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JOHN G. GRUBBS, INC. vs SCHOOL BOARD OF CITRUS COUNTY, 93-004325BID (1993)
Division of Administrative Hearings, Florida Filed:Brooksville, Florida Aug. 04, 1993 Number: 93-004325BID Latest Update: Oct. 29, 1993

Findings Of Fact By invitation to bid for Architect's Project No. 9129-A, the Board solicited bids for "construction of one new single story building at Lecanto School Complex in Lecanto, Florida." Joint Exhibit No. 1, p. 01010.1. Specifications (Re)stated The invitation to bid gave notice of a mandatory pre-bid conference at two o'clock on the afternoon of June 10, 1993, at Lecanto Vocational Center at the project site. Joint Exhibit No. 1, A-1. ("BIDDERS MUST ATTEND . . . TO BE ABLE TO BID") The invitation to bid consisted of a project manual, amended seriatim in a series of four addenda. Joint Exhibit No. 1. The project manual required substantial completion of the project within 250 days of written notice to proceed, Joint Exhibit No. 1, p. 00700.8, but on another page the same document required substantial completion by July 13, 1993. Id. at 00100.8. Later Addendum No. 1 put the date for substantial completion at "250 days after Notice to Proceed is given," but superseding Addendum No. 2 reverted to July 13, 1993. Addendum No. 3 directed prospective bidders to "[d]elete all previously issued Proposal Forms and replace with the Proposal Form attached." The attached form states: The undersigned agrees that if this bid is accepted, construction of this project will begin after receipt of "Notice to Proceed" and shall be substantially completed within 250 calendar days and finally completed within thirty (30) calendar days from substantial completion. Directions concerning the form specify that it is to "be copied on Contractor's business letterhead." Addendum No. 3, p. 5. Among the specifications were bond requirements, including minimum ratings for companies writing the bonds: To be acceptable to the owner as surety for Bid Bonds, Performance Bond, and Payment Bonds, a surety company shall comply with the following provisions: 3. The surety shall have at least the following ratings: . . . 1,000,000 to 1,500,000 A Class XI Joint Exhibit No. 1, p. 00600.1. Addendum No. 2 "delete[d] the Class ratings" but not Best's Policyholder's Ratings. Although the copy of the invitation to bid that came in evidence as Joint Exhibit No. 1 lacked pages 00400.1 and 00400.2, the table of contents indicates that these pages contain a bid bond requirement. The proposal form also calls for a bid bond. In its proposed recommended order, moreover, petitioner states that the Board "set forth in its project manual a provision that bidders should submit a bid bond from a company with an 'A 11' rating." The Project Manual states, at page 00100.3, that a contract "will be awarded only to a responsible Bidder, qualified by experience . . . . " Joint Exhibit No. 1. Bidders were required to submit forms along with their bids which called for, among other things, lists of major construction projects in process and major projects completed in the last five years. Joint Exhibit No. 1, p. 00110.3. Compliance Attempted When, on the afternoon of June 10, 1993, Greg Cecil, Grubbs' general manager, arrived for the pre-bid conference, he was erroneously "instructed that Lakeview was at another site in Hernando." T.70. When he arrived there, "somebody on site . . . said . . . Lakeview Relocation is going to be moved to the site that you were previously at." Id. By the time he again reached his original, correct destination, he "ended up being late for the meeting." Id. It was about quarter of three and only Tom Williford, who is the Board's Director for General Services, and an electrical subcontractor remained. T.78. Mr. Williford recounted what had occurred before the other contractors had dispersed, and told Mr. Cecil "that there would be an addendum issue[d] reflecting any items that occurred that day." T.211. The Board's Addendum No. 2 lists Mr. Cecil as having been "in attendance at the Mandatory Pre-Bid Conference." Bids Submitted Grubbs, Caldwell and others submitted bids for Architect's Project No. 9129A. Grubbs' bid was low, at one million one hundred five thousand dollars ($1,105,000.00). Dated June 17, 1993, Grubbs' proposal offered to bring construction to substantial completion by July 13, 1993. In a blank for "Bond Rating," "A- 11" was inserted. Joint Exhibits No. 2 and 3.11. The bid documents contained no other rating information. A form bid bond executed by Grubbs' president and by Sandra McCullough, as attorney in fact both for Reliance Insurance Company, a Pennsylvania Corporation, and for Employees Reinsurance Corporation, a Missouri corporation, accompanied Grubbs' bid. Best rates the former company A- and the latter A++, evidence at hearing showed. The body of the bond begins: KNOW ALL MEN BY THESE PRESENTS, that we JOHN G. GRUBBS, INC. P.O. BOX 10262, BROOKSVILLE, FLORIDA 34601 as Principal, hereinafter called the Principal, and RELIANCE INSURANCE COMPANY AND EMPLOYERS REINSURANCE CORPORATION, P.O. BOX 945090 MAITLAND, FLORIDA 32751 a corporation duly organized under the laws of the State of PENNSYLVANIA as Surety, hereinafter called the Surety, are held and firmly bound unto SCHOOL BOARD OF CITRUS COUNTY . . . . Joint Exhibits Nos. 2 and 3. Attached to the bid is a power of attorney appointing Ms. McCullough attorney in fact for Reliance Insurance Company and another limited power of attorney appointing her attorney in fact for Employees Reinsurance Company, which authorizes her to execute "any bond . . . in co- suretyship with RELIANCE INSURANCE COMPANY." Id. Grubbs' bid included a list of five "open contracts" for amounts ranging from $98,749 to $1,362,252 for projects ranging from a water storage system to sanitary sewer installation to road construction; and a list of some 95 completed projects including roads, sewers, clearing, earthwork, a $53,387 reroofing job, and a $116,772 job installing a canopy and sidewalks for a middle school in Hernando County. Joint Exhibit Nos. 2 and 3. After the bids had been opened, John G. Grubbs told the Board's architect of still other projects Grubbs had completed. On July 1, 1993, a principal of the architectural firm the Board had engaged wrote Mr. Williford, as follows: Dear Tom: We have reviewed the bids received and would recommend that the low bid from John G. Grubbs, Inc. be rejected for being in non- conformance with the Bid Documents for the following reasons: The bid by John G. Grubbs, Inc. was submitted on a proposal form that contained an error in the completion date. Their form indicated construction to be completed by July 13, 1993; rather than 250 days as required by the Bid Documents, per addendum #3. Bid Bond received was written by a bonding company having a Best rating of "A minus" (A-). The Documents require an "A" rating. (Section 00600, Page 00600.1, Third Paragraph) The Contractor's Qualification form indicates that John G. Grubbs, Inc. has been in the Site and Drainage business for ten (10) years but has not constructed any School Facilities. It also shows having completed construction of only two buildings and one under construction. These 3 buildings are small fire stations in the $300,000 range each. Due to the above outlined concerns we would recommend the contract be awarded to Caldwell Construction Company, the next low bidder. Respondent's Exhibit No. 1. The Board met on July 8, 1993. During the meeting, one Board member opined, "the critical thing here is probably the bond rating." Id., p. 26. The Board voted to reject Grubbs' bid and, separately, to accept Caldwell's.

