Findings Of Fact During the tomato growing season involved in this case (November 1982) Max Frosteg, Respondent, was salesman for Isom, Petitioner, under the terms and conditions of the contract admitted into evidence as Exhibit 1. The tomatoes were grown by Isom and sent to the packing house where Frosteg's agent, Boyd, acted as salesman for the grower. Boyd contacted various buyers and obtained prices for tomatoes of specified grade at destination and took orders for these tomatoes. The tomatoes were shipped from the packing house and, upon arrival at destination, the buyer did not always pay the invoice price. It is the difference in invoice price and price paid by the buyer that is here in dispute. The contract (Exhibit 1) authorized the salesman to make adjustments in the price that may be necessary, to assign the contract, or use price arrivals in selling the product. The duty of the salesman is to get the best price possible for the grower. The contract further provided, and it is customary in the business, that the salesman apprise the grower of all situations where the buyer fails to pay the invoice price because of alleged grade discrepancies in the product or for any other reason. This gives the grower the option of requesting an inspection of the product at destination to determine if the product, in fact, meets or does not meet specifications; and the option of refusing the offering price if the product does not meet specifications. On the invoices here in question the salesman accepted less than invoice price for the tomatoes but failed to notify the grower and give the grower the option of accepting or refusing the lower price. The money paid for the tomatoes was forwarded to Frosteg, who remitted to Isom his portion of the money received. The amount received by Isom was $9,529.43 less than Isom would have received if the invoice price had been paid for the tomatoes. By failing to notify the grower that he was accepting a less-than- invoice price, the salesman, Boyd, breached his duty to the grower, Isom. No inspection reports were submitted to show that the tomatoes shipped met specifications for the classification shown on the invoices and no inspection reports were submitted to show that the tomatoes failed to meet said invoice specifications at destination. Since neither party was represented by an attorney at this hearing, available evidence may not have been submitted.
The Issue Whether Petitioner, instead of Intervenor, is entitled to the award of RFP-DOT-98-99-4005.
Findings Of Fact The Department issued and advertised RFP-DOT-98-99-4005 (RFP) for bridge tending, maintenance and repair service contracts for movable bridges in St. Lucie and Martin counties. Theresa Martin has been the Department's District IV Contractual Services Coordinator for the past four years. Ms. Martin is responsible for reviewing all requests for contractual services contracts, and did so in the present case. In preparing RFP’s, including the RFP that is the subject of this proceeding, the Contractual Services Office follows the statutory and rule provisions of Section 287.057, Florida Statutes, and Chapter 60A, Florida Administrative Code, and utilizes the Department's Contractual Services Acquisition Procedures, Procedure Number 357-040-020-D. The RFP specifications were not protested. Three proposers submitted timely responses to the RFP: General Electric Industrial Services(GE), Old Tampa Bay Enterprises (OTBE), and C&S Building Maintenance (C&S). The Department determined that the proposals of all three vendors were responsive. Having determined that the proposals were responsive, the Department reviewed and scored the proposals in accordance with the criteria listed in the RFP. The RFP established five (5) different criteria upon which the Department was to evaluate each proposal. The criteria and the maximum allotted points for each criteria were as follows: Management Plan . . . . . . . . .35 points Technical Plan . . . . . . . . .35 points 3. Price . . . . . . . . . .. . . . 25 points Certified Minority Business .. . .5 points Executive Judgment . . . . . . . .5 points GE received the highest rating among the three proposers for its proposal and OTBE was rated second. Based on these ratings, the Department of Transportation posted its intent to award the project to GE. The RFP required submission of separate price and technical proposals. The price proposal included forms for both the proposer’s price and for certification of the proposer’s intention with respect to the use of Disadvantaged Business Enterprises (DBEs). The price proposal and technical proposal were to be submitted to the Department at the same time but in separate sealed envelopes. The price proposal and the technical proposal were then opened separately and scored separately. The technical proposals were properly reviewed and scored by a technical review committee. After the technical proposals were scored, the members of the technical review committee reviewed the price proposals and provided the Department’s contract administrators with their views as to whether the price proposal was acceptable. The technical review committee concluded that GE’s pricing was acceptable, although it exceeded the Department’s estimated budgetary ceiling. The RFP expressly provides: "This is an Indefinite Quantity Contract for which the Department has established an estimated budgetary ceiling amount of $480,000.00. The Contractor shall not exceed the estimated budgetary ceiling amount without an executed Supplemental Agreement. A Supplemental Agreement to increase the estimated budgetary ceiling amount may be entered into based upon Department need and availability." The Department did not interpret the "estimated budgetary ceiling" as an absolute cap. Rather, the Department considered the "estimated budgetary ceiling" a budgeting tool that gave the proposers an indication of the Department’s estimation of the dollar amounts necessary and available for the contract. The estimated budgetary ceiling amount is typically based upon the Department's recent expenditures in similar contracts. Given that the budgetary ceiling in the RFP is an estimate, the RFP specifically authorizes the Department to amend or supplement the contract with additional dollars during the course of the project. The budgetary modification process provided by the execution of Supplementary Agreements for indefinite quantity contracts occurs on a regular basis in District IV and is provided for in the Department's governing Contractual Services Procedures. Consistent with the Department's interpretation of the "estimated budgetary ceiling," a price proposal that was higher than the budgetary estimate would not be considered irregular and rejected as non-responsive. OTBE apparently believed that the RFP’s statement of an "estimated budgetary ceiling" created an absolute cap on the amount of permissible bids. Based on its mistaken belief, OTBE submitted a price of $479,987.00, three dollars below the Department’s estimated budgetary ceiling amount. Both GE and C&S bid amounts that exceeded the estimated budgetary ceiling with GE’s total price bid being $575,100.00. Although the price proposals of GE and C&S exceeded the estimated budgetary ceiling of $480,000.00, the Department did not consider either of these proposals non-responsive. The Department’s decision in this regard was consistent with its definition and interpretation of estimated budgetary ceiling. To determine the number of points each proposal would be awarded in the price category, the Department applied the mathematical formula that was specified in the RFP. According to the RFP: THE PRICE USED IN AWARDING POINTS WILL BE THE GRAND TOTAL SHOWN ON PRICE PROPOSAL FROM "C." ALL RESPONSIVE PRICE PROPOSALS WILL BE SCORED IN RELATION TO THE LOWEST PRICE PROPOSAL USING THE FOLLOWING FORMULA: (Low proposal/subject proposal x 25 points = awarded price points) The points awarded for the price proposal after applying the aforementioned mathematical formula were applied to the price proposal and then added to the particular proposer’s technical proposal point total. Pursuant to the formula specified in the RFP, the low price proposal received 25 points and the other proposals received a proportionate share of 25 points equal to the ratio of the low price to the proposer’s price. The Department reviewed and scored the prices bid by GE, OTBE, and C&S using the price formula established in the RFP. OTBE, with the low bid a price of $479,100.00, was awarded 25 points in the price category. The RFP formula was also applied to GE’s price bid of $575,100.00; as a result thereof, GE was awarded 20.87 points in the price category. OTBE received the benefit of its low bid by receiving the maximum points in the price category. There was no minority business enterprises or DBE goal set for this RFP. However, pursuant to Section 287.057(6)(c), Florida Statutes, the Department provided a point preference for proposers that certified that they would subcontract at least 3 percent to 10 percent of the contract value to certified DBEs. The RFP provided that: The Department will add up to 5 points to the scores of firms (non-CDBE) utilizing Certified DBE’s as subcontractors for services or commodities as follows: 10% and above of total project dollars - 5 points, 3% - 9.9% of total project dollars - 2 points Complete and attach the DBE Preference Points Certification Form (Form "D") in the Price Proposal if CDBE preference points are to be considered. The DBE Preference Certification Form was included as part of the RFP package and was required to be submitted as part of each proposer's price package. Furthermore, the face of the form also required each proposer to declare if it intended to subcontract part of the work to DBEs and specified the scoring for certification of an intent to use DBEs. The DBE Preference Certification Form also advised vendors that a proposer who certified an intent to subcontract at least 10 percent of the contract was awarded 5 points; that a proposer who certified an intent to subcontract more than 3 percent, but less than 10 percent, was awarded 2 points; and that a proposer who did not commit to an intention to subcontract to DBEs would receive no additional points in this category. The purpose of utilizing the DBE Preference Form Certification is for the Department to provide an incentive for contractors to utilize DBEs on Department projects and to bind the proposer to the commitment that is certified on DBE Preference Certification Form. However, when the Department utilizes the form, it is a discretionary election of the proposer to take advantage of utilizing a DBE and receive the additional points. OTBE’s DBE Preference Certification Form stated that OTBE did not intend to use DBEs. Thus, OTBE did not receive any points in the certified business criteria. GE stated on its DBE Preference Certification Form that it intended to subcontract at least 10 percent of the contract to DBEs. Based on GE's certification of an intention to use DBEs for 10 percent of the contract work, in accordance with the provision of the RFP, the Department awarded GE 5 points. On the DBE Preference Certification Form, there was a place for the proposer to list the DBEs it proposed to use and to indicate the type of work and/or commodities that the DBEs would provide. On its DBE Preference Certification Form, GE listed the two DBE entities that it intended to use on the project: Advanced Marketing Consultants and J.C. Industrial Manufacturing Corp. (JC Machines). With regard to the type of work that could be subcontracted to these DBEs, GE indicated on its DBE Preference Certification Form that Advanced Marketing Consultants could provide payroll services and that JC Machines could perform mechanical repairs. The Department’s District IV Contracting Office reviewed GE’s price proposal, including GE’s DBE Preference Certification Form. As part of that process, the District IV contract administrator checked with the Department’s Central Office in Tallahassee, Florida, and confirmed that the DBE’s listed in GE’s proposal were certified DBEs. There is sufficient work available under the contract specifications for GE to meet its DBE commitment using the DBEs that GE listed in its proposal. Moreover, the DBEs listed by GE are capable of performing much of the work required in the RFP’s Scope of Services. The RFP required that each proposal include the names of qualified personnel that are able to perform the job duties and responsibilities outlined in the RFP specifications and that the proposer intended to use if it were awarded the contract. In this case, all three proposers, GE, OTBE, and C&S, submitted the same three key personnel for the bridge superintendent, bridge electrician, and bridge mechanic positions. At the time the proposals were submitted, the key personnel included in those proposals were all working in the positions for which they were listed. Apparently, these individuals had agreed to continue in their positions regardless of which proposer was awarded the contract. The RFP did not require that the personnel listed in a proposal be current employees of the proposer. Rather, the Department expected that these individuals would be employed by the proposer after the vendor was awarded the contract. The RFP specifies the percentage of work that the successful proposer may sublet under the contract. Section 6.0 of the RFP's Scope of Services (Section 6) provides in relevant part: The Contractor shall not sublet, transfer, assign or otherwise dispose of the contract or any portion thereof, or his right, title or interest therein without written approval of the Maintenance Engineer otherwise and in accordance with this agreement. Contractor shall not sublet more than fifty percent (50%) or [sic] a non set-a-side project. Based on the above-quoted provision, the successful proposer, as the prime contractor, can subcontract no more than 50 percent of the value of the contract. Notwithstanding the RFP’s limitation on the percentage of work that may be subcontracted, the RFP did not require proposers to state what percentage of the contract work they intend to subcontract. Moreover, the RFP did not require the vendors to submit proposed subcontracts nor did the RFP specify required terms for subcontracts. Therefore, at the time the RFP’s were evaluated, the Department did not and could not determine precisely what portion of the contract a proposer intended to subcontract or to whom work would be subcontracted. The Department interprets Section 6 to be a contract performance issue. The reason is that the percentage of the work that is subcontracted by the prime contractor after execution of the agreement is monitored by the Department during the performance of the contract. Such monitoring is accomplished by the Department’s requiring that all requests to subcontract portions of the contract be approved by the Department's project engineer. GE or any other successful proposer is obligated to comply with all the requirements and specifications of the RFP and contract. Failure of a successful proposer to comply with these requirements is a contract performance issue and not an issue that the Department is required or able to address at the proposal review and selection phase. In the instant case, the Department intended to award the contract to the responsive and responsible offerer whose proposal it determined to be the most advantageous to the State taking into consideration price and other criteria. GE was the apparent highest ranked, responsive, and responsible proposer or offerer with a total score of 87.20, including 20 points in the price category and 5 points for certifying its intent to use DBEs. OTBE was the second ranked proposer with 82.67, including 25 points for the price category; OTBE properly received no points for the DBE Preference Certification.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Transportation enter a final order awarding the contract to GE Industrial Systems and dismissing Petitioner’s challenge to the award of RFP-DOT-98-99- 4005. DONE AND ENTERED this 22nd day of June, 1999, in Tallahassee, Leon County, Florida. CAROLYN S. HOLIFIELD 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 22nd day of June, 1999. COPIES FURNISHED: Thomas F. Barry, Secretary ATTN: James C. Myers, Clerk of the Agency Proceedings Department of Transportation Haydon Burns Building 605 Suwannee Street, Mail Station 58 Tallahassee, Florida 32399-0450 Pamela Leslie, General Counsel Department of Transportation Haydon Burns Building 605 Suwannee Street, Mail Station 58 Tallahassee, Florida 32399-0450 Brian F. McGrail Assistant General Counsel Department of Transportation Haydon Burns Building 605 Suwannee Street, Mail Station 58 Tallahassee, Florida 32399-0450 Brant Hargrove, Esquire 1545 Raymond Diehl Road, Suite 150 Tallahassee, Florida 32301 Jonathan Sjostrom, Esquire Steel, Hector & Davis, L.L.P. 215 South Monroe Street, Suite 601 Tallahassee, Florida 32301-1804
The Issue Whether Respondent, Department of Corrections' ("Department") intended decision to award contracts to Intervenors, Gateway Foundation, Inc. ("Gateway"), and The Unlimited Path, Inc. ("UPI"), for licensed in-prison substance abuse treatment services pursuant to Invitation to Negotiate FDC ITN 17-112 ("the ITN"), is contrary to the Department's governing statutes, rules, or the ITN specifications, and contrary to competition, clearly erroneous, arbitrary, or capricious.
