in the EDS Subsidiary proposal there are references to companies that do not exist.
3/ See Affidavit of Membership and Contributions of Foreign Limited Liability Company within Petitioner's Exhibit 24, which states that members of EDS Subsidiary were contributing assets valued at $1,109,590,142.00. Those assets included a wide variety of tangible and intangible assets. EDS Subsidiary has also been involved in business transactions involving hundreds of millions of dollars worth of revolving secured financing arrangements. See notes to the consolidated financial statements in the 2004 annual report of EDS Parent.
4/ EDS Subsidiary argues in its proposed recommended order that a representative of the surety has assured that the surety would honor a claim against the proposal guarantee if EDS Subsidiary failed to enter into a contract. The evidence in that regard is unpersuasive for at least two reasons; (1) the plain language of the proposal guarantee is inconsistent with the argument, and (2) the witness who testified in this regard had no experience in handling claims on surety bonds.
5/ Although there is very little evidence in the record of this case regarding the financial records maintained by EDS Subsidiary, there is evidence that EDS Subsidiary does have its own internal financial records and its own internal audit records, even if its records have not been audited by independent outside auditors.
Further, common sense indicates that a company that has had assets of over one billion dollars and has engaged in revolving financing arrangements involving hundreds of millions of dollars must, of necessity, have quite a large number of financial records.
6/ The evidence in this case contains quite a bit of expert witness testimony containing opinions on such matters as: (a) what technical solutions were required by the RFP, (b) what technical solutions were permitted by the RFP (even if not required by the RFP), and (c) what technical solutions were prohibited by or otherwise ran afoul of the mandatory requirements of the RFP. There is quite a bit of conflict in the expert opinions regarding what is required, permitted, or prohibited by the technical requirements of the RFP. Upon consideration of all of the expert witness testimony in the context of all the other evidence in the record, on issues where the expert opinions conflict, the testimony supporting the sufficiency and adequacy of the EDS
Subsidiary technical solution has been found to be more persuasive than the opposing expert witness testimony.
7/ Some evaluators testified that the Gartner information did not cause them to make any scoring changes. A few others said that it did, but they never clarified whether the changes were up or down and never identified which proposer's scores they changed. Yet another evaluator mentioned making scoring changes after the Gartner information and after other information at other meetings, but even this witness did not indicate which proposer's scores were changed nor whether the changes were up or down.
8/ Several evaluators testified that they read and considered the Georgia and Florida corporate references, but none testified as to the extent to which such references affected their scoring.
9/ This is such a clear case of a waivable minor irregularity that it would appear to be arbitrary and capricious if the agency should fail to waive it.
10/ It is gratuitously noted that if it were necessary or appropriate to address the merits of the challenges to the responsiveness of the Unisys proposal, for reasons mentioned in addressing some similar challenges to the EDS Subsidiary proposal, the Unisys proposal would retain its responsive status.
11/ The Recommended Order in Linder, et al. also discusses and notes the short-comings of many arguments raised in that case that are the same as or similar to unpersuasive arguments raised in this case.
12/ It is gratuitously noted that the meetings which are asserted to be violations of the Sunshine Law do not appear to be meetings of the type that come within the scope of the Sunshine Law.
COPIES FURNISHED:
Barbara D. Auger, Esquire Bryant, Miller & Olive, P.A.
201 South Monroe Street, Suite 500 Tallahassee, Florida 32301
A. “Seth” Mills, Jr., Esquire Mills, Paskert, Divers, P.A.
100 North Tampa Street, Suite 2010 Tampa, Florida 33602
John A. Radey, Esquire
Radey, Thomas, Yon & Clark, P.A.
301 South Bronough Street, Suite 200 Post Office Box 10967
Tallahassee, Florida 32302
Robert H. Hosay, Esquire Harrell & Hosay, P.L.
2473 Care Drive, Suite 1
Tallahassee, Florida 32308
W. Robert Vezina, III, Esquire Vezina, Lawrence & Piscitelli, P.A.
318 North Calhoun Street Tallahassee, Florida 32301-7606
D. Andrew Byrne, Esquire Cooper & Byrne
3520 Thomasville Road, Suite 200
Tallahassee, Florida 32309
Richard Shoop, Agency Clerk
Agency for Health Care Administration 2727 Mahan Drive, Mail Station 3
Tallahassee, Florida 32308
Christa Calamas, General Counsel Agency for Health Care Administration Fort Knox Building, Suite 3431
2727 Mahan Drive
Tallahassee, Florida 32308
NOTICE OF RIGHT TO FILE 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 |
|---|---|---|
| Mar. 03, 2006 | Agency Final Order | |
| Jan. 17, 2006 | Recommended Order | The response to the Request for Proposal with proposal guarantee and cost proposal in other names was non-responsive and should be rejected. |
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PAB CONSULTANTS, INC. vs DEPARTMENT OF TRANSPORTATION, 05-003676BID (2005)