Recommendation It is, accordingly, RECOMMENDED: That the Board dismiss Grubbs' petition and award the contract for Architectural Project No. 9129-A to Caldwell. DONE AND ENTERED this 11th day of October, 1993, in Tallahassee, Florida. ROBERT T. BENTON, II 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 11th day of October, 1993. APPENDIX TO THE RECOMMENDED ORDER IN CASE NO. 93-4325BID Petitioner's proposed findings of fact are not separately numbered. Respondent's proposed findings of fact Nos. 1-11 and 14-19 have been adopted, in substance, insofar as material. With respect to respondent's proposed finding of fact No. 12, respondent's Mr. Williford concluded at the time that Grubbs had complied. Respondent's proposed finding of fact No. 13 pertains to a subordinate matter. With respect to respondent's proposed finding of fact No. 20, Grubbs built a canopy and sidewalks at a school. With respect to respondent's proposed finding of fact No. 21, both the bid rating and the completion date were deviations. Intervenor's proposed findings of fact Nos. 1-22, 25, 26, 27 and 28 have been adopted, in substance, insofar as material. Intervenor's proposed findings Nos. 23 and 24 pertain to subordinate matters. With respect to intervenor's proposed finding of fact No. 29, the completion date and bond rating were both deviations. COPIES FURNISHED: Carl E. Austin, Superintendent Citrus County School Board 1007 W. Main Street Inverness, Florida 34450-4698 Thomas S. Hogan, Jr. 20 South Broad Street Brooksville, Florida 34605 Richard S. Fitzpatrick 213 North Apopka Avenue Inverness, Florida 34450-4239 Clark S. Stillwell Post Office Box 250 Inverness, Florida 34451-0250

Florida Laws (1) 120.53
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CRUISES UNLIMITED TRAVEL AND TOURS, INC. vs DEPARTMENT OF AGRICULTURE AND CONSUMER SERVICES, 94-002361 (1994)
Division of Administrative Hearings, Florida Filed:Fort Lauderdale, Florida Apr. 28, 1994 Number: 94-002361 Latest Update: Nov. 21, 1994

Findings Of Fact Cruises Unlimited Travel/Tours, Inc. (Petitioner), is a "seller of travel", as that term is defined by Section 559.927(1)(2), Florida Statutes. 2/ Elaine Scola is Petitioner's owner. As of 1988, sellers of travel were required to register with the Department of Agriculture and Consumer Services, Division of Consumer Services (Respondent), and it was a violation of Section 559.927, Florida Statutes, for any person to conduct business as a seller of travel without registering annually with Respondent. Any such violation subjected the offending party to civil and criminal penalties. Petitioner did not register with respondent and, in or around November 1993, Respondent notified Petitioner of its (Petitioner's) obligation to register with Respondent. Around or on February 23, 1994, Petitioner, by and through Ms. Scola, made application for registration as a seller of travel and requested Respondent to waive the annual performance bond requirement. Petitioner included with the application, among other things, a registration fee and a 1993 unaudited financial statement. Around or on March 16, 1994, Respondent requested additional information: an audited financial statement or latest income tax return, and documentation showing five or more consecutive years of business ownership experience as a seller of travel in Florida (occupational license or tax returns). Around or on March 21, 1994, Petitioner provided Respondent a copy of its occupational licenses for the past seven years and a copy of its 1992 income tax return. Petitioner indicated that its 1993 tax return was not, as yet, completed. Petitioner's occupational licenses dated back to 1986. For a brief period from September 30, 1988, to March 29, 1989, Petitioner did not have an occupational license. Around or on April 7, 1994, Respondent denied Petitioner's request for a waiver of the bond requirement, contending that Petitioner had failed to satisfy the waiver requirements of Section 559.925(10)(b), Florida Statutes, on two grounds. One was that Petitioner had failed to submit an audited financial statement. The second was that Petitioner had failed to show that it had "five or more consecutive years of experience as a seller of travel in Florida, while in compliance with the law." The second reason presented by Respondent is based upon its interpretation of Section 559.927(10)(b)5, Florida Statutes, to require that the "five or more consecutive years of experience as a seller of travel" must have been lawful, i.e. that it have occurred while the person was duly registered with Respondent, with appropriate security. By waiving the requirement for an annual performance bond, Respondent contends the statute was designed to reward sellers of travel who have complied with the registration and bond requirements. Respondent has not promulgated any rule evidencing its interpretation. However, it has begun the rulemaking process. Prior to Petitioner making application for registration as a seller of travel, it had never registered with Respondent as a seller of travel or posted a performance bond.

Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Department of Agriculture and Consumer Services enter a final order DENYING Cruises Unlimited Travel/Tours, Inc.'s, request for a performance bond waiver. DONE AND ENTERED in Tallahassee, Leon County, Florida, this 31st day of October 1994. ERROL H. POWELL 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 31st day of October 1994.

Florida Laws (3) 120.57501.201559.927
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M AND J CONSTRUCTION COMPANY vs DEPARTMENT OF TRANSPORTATION, 94-006917BID (1994)
Division of Administrative Hearings, Florida Filed:Tallahassee, Florida Dec. 13, 1994 Number: 94-006917BID Latest Update: Jan. 25, 1995