Findings Of Fact The ITN, Site Visits, and Addenda The Department is a state agency responsible for the supervisory and protective care, custody, and control of all inmates incarcerated by the Department in each of its four regions. As of June 30, 2016, the Department had a total inmate population of 99,119, with 62 percent (61,454) of those inmates in need of treatment for a substance abuse disorder. The Department wants to strategically improve the manner in which it provides licensed substance abuse treatment services to inmates by focusing on maximizing the levels of treatment and individual inmate needs without increasing costs. The Department chose to utilize a flexible competitive procurement process to achieve its goals; specifically, an invitation to negotiate method of procurement rather than an invitation to bid or request for proposals, because it wanted industry leaders to craft individual and innovative solutions to address the problem.1/ Against this backdrop, on September 21, 2016, the Department issued the ITN, "In-Prison Substance Abuse Treatment Services," seeking replies from qualified vendors to provide licensed substance abuse treatment services to inmates incarcerated by the Department in each of its four regions. The Department reserved the right to make separate awards to each of its four regions, or to make a statewide award to a single vendor. The initial term of the contract(s) to be awarded under the ITN is five years. In addition, the Department may renew the contract(s) for up to one additional five-year term. The ITN separated substance abuse treatment services into five distinct service types: Prevention Services, Outpatient Substance Abuse Treatment, Intensive Outpatient Substance Abuse Treatment, Long-term Residential Therapeutic Community, and Aftercare. Additional services were also required, including motivation/readiness classes for program participants awaiting admission to Outpatient, Intensive Outpatient, or Residential Therapeutic Community services, and an alumni support group for program participants who have completed treatment services. The ITN required that the treatment services be provided in programs licensed pursuant to Florida Administrative Code Chapter 65D-30. The ITN identified the selection criteria as follows: The focus of the negotiations will be on achieving the solution that provides the best value to the State based upon the "Selection Criteria" and satisfies the Department's primary goals as identified in this ITN. The Selection Criteria may include, but is not limited to, the following. Selection Criteria: Respondent's articulation of their solution and the ability of the solution to meet the requirements of this ITN and provide additional innovations. Respondent's experience in providing the services being procured and the skills of proposed staff relative to the proposed approach and offering. Respondent's Technical Reply and Cost Reply, as they relate to satisfying the primary goals of the services identified herein. All interested vendors, before submitting their replies, were required to visit various sites within the regions covered by their reply. GEO attended these site visits, which were held in October to November 2016. During the visits, the topic of the budget was discussed. All vendors were informed that the Department "did not have any new money," and that it would be operating within the existing budget. Section 4.10, TAB A, of the ITN required that each vendor submit with its reply a letter from a surety company or bonding agent that documents the vendor's present ability to obtain a performance bond or irrevocable letter of credit in the amount of $1,500,000, per region. In Section 4.8 of the ITN, Pass/Fail Mandatory Responsiveness Requirements, the Department stated it would reject any and all replies that did not meet the pass/fail criteria. One of these criteria, Section 4.8e), specifically required each vendor to demonstrate its ability to meet the performance bond requirement. A vendor was likewise required to make this certification on Attachment IV to the ITN, Pass/Fail Requirement Certification and Non-Collusion Certification. Section 4.8e) stated as follows: The Vendor must be able to demonstrate its ability to meet the Performance Bond requirements. Prior to execution of prospective contract, Respondent will deliver to the Department a Performance Bond or irrevocable letter of credit in the amount equal to the lesser of $1.5 million dollars, per region, or the average annual price of the Contract (averaged from the initial five year Contract term pricing). The bond or letter of credit will be used to guarantee at least satisfactory performance by Respondent throughout the term of the Contract (including renewal years). Section 5.36 of the ITN, Performance Guarantee, also provided: The Vendor shall furnish the Department with a Performance Guarantee in the amount of $1,500,000, per region, on an annual basis, for a time frame equal to the term of the Contract. The form of the guarantee shall be a bond, cashier's check, or money order made payable to the Department. The guarantee shall be furnished to the Contract Manager within thirty (30) days after execution of the Contract which may result from this ITN. No payments shall be made to the Vendor until the guarantee is in place and approved by the Department in writing. Upon renewal of the Contract, the Vendor shall provide proof that the performance guarantee has been renewed for the term of the Contract renewal. Based upon Vendor performance after the initial year of the Contract, the Department may, at the Department's sole discretion, reduce the amount of the bond for any single year of the Contract or for the remaining contract period, including the renewal. The purpose of a performance bond is to mitigate the Department's risk should a vendor fail to perform on a contract. In Addendum 2, the Department identified six current contracts being replaced by the ITN, and provided links to those contracts and budgetary information on the Florida Accountability Contract Tracking System ("FACTS").2/ The Department also provided two rounds of formal questions and answers, which are reflected in Addenda 6 and 7. In Addendum 6, question 3, a vendor asked a question about cost. In response, the Department answered as follows: Vendors are encouraged to submit a Cost Reply in such a manner as to offer the most cost effective and innovative solution for quality services and resources, as both cost efficiency and quality of services will be a consideration in determining best value. In Addendum 6, question 77, a vendor asked a question about how to submit a reply. In response, the Department answered as follows: Vendor's shall only submit one Reply, and the Reply must be clearly labeled with the Region(s) included, or that the Reply is Statewide. In Addendum 7, question 2, the Department again addressed the issue of how many replies are required of a vendor who was interested in either a statewide or a regional award, through the following questions and answers: Question 2: In the responses to vendor questions (Addendum 006), Change to No. 6- "4.9 Submission of Replies" states that "In Reply to this ITN, each Vendor shall: Submit a separate Reply for each Region (bullet item a on page 8). However, under answer #77 (p.21), it states that "Vendor's shall only submit one Reply, and the Reply must be clearly labeled with the Region(s) included, or that the Reply is Statewide." Can you please confirm that a statewide proposal can be one, single proposal for the entire state rather than four separate proposals for each of the four regions? Answer: Yes. If submitting for a Reply for Statewide, the Reply can be submitted as one (1) Reply. If submitting a Reply for multiple Regions such as Regions 1 and 2, a Reply must be submitted for each Region. A separate Technical Reply and Cost Reply must be included for each submission. The Cost Replies must be sealed in a separate envelope from the Technical Replies, but they can all be submitted in the same package. Submission and Evaluation of Replies to the ITN On June 15, 2017, the Department received replies to the ITN from the following six vendors: GEO, Gateway, UPI, SMA Behavioral Health Services, Inc., Village South, Inc., and Bridges of America, Inc. GEO submitted five separate replies, one for each region and one for statewide. Gateway submitted a single statewide reply, but indicated in the reply that it wanted to be considered for a statewide award and one or more regional awards. Gateway also included a detailed budget breakdown by region with pricing for each region. The Department's instructions to the evaluators of the replies included a note reminding them that Gateway submitted a statewide response, but that it wanted to be considered for each individual region. UPI submitted three separate replies, one each for Regions 1, 2, and 3. UPI made the required certifications regarding the performance guarantee and submitted a letter from a surety company evidencing its ability to obtain a performance bond in the amounts required by the ITN. All of the replies were deemed to satisfy the pass/fail criteria and were then evaluated and scored. Negotiations Following the evaluation of the replies, the Department entered into the negotiation phase with GEO, Gateway, UPI, and Bridges of America, Inc. Negotiations commenced in August 2017 and continued through October 2017. The Department held a total of three negotiation sessions with each of these vendors. The ITN provided that the scores from the evaluation phase would not carry over into negotiations and that the negotiation team was not bound by the scores. The Department's negotiation team consisted of Kasey Faulk, chief of the Bureau of Procurement (lead negotiator); Patrick Mahoney, chief of the Bureau of Readiness and Community Transition; and Maggie Agerton, the assistant chief of In-Prison Substance Treatment in the Bureau of Readiness and Community Transition. Ms. Faulk has a master's degree in business administration from the University of Florida. She is also a Florida-certified project management professional; Florida- certified contract negotiator; and Florida-certified contract manager. In her tenure as chief of the Bureau of Procurement, she has overseen more than 130 competitive solicitations, including at least 80 invitations to bid, at least 30 requests for proposals, and approximately 17 invitations to negotiate. She has drafted procurement procedures at two different state agencies, and helped draft revisions to Florida Administrative Code Chapter 68-1. Without objection, Ms. Faulk was accepted at hearing as an expert in the area of Florida procurement processes. Ms. Agerton authored the programmatic portions of the ITN and served as an evaluator. She has a bachelor's and master's degree in criminology. She is also a Florida-certified addiction professional and certified criminal justice addictions professional. She currently serves as contract manager for the Everglades Recovery Center ("Everglades") contract, of which GEO is the incumbent vendor.3/ During negotiations, GEO, which had only provided services to the Department for a short time, touted its experience and devotion of resources at Everglades. However, GEO was under a corrective action plan at Everglades as of May 12, 2017, because of missing information in clinical files and lack of staff supervision. Complete clinical files are very important to substance abuse treatment. Proper clinical documentation is necessary for licensure purposes and allows the Department to ensure that services are being provided in accordance with the contract. By the end of October 2017, Ms. Agerton had conducted a site visit to Everglades, and although GEO had made significant progress in the area of leadership and staff, the clinical files were still a significant problem. Ms. Agerton and Ms. Faulk had concerns about GEO's current contract performance at Everglades. During the negotiation phase, GEO was aware of the Department's concerns regarding its performance at Everglades. During negotiations, GEO was told by the Department that it is trying to spend its money more efficiently and in a cost-effective manner. GEO was told by the Department that its price was outside the range of competitive replies, and GEO was encouraged to provide alternative pricing models and "sharpen its pencils." During negotiations, the Department asked every vendor to identify its cost drivers. GEO did not identify the performance bond as a cost driver. However, UPI identified the performance bond as a cost driver. UPI informed the Department that a performance bond would cost it $200,000 per year regardless of whether the amount of the bond was reduced, because the cost of the bond is based on the complete value of the contract. UPI requested that it be allowed to submit a cashier's check to the Department in the amount of $1,000,000 for three regions in lieu of paying $200,000 per year for five years to a bonding company for a performance bond. At hearing, Ms. Faulk explained the process of negotiating with individual vendors, the importance of having a strategy, and the value of making individual concessions with individual vendors during negotiations. UPI had performed services for the Department for over ten years, through budget cuts, and had not walked away from their contracts. Accordingly, the negotiation team considered UPI's suggestion to be a low risk. That is, the Department did not believe there was a significant risk that UPI would abandon the contract. In any event, the cashier's check proposed by UPI would benefit the Department because the Department could easily take the money and use it to recoup losses in the event of nonperformance, as opposed to a bond, which may require the Department to engage in protracted litigation with a surety company to obtain the value of the bond. The Department also saw the cashier's check as an opportunity to obtain lower pricing from UPI. The negotiation team told UPI it would accept, in lieu of the performance bond, a $1,000,000 cashier's check if UPI was awarded three regions; a $750,000 cashier's check if UPI was awarded two regions; and a $500,000 cashier's check if UPI was awarded one region. Allowing UPI to post a cashier's check in the amount of $750,000 for the two regions it was awarded did not provide UPI with a competitive advantage over GEO. At hearing, GEO's representative, John Thurston, who oversaw the development of GEO's reply and BAFO, and participated in the negotiations, acknowledged that GEO's cost to obtain a performance bond in the amount of $1,500,000 would only have been $67,500 per year. During negotiations, the Department revised the scope of work. Following the negotiations, on October 25, 2017, the Department emailed an RBAFO to those vendors who participated in the negotiations. The RBAFO informed vendors that the term "Best and Final Offers" is used to provide the vendor the opportunity to clarify its response and adjust its price based on the negotiations, and that this does not preclude the Department from seeking clarification or additional information upon receipt of the BAFOs. The RBAFO further stated that the BAFO "must contain a written narrative of services to be provided inclusive of clarifications and any alternative or modifications discussed during the negotiation process." The BAFO required an executive summary, description of service delivery, a staffing matrix, and a price sheet. GPR-037 (General Program Requirements) in the RBAFO addressed staffing and provided, in pertinent part: The vendor shall ensure that all required Vendor staff positions are filled for the entire scheduled 40 hour weekly working period, and that those individuals are physically present at the work site. All positions are full-time, unless otherwise specified, inclusive of interim positions. As to the price sheet, the per diem pricing "should represent the best price the Vendor is willing to offer to the Department." The RBAFO specifically addressed and allowed for vendors to provide alternative pricing models and methods. Providing alternative price offerings gives the Department more options to solve its problem and demonstrates a vendor's understanding of the Department's needs. All vendors were provided with an equal opportunity to submit BAFOs reflecting revisions to the ITN made by the Department during negotiations. The RBAFO reminded vendors to include in their BAFOs alternatives or any modification discussed during the negotiation process. GEO was aware during negotiations that it could have inquired about or proposed to negotiate different components of all aspects of its proposal. GEO was also aware that any global changes for all vendors would be included in the RBAFO, but that negotiation concessions, innovative solutions, and negotiated points with individual vendors, would not be included. In fact, GEO negotiated items that were not shared with other vendors. The BAFOs and Negotiation Team Recommendation The deadline for vendors to submit their BAFOs was November 14, 2017. The Department received BAFOs from the four vendors invited to negotiate. The ITN provided that BAFOs would not be scored and the negotiation team would make a recommendation of award based on which vendor's solution presented the best value to the state, utilizing the selection criteria in the ITN. Prior to submitting its BAFO, the Department responded to Gateway's inquiries about differences between what was to be included in the BAFO and what was discussed during negotiations, specifically in the context of the ratio of Prevention Services counselors (indicated as one counselor to fifty participants in the RBAFO, but discussed during negotiations as one counselor to eighty participants). The Department instructed Gateway to use the ratios included in the RBAFO, and "provide an alternative price with the ratio your Company is proposing." As allowed by the RBAFO and further clarified by the Department, Gateway's BAFO included both a base price offering and an alternative price offering, with detailed explanations of the assumptions included within each offering. Gateway's BAFO included a ratio for Prevention Services counselors from one counselor for every fifty participants (1:50), and an alternative ratio of one counselor for every eighty participants (1:80). Gateway's staffing models in its BAFO also included part-time positions. The members of the negotiation team reviewed the BAFOs and then made a formal recommendation of award at a public meeting held on November 17, 2017, with recorded minutes. The negotiation team recommended regional awards rather than a statewide award. It recommended an award of Regions 1 and 2 to UPI and Regions 3 and 4 to Gateway. The team recommended these vendors because it believed their solutions represented the best value to the state based on the selection criteria identified in the ITN. Ms. Faulk recommended UPI for Regions 1 and 2 because UPI was an incumbent vendor with a long history of providing satisfactory services to the Department. Additionally, she felt UPI had tremendous ideas on how to maximize treatment, their cost was affordable, and they proposed innovative solutions. Ms. Faulk ultimately recommended Gateway's alternate price offering for Regions 3 and 4 because she found them very innovative and treatment-focused. She felt they had extensive experience in a correctional setting providing substance abuse treatment, and their cost was very affordable. She recommended the alternate price offering because it was an innovative solution to increase services. Gateway's alternate price offering increased the number of available treatment slots and provided staffing which the Department found acceptable and appropriate, while at the same time offering a better price. Ms. Agerton recommended UPI for Regions 1 and 2 because she felt UPI brought an innovative solution in negotiations, as well as many different ideas. She felt that based on their incumbent status, they had knowledge of the Department's systems and were able to suggest improvements while remaining affordable. Ms. Agerton recommended Gateway for Regions 3 and 4 because they also brought innovative solutions, particularly an evaluator that would help with monitoring their implementation. She also felt Gateway was likewise affordable and energetic. Neither Ms. Faulk nor Ms. Agerton recommended GEO for any of the regions. Ms. Faulk felt GEO's cost was significantly higher than the other vendors. She also had concerns about some of GEO's responses during the negotiation sessions, particularly with regard to the problems at Everglades. Ms. Faulk felt GEO lacked innovation, it did not understand the problems at Everglades, and it lacked an effective strategy for how not to have the problems reoccur in the future. Ms. Agerton did not recommend GEO for any of the regions because she felt they were very expensive compared to the other vendors; so expensive, in fact, that their price exceeded the Department's budget. Ms. Agerton also had concerns about GEO's current contract performance at Everglades. A formal recommendation memorandum was prepared by the procurement officer and routed through various levels of the Department. The memorandum included a cost analysis, which reflected the total awarded price for all four regions for the initial five-year term to be $57,683,377.25. GEO's proposed price for all four regions for the same period was $80,558,693.75, approximately $22,000,000 higher than the Department's intended awards for all four regions. Notably, the formal recommendation memorandum mistakenly reflected 225 prevention slots in Region 3, instead of the 320 prevention slots included in Gateway's alternative proposal; and 200 prevention slots in Region 4, instead of the 320 prevention slots included in Gateway's alternative proposal. For Region 3, multiplying 320 slots times Gateway's per diem rate of $3.89 (and by 365 days a year), results in an annual total cost of $454,352; compared to the annual cost figure of $319,466.25 for 225 slots reflected in the memorandum. For Region 4, multiplying 320 slots times Gateway's per diem rate of $3.89 (and by 365 days a year), results in an annual total cost of $454,352; compared to the annual cost figure of $283,970 based on 200 slots. Thus, accounting for the increased prevention slots for Regions 3 and 4 results in an annual increase in cost of $305,267.75 above the $11,536,675.45, for a total annual cost for all four regions of $11,841.943.20, and a five-year cost of $59,209,716. On the other hand, GEO's proposed price for all four regions for the same period was $80,558,693.75, which divided by five results in an annual cost to the Department of $16,111,738.70. GEO eliminated the cost of Aftercare services because the Department intends to use an Alumni Program for zero cost in lieu of Aftercare services. GEO calculated that removing the cost to the Department of Aftercare services would result in $1,885.790.75 less, or a total annual cost of $14,225,948.70. Thus, removing the cost of Aftercare services from GEO's proposed price for all four regions would still result in a five-year cost to the Department of $71,129,743.50, which may exceed the amount appropriated, budgeted, and available to the Department for substance abuse treatment for Fiscal Year 2017- 2018, and which far exceeds the cost of $59,209,716 (the amount of the proposed award to Gateway and UPI for the same time period).4/ The recommendation memorandum was approved by the Department's secretary on January 9, 2018. GEO's Protest GEO's protest raises numerous issues, none of which warrant rescission of the Department's intended award to Gateway and UPI. Gateway's Reply to the ITN GEO contends Gateway submitted only a single "statewide" reply to the ITN, and no reply for any regions, and therefore, Gateway is ineligible for a regional award. The persuasive and credible evidence adduced at hearing demonstrates that Gateway's reply was properly considered as a reply for multiple regions because Gateway clearly indicated its intent to be considered for multiple regions. Moreover, Gateway gained no competitive advantage over other vendors as a result of combining its statewide reply with a regional reply. In fact, the Department would have been inundated with replies if it required a vendor to reply for every conceivable combination of regions. UPI's Performance Guarantee GEO contends the Department materially deviated from the ITN and gave UPI a competitive advantage over it by allowing UPI to provide, in lieu of a performance bond, a cashier's check in the amount of $500,000 if awarded one region; $750,000 if awarded two regions; or $1,000,000 if awarded three regions. The persuasive and credible evidence adduced at hearing demonstrates that the Department did not materially deviate from the ITN and give UPI a competitive advantage over GEO by allowing UPI to provide, in lieu of a performance bond, a cashier's check in the amount of $500,000 if awarded one region; $750,000 if awarded two regions; or $1,000,000 if awarded three regions. Notably, the ITN did not require proposers to submit a performance bond or letter of credit with its reply to the ITN, and none of the vendors submitted a performance bond or letter of credit with their replies. Instead, in replying to the ITN, a vendor was only required to "demonstrate its ability to meet the Performance Bond requirements." UPI satisfied the requirements of the ITN by demonstrating its ability to meet the performance bond requirements. In any event, the reduction in the amount of the bond agreed to by the Department ($750,000 in connection with the award of contracts for two regions) did not provide UPI with a competitive advantage over GEO. At hearing, Mr. Thurston estimated GEO's annual cost of providing a performance bond in connection with contracts to be awarded pursuant to the ITN would be approximately $67,500, well below the $200,000 per year that UPI was quoted for its bond. Moreover, the amount of $67,500 is insignificant compared to the significant disparity in the annual, total prices proposed by GEO and UPI in their BAFOs for Regions 1 and 2 (GEO: $9,299,141.50; UPI: $6,342,203, for a difference of $2,956,938.50 per year). At hearing, Mr. Thurston acknowledged he could have raised the issue of the performance bond during negotiations. As Mr. Thurston also acknowledged at hearing, even if GEO had been able to negotiate an elimination of the performance bond amount requirement in its entirety, GEO would not have been able to offer a price that would have remedied the disparity. Gateway's BAFO (Prevention Services Ratio) GEO contends Gateway's ratio for Prevention Services counselors of 1:80, as provided in Gateway's BAFO alternative price offering, is a material deviation from the RBAFO requirements. As detailed above, this alternative offering was expressly permitted by the RBAFO and was further clarified by the Department to Gateway before its BAFO was submitted. Moreover, increasing the prevention capacity to 80 per institution adds an additional 605 inmates served at any one time, resulting in the Department being able to serve more inmates for the same appropriation amount. This is precisely the type of innovative thinking the Department sought to reach its goals. GEO did not submit an alternative pricing model, and it never asked the Department if the ratios for Prevention Counselors were negotiable. At hearing, GEO could not say how much it could have lowered staff levels, if at all, if it attempted to negotiate ratios. Gateway was not given a substantial advantage over GEO by increasing the prevention capacity. In addition, although chapter 65D-30 does include required ratios for certain types of services, there is no maximum caseload requirement applicable to Prevention Services. Gateway's BAFO (Part-Time Positions) GEO also contends Gateway violated GPR-037 in the RBAFO because Gateway's staffing models included part-time positions. However, the Department interprets the phrase "unless otherwise specified" to mean that unless the vendor specifies a position in its reply as part time, the Department will assume that any positions referenced in the reply are full time (40 hours). GEO never asked the Department for clarification