Findings Of Fact Petitioner, M & J Construction Company of Pinellas County, Inc. (M & J) is a contractor prequalified to bid on FDOT construction projects in excess of $250,000. Mayo Contracting, Inc. (Mayo) is a contractor prequalified to bid on FDOT construction projects in excess of $250,000. Bid solicitation notices for state project no. 75280-3416 were mailed out to prospective bidders, including M & J, on August 26, 1994; and bid packages were mailed to firms requesting them on September 26, 1994. M & J received a bid package. On September 28, 1994, bids were submitted for a bridge repair contract in Orange County. Mayo submitted the lowest bid for the contract in the amount of $426,860.75 which was $54,060.05 lower than the second low bidder. M & J submitted the third lowest bid for the contract in the amount of $499,103.40. (Exhibit 5) The bid documents included the following notice which is printed in two different places in the bid package; once in double spaced bold capital letters, and once in standard size font. UNLESS OTHERWISE NOTIFIED IN WRITING, RETURN RECEIPT, THE SUMMARY OF BIDS FOR THIS PROJECT WILL BE POSTED WITH THE CLERK OF AGENCY PROCEED- INGS, FLORIDA DEPARTMENT OF TRANSPORTATION, 605 SUWANEE STREET, ROOM 562, TALLAHASSEE, FLORIDA 32399-0458, ON OCTOBER 20, 1994 OR NOVEMBER 7, 1994. BY CALLING THE CLERK OF AGENCY PROCEEDINGS, FLORIDA DEPARTMENT OF TRANSPORTATION, (904) 488-6212, DURING EACH POSTING PERIOD, INFORMATION CONCERNING THE POSTED PROJECTS CAN BE OBTAINED. INTERESTED PARTIES THAT HAVE A COMPUTER AND A MODEM CAN ACCESS INFORMATION FROM THE CONTRACTS ADMINISTRATION ELECTRONIC BULLETIN BOARD CONCERNING PROJECTS WHICH WERE POSTED WITH THE CLERK OF AGENCY PROCEEDINGS DURING EACH POSTING PERIOD BY DIALING (904) 922-4158 OR 922-4159. POSTING WILL PROVIDE NOTICE OF THE DEPARTMENT'S INTENT TO AWARD A CONTRACT OR TO REJECT ALL BIDS. THE DEPARTMENT'S NOTICE OF INTENT REGARDING THIS PROJECT WILL BE POSTED ON ONLY ONE OF THE ALTERNATE POSTING DATES. BIDDERS ARE SOLELY RESPONSIBLE FOR TIMELY MONITORING OR OTHERWISE VERIFYING ON WHICH OF THE SPECIFIED ALTERNATE POSTING DATES THE POSTING OF AWARD OR REJECTION OF ALL BIDS ACTUALLY OCCURS. (Exhibits 1 and 2). This notice is included in all FDOT bid packages. M & J has been bidding for FDOT contracts for seven years and submits approximately 40 bids to FDOT per year. M & J admits it did not heed the notices in the bid documents advising bidders that (1) the posting dates identified in the bid documents would not be changed unless written notice was provided, and (2) that the bidders are solely responsible for monitoring the posting dates. Mr. Boutzoukas and Mr. Leone said they were aware that the bid documents contained information regarding posting but they did not made any special note of the time frames nor did they double check after Mr. Leone's conversation with an FDOT employee. The day after the bid was submitted, M & J personnel became concerned about some alleged irregularities in the bid specifications or the bidding process. Mr. Leone called the FDOT contract office to find out the posting date. He is not certain of the identity of the person with whom he spoke, but he believes that it was Michael Schafenacher because of his "distinct, eloquent voice". The FDOT staff person, according to Mr. Leone, told him the posting was November 17 or December 5, 1994. This information was in conflict with the printed information in the bid package described in paragraph 5, above. No one at M & J bothered to look at the dates in the bid package, either before or after the telephone call to FDOT. Instead, Mr. Leone put the November 17/December 5 dates on the office chalkboard and continued with his investigation of the alleged irregularities, as directed by Mr. Boutzoukas. On October 20, 1994, consistent with the requirements of Section 120.53, F.S. and as provided in the notices in the bid packages, FDOT posted the notice of intent to award the contract to Mayo. On or about November 4, 1994, during the course of collecting data on the project, Mr. Boutzoukas realized that posting must have already occurred. He told Mr. Leone to call FDOT again and they then learned that the posting had occurred on October 20. Michael Schafenacher has worked in the FDOT contracts administration office for nine years. He maintains the critical dates chart for various projects and is involved in the pre- and post-bidding process. He and at least four or five other staff respond to numerous telephone inquiries each day regarding dates and the posting process. He remembers the early November call from M & J but nothing sooner, and he does not believe that he would have given erroneous dates from the critical dates chart. The chart reflects the same dates for the project as stated in the bid packages. FDOT keeps track of its contracts by the "letting" date, that is, the month in which bids are opened for a particular project. The project at issue, No. 75280-3416, was in the September letting. Mr. Schafenacker keeps his critical dates chart taped to his desk for easy reference. With or without the letting date, Mr. Schafenacher can quickly and easily find dates in response to telephone inquiries. If Mr. Schafenacher had given the wrong dates and had been told that the dates were inconsistent with the bidding documents, he would have investigated further to resolve the discrepancy. FDOT did not change the dates for the award of the project at issue; if it had, M & J and the other bidders would have received written notice. When there was no timely protest after the October 20 letting, FDOT awarded the contract to Mayo on or about October 26, 1994. As soon as it found out on November 4th that the bid was let, M & J filed its notice of protest by FAX on November 4, 1994. It did not follow up this notice with a formal protest, but rather filed a document called "Request for Opportunity to Protest More than Ten Days after the Post of the Intent to Award Bid, on or about November 30, 1994, after discussions with FDOT's legal staff. At no time did M & J file a protest bond. M & J's reliance on erroneous verbal information by an unidentified FDOT employee was unreasonable since M & J had the proper information readily in hand and ignored it. M & J waived its right to protest the bid award when it failed to timely file notice of the protest, a proper protest bond or a formal protest.

Recommendation Based on the foregoing, it is hereby RECOMMENDED: That the Florida Department of Transportation enter its final order denying the bid protest of M & J. DONE AND ENTERED this 24th day of January, 1995, in Tallahassee, Florida. MARY CLARK 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 24th day of January, 1995. APPENDIX The following constitute specific rulings on the findings of fact proposed by the parties. Petitioner's Proposed Findings M & J filed a memorandum and a four paragraph order. The findings proposed in that order are rejected as unsupported by the weight of evidence. However, the finding proposed in paragraph 3 is adopted to the extent that it establishes that M & J filed a notice as soon as it learned from FDOT that the bid was let on October 20. Respondent's Proposed Findings 1. Adopted in paragraph 3. 2.-4. Adopted in paragraph 5. Adopted in paragraph 3. Adopted in paragraph 5. Rejected as unnecessary. 8. Adopted in paragraph 1. 9. Adopted in paragraph 6. 10.-11. Rejected as unnecessary. 12.-13. Adopted in substance in paragraph 6. 14. Adopted in paragraph 3. 15.-16. Adopted in substance in paragraph 7. 17. Adopted in paragraph 11. 18.-20. Adopted in paragraph 12. 21. Adopted in paragraph 11. 22. Rejected as unnecessary. 23. Adopted in paragraph 12. 24. Adopted in paragraph 13. 25. Adopted in substance in paragraph 16. 26.-27. Adopted in paragraph 14. 28.-29. Adopted in paragraph 15. 30. Adopted in paragraph 14. 31. Adopted in paragraph 15. 32. Adopted in paragraph 16. Intervenor's Proposed Findings 1.-7. Adopted in paragraphs 1-6. Adopted in paragraph 7. Adopted in paragraph 9. Adopted in paragraph 14. 11.-12. Adopted in paragraph 15. COPIES FURNISHED: Michael E. Boutzoukas, Esquire Post Office Box 2731 Dunedin, Florida 34697-2731 Thomas H. Duffy, Esquire Department of Transportation 605 Suwannee Street Tallahassee, Florida 32399-0450 Mary M. Piccard, Esquire Post Office Box 589 1004 DeSoto Park Drive Tallahassee, Florida 32302-0589 Ben G. Watts, Secretary ATTN: Deidre Grubbs Department of Transportation Haydon Burns Building, MS 58 605 Suwanee Street Tallahassee, Florida 32399-0450 Thornton J. Williams, General Counsel Department of Transportation 562 Haydon Burns Building Tallahassee, Florida 32399-0450

Florida Laws (3) 120.53120.57120.68 Florida Administrative Code (1) 14-25.024
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WOODRUFF AND SONS, INC. vs DEPARTMENT OF TRANSPORTATION, 96-005658BID (1996)
Division of Administrative Hearings, Florida Filed:Tallahassee, Florida Dec. 03, 1996 Number: 96-005658BID Latest Update: Apr. 21, 1997

The Issue The issue in the case is whether the Department of Transportation's rejection of all bids in this case meets the requirements of law.