on the meaning of the phrase "unless otherwise specified." At hearing, Mr. Thurston could not say whether its BAFO would have been adjusted had GEO asked about negotiating the positions, in terms of being full time. In any event, the Department currently utilizes part- time staff under the contracts being replaced by the ITN. Part- time staff may provide a more cost-effective solution than full- time staff. Gateway's BAFO (Clerical Positions) GEO also contends Gateway's alternate price offering provided for a reduction in clerical staff positions contrary to GPR-035 as set forth in Addendum 6 and the RBAFO. GPR-035 required that each vendor provide a minimum of one clerical position for up to 136 treatment slots, and one-half position for each additional 68 treatment slots. In support of its position, GEO presented Exhibit 1. However, GEO's Exhibit 1 is based on incorrect assumptions, and it is unreliable and unpersuasive. First, the ratios calculated by GEO are impermissibly "rounded-up." Secondly, contrary to GEO's position, the Department only calculates an additional one-half position once the full 68 treatment slots have been achieved. GPR-035 does not require one-half positions for "up to each additional 68 slots." A plain reading of GPR-035, consistent with the Department's reasonable interpretation, is that an additional one-half position is required only after the full 68 slots have been achieved. Gateway's base price offering fully complied with the staffing ratios when the ratios are calculated according to a plain reading of GPR-035, which is bolstered by the Department's practice in calculating ratios. Gateway's alternative price offering providing for a reduction in clerical positions to one full-time employee per facility was a cost-saving measure discussed with the Department and a product of negotiations. Even if Gateway's alternative price offering deviated with regard to the clerical positions, given the discrepancy between GEO's and Gateway's price offerings, the deviation is so small that it is a minor irregularity and not a material deviation. Gateway's BAFO (Pricing) GEO also contends Gateway failed to provide region- specific pricing or a final, firm pricing offer of any kind for the initial term or the renewal term. During negotiations and in its BAFO, Gateway reiterated that it would accept a regional or multi-regional award. Under Section 4.12 of the ITN, the Department reserved the right to seek clarification from vendors regarding their BAFOs and to reopen negotiations after receiving BAFOs. The negotiation team recommended awarding Gateway's alternate price offering for Regions 3 and 4 contingent upon clarification from Gateway that its pricing would be applicable to Regions 3 and 4. Although vendors were invited and could have attended the public meeting and heard this for themselves, none of them chose to attend. Four days later, on November 21, 2017, the Department's procurement officer reached out to Gateway's representative asking it to confirm that the pricing listed in the alternate price offering would remain the same if awarded individual regions as opposed to the entire state. Gateway's representative responded that the alternate prices included in Gateway's BAFO could remain in effect with a modified administrative personnel staffing plan if Gateway was awarded more than one region. At the time of this exchange, the Department's negotiation team had already recommended Gateway for Regions 3 and 4; so, the Department knew there would be no need to renegotiate pricing because Gateway was recommended to receive more than Region 4. According to Ms. Faulk, the Department understood Gateway's response to mean that the per diem pricing provided in Gateway's BAFO would apply to Regions 3 and 4. Gateway would reduce the oversight positions to two or three positions, consistent with the smaller level of responsibilities required for two regions instead of four. This exchange occurred prior to the drafting of the award recommendation memorandum, which was dated November 28, 2017. It was not signed by Ms. Faulk until January 3, 2018, or the Secretary until January 9, 2018. Gateway's per diem statewide pricing applied equally to Regions 3 and 4. Although Gateway did not provide a grand total price on its BAFO price sheet, the Department calculated the grand total price using the correct per diem unit prices provided. The ITN stated that unit prices would control in the event of a mathematical error. As it pertains to the price sheet instructions, the RBAFO stated that the vendor's pricing should represent the best price the vendor is willing to offer the Department. Gateway provided both a base price offering and an alternate price offering. The base price offering's price sheet contained the required per diem prices for both the original contract term and the renewal contract term. Under the section titled "TOTAL PRICE," Gateway appeared to sum the individual per diem prices rather than provide an actual grand total contract amount. Gateway did the same for its alternate price offering price sheet. Although Gateway did not provide a grand total price on the price sheet, it included a detailed budget breakdown for both its base price offering and alternate price offering. The Department felt these breakdowns offered additional transparency into Gateway's pricing. Section 4.10, Tab F, of the ITN provided that all calculations would be verified for accuracy by the Department's Bureau of Support Services staff, and that unit prices submitted by a vendor would prevail in the event a mathematical error is identified. Ms. Faulk testified the Department could calculate a grand total price by using the per diem pricing provided on the price page. She explained the Department could multiply the per diem price for each service type by the number of slots for that service, and then multiply that number by 365 days to arrive at the yearly price for a particular service. The Department could then add those prices together to obtain an annual total. She also explained these same calculations could be done for the renewal pricing. UPI's BAFO (Clerical Positions) GEO contends UPI deviated from the staffing requirements by providing fewer clerical support positions than required by the RBAFO. Specifically, GEO contends UPI had a deficit of six clerical support positions, and that if GEO knew it could reduce the staffing complement by six, it would have been worth approximately $270,000. UPI's clerical staffing ratios deviated from GPR-035, because its ratios were calculated based on the belief that prevention slots were not "treatment" slots. The ITN and RBAFO refer to prevention slots as treatment slots. Nevertheless, given the discrepancy between the prices submitted by GEO and UPI, UPI's deviations from the clerical staffing requirements are so small that they are minor irregularities and not material deviations. UPI's BAFO (Pricing) GEO also contends UPI's BAFO failed to include the Revised Price Sheet. Specifically, in paragraph 24 of its amended petition, GEO alleged: "UPI appears to have created its own form that emulated the format of the required form but provides many more spaces for additional information. Other Vendors that used the ITN required form did not have the opportunity to include this additional information." Although UPI did not use the specific Revised Price Sheet form, it provided per diem prices for each level of treatment as required by the form and additional information for the Department's consideration. GEO failed to include per diem pricing for Residential Therapeutic slots in Regions 2 and 4. GEO also modified its price sheets and submitted additional information in the form of annotations denoted by asterisk. In sum, the persuasive and credible evidence adduced at hearing demonstrates that the Department appropriately determined that the proposed awards to Gateway and UPI will provide the best value to the Department based on the selection criteria. Any irregularities in Gateway's and UPI's replies and BAFOs as alleged by GEO were minor and not material deviations. The Department's intended awards to Gateway and UPI are not contrary to the Department's statutes, rules, the ITN specifications, clearly erroneous, contrary to competition, arbitrary, or capricious.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Corrections enter a final order dismissing the protest of GEO Reentry Services, LLC. DONE AND ENTERED this 20th day of April, 2018, in Tallahassee, Leon County, Florida. S DARREN A. SCHWARTZ Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 20th day of April, 2018.
Findings Of Fact Based upon the testimony of the witnesses and the documentary evidence received at the hearing, the following findings of fact are made: Florida Brethren Homes, Inc. is a not for profit corporation doing business as the Palms. The Palms is a nursing home facility certified to participate in the Medicaid program. The Department is the state agency charged with the responsibility of reviewing costs claimed by facilities participating in the Medicaid program. The Palms filed a cost report for Medicaid reimbursement for the fiscal period ending December 31, 1987. The cost report reviews the past payment rate and sets the prospective rate. The Department reviewed Petitioner's report and disallowed interest costs in the amount of $298,500 which were included by the Palms. The Palms timely challenged that disallowance. In 1984, the Palms participated in a revenue bond issuance in order to finance the construction of certain improvements to its health care facilities. That bond issue in the amount of $13,970,000 bore a tax exempt interest rate of approximately 12.89 %. For the period ending December 31, 1987, the interest which was due on that bond debt was $298,500. On April 5, 1988, the Palms filed a Chapter 11 action in the Bankruptcy Court for the Southern District of Florida. The Palms did not pay the accrued interest prior to filing its petition in bankruptcy. In fact, the Palms was in default on the interest at the time of the bankruptcy petition. The Medicaid rate which had been established prior to that time had presumed an allowable interest cost for the period and had included that interest payment in the calculation of the rates then available to the Palms. In filing bankruptcy, the Palms sought to restructure its debt. As a result, the Palms executed an Amended And Restated Indenture of Trust which included the accrued but unpaid interest which had accumulated under the 1984 revenue bond issue. The plan called for a bond issuance and for deferred interest certificates to cover the unpaid interest. The deferred interest certificates had not been issued as of the date of the final hearing. The accrued but unpaid interest provided in the deferred interest certificate has a maturity date of December 1, 2016. The unpaid interest is subject to a mandatory prepayment from available net cash flow after December 1, 1992. The restructure of Petitioner's debt has allowed it to remain in business. The plan of reorganization was entered into as a good faith, arm's length transaction. The plan of reorganization was confirmed by the Bankruptcy Court and the proceedings before that tribunal have concluded. In its audit of the Palms, the Department determined that the deferred interest obligation does not mature and become due and payable until December 1, 2016, and that, therefore, the interest expense is not a reimbursable cost for the period that ended December 31, 1987. The Palms' claims that for cost reimbursement purposes the accrued interest was paid by the refinancing of the debt and that the amount should remain an allowable cost to be included for that period.
Recommendation Based upon the foregoing, it is RECOMMENDED: That the Department audit disallowing interest claimed for the period that ended December 31, 1987, be confirmed. DONE and ENTERED this 14th day of June, 1991, in Tallahassee, Leon County, Florida. Joyous D. Parrish Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32301 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 14th day of June, 1991. APPENDIX TO CASE NO. 90-1770 Rulings on the proposed findings of fact submitted by the Petitioner: Paragraphs 1 through 3 are accepted. Paragraphs 4 and 5 are not findings of fact but restate the stipulation reached by the parties at the outset of the hearing. Paragraphs 6 through 11 are accepted. Paragraph 12 is rejected as it is not a finding of fact but, if accurate, would be a conclusion of law. Such conclusion has not been reached in this case. Paragraph 13 is rejected as irrelevant. Paragraph 14 is accepted. With regard to paragraph 15, it is accepted that the repayment of the accrued interest is not a short term liability. Otherwise, the paragraph is rejected as irrelevant. Paragraph 16 is rejected as a restatement of the issue or fact not supported by the weight of the evidence. Paragraph 17 is rejected as irrelevant. Paragraph 18 is accepted. Paragraph 19 is rejected as irrelevant. Paragraphs 20 and 21 are rejected as irrelevant or a conclusion of law. Paragraph 22 is accepted. Paragraph 23 is rejected as irrelevant. Paragraph 24 is rejected as a conclusion of law not supported by the record in this case. Paragraph 25 is rejected to the extent that the term "refinancing" is used to suggest a payment of allowable interest; it is accepted that restructuring the Palms' debt was required to allow it to continue in business. Paragraph 26 is rejected as irrelevant. Rulings on the proposed findings of fact submitted by the Department: 1. Paragraphs 1 through 14 are accepted. COPIES FURNISHED: Scott D. LaRue Assistant General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Building One, Room 407 Tallahassee, Florida 32399-0700 Karen L. Goldsmith Goldsmith and Grout, P.A. P.O. Box 2011 Winter Park, Florida 32790-2011 Sam Power, Agency Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Linda K. Harris Acting General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700
The Issue The issue in this case is whether Respondent Southern Corporate Packers, Inc. owes Petitioners money for watermelons and, if so, how much.
Findings Of Fact Prior to the 1995 growing season, Petitioners and Respondent Southern Corporate Packers, Inc. (Respondent) formed a partnership. Their respective interests were Respondent--40 percent, Petitioner Juman--38 percent, and Petitioner Carter--22 percent. Petitioners agreed to grow the watermelons, and Respondent agreed to sell them and remit the sale proceeds to the partnership after deduction for a standard one cent sales commission and freight costs. Petitioner Juman agreed to contribute farming equipment to the partnership. Petitioner Carter agreed to contribute $10,000 cash, and Respondent agreed to contribute $25,000. Petitioner Juman and Respondent made their respective contributions of equipment and money, but Petitioner Carter may not have made his contribution of money. In any event, the actual contributions were insufficient. The agreement required each partner to advance any additional expenses based on his respective share in the partnership. Petitioner Juman and Respondent made additional contributions of equipment and cash, but Petitioner Carter did not, unless his contribution could be made in services, which the evidence does not address. Problems plagued the farming operation from the start. Petitioners planted crimson sweet watermelons because Petitioner Carter could acquire these seeds inexpensively. Such watermelons are less valuable than the more- marketable sangria watermelons. The watermelons grew poorly. Petitioners failed to produce a single load of large melons. Instead, they produced twelve loads of mediums and nine loads of peewees, for which demand is relatively slight. As agreed, Respondent transported the watermelons to distant markets for sale. Unable to demand market prices, Respondent sold the melons for the highest possible price. In 21 transactions Respondent realized gross proceeds of $59,184.55. The parties dispute the available price for the watermelons. Respondent failed to obtain inspections of the melons, as it was required to do. Despite this failure, Respondent has shown that it obtained the highest available prices for the melons. In transporting the melons Respondent incurred freight charges of $22,288.76 and earned sales commissions of $6780.75. Additionally, Respondent paid an additional partnership expense of $11,799.53 in harvesting costs, which were not its obligation under the partnership agreement. Thus, the total allowable reductions are $40,880.94, leaving Responsible liable to pay the partnership the remaining $18,303.61. A partnership accounting might identify additional setoffs and counterclaims available to Respondent against the partnership or one or both of the partners. However, the record does not permit such an accounting, even if the law were to provide for such a remedy in this administrative proceeding. The central facts are that Respondent acquired watermelons from the partnership, sold the melons on behalf of the partnership, properly deducted from the sales proceeds certain allowable expenses in the form of freight, sales commissions, and harvesting expenses, and improperly retained the remaining $18,303.61 that it should have paid to the partnership. Less Respondent's share of 40 percent of the net proceeds, which Respondent may properly retain, the final balance due at this time to the two partners is $10,982.17.
Recommendation It is RECOMMENDED that the Department of Agriculture and Consumer Services enter a final order requiring Respondent to pay Petitioners $10,982.17 within 10 days of the final order and, absent such a payment, requiring Amwest Surety Insurance Company, after notice of nonpayment, to pay the same amount to Petitioners up to the total amount remaining under the bond. ENTERED on December 20, 1995, in Tallahassee, Florida. ROBERT E. MEALE, Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 20th day of December, 1995. COPIES FURNISHED: Hon. Bob Crawford Commissioner of Agriculture The Capitol, PL-10 Tallahassee, FL 32399-0810 Richard Tritschler, General Counsel Department of Agriculture The Capitol, PL-10 Tallahassee, FL 32399-0810 Brenda Hyatt, Chief Bureau of Licensing and Bond Department of Agriculture 508 Mayo Building Tallahassee, FL 32399-0800 Ronald W. Carter Roshan Juman 321 7th St. LaBelle, FL 33935 Bryan Arrigo, President Southern Corporate Packers, Inc. 424 New Market Rd. Immokalee, FL 33934 Amwest Surety Insurance Co. Legal Department Box 4500 Woodland Hills, CA 91365-4500
The Issue The issue is whether Respondent Ro-Bee Sons, Inc., owes Petitioner Neal Ott Farms, Inc., additional money for squash and zucchini grown by Neal Ott Farms, Inc., and delivered in March and April 1997 to Ro-Bee Sons, Inc.
Findings Of Fact Petitioner grows straightneck, yellow squash (squash) and green zucchini on its farm in Estero. The local growing season for these crops is September to May. As is customary, Petitioner began planting these crops on September 1, 1996, and continued to plant in phases, so that Petitioner could harvest crops throughout the harvesting season. Zucchini takes 40-50 days from planting to harvesting, and squash takes as little as four weeks. The planting, growing, and harvesting continued normally until January 18, 1997. On January 18 and 19, a freeze hit Southwest Florida. Petitioner and other growers in a wide area lost their crops and resumed planting on January 20, 1997. A large number of growers planted crops simultaneously and enjoyed good growing conditions. The market responded with lower prices in March, recovering somewhat in April. Until March 1, 1997, the parties enjoyed a satisfactory business relationship during the 1996-97 growing season. The dispute in this case involves almost two dozen shipments of squash and zucchini shipped by Petitioner to Respondent Ro-Bee Sons, Inc. (Respondent), from March 1, 1997, through April 14, 1997. After Petitioner's repeated requests for sales returns, Respondent belatedly sent approximately six weeks' worth to Petitioner on April 15. This information revealed for the first time the discrepancy between what Petitioner believed it was due and what Respondent believed it owed for the period from March 1 through April 15. Upon receipt of this information, Petitioner ordered that a truck already en route to Respondent take the product to another destination. As is typical in cases of this type, the parties did not memorialize the conditions of their agreement, and they now dispute the conditions of this agreement. Respondent offers two pieces of paper as evidence of the arrangement between the parties. The credibility of both principals suffers in assessing the weight to be given this evidence. First, Respondent's principal representative testified that, "at first contact with any grower," Respondent would have sent a blank contract form, on Respondent's letterhead, to Petitioner. Respondent's principal representative supplied the form that he claims was used in this case. However, the only items typed in on the form, which is called a Grower and Sales Agent Agreement, are Petitioner's name and a commission amount of ten percent. The form is undated and unsigned by both parties, and Petitioner's witnesses denied receipt of the form. Respondent never sent this unsigned, undated form to Petitioner, and Respondent's principal likely knows as much. A different employee handled this account for Respondent at the time of its inception. This salesman left Respondent in mid- to late-March, as marketing problems mounted, although the record is silent as to whether his departure was related to these problems. Respondent found itself shorthanded from the departure of this and other employees. No one ever bothered to send this form to Petitioner. Second, Respondent offers a paper signed by Petitioner's principal and dated September 21, 1997. The credibility of Petitioner's principal suffered when, at first, he implausibly denied the existence of such a document. However, this signed document delivers less than appears at first blush. In its entirety, the document states: "We, Neal Ott Farms, Inc., realize that per our contract with Ro-Bee & Sons. That if we collect any money do to us. That Ro-Bee & Sons are entitled to their 10% commission." This document acknowledges only that Petitioner owes Respondent its commission if Petitioner collects on any sales made by Respondent. The evidence establishes the following conditions in the business arrangement between the parties. Petitioner obligated itself to harvest, pack, and ship to Respondent squash and zucchini. Petitioner also obligated itself to pay Respondent a commission of ten percent of the gross sales price on all sales made by Respondent, which was entitled to deduct its commission prior to the payment of the net proceeds to Petitioner. Respondent obligated itself to use its best efforts to market the vegetables at the best available price, but did not obligate itself to pay Petitioner the difference between the best available sales price resulting from Respondent's best efforts and the prevailing market price. In this case, the market price is a frame of reference within which to consider whether, shipment-by-shipment, Respondent satisfied its obligation to use its best efforts to obtain the best available price for Petitioner's product. The parties litigated their liability for other expenses: the cost of boxes supplied by Respondent and the incremental cost of shipping, inspection, and disposal of less- than-optimal or unusable product. These matters are outside of the jurisdiction of the administrative law judge for the reasons stated in the conclusions of law. This case requires the determination of the rights and responsibilities of the parties. The reasonable expectations set forth below are part of the parties' agreement. More specifically, this dispute requires the determination of the parties' rights and responsibilities for squash that were in less than beautiful condition and zucchini that were larger than represented. As the market deteriorated for sellers, these nonconforming products encountered greater customer resistance, and, at the time, large discrepancies emerged between the market price and actual price realized on sale. Petitioner reasonably anticipated that Respondent would promptly advise Petitioner of marketing problems with the product. However, there are two important limitations on this obligation of Respondent. First, marketing problems do not involve Petitioner's packing and shipping procedures. In other words, Respondent had no duty to advise Petitioner of problems of which Petitioner was clearly aware. These problems involve Petitioner's failure to wrap individually any squash except those in the top of each box, Petitioner's method of nonrefrigerated shipment, Petitioner's failure to hydrocool the product in the field after picking, and Petitioner's inclusion of larger, less marketable product in boxes containing smaller, more marketable product. Second, Respondent had no duty to advise Petitioner of anticipated marketing problems in advance of shipment by Respondent to its customers. None of the product was so oversized or poor in condition that it was unreasonable for Respondent, without prior notice to Petitioner, to ship the product in the exercise of its obligation to use its best efforts to obtain the best available price. An important issue in this case is the promptness with which Respondent informed Petitioner of customer rejections, which are not always immediately known to Respondent. Although the agreement allowed Respondent to sell at the best price that its best efforts could obtain, even if this was less than market price, it also required Respondent to notify Petitioner reasonably promptly of marketing problems that resulted in substantial deviations from market price. By doing so, Respondent would have given Petitioner the opportunity to remedy or try to remedy the marketing problems, such as by changing packing or shipping methods, hydrocooling the vegetables in the field, packing by size more carefully, or changing its dealer. In the presence of such reasonably prompt notification, the agreement requires that Petitioner accept the sales price obtained by Respondent because Petitioner supplied nonconforming product, and Respondent gave Petitioner an opportunity to remedy the problems. In the absence of such reasonably prompt notification, the agreement requires that Respondent account for the best available sales price for the product. This sales price may be greater than the sales price realized by Respondent, but will be less than market price due to the size and condition of the product. A subsidiary effect of Respondent's failure to notify Petitioner promptly of marketing problems is to cast doubt upon whether Respondent used its best efforts in marketing the product. This factor also justifies imposing upon Respondent the liability of paying Petitioner more than Respondent actually realized for the sale of some product. As to size, Petitioner has failed to prove that it sent zucchini that were the size represented by Petitioner on its records. Bigger zucchini obtain lower prices on the market than smaller specimens, due to retail customer resistance to the larger sizes. However, there was no problem with the size of the squash. Respondent's principal admitted that the sizing of the squash was "okay." As to size, the record supports an adjustment based on the fact that the zucchini was actually one size larger than shown on the records. This adjustment is described in more detail below. As to condition, the squash is far more delicate than the zucchini, and Respondent's packing and shipping of the squash raised marketing problems. Petitioner proved that its zucchini was in satisfactory condition, but the squash requires a five percent reduction off market price to reflect ongoing quality problems. Of course, in situations in which the realized price is used, rather than an adjusted price, there is no five percent reduction. As to notice, Petitioner has proved that Respondent never advised Petitioner of any marketing problems until April 15, at which time Petitioner promptly terminated the relationship. One week from date of shipment from Petitioner is reasonable time for Respondent to learn and inform Petitioner of marketing problems. Thus, Respondent is not responsible for any price discrepancies until after March 7. This means that, for product shipped by Petitioner from March 1 through March 7, inclusive, the size and condition are as stated by Respondent, notwithstanding any contrary findings in the preceding paragraphs. For the shipments from March 1 through March 7, Respondent calculated that it owed $12,700.80, after reduction for Respondent's ten percent commission. This calculation is correct. For the shipments after March 7, it is necessary to determine the sales price that would have resulted from the best efforts of Respondent to obtain the best available sales price for Petitioner's product, given its size and condition. The adjustments contained in the following paragraph address the size problems suffered by the zucchini and the quality problems suffered by the squash. All prices, such as $2, are per box. The adjustment for the post-March 7 squash shipments is to reduce the market price by $2 for fancies (which is a growing and marketing euphemism for smalls) and mediums. There is no adjustment for larges because Petitioner did not ship any large squash to Respondent. The purpose of this adjustment is to account for the actual market conditions in which Respondent would have exerted its best efforts to obtain the best available price, as distinguished from the top-end market prices demanded by Petitioner. This adjustment also accounts for the less-than- beautiful quality of Petitioner's squash during this period. Next, the tentative price is then reduced by five percent to reflect more severe