Findings Of Fact In August 1996, the Department sought bids for several road projects to be constructed in Bradenton, Florida. The projects were identified as State Project Numbers 13160-3512, 13160-6501, 13160-6502, and 13160-6512. The construction project includes utility relocation work to be performed on behalf of the Manatee County, the City of Bradenton, and GTE, the owners of various utilities within the project area. In preparing for road construction projects, the Department enters into joint partnership agreements with utility owners. The agreements identify the responsibilities of the parties related to performance of utility relocation/construction work related to the road project. Essentially, the owner and Department determine an estimated cost for the utility construction which the owner places into escrow and the Department assumes the responsibility for obtaining bids for the utility work. In the event that the bid exceeds the escrowed estimated cost, the utility owner may withdraw from the agreement. Upon such withdrawal, the joint partnership agreement provides that the owner may perform the work itself or the Department can pay the amount in excess of that which the owner has escrowed. If the Department agrees to pay the "excess" cost, the utility work remains included in the bid project. If the Department does not pay the "excess," the work is performed by the utility owner in accordance with the Department's construction schedule, and is deleted from the final contract negotiated with the winning bidder. Six companies filed bids in relation to the projects at issue in this proceeding, including Gator Asphalt Co., APAC- Florida, MacKenzie E.T. Company, Westra Construction Corporation, Smith and Co., Inc., and the Petitioner. The Petitioner's bid of $6,586,034.13 was the low bid submitted. The Petitioner has been properly prequalified by the Department to perform the work that is the subject of the bid at issue in this proceeding. The date upon which the bids were opened is unclear, but by October 4, 1996, the bids had been opened and tabulated. By letter dated October 4, 1996, the Department notified the City of Bradenton of the bid tabulation. Although the estimated cost of work to be performed on behalf of the city was about $400,000, the letter indicates that the total amount of the deposited escrow should be $534,160.50. The letter provided a deadline of October 10 to provide certification to the Department that the funds had been escrowed. Although the Department's letter of October 4 does not address whether the Department was willing to pay the "excess," the request for additional city funds indicates that the Department was not offering to pay the additional costs associated with the work. By letter dated October 9, 1996, the City of Bradenton withdrew its participation from the project. The city portion of the work was State Project Number 13160-6501. The Department's technical review committee met on October 9, 1996. The committee reviews bid proposals and makes a recommendation to the awards committee. There is no reliable evidence of what occurred during the technical review committee meeting. No one who attended the technical review committee meeting testified at the hearing. At the hearing, a witness who did not attend the meeting reviewed minutes of the committee meeting and testified as to what the minutes appeared to indicate. The minutes were not offered into evidence. The awards committee met on October 15, 1996. There is no reliable evidence of what occurred during the awards committee meeting. No one who attended the awards committee testified at the hearing. Despite the lack of information as to what occurred during the committee meetings of October 9 and 15, the evidence establishes that the Department made no attempt to recalculate the bid amounts after the City of Bradenton withdrawal. On November 4, 1996, the Department posted notice of its intention to reject all the bids for State Project Numbers 13160-3512, 13160-6502, and 13160-6512. Four bids exceeding the maximum acceptable bid established by the Department were rejected. Two bids, including the Petitioner's, were rejected as nonresponsive for failing to meet requirements related to utilization of "Disadvantaged Business Enterprises" (DBE) in the project. The Petitioner filed a timely protest of the Department's proposed rejection of all bids. The Department requires that each bid proposal either meet specific goals for DBE utilization or include an adequate "good faith effort" package identifying the efforts made by the bidder to meet the goal. The DBE goal for these projects was 12 percent of the total bid amount. Failure to either meet the DBE goal or submit an adequate "good faith effort" package renders a bid submittal nonresponsive. The evidence establishes that the Petitioner's bid was nonresponsive for failing to meet the DBE requirements. The parties have stipulated that the Petitioner's proposal did not include an adequate "good faith effort" package. The Petitioner's bid identifies DBE participation as 11.3 percent of its total bid. The Petitioner's total bid amount included the utility work for the City of Bradenton. The Petitioner asserts that a specification set forth in the bid package requires that the Department recalculate the bid proposals by deleting the City of Bradenton work from the project. Article 3-1 of the Supplemental Specifications issued as part of the bid package at issue in this proceeding, states as follow: The Department reserves the right to delete the bid portion of the utility relocation work from the Contract. Deletion of any utility relocation work from the Contract will require the Contract bid tabulations to be recalculated based on the remaining project quantities. According to calculations made by the Petitioner, reducing the amount of his total bid by the cost of utility work related to the City of Bradenton, results in his DBE participation rising to 11.9777 percent of the revised total. The DBE reporting form supplied to bidders by the Department states that the "[g]oal may be rounded to the nearest tenth percent," indicating that his 11.977 percent could be rounded up to 12 percent. The Petitioner asserts that the withdrawal of the City of Bradenton from the project and the rounding of the goal results in his bid meeting the DBE requirement of 12 percent. The language of Article 3-1 of the Supplemental Specifications is applicable, not to bid proposals, but to the contract negotiated between the successful bidder and the Department. In practice, the Department has implemented this provision according to the specification language. Items specifically related to withdrawn utility relocation work are deleted from the contract negotiated with the successful bidder. The evidence fails to establish the Petitioner is entitled to recalculation of his bid proposal.

Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is recommended that the Department of Transportation issue a Final Order dismissing the protest filed by the Petitioner in this case. RECOMMENDED this 18th day of February, 1997, in Tallahassee, Florida. WILLIAM F. QUATTLEBAUM Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32301-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 18th day of February, 1997. COPIES FURNISHED: Pamela Leslie, General Counsel Department of Transportation 562 Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0450 Ben G. Watts, Secretary Department of Transportation Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0450 Brant Hargrove, Esquire 1026 East Park Avenue Tallahassee, Florida 32301 Mary S. Miller, Esquire Department of Transportation Haydon Burns Building 605 Suwannee Street, Mail Station 58 Tallahassee, Florida 32399-0458

Florida Laws (1) 120.57
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UNISYS CORPORATION vs. DEPARTMENT OF HEALTH AND REHABILITATIVE SERVICES, 88-002525BID (1988)
Division of Administrative Hearings, Florida Number: 88-002525BID Latest Update: Jul. 26, 1988

The Issue Whether the bids of Unisys and NCR were responsive to the Invitation to

Findings Of Fact Overview Invitation to Bid VH-2 (ITB) sought bids for full service hardware maintenance for approximately 3,500 computer terminals, printers, microcomputers and associated components and peripheral devices, located throughout the state. Upon acceptance of the lowest responsive bid, the State would enter into a six- month contract, renewable for two twelve-month periods. HRS officials considered whether to acquire the services through a Request for Proposal process or through an Invitation to Bid. The decision was made to pursue an ITB. The ITB was prepared by Harriet Parker, who, at the time, was the administrator of the HRS Data Center in Jacksonville, Florida. Ms. Parker's employment with HRS ended after the bidder's conference and after she had answered bidder's questions which came in after the bidder's conference. Ms. Parker was not employed by HRS when the bids received in response to the ITB were received. HRS issued the ITB on January 22, 1988. After a bidder's conference was held, HRS, on March 1 and 9, 1988, issued addenda to the ITB, which contained changes to the ITB. Additionally, the addendum issued on March 1, 1988 contained written responses to questions submitted by potential bidders. The ITB and addenda were reviewed by the Information Technology Resource Procurement Advisory Council. Five companies submitted bids: RAM Systems, Inc., Data Access Systems, Inc., Instrument Control Services, Inc., NCR, and Unisys. The bid of RAM Systems, Inc. was rejected as untimely. The remaining four bids were timely filed. Ms. Parker appointed three HRS employees to serve on the bid evaluation committee which reviewed the bids received in response to the ITB. The three employees were: Vincent C. Messina, a Data Communications Specialist III, James R. Hall, a Data Processing Manager II, and Hilda Fowler Moore, an administrative assistant. All three committee members were employees at the HRS Data Center in Jacksonville, Florida. At its first meeting, the committee reviewed the four bids to determine if they were in the format requested in the ITB. This review was solely as to form, instead of content. After the meeting, each committee member prepared cost extension sheets for each bid, in accordance with the method set forth in the ITB, to determine which bidder was the lowest. At the next meeting, the committee members compared the cost extension sheets each had prepared. While there were differences between them, each member had the bids ranked in the same order. The committee determined that Data Access Systems, Inc. was the lowest bidder, NCR the next lowest, then Unisys and, finally, Instrument Control Services, Inc. After further review, the bid of Data Access Systems, Inc. was rejected as nonresponsive. The committee then decided to concentrate their review on the bids of NCR, now the lowest bidder, and Unisys, now the second lowest bidder. The bid of Instrument Control Services, Inc. was laid aside, since it was the high bidder. After reviewing the content of the NCR and Unisys bids, the committee determined that both bids were responsive. Since NCR was the lowest bidder, the committee decided NCR should be awarded the bid. The Notice of Intent to award the bid was posted on April 5, 1988. Unisys timely filed its notice of intent to protest, and its formal written protest and request for a hearing. Review Standards Used by Committee The committee was not given any direction on how to evaluate the bids, and no instructions on how to determine a bid was responsive. The committee members never discussed the meaning of the terms "minor irregularity or "material deviation" and were never told the meaning of these terms. Finally, the committee members neither sought nor received legal advice on how to evaluate certain provisions contained in the bids. Mr. Messina interpreted his role on the committee to be to compare the items in each bid with the ITB. Reviewed his role as determining whether the wording of the bid would be sufficient to supply the State with a viable service agreement. His determination of whether a bid was responsive was not based on a word for word comparison of the bid with the ITB, but on an overall impression of what each bid contained. Mr. Hall reviewed the bids to make sure that each bidder was meeting what the ITB required. His main focus in reviewing each bid was whether the wording of the bid gave that bidder an advantage over another bidder. At the time of reviewing the bids, Ms. Fowler Moore's understanding of what constituted a "material deviation" was that it would be a major change which would affect an issue or an item in some way. She understood a "minor irregularity" to be a lesser difference. The committee as a group believed that there would be further review of their decision and that some differences between the bids and the ITB would be worked out later by others. The committee members did not think that their decision would be the final decision. The ITB, General Provisions The ITB, including attachments and the two addenda consisted of over 150 pages. The ITB contained a number of mandatory requirements. The ITB explained these as follows: MANDATORY REQUIREMENTS Introduction The State has established certain requirements with respect to bids to be submitted by bidders. The use of "shall", "must" or "will" (except to indicate simple futurity) in this Invitation To Bid indicates a requirement or condition from which a material deviation may not be waived by the State. A deviation is material if, in the State's sole discretion, the deficient response is not in substantial accord with this (sic) Invitation To Bid requirements, provides an advantage to one bidder over other bidders, has a potential significant effect on the quantity or quality of items bid, or on the cost to the State. Material deviations cannot be waived. The words "should" or "may" in this Invitation To Bid indicate desirable attributes or conditions, but are permissive in nature. Deviation from, or omission of, such a desirable feature, will not in itself cause rejection of a bid. (Emphasis in original) On page 5, the ITB provided that "any Bid which fails to meet the mandatory requirements stated in this Invitation to Bid shall be rejected." On page 1, the ITB provided that "Bids containing terms and conditions conflicting with those contained in the invitation to bid shall be rejected. On page 6, the ITB, in describing the format to be used, provided that "there is no intent to limit the content of the Bid. Additional information deemed appropriate by the bidder should be included." The addendum issued on March 1, 1988, contained the following: Q. Can a bid contain options that HRS will consider, providing all mandatories are met? If all mandatories are met, bidder may submit options for HRS consideration. These need to be clearly identified in a separate section of the bid. The bid price should not be based on HRS acceptance of options. The ITB contained the standard language that "Any questions concerning conditions and specifications shall be directed in writing . . . for receipt no later than ten (10) days prior to the bid opening," and gave bidders the opportunity to dispute the reasonableness, necessity and competitiveness of the terms and conditions of the ITB. On page 3, the ITB provided: Contractual Mandatories A bidder's response to this Invitation To Bid shall be considered as the bidder's formal offer. The signing of the contract by the Department shall constitute the Department's written acceptance of the successful Bid and a copy of the signed contract shall be forwarded to the successful bidder. The contract for services required by this Invitation To Bid is contained herein. The contract included in the -ITB incorporated and made part of the contract both the ITB and the successful bidder's bid. Comparison of the NCR Bid with the ITB The NCR bid contained numerous changes to the provisions of the ITB. These changes are set forth below. Supplemental Bid Sheets Pages 146 and 147 of the ITB consisted of a form which each bidder was to complete and return as part of its bid. The form stated that "each designated paragraph in this Invitation to Bid must be addressed. The bidder must initial the designated item indicating concurrence." The form set forth 47 items. The layout of the form, showing the first two items for illustration purposes, was as follows: TITLE RESPONSE INITIALS Introduction Understood and Agreed Mandatory Requirements Understood and Agreed The NCR bid contained initials in the appropriate place for all items. On thirteen of the items, NCR's bid contained the words "as per Bidder's Proposal" typed under the words "Understood and Agreed" as shown in the following example: TITLE RESPONSE INITIALS Introduction Understood and Agreed as per Bidder's Proposal Mandatory Requirements Understood and Agreed as per Bidder's Proposal The words inserted by NCR related to the items in the line directly above the inserted words. The committee members interpreted the insertion of the words "as per Bidder's Proposal" in different ways. Mr. Messina interpreted it to mean that NCR was agreeing to the terms of the ITB and was offering the State something better and different which the State could accept or reject. He thought the differences would be worked out later; that the differences were more a "legal matter" than something the committee could solve. Mr. Hall interpreted it to mean that NCR agreed to the provisions of the ITB as some of the provisions had been changed by NCR. Ms. Fowler Moore interpreted it to mean that the items for which "as per Bidder's Proposal" was added were qualified and the ones where nothing was added were not qualified. Limitation of Remedies The addendum issued on March 1, 1988 contained two new pages which became