quality problems in the squash not already taken into consideration by the previous adjustment. The agreed-upon total price for each post-March 7 squash shipment is thus the greater of the price yielded by these adjustments or the price actually realized by Respondent. The adjustment for the post-March 7 zucchini shipments is to raise the represented size by one size, so that fancies become mediums and mediums become larges. Larges are not raised to a higher category because there is no recognizable market for zucchini of this size, except possibly through sale at auction of individual specimens. The purpose of this adjustment is to reflect Petitioner's consistent failure to size properly the zucchini during this period. Next, the market price for this adjusted size is reduced by $2 for mediums (there can be no fancies after the first adjustment). Thus, a fancy becomes a medium, and its medium market price is reduced by $2. Because there is no market price for larges, the price for mediums that become larges is discussed in the next paragraph. The purpose of this adjustment is to account for the actual market conditions in which Respondent would have exerted its best efforts to obtain the best available price, as distinguished from the top-end market prices demanded by Petitioner. A minor purpose of this adjustment--much less important than was the case with the squash--is to account for the rare quality problems encountered in Petitioner's zucchini during this period, such as the problem conceded by Petitioner in its proposed recommended order concerning the March 10 shipment. Although there is no market price for large zucchini in the Market News Service Daily News Reports, Petitioner's spreadsheet supplies estimated market prices for this size zucchini. There are only six dates on which Petitioner shipped what it represented were large zucchini: March 1, 5, 6, 7, 8, and On all but March 5, Petitioner shipped at the same time what it represented to be medium zucchini, so as to permit a useful comparison. On March 1, Petitioner's market prices were $10 for the more valued medium and $7 for the large. These respective prices were $8 and $6 on March 6, $8 and $4 on March 7, $8 and $6 on March 8, and $5 and $3 on March 10. Based on this information, this order calculates the market prices of large zucchini as the medium market price less $3. As is the case with the squash, the agreed-upon total price for each post-March 7 zucchini shipment is thus the greater of the price yielded by these adjustments or the price actually realized by Respondent. For March 8, 118 fancy zucchini are priced as mediums at $8 market less $2, or $6, for a total of $708. One hundred forty-seven mediums are priced as larges (i.e., medium less $3) at $5, for a total of $735. Fifty-eight larges sold at $2, for a total of $116. The total due for zucchini is $1559. For the squash, 127 fancies obtain $10 market less $2, or $8, for a total of $1016, and five mediums obtain $8 market less $2, or $6, for a total of $30. After the five percent reductions, these respective figures are $965.20 and $28.50, for a total of $993.70. Thus, the total owed for March 8 is $2552.70, less the commission, for a net due of $2297.43. After deducting the commission, Respondent calculated that it owed $1635.30. Thus, Respondent owed an additional $662.13 for March 8. For March 10, 133 fancy zucchini are priced as mediums at $5 market, less $2, or $3, but they actually sold for $6, so their total is $798. Two hundred sixty medium zucchini are priced as larges at $5 market, less $3, or $2, but they actually sold for $3.50, so their total is $910. Fifty-three large zucchini sold at $2, so their total is $106. The total due for zucchini is $1814. For the squash, 297 fancy squash obtain $8 market less $2, or $6, for a total of $1782, and 30 medium squash obtain $6 market, less $2, or $4, for a total of $120. After the five percent reductions, these respective figures are $1692.90 and $114.00, for a total of $1806.90. Thus, the total owed for March 10 is $3620.90, less the commission, for a net due of $3258.81. After deducting the commission, Respondent calculated that it owed $2782.80. Thus, Respondent owed an additional $476.01 for March 10. For March 12, 143 fancy zucchini are priced as mediums at $6 market, less $2, or $4, for a total of $572. Two hundred forty-seven medium zucchini are priced as larges at $6 market, less $3, or $3, for a total of $741. The total for zucchini is $1313. For squash, 268 fancies obtain $8 less $2, or $6, for a total of $1608, and 90 mediums obtain $6 less $2, or $4, for a total of $360. After the five percent reductions, these respective figures are $1527.60 and $342, for a total of $1869.60. Thus, the total owed for March 12 is $3182.60, less the commission, for a net due of $2864.34. After deducting the commission, Respondent calculated that it owed $1845. Thus, Respondent owed an additional $1019.34 for March 12. For March 15, 398 fancy zucchini are priced as mediums at $4 market, less $2, or $2, but they actually sold at $3.50, so their total is $1393. One hundred sixty-six medium zucchini are priced as larges at $4 market, less $3, or $1, but 79 sold at $2.50 and 87 sold at $2, so their total is $371.50. The total for zucchini is $1764.50. For the squash, 145 fancy squash obtain $6 market, less $2, or $4, for a total of $580, and 202 medium squash obtain $4 market, less $2, or $2, which is the actual sales price, for a total of $404. There is no five percent reduction for the medium squash because they realized $2 each. After the five percent reduction for the fancy squash, the adjusted price is $551. The total for squash is $955. Thus, the total owed for March 15 is $2719.50, less the commission, for a net due of $2447.55. After deducting the commission, Respondent calculated that it owed $2343.15. Thus, Respondent owed an additional $104.40 for March 15. For March 17, 208 (not 198, as reported by Respondent) fancy zucchini are priced as mediums at $3 market, less $2, or $1, but they actually sold at $3.50, for a total of $728. Two hundred seventy-seven mediums are priced as larges at $3, less $3, or 0, but they actually sold at $2, for a total of $554. The total for zucchini is $1282. For the squash, Petitioner's spreadsheet contains no entries for market price. Using the prices from March 15, 187 fancy squash obtain $6 market, less $2, or $4, for a total of $748, and 87 mediums obtain $4 market, less $2, or $2, for a total of $174. There is no five percent reduction for the medium squash because they realized $2 each. After the five percent reduction for the fancy squash, the resulting price is $710.60, for a total of $884.60. Thus, the total owed for March 17 is $2166.60, less the commission, for a net due of $1949.94. After deducting the commission, Respondent calculated that it owed $1783.80. Thus, Respondent owed an additional $382.80 for March 17. For March 19, 232 fancy zucchini are priced as mediums at $3 market, less $2, or $1, but they actually sold for $3.50, for a total of $812. One hundred fifty-three mediums are priced as larges at $3, less $3, or 0, but they actually sold for $2, for a total of $306. The total for zucchini is $1118. For the squash, 118 fancy squash obtain $5 market, less $2, or $3, which is the actual sales price of 12, for a total of $354. Eighty- eight medium squash obtain $3 market, less $2, or $1, but they actually sold at $2, for a total of $176. After the five percent reduction for the 106 fancy squash, their adjusted price is $302.10, so the total for squash is $514.10. Thus, the total owed for March 19 is $1632.10, less the commission, for a net due of $1468.89. After deducting the commission, Respondent calculated that it owed $1435.50. Thus, Respondent owed an additional $33.39 for March 19. For March 21, 152 fancy zucchini are priced as mediums at $4 market, less $2, or $2, but they actually sold at $5, so their total is $760. Two hundred twenty-three medium zucchini are priced as larges at $4 market, less $3, or $1, but they sold at $2.50, so their total is $557.50. The total for zucchini is $1317.50. For the squash, 178 fancy squash obtain $6 market, less $2, or $4, which is the actual sales price, for a total of $712. Sixty-nine medium squash obtain $4 market, less $2, or $2, but actually sold for $2.50, for a total of $172.50. There is no five percent reduction for the squash because they realized these prices. The total for squash is $884.50. Thus, the total owed for March 21 is $2202, less the commission, for a net due of $1981.80, which is the amount that Respondent calculated that it owed. For March 24, 154 fancy zucchini are priced as mediums at $4 market, less $2, or $2, but they actually sold at $4.50, so their total is $693. Three hundred seventy-four medium zucchini are priced as larges at $4 market, less $3, or $1, but they actually sold at $2.50, so their total is $935. The total for zucchini is $1628. For the squash, 129 fancy squash obtain $8 market, less $2, or $6, for a total of $774, and 116 medium squash obtain $6 market, less $2, or $4, for a total of $464. After the five percent reduction, the respective prices are $735.30 and $383.80, so the total for squash is $1119.10. Thus, the total owed for March 24 is $2747.10, less the commission, for a net due of $2472.39. After deducting the commission, Respondent calculated that it owed $2469.15. Thus, Respondent owed an additional $3.24 for March 24. For March 26, 305 fancy zucchini are priced as mediums at $4 market, less $2, or $2, but they actually sold at $5, so their total is $1525. Seventy-seven medium zucchini are priced as larges at $4 market, less $3, or $1, but they actually sold at $2.50, so their total is $192.50. The total for zucchini is $1717.50. For the squash, 85 fancy squash obtain $8 market, less $2, or $6, for a total of $510, and 49 medium squash obtain $6 market, less $2, or $4, for a total of $196. After the five percent reduction, the respective prices are $484.50 and $186.20. The total for squash is $670.70. Thus, the total owed for March 26 is $2388.20, less the commission, for a net due of $2149.38. After deducting the commission, Respondent calculated that it owed $2098.80. Thus, Respondent owed an additional $50.58 for March 26. For March 28, 262 fancy zucchini are priced as mediums at $4 market, less $2, or $2, but they actually sold at $5, so their total is $1310. Two hundred eighty-two medium zucchini are priced as larges at $4 market, less $3, or $1, but they actually sold at $2.50, so their total is $705. The total for zucchini is $2015. For the squash, 61 fancy squash obtain $10 market, less $2, or $8, for a total of $488, and 29 medium squash obtain $8 market, less $2, or $6, for a total of $174. After the five percent reduction, the respective prices are $463.60 and $165.30, for a total of $628.90. Thus, the total owed for March 28 is $2643.90, less the commission, for a net due of $2379.51. After deducting the commission, Respondent calculated that it owed $2302.20. Thus, Respondent owed an additional $77.31 for March 28. For March 31, 410 fancy zucchini are priced as mediums at $4 market, less $2, or $2, but 140 sold at $5 and 270 sold at $4.50, so their total is $1915. Six hundred five medium zucchini are priced as larges at $4 market, less $3, or $1, but 208 sold at $2.50 and 397 sold at $2, so their total is $1314. The total owed for zucchini, which was the only product shipped on March 31, is $3229, less the commission, for a net due of $2906.10, which is the amount that Respondent calculated that it owed. For April 2, 317 fancy zucchini are priced as mediums at $4 market, less $2, or $2, but they actually sold at $6, so their total is $1902. One hundred fifty-five medium zucchini are priced as larges at $4 market, less $3, or $1, but they actually sold at $4, so their total is $620. The total owed for zucchini, which was the only product shipped on April 2, is $2540, less the commission, for a net due of $2269.80, which is the amount that Respondent calculated that it owed. For April 4, 291 fancy zucchini are priced as mediums at $6 market, less $2, or $4, but they actually sold at $8, so their total is $2328. Two hundred seventeen medium zucchini are priced as larges at $6 market, less $3, or $3, but they actually sold at $5.50, so their total is $1193.50. The total owed for zucchini, which was the only product shipped on April 4, is $3521.50, less the commission, for a net due of $3169.35, which is the amount that Respondent calculated that it owed. For April 6, 393 fancy zucchini are priced as mediums at $8 market, less $2, or $6, but they actually sold at $9.50, so their total is $3733.50. Two hundred sixty-seven medium zucchini are priced as larges at $8 market, less $3, or $5, but they actually sold at $7, so their total is $1869. The total owed for zucchini, which was the only product shipped on April 6, is $5602.50, less the commission, for a net due of $5042.25, which is the amount that Respondent calculated that it owed. For April 8, 235 fancy zucchini are priced as mediums at $8 market, less $2, or $6, but they actually sold at $10, so their total is $2350. Two hundred ninety-nine medium zucchini are priced as larges at $8 market, less $3, or $5, but they actually sold at $7, so their total is $2093. The total owed for zucchini, which was the only product shipped on April 8, is $4443, less the commission, for a net due of $3998.70, which is the amount that Respondent calculated that it owed. For April 10, 259 fancy zucchini are priced as mediums at $8 market, less $2, or $6, but they actually sold at $9.50, so their total is $2460.50. Eighty-seven medium zucchini are priced as larges at $8 market, less $3, or $5, but they actually sold at $6, so their total is $522. The total owed for zucchini, which was the only product shipped on April 10, is $2982.50, less the commission, for a net due of $2684.25, which is the amount that Respondent calculated that it owed. For April 14, 203 fancy zucchini are priced as mediums at $8 market, less $2, or $6, but 100 sold at $8 and 103 sold at $6, so their total is $1418. Two hundred seventy-seven medium zucchini are priced as larges at $8 market, less $3, or $5, so their total is $1385. The total owed for zucchini, which was the only product shipped on April 14, is $2803, less the commission, for a net due of $2522.70. After deducting the commission, Respondent calculated that it owed $2345.40. Thus, Respondent owed an additional $177.30 for April 14. The total of the additional amounts that Respondent owed is $2986.50. However, Respondent owes Petitioner more than this amount because Respondent did not pay Petitioner the entire amount that Respondent determined that it owed Petitioner. Respondent owes Petitioner, after taking its commissions, $58,563.99. Respondent paid Petitioner for the shipments in question $49,590.05. This is the sum of check number 2621 dated March 14 for $5000, check number 2697 dated March 28 for $5000, check number 2727 dated April 1 for $7500, check number 2809 dated April 24 for $6000, check number 2853 dated May 5 for $8189.70, check number 2879 dated May 16 for $11,406.35, and a wire transfer on April 17 for $6494. Respondent is not entitled to a credit for check number 2503 dated February 21 for $8087.40 because this check was for product shipped prior to March 1. In addition to the date on this check, further proof of its proper application is that the checks dated March 14 and 28 and April 1 were called "advances," as further proof that Respondent had not yet calculated its debt for the shipments starting March 1 when it wrote the check dated February 21. Respondent is also not entitled to a credit for boxes for the reasons stated in the conclusions of law. Thus, Respondent paid $49,590.05 on a net debt of $58,563.99 for vegetables and still owes $8973.94.