part of the contract section of the ITB. These new pages were numbered 23A and 23B. In its bid, NCR changed the wording of page 23A. The relevant portions of page 23A of the NCR response are set forth below: Limitation of Remedies Contractor's entire liability and the State's exclusive remedy shall be as follows: In all situations involving performance or non-performance of machines or programming maintained or serviced [furnished] under this Agreement, the State's remedy is (1) the adjustment or repair of the machine or replacement of its parts by Contractor, or, at Contractor's option, replacement of the machine [or correction of programming] errors, or (b) if, after repeated efforts, Contractor is unable to install the machine or a replacement machine, model upgrade or feature in good working order, or to restore it to good working order, or to make programming operate, [all as warranted,] the State shall be entitled to recover actual damages to the limits set forth in this Section. * * * Contractor's liability for damages to the State for any cause whatsoever, and regardless of the form of action, whether in contractor or in tort including negligence, shall be limited to the greater of $100,000 or the actual amount laid by the State to the Contractor for the services provided under this Agreement [appropriate price stated herein for the specific machines that caused the damages or] that are the subject matter of or are directly related to the cause of action.... Contractor shall hold and save the State harmless for any and all suits and judgements against the State for personal injury or damage to real or personal property up to the value of the Agreement at the time this Agreement is terminated caused by Contractor's tortious conduct in the performance of this Agreement.... (Underlined words were added by NCR, brackets indicate words NCR struck through). The committee members felt that these changes either were necessary, enhanced the language in the ITB, or would not have much of an effect on the contract. From a legal standpoint, however, the committee was not sure what the changes meant. The committee members felt that they were not qualified to determine whether the changes constituted a material deviation and believed that decision would be made by someone else after the committee was finished. The changes made by NCR to the first paragraph help to clarify the document to meet the provisions of the ITB. The ITB was not for the purchase of machines or programming, but for the servicing of hardware. The changes made to the second paragraph enhance HRS's position and help to clarify the language. HRS's position is enhanced because under the ITB language the limitation would have been the greater of $100,000 or $0 since the ITB did not contain prices for specific machines. Again, the stricken language would apply to a purchase agreement and not to a service contract. The change to the third paragraph has the effect of nullifying the hold harmless clause, since "the value of the Agreement at the time this Agreement is terminated" is zero. Bid Bond On page 3, the ITB required bidders to submit a bid bond or bid guarantee in the amount of $10,000. If the successful bidder failed to execute a contract within ten days after notification of award, the bid guarantee was to be forfeited to the State. The bid bond submitted by NCR contained the following language: NOW, THEREFORE, the condition of the obligation is such that, if the said principal shall be awarded the said contracts and shall within (*) days after receiving notice of the award enter into a contract. . . *to be negotiated between said principal and said obligee. Since NCR's bid bond left the period of time within which to enter into a contract to be negotiated, the bid bond was not in compliance with the ITB's requirements. Invoicing On page 21, the ITB set forth certain requirements for invoices. One of the requirements was that "the invoice will include a detail list of costs for parts replaced listed on each malfunction incident report." This information was important to Ms. Parker in order for HRS to know what it was paying for, even though the contract price included both parts and labor. NCR's bid had the quoted language stricken through. On page 12, the ITB required that "Invoices for payment must be submitted to the State monthly, with at least the same level of detail found in Attachment A." Page 13 of NCR's bid, under the caption "Invoices," stated that "NCR agrees to conform with the existing payment plans as established in previous agreements between NCR and the State of Florida Comptroller's Office." The committee members did not think that the requirement that the invoice contain the cost of replacement parts was important. They assumed that they would not receive this information from the winning bidder, since they were not receiving it from the existing contractor. The committee members did not know what the previous agreements were between NCR and the Comptroller's Office. The committee assumed that NCR's response would be sufficient to meet HRS's needs. Configurations The addendum issued on March 1, 1988, contained a new page 26 for the ITB, which contained the following language: Full service maintenance for microcomputers will include the following configuration: Up to 768KB RAM plus up to one memory expansion card, up to two 5 1/4 inch 360KB or up to two 1.2MB floppy disk drives, up to 20MB hard disk, enhanced graphics capability, monochrome or color monitor, and an ICC card if required for network communications. This full service maintenance configuration was developed to include features that are basic to microcomputers connected to the HRS Data Communications Network and are, therefore, the maintenance responsibility of the Data Center. Machine features that are not included in this configuration are not covered by the maintenance contract resulting from this ITB. Enhancements that may be on a microcomputer covered by the maintenance contract but would not themselves be covered include, but are not limited to: local area network (LAN) cards, 40MB hard disk, 3 1/2 inch floppy disk drive and Bernoulli Boxes. Maintenance of these enhanced features are the responsibility of the user. (emphasis added) NCR, in listing its price for servicing certain equipment, assumed configurations that are less than those stated in the ITB. For example, NCR did not include hard disks in its configuration for some equipment. Hard disk drives are some of the more expensive items to repair and replace in computers. The committee members did not compare the configurations in the NCR bid with those in the ITB. Therefore, they did not take into account the differences between the two in determining that the NCR bid was responsive. Termination of the Contract Page 11 of the ITB provided that: The State reserves the right to cancel maintenance coverage for any single piece of equipment or any number of pieces of equipment or the entire contract upon thirty (30) days written notice to the Contractor. NCR in its bid provided that: Withdraw/Termination Neither party shall be deemed to be in default of this agreement, or of any contract entered into pursuant to it unless, as a condition precedent thereto, the other party shall have first given written notice describing with reasonable detail the condition which it perceives to be a default as outlined in Attachment D and the Bidder's Proposal, and within sixty (60) days following receipt thereof, the party receiving such notice shall have failed or refused to correct such condition. Both parties shall make all reasonable efforts to correct any problems which may lead to termination of the agreement. The evaluation committee noticed this difference, and felt that this was an area to be looked at by other persons who would do a final review. Engineering Changes The ITB, on pages 12 and 13 stated that: Cost of maintenance shall include installation of all announced engineering changes applicable to any piece of equipment covered by this contract. All engineering changes which the manufacturer considers mandatory or engineering changes which the manufacturer or the Contractor considers necessary for safety reasons must be installed as soon as possible. Contractor shall notify the State in writing of all mandatory and safety related engineering changes. Engineering changes which the manufacturer recommends but which are neither mandatory nor for safety reasons must be installed within a reasonable period of time after the Contractor has notified the State of such changes and the State has authorized the installation of such changes . . . It is the Contractor's responsibility to determine what engineering changes are available, whether they are mandatory changes, safety changes, or other changes. Furthermore, it is the Contractor's responsibility to initiate the installation of all such changes. (emphasis added) Page 9 of NCR's bid provided that: Engineering Changes should a reliability modification released from an OEM be deemed necessary by NCR, the modification will be performed during the prime shift of maintenance at no additional charge to the State of Florida. The original equipment manufacturers with whom NCR has agreements are responsible for providing notification to NCR on any engineering changes. NCR will make HRS aware of engineering changes when the necessary. information becomes available to NCR. (emphasis added) The committee assumed that if a manufacturer considered an engineering change to be mandatory, NCR would deem it to be necessary and would make this change. Therefore, the committee determined that the NCR language was responsive and would result in the State receiving the service it expected. Malfunction Incident Reports Page 10 of the ITB required that the