Recommendation It is RECOMMENDED that the Department of Agriculture and Consumer Services enter a final order directing Respondent Ro-Bee Sons, Inc., to pay Petitioner Neal Ott Farms, Inc., the sum of $8973.94. DONE AND ENTERED this 6th day of November, 1998, in Tallahassee, Leon County, Florida. ROBERT E. MEALE 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 Filed with the Clerk of the Division of Administrative Hearings this 6th day of November, 1998. COPIES FURNISHED: Carolann A. Swanson Roetzel & Andress 2080 McGregor Boulevard, Third Floor Fort Myers, Florida 33901 Robert E. Goldman, Attorney 1543 7th Street, Suite 202 Santa Monica, California 90401 New York Surety Company 80 Cutter Mill Road Great Neck, New York 11021 Richard Tritschler, General Counsel Department of Agriculture and Consumer Services The Capitol, Plaza Level 10 Tallahassee, Florida 32399-0810 Brenda Hyatt, Chief Bureau of License and Bond Department of Agriculture and Consumer Services 508 Mayo Building 407 South Calhoun Street Tallahassee, Florida 32399-0800
The Issue Whether the Department of General Services should disqualify as unresponsive Kodak's bid for Classes 11 and 12, Types I, III, IV of Bid No. 402- 600-38-B, Walk-Up Convenience Copiers, Plain Bond Paper.
Findings Of Fact The Department is the state agency empowered to contract for the purchase, lease, or acquisition of all commodities required by any state agency under competition bidding or by contractual negotiation. On April 26, 1984, the Department issued Invitation to Bid No. 402-600- 38-8 entitled Walk-up Convenience Copiers, Plain Bond Paper. The bid invitation categorized walk-up convenience copiers by type, class, and acquisition plan. The specifications provided for four types and twelve classes of copiers with four acquisition plans--one-year lease, two-year lease, three-year lease, and outright purchase. Kodak responded to the bid invitation on June 26, 1984, by submitting bids on all acquisition plans for the following categories: Type I, Classes 8- 12; Type II, Class 12, Type III, Classes 8-12; and Type IV, Classes 8-12. The Department posted its decision on the Copier Bid on August 9, 1984, at which time the Department indicated its intent to reject all bids submittsd by Kodak on the ground that Kodak's bid contained additional terms and conditions. Addendum A to Kodak's bids contains the language which the Department found to be additional terms and conditions and consists of an explanation of a quantity discount offered by Kodak to all state agencies. Kodak's bids were the lowest bids received by the Department of the two-and three-year lease plans for the following categories: Type I, Classes 11 and 12 Type III, Classes 11 and 12 Type IV, Classes 11 and 12 In addition, Kodak's bids were the lowest bids for the one-year lease plans on Class 12 of Type I, III, and IV. The quantity discount reflected in Addendum A does not affect the bid prices (price per copy made) submitted by Kodak for any of the machine categories or acquisition plans on which Kodak bid and was not considered by the Department in finding Kodak to be the low bidder in those categories specified above. The invitation to bid (ITB) contains general and special conditions. The "general conditions" are conditions that apply to all contracts bid by the state; the "special conditions" are the terms and conditions that apply specifically to the invitation to bid under consideration. The general conditions provide that "[a]ny and all special conditions and specifications attached hereto which vary from these general conditions shall have precedence." Section 4(b) of the general conditions provides: "Under Florida law use of State contracts shall be available to political subdivisions (county, county board of public instruction, municipal, or other local public agency or authority) and State Universities, which may desire to purchase under the terms and conditions of the contract. Such purchases shall be exempt from the competitive bid requirements otherwise applying to their purchases." The special conditions set forth the purpose of the bid as the establishment of "....a 12 month contract for the purchase of Walk-up Convenience Copiers: Plain Bond Paper by all State of Florida agencies and institutions." The purpose provision does not mention political subdivisions. However, several special conditions of the ITB refer to political subdivisions. Under "Estimated Quantities" it states: "It is anticipated that the State of Florida agencies and other eligible users will expend approximately $1,000,000 under any term contract resulting from this bid." Other eligible users include political subdivisions. The condition entitled "Distribution of Literature" provides: "Successful bidder will be required to furnish State agencies and political subdivisions...with descriptive literature..." The condition entitled "Summary of Total Sales" provides that "Total Dollar sales to political subdivisions may be submitted in lieu of the detailed information required for State and university placements." Although political subdivisions may purchase under the terms and conditions of the state copier contract, certain of the special conditions distinquish between state agencies and political subdivisions. As mentioned above, the ITB provides that total dollar sales to political subdivisions may be submitted in lieu of the information required for state and university placement. Further, the ITB requires each bidder to identify its equity accrual plan and sets forth minimum requirements that the plan must meet. One of the minimum requirements refers to State agencies only, directing that "[t]he State shall have the right to transfer the equipment from one State agency to another State agency without the loss of equity accrued." The special condition at issue in this proceeding is entitled" Quantity Discounts". It provides: "Bidder is urged to offer additional discounts for one time delivery of large single orders of any assortment of items." In response to this provision, Kodak included as part of its bid "Addendum A", which reflects the quantity discount offered by Kodak to major customers. The discounts offered by Kodak are based upon the total number of machines installed in state agencies at the time invoices are sent out. If the state has fewer than seventy-five machines installed, it enjoys no discount and pays the full amount indicated on the price sheets submitted in Kodak's bid. If a seventy-fifth machine is installed, the state receives a two percent discount off the bottom line of each monthly invoice on all Kodak machines installed. When the number of Kodak machines exceeds 149 the state receives a three percent discount, and when the number of machines exceeds 199, a four percent discount is applied. When the discount level changes either up or down due to a change in the machine base, Kodak provides 60 days advance written notice prior to applying the new discount level. Kodak's billing system utilizes a computer which tracks the number of machines and applies the quantity discounts. Each individual account or customer has a "custom master" in the computer, which is a computer record consisting of the name of the company, the address, the customer number, and information concerning invoices. The "custom master" is used in billing the customer. When quantity discounts are involved, a master agreement number and/or a common owner number is assigned and that number is placed on each individual custom master in the system that comes under the master agreement. Thus, each individual account has both an individual customer number and a master agreement number. When the computer prepares the bill, it automatically counts the number of machines installed with all customers who share the same master agreement number. Because of the billing system, any machine that is included in the billing is also included in determining the quantity discount. If the machine is not counted in the machine base, the customer is not being charged for the machine. Paragraph II of Addendum A provides: 11. Eligible Users Eligibility under the Quantity Discount Schedule listed below will be exclusively for installations of KODAK EKTAPRINT Copier-Duplicator and Duplicator models within the State of Florida's Government departments, agencies, and State universities. The Quantity Discount Schedule does not apply to installations of KODAK EKTAPRINT Copier-Duplicator and Duplicator models within political subdivisions in the State of Florida (county, county board of public instruction, municipal, or other local public agency or authority). This provision prevents the state from receiving discounts based upon machines purchased by political subdivisions, and also prevents political subdivisions from receiving quantity discount credit for machines placed with state agencies and universities. In other words, the machine base for state agencies and universities would be determined solely by the number of machines installed with state agencies and universities; machines installed within political subdivisions would not be counted in that machine base because political subdivisions would not have the master agreement number assigned to state agencies and universities. Although Kodak contends that each political subdivision would be eligible for quantity discounts based upon the number of machines installed within that particular political subdivision, that provision was not included in Addendum A. Kodak did not address political subdivisions in the quantity discount provision because the purpose of the ITB, as stated in the special conditions, was to establish a contract for state agencies and because the quantity discount provision did not specify that any quantity discounts offered must include political subdivisions. After the copier contract is awarded, each eligible user places its orders for copiers from the contract. The orders do not go through the Department, and the Department does not have a system that indicates how many machines are installed in state agencies and universities. Although the Department does not have a system for independently monitoring the number of machines installed, under Kodak's billing system the state may elect to receive a monthly or quarterly printout which lists each machine installed by its purchaser and provides information relating to the machine's location, type, and acquisition plan. In addition, the state may designate a central location to receive copies of all invoices sent out on each machine installed within the state system. The Department determined that Kodak's bids should be disqualified as containing additional terms and conditions. Specifically, the provision of Addendum A excluding political subdivisions from participation in the quantity discount offered and the Department's inability to independently monitor the quantity discount were identified as the additional terms and conditions. If not for Addendum A, Kodak would have been awarded the contract on the categories for which it was the low bidder. Had Kodak failed to provide any quantity discounts it would have been awarded the contract. Had Kodak omitted Addendum A from its bids, but automatically accorded to the state its quantity discount through its billing system, the state would have paid the discounted prices. The inclusion of Addendum A in its bids does not give Kodak an advantage or benefit not enjoyed by other bidders. All bidders were "urged to offer additional discounts...; however, the quantity discounts offered were not considered in determining the low bidder. Therefore, the inclusion of the quantity discount offered by Kodak could not have given it a competitive advantage not enjoyed by other bidders. The inclusion of Addendum A does not adversely impact the interests of eligible users of state contracts. Had Addendum A not been included in Kodak's bids, Kodak would have been awarded the contract in the categories previously specified, and all eligible users would pay the full contract price. Political subdivisions are not adversely affected by the inclusion of Addendum A because they will pay no more than they would have paid had Kodak failed to provide any quantity discounts. State agencies and universities are not adversely affected by the quantity discount offered because they will pay the same or less than they would have paid had Kodak not included Addendum A.
Recommendation Based on the foregoing, it is RECOMMENDED that the State of Florida, Department of General Services, award to Eastman Kodak Company the following portions of Bid Number 402-600-38- B: Class 11, Types I, III, IV - two and three year lease. Class 12, Types I, III, IV - one, two and three year lease. DONE and ENTERED this 26th day of February, 1985, in Tallahassee, Florida. DIANE A. GRUBBS Hearing Officer Division of Administrative Hearings 2009 Apalachee Parkway The Oakland Building Tallahassee, Florida 32301 (904)488-9675 Filed with the Clerk of the Division of Administrative Hearings this 26th day of February, 1985.
The Issue The issue for consideration is whether Respondent, Southern Corporate Packers, Inc., and its surety, are liable to Petitioner for additional payment for the sale of watermelons during the months of June and July, 1992.
Findings Of Fact During June, 1993, Petitioner, Howell J. Walker, a farmer in Branford, Florida for more than 30 years, was able to sell the majority of his watermelon crop to a produce broker. That sale is not pertinent to the issues herein except in that there remained, after the sale, a substantial number of smaller melons in which his other broker apparently was not interested. This broker, however, referred him to Southern Corporate Packers, Inc., a broker with which Petitioner had not, to that time, done business. Ron Carter, a buyer for the Respondent came to Petitioner's farm and agreed to buy "whatever they could use" at a "guaranteed" price of 3.5 cents per pound. Petitioner claims that he advised Mr. Carter then, that his usual practice was to get his labor costs for loading right away and get the balance at a later date. This seemed to be agreeable to Respondent and a deal was struck. Petitioner received a wire transfer of $10,000.00 from Respondent at the completion of loading on July 3, 1992, and was to get an additional $8,000.00 shortly thereafter, with the balance due payable soon after that. Based on the weights recorded for the melons loaded, the total price for the shipment was $30,977.10. It was not a "cash in the field" transaction. Unfortunately the parties did not clearly define the exact terms of the sale. Both agree the Petitioner was to get a "guaranteed" price of 3.5 cents per pound. Petitioner contends that at no time did he agree to "ride the load", and assume the risk of loss or spoilage of the shipment. Respondent contends that by taking a "guaranteed" price, Petitioner, according to the custom of the trade, agreed to assume the risk of loss due to spoilage or shrinkage, and that the price he was to be paid was the price received by the broker after deducting for spoilage or shrinkage. Petitioner claims he shipped at least 20 truckloads, figuring from the amount of pounds he paid his help to load. However, he has loading receipts and bills of lading for only 18 truck loads. Respondent claims only 18 truckloads were shipped and, absent any further proof that the exact number exceeds 18, it is found that the number of loads shipped was 18. Of this number, one truck load was lost entirely. It completely disappeared and never arrived at the destination in Canada to which it was sent. Respondent assumed the risk of that loss and paid Petitioner for the full amount of the load. There were several other loads that were "in trouble", however, for which a market could not be found at the "guaranteed" price. In each case, when Respondent was notified the load was rejected or could not be delivered, Mr. Arrigo, Respondent's President, would try to find an alternative buyer. In each case, the amount received for that load was considerably less than the expected price for a full load. When Respondent was advised that the first shipment was in trouble, he contacted Mr. Walker by phone with Mr. Carter, Respondent's buyer, also involved. He advised Petitioner of the situation and claims that Petitioner told him to get the best price possible. This is not unreasonable and does not, by itself, indicate Petitioner agreed to "ride the load." As to many of the others, which were delivered as sent, they, too, suffered from shrinkage in which the delivery weight was somewhat less than the shipping weight. After the last shipment was dispatched and Petitioner did not receive any further payment after several phone calls to Respondent's Immokalee, Florida's office, Petitioner and his wife went there and still were not able to get a firm answer as to when they would be paid. Petitioner was ultimately able to contact Mr. Arrigo by phone and at that time was told that because he had accepted a "guaranteed" price, he was considered to be "riding the load" and assuming the risk of loss. At this point one must consider the meaning of the term "guaranteed" as used in the instant context. In the produce buying business, the word, "guaranteed price" means that the grower/shipper guarantees safe delivery, and also that the buyer/broker guarantees no less than the agreed-upon price if the produce arrives in good condition, regardless of the fluctuations in the market at the time of delivery. Respondent contends, then, that if Petitioner did not want to assume the risk of spoilage/shrinkage, he should have sold at a lower, "cash at the field", price. Petitioner claims he never does this. Petitioner ultimately received a check for $8,000.00 from Respondent. The check was dated July 8, 1992 but the postmark on the envelope in which it was received reflects a mailing date from Ft. Myers, Florida of July 23, 1992. Petitioner claims a balance due of $12,977.10 based on a total price of $30,299.10 for the total weight of melons shipped, less the $10,000.00 wire transfer and the $8,000.00 check received. Respondent claims a balance due of only $2,253.14 based on a total price of $20,253.14, (total weight received on 13 loads, plus actual price received on 3 "troubled" shipments, minus the freight charge for 2 rejected shipments), less the $10,000.00 wire transfer and $8,000.00 check, and forwarded a check for that amount to the Department to hold in escrow for Petitioner pending resolution of this hearing. Petitioner was able to produce shipping documents for only 18 loads, of which one was unweighed. However, figuring the total weight for the other 17 shipments (753,060 pounds) and adding thereto the average weight per shipment, (44,297 pounds) indicates 797,357.64 pounds were shipped at 3.5 cents per pound. This results in a total price for the 18 loads of $27,907.52 instead of the $30,977.10 indicated by Mr. Walker. Petitioner unequivocally denies he agreed to "ride the load" and assume the risk for loss or spoilage of any shipment. Neither Mr. Carter nor Mr. Arrigo, the only two individuals from Respondent with whom Petitioner negotiated, can specifically recall if either told Petitioner his acceptance of the "guaranteed" price of 3.5 cents per pound meant he agreed to ride the load. Notwithstanding Mr. Duer's testimony that the custom of the industry so indicates, Petitioner's clear denial, not clearly offset by any definitive evidence to the contrary, here must be accepted as the better evidence.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is, therefore: Recommended that a Final Order be entered requiring Respondents to pay to the Petitioner, Howell Walker, d/b/a Walker Farms, Inc., the sum of $7,654.38 for watermelons sold and delivered. RECOMMENDED in Tallahassee, Florida this 19th day of January, 1993. ARNOLD H. POLLOCK Hearing Officer Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 19th day of January, 1993. COPIES FURNISHED: Howell J. Walker Route 3, Box 52 Branford, Florida 32008 John B. Grandoff, III, Esquire Hill, Ward & Henderson, P.A. Suite 300 - Barnett Plaza 101 East Kennedy Blvd. Tampa, Florida 33601 Hon. Bob Crawford Commissioner of Agriculture The Capitol, PL-10 Tallahassee, Florida 32399-0810 Richard Tritschler General Counsel Department of Agriculture The Capitol, PL-10 Tallahassee, Florida 32399-0810 Brenda Hyatt, Chief Bureau of Licensing & Bond Department of Agriculture 508 Mayo Building Tallahassee, Florida 32399-0800
Recommendation Based on the foregoing findings of fact and conclusions of law I hereby recommend that the Petitioner's challenge to the Department's determination of sales taxes due herein pursuant to Chapter 212, Florida Statutes, be denied and that the revised assessment notices be upheld as issued. RECOMMENDED this 17th day of January, 1978, in Tallahassee, Florida. JAMES E. BRADWELL Hearing Officer Division of Administrative Hearings 530 Carlton Building Tallahassee, Florida 32304 (904) 488-9675 COPIES FURNISHED: Cecil Davis, Esquire Assistant Attorney General Department of Legal Affairs The Capitol Tallahassee, Florida 32304 Robert F. Nunez, Esquire Post Office Box 12726 St. Petersburg, Florida 33733 Mercer Farrington, Esquire Post Office Box 1548 Tallahassee, Florida 32302
The Issue The issues in this case are: Did the Respondent, Alix Aldonis (Mr. Aldonis), commit fraud; misrepresentation; concealment; false promises; false pretense; dishonest dealings by trick, scheme or device, culpable negligence; or breach of trust in a business transaction by: (a) misrepresenting the sales price of real estate in a sale and purchase contract, (b) misrepresenting a commission amount in a sales and purchase contract, and (c) misrepresenting receipt by an escrow agent of a $5,000 deposit? Did Mr. Aldonis fail to obtain and retain written confirmation from the escrow agent of delivery of the Buyer's funds for purchase of the property?
Findings Of Fact The Department is the state agency charged with the licensing and regulation of the real estate industry in the State of Florida, under the authority of section 20.165, Florida Statutes (2010), and chapters 455 and 475, Florida Statutes (2010). At all times material to this proceeding, the Department licensed Mr. Aldonis as a State of Florida real estate sales associate. He holds License Number SL-3117116, which is in effect until March 31, 2011. At all times material to this proceeding, Total Stop, Inc., d/b/a Total Stop Real Estate (Total Stop Real Estate), contracted with Mr. Aldonis to affiliate with it as a sales associate. At all times material to this proceeding, Lawrence Ligonde, of Total Stop Real Estate, was the licensed real estate broker with whom Mr. Aldonis was affiliated. Mr. Ligonde did not employ Mr. Aldonis. Currently, Mr. Aldonis is affiliated with Tropical Springs Realty, Inc. The agreement between Mr. Aldonis and Total Stop Real Estate did not provide for Total Stop Real Estate or Mr. Ligonde's receiving a percentage commission based on the price of sales that Mr. Aldonis made. Mr. Aldonis paid a flat fee of $495 to be affiliated with Mr. Ligonde. In 2006, Joseph Phen and Cheryl Phen listed a home that they owned, located at 3500 S.W. Viceroy Street, Port St. Lucie, Florida, for sale. They listed the property for $330,000. Ms. Phen was a real estate sales broker. She was the listing agent for the property. Mr. Aldonis represented a buyer in the sale of the Viceroy Street property. The buyer, Manuela Celestin, signed a Residential Sale and Purchase Contract for the property on August 2, 2006. Mr. and Ms. Phen signed the contract on August 3, 2006. They also initialed each page. The contract set forth a purchase price of $272,000. The contract also indicated that the buyer was providing a $5,000 deposit. Mr. Aldonis sent Ms. Phen a copy of the contract and a copy of a deposit check by facsimile transmission. The record does not reveal the sequence of contract signing, contract transmission, check transmission, the date of the check transmission, or whether the contract was transmitted more than once to Ms. Phen. Due to conversations with Ms. Augustine at Premier Choice Title & Escrow, the escrow agent identified in the contract, Ms. Phen grew concerned about whether the deposit had been placed in escrow. She spoke to Ms. Augustine about her concerns. Ms. Phen also told Mr. Aldonis she was concerned that the deposit check may not have been deposited in an escrow account. After the conversation, Mr. Aldonis sent Ms. Phen a copy of a check payable to Total Stop Real Estate from Charassard & Associates, P.A., for $5,000. "Phen/Celestin" is written in the "Memo" section of the check. The check bears the date August 6, 2006. Persuasive evidence does not establish if this was a copy of a second check or another copy of the check Mr. Aldonis transmitted earlier. Ms. Phen requested and received a copy of the Residential Sale and Purchase contract from the title company. The first page of this copy listed the sale price as $330,000. Although Ms. Phen testified about two HUD closing statements, the Department did not offer a copy of a HUD closing statement into evidence. The sale of the property occurred. The closing sale price was $272,000. The Department entered a second copy of the contract signed by the Phens and Ms. Celestin into evidence. The first page of the second contract reflected a sales price of $330,000. The initials at the bottom of the first page are not the initials of the Phens. The rest of the contract is identical to the contract signed by the Phens on August 3, 2006. Nothing in either contract provides for a four percent commission to be paid to any person or entity. There is no persuasive evidence indicating who created the second contract or how the title company obtained it. Mr. Ligonde testified that the contract with the higher purchase price "looks like" the one Mr. Aldonis provided him. The contracts "look" the same. Only a very close examination would identify the differences in the initials on the first page. The difference in amounts is more obvious, but it still requires a reading of the contract, not just looking at it, to note the different amount. Mr. Ligonde did not testify that the second contract entered into evidence came from his files. He also did not provide any information about how files are maintained at his business or who has access to them. He did not know when the contract arrived at his office or how. In addition, Mr. Ligonde's statement that a document "looks like" one provided him by Mr. Aldonis does not equate to testimony that the document is in fact the document Mr. Aldonis provided. At some point in the transaction, the employees of Mr. Ligonde's office, the employees of a title insurance company, and the employees of a mortgage broker had possession and control of the sales contract or a copy of it. The Department did not present credible, persuasive evidence that ruled out any of those individuals having created the new page one with the $330,000 sales price.
Recommendation Upon consideration of the facts found and conclusions of law reached, it is RECOMMENDED that the Florida Real Estate Commission enter a Final Order dismissing the Administrative Complaint. DONE AND ENTERED this 2nd day of February, 2011, in Tallahassee, Leon County, Florida. S John D. C. Newton, II 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 2nd day of February, 2011.