winning bidder furnish HRS with a written--malfunction incident report upon completion of each maintenance call. The ITB went on to describe ten items which had to be included in the reports. Page 12 of the NCR bid provided the following: Reports NCR has the ability to provide monthly service reports to HRS which summarize the maintenance activity of the account. Such records may include a listing of all equipment covered in the maintenance agreement accompanied by the dates of service calls, number of service calls received per equipment type, description of problem and solution, and the time spent for repair. NCR maintains a comprehensive equipment history file to meet your reporting needs. Reporting procedures will be jointly defined by NCR and HRS. (emphasis added) One member of the evaluation committee did not consider the reports to be an important item. Another member of the committee assumed that HRS would get the information it needed from the reporting procedures to be jointly defined by NCR and HRS once the contract was awarded. Additional Equipment Page 11 of the ITB required that the contractor would be responsible for maintaining all the equipment owned by the State which is of the type set forth in the ITB, regardless of whether the specific piece of equipment is listed in the ITB or subsequently purchased. Equipment of a type not described in the ITB is not part of the agreement. NCR's bid is consistent with this requirement. Also, NCR's bid gives HRS the option of adding equipment of a type not described in the ITB, after NCR evaluates the equipment and agrees to accept it. Principal Period of Maintenance Page 9 of the ITB provided that the "Principal period of maintenance shall be at least from 8:00 a.m. to 5:00 p.m., local time at each site, Monday to Friday, exclusive of holidays observed by the Department." Also, page 17 of the ITB provided that, "Principal Period of Maintenance (PPM)" shall be defined as at least nine consecutive hours per day (usually between the hours of 8:00 a.m. and 5:00 p.m.; local time at the site) as selected by the State, Monday through Friday, excluding holidays observed at the site." Finally, page 19 of the ITB contained language similar to the language in page 9 of the ITB. In the industry, "principal period of maintenance is that period of time during which a customer is buying services, including parts and labor, at a flat rate under a contract with the service provider. Page 8 of NCR's bid provided that "NCR's Principal Period of Maintenance (PPM) is Monday through Friday, 8:00 a.m. to 5:00 p.m., including a one hour meal period." NCR's bid did not change the language contained in page 19 of the ITB, noted above, which became part of its bid. Finally, in its Attachment to the contract provided in the ITB, NCR's bid stated that "the 'Principal Period of Maintenance' shall be defined as Monday through Friday, 8:00 a.m. to 5:00 p.m., exclusive of a one hour meal period, excluding holidays." The evaluation committee discussed the differences in the language between the NCR bid and the ITB dealing with principal period of maintenance and decided that the NCR bid was responsive. Response Time, Loaner Equipment and Penalties Page 9 of the ITB required the following: 5. Contractor must provide on site response within four (4) hours in metro areas and six (6) hours in all other areas at a 95 percent response level. Metro and non-metro locations are listed in Attachment B. If the response level falls below ninety-five percent (95 percent) overall for the State on a monthly basis, the Contractor will forfeit ten percent (10 percent) of the monthly maintenance cost per unit for each incident in the month of the occurrence. 7. The Contractor will have the equipment repaired and accepted by HRS Data Center staff or the Contractor will install an equivalent substitute device within six (6) hours after the maintenance begins. Maintenance begins when the Contractor arrives at the site and takes control of the equipment. If the equipment is not repaired or the Contractor does not install equivalent working equipment, the Contractor shall forfeit ten percent (10 percent) of the monthly maintenance cost per unit for each incident in the month of the occurrence. The NCR bid, on pages 8-9, provided the following: Response Time A firm commitment to response time and a stringent set of escalation procedures will be an integral part of NCR's service program for HRS. NCR has a commitment to arriving on-site within four (4) business hours of receipt of call during NCR's Principal Period of Maintenance, for equipment located within metropolitan areas. For non- metropolitan equipment sites, the average response commitment is six (6) hours. NCR understands the State of Florida's objectives to make system availability as high as possible, and we have an internal commitment to help the State meet the goal. Should NCR fail to meet its response and escalation standards as outlined herein, NCR will entertain future negotiations relative to credits and penalties. Because of NCR's response time, repair and escalation procedures, NCR generally does not provide loaner equipment. (emphasis added) The NCR bid then continues, on pages 10-12, under the heading "Escalation/Problem Resolution," to explain the procedures NCR personnel will follow when a machine cannot be restored to good operating condition within set periods of time. The evaluation committee interpreted NCR's bid to mean that NCR would respond within six (6) hours in the non-metro areas, even though the NCR bid stated that "the average response commitment is six (6) hours." The evaluation committee believed that the ten percent (10 percent) penalties set forth in the ITB were irrelevant and not necessary, since the penalties were too low. Therefore, the committee felt that NCR's proposal to negotiate a system of penalties and credits made sense. The committee also believed that, under NCR's escalation procedures, coupled with the statement on page 8 of the NCR bid that "Periodically, a whole unit swap philosophy may be utilized to maximize system uptime," the machines would be fixed within six (6) hours or an equivalent working device (loaner) would be installed. Probationary Period Evaluation Page 145 of the ITB set forth the evaluation criteria which HRS would use to evaluate the contractor's performance during the initial 6-month term of the contract. NCR's bid added language to five of the criteria, as follows: Is the response level of ninety-five (95 percent) maintained consistently each month in all major areas of the State? On the average. Are adequate spare parts available for equipment repair within six (6) hours? Spare carts are generally available within six (6) hours; maximum of twenty- four (24) hours. Is an equivalent substitute device installed if parts are not available or if repair is expected to require more than six (6) hours? Compliance in the following manner: NCR's repair and escalation procedures may result in utilizing a substitute device to maximize system uptime. Are the changes in priorities easily accomplished? As stated, not a quantifiable standard; would prefer substitute language. Are malfunction incident reports received on a timely basis? Compliance defined in Reporting section of Bidder's Proposal. (Underlined words were added by NCR) The committee noted that the NCR bid contained changes to the evaluation language. Implementation of Contract The NCR bid, in Appendix C, contained an implementation schedule calling for service to certain equipment to begin five weeks after the contract was awarded and to the remainder of the equipment nine weeks after the contract was awarded. The ITB, while not explicitly stating when the new contractor was to begin services, appears to contemplate that full service would begin immediately, since it provides for HRS to begin paying maintenance charges on the effective date of the contract. Under the terms of the ITB, the effective date of the contract would be no later than ten days after the award was posted. One member of the evaluation committee, Mr. Hall, believed the new contractor would begin service immediately, which to him meant within a month after the award was made. Execution of Contract The ITB contemplated that the successful bidder execute the contract provided in the ITB within ten days of notification of the award. The NCR bid provided that "Upon mutual agreement of the terms and conditions between our organizations, NCR agrees to execute a contract within ten (10) days." Also, the implementation schedule set forth in Appendix C of the NCR bid provided for the contract to be negotiated and executed between the second and fifth week after notification of the award. Assignment of Contract Page 22 of the ITB provided that "This Agreement is not assignable without the prior written consent of the Customer. Any attempt to assign any of the rights, duties or obligation of this Agreement without such consent is void. In its bid, NCR struck through the word "Customer" and inserted the word "parties." Site Rules and Regulations Page 23 of the ITB stated that: The Contractor shall use its best efforts to assure that its employees and agents, while on the State's premises, shall comply with the State's site rules and regulations. The NCR bid in its attachment to the contract, under the heading "The Rules and Regulations," provided that "Execution of a contract by NCR is contingent upon NCR's review of the State's site rule and regulations." REVIEW OF THE UNISYS BID As stated earlier, the Unisys bid was found to be responsive by the evaluation committee. Unisys agreed to all the performance mandatories of the ITB. The Unisys bid did not contain any deviations from the ITB and was consistent with all the terms and conditions of the ITB. Bid?

Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that HRS issue a final order finding NCR's bid to be nonresponsive and awarding the contract under the Bid No. VH-2 to Unisys. DONE and ENTERED 26th day of July, 1988, in Tallahassee, Florida. JOSE A. DIEZ-ARGUELLES Hearing Officer Division of Administrative Hearings The Oakland Building 2009 Apalachee Parkway Tallahassee, Florida 32399-1550 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 26th day of July, 1988. APPENDIX TO RECOMMENDED ORDER, CASE NO. 88-22525Bid The parties submitted proposed findings of fact which are addressed below. Paragraph numbers in the Recommended Order are referred to as "RO " UNISYS' Proposed Findings of Fact Proposed Finding of Fact Number Ruling and RO Paragraph 1.-14. Accepted. 15.-18. Accepted as set forth in RO34. Accepted. Rejected as a conclusion. But see Conclusions of Law section of this Order. 21.-45. Accepted. 46. Rejected as irrelevant. 47.-52. Accepted. 53. Accepted. See Conclusions of Law section of this Order. 54.-58. Accepted. 59. Accepted except for last two phrases which are rejected. The evidence is inconclusive on whether NCR would have an advantage over other bidders and whether the price of the contract was affected by this provision. 60.-63. Accepted. 64.-65. Rejected. The evidence is inconclusive as to the effect the NOR bid's language would have. See Conclusions of Law section of this Order. 66.-69. Accepted. Rejected. Since, there is no way of knowing the result of the negotiations, one cannot determine if this would result in an unfair advantage or would have an economic impact. Rejected. Delay can occur in any contract. Under the ITB, undue delay would be penalized. 72.-75. Accepted. Rejected as irrelevant. Rejected as irrelevant. The statement may be true, but that is not the situation here. 78.-79. Accepted. 80. First phrase, rejected. NCR did not agree to anything. Second phrase, accepted. 81.-83. Accepted. 84. Rejected as a conclusion and an assumption, since no one knows what the jointly defined procedures would be. 85.-86. Accepted. Accepted as what the committee felt. However, the provisions of the NCR bid dealing with additional equipment are consistent with the ITB. Rejected as contrary to facts found. 89.-90. Accepted. Accepted. See Conclusions of Law section of this Order. Accepted. Accepted. See Conclusions of Law section of this Order. 94.-97. Accepted. 98. First two sentences accepted. Third sentence rejected; the evidence does not show what is included in the payment plans with the Comptroller. 99-102. Accepted. Rejected. The evidence is inconclusive on whether this item affected the price of the bid. Rejected as irrelevant. Rejected as irrelevant. Accepted. Rejected as not supported by the evidence. The NCR bid states that NCR would prefer substitute language. 108.-112. Accepted to the extent they restate the ITB and the NCR bid. However, the implicit conclusion that this is at variance with the ITB is rejected as not supported by competent evidence. 113.-119. Accepted. 120. The introductory paragraph is rejected as a conclusion of law. Subparagraphs A. through are accepted. HRS's Proposed Findings of Fact Proposed Finding of Fact Number Ruling and RO Paragraph 1.-7 Accepted Accepted. Accepted. True but unnecessary. Accepted generally. Accepted. Accepted generally. Accepted generally. Rejected as not supported by the weight of the evidence. First sentence accepted. Second sentence is true as to what the evaluation committee believed. However, the overall service to the State is affected by the NCR bid. True that this is what the evaluation committee determined, believed and concluded. However, the findings of fact made in this RO differ from what the evaluation committee believed. Rejected as contrary to the weight of the evidence. Rejected as contrary to the weight of the evidence. Rejected as contrary to the weight of the evidence. Rejected as contrary to the weight of the evidence. Rejected. While the cost of the services may be the same, less services are provided for in the NCR bid than are called for in the ITB. Rejected as contrary to the weight of the evidence. Rejected as contrary to the weight of the evidence. Rejected. HRS may wish to accept the NCR bid; if it does so, however, it will agree to a different agreement than called for in the ITB. There can be no meeting of the minds when items are left to be negotiated and where the evaluation committee members did cot understand all the provisions of the NCR bid. Rejected. See RO41. Rejected as irrelevant. See also Conclusions of Law. Rejected as irrelevant. Supported by competent evidence, but unnecessary to the decision reached. Also, the fact that this was the first ITB that Ms. Parker ever prepared does not mean that HRS can now disregard its mandatory provisions. Rejected as irrelevant. NCR's Proposed Findings of Fact Proposed Finding of Fact Number Ruling and RO Paragraph 1-6. Accepted Subparagraphs a) through s) are accurate representations of what the ITB contained. However, the first phrase to the effect that the ITB recognized and incorporated concepts of variability is rejected. The ITB was rigid and precise. Accepted. Accepted. Accepted. First sentence, true but irrelevant. Second sentence accepted. RO2. Third sentence, true but irrelevant. Fourth sentence rejected; the ITB is neither ambivalent nor flexible. Fifth sentence rejected as irrelevant and not supported by competent evidence. Accepted. Accepted. Supported by competent evidence but unnecessary to the decision reached. Supported by competent evidence but unnecessary to the decision reached. First two sentences rejected as contrary to the weight of the evidence. Third and fourth sentences rejected as argument and conclusions. First three sentences are accepted as what they are: the evaluation committee's views, beliefs and understandings. Fourth sentence is rejected. The ITB reserved the right "to reject any and all bids or waive any minor irregularity or technicality in bids received." It did not reserve the right to waive any proposed additions or changes which are unacceptable, regardless of how material they may be. Also, the ITB did not provide for further negotiations prior to contract finalization. Fourth sentence rejected; the evidence is inconclusive on what the NCR language means. Rest of paragraph accepted. First, second and fourth sentences accepted. Third sentence rejected as contrary to the weight of the evidence and the words of the ITB. Fifth sentence rejected as irrelevant; while the NCR proposal may be more beneficial to the State it is inconsistent with the ITB. First, second, fourth and seventh sentences accepted. Third sentence rejected as irrelevant. Fourth sentence accepted. Fifth sentence rejected as irrelevant; while NCR's view may be useful, the ITB did not contemplate it. Sixth sentence accepted, but this only refers to controlling and installing the engineering change and not to deciding whether the change should be made. First, and seventh sentences accepted. Second sentence rejected as irrelevant. Third through sixth sentences reflect what NCR proposed, but this is contrary to the requirements of the ITB. Seventh sentence rejected as argument. First three sentences accepted. Fourth sentence rejected as argument. First and second sentences accepted, noting that the four week training period ended eight weeks after the notice of award. Third sentence accepted, but ITB appeared to contemplate immediate service under the contract since it provided for payments to begin upon execution of the contract. Fourth sentence accepted, but the ITB language speaks to ongoing training of the contract and not training specific to this contract. Fifth sentence accepted. Sixth sentence accepted; however, it is unclear whether the ITB contemplated a nine week delay for full implementation of the contract. First, third and sixth sentences accepted. Second, fourth and fifth sentences rejected as contrary to the weight of the evidence. Last sentence rejected as not supported by the evidence. The evaluation team considered the malfunction incident reports unimportant and did not know what the existing payment plans with the Comptroller's office were; therefore, the committee could not know if these plans met HRS's needs. Rest of paragraph accepted, except to note that there is no evidence to show that the payment plans with the Comptroller's office would meet HRS needs, and that, while HRS may now decide that parts costs are not needed, this was a mandatory requirement of the ITB. Rejected as irrelevant. If NCR or any other bidder had a problem with the ITB they could have asked for clarification or could have challenged the ITB for restricting competition. Rejected as irrelevant. 21.c. First and second sentences accepted. Third, fourth and fifth sentences irrelevant; NCR could have asked for clarification or challenged the ITB. Fourth sentence irrelevant. Sixth sentence rejected as irrelevant. Seventh sentence irrelevant and not supported by competent evidence; it is impossible to now determine what NCR would have bid. Accepted. Accepted. The first sentence being the one following the quoted material, which is accepted. First sentence rejected as being contrary to the weight of the evidence. Second sentence accepted. Third sentence rejected as irrelevant; this is the number of calls made in the past. Fourth and fifth sentences rejected as assumptions. Fifth sentence accepted. First, second and third sentences accepted. Fourth and fifth sentences rejected as irrelevant; while these statements may be true, the NCR bid's provisions conflict with the ITB. First sentence accepted. Rest of paragraph rejected as argument and conclusion. First and second sentences accepted. Third sentence rejected as irrelevant. Fourth sentence rejected; while the addendums issued to the ITB maintained February 8th as the last day for submissions and inquiries, the ITB's general conditions stated that inquiries could be sent in 10 days prior to bid opening. The limitation of remedies form was sent to bidders on March 1, 1988; bids were not due until March 29, 1988. Fifth through ninth sentences accepted. Tenth sentence rejected; the language in the NCR bid is clear and does limit NCR's liability. Eleventh and twelfth sentences rejected as irrelevant. Thirteenth sentence rejected; the NCR language does not refer to the value of the remaining contract but to the value at the time of termination, which is zero at all times. Rejected as not supported by competent evidence. The evidence is insufficient to determine whether the person was licensed at the time the bid bond was countersigned. Rejected as irrelevant. Rejected as a recitation of testimony. The evidence shows that Unisys agreed to the ITB provisions requiring a Jacksonville office. Rejected as irrelevant. Unisys agreed to the provisions of the ITB and will be penalized for failure to comply with them. Rejected as irrelevant. First sentence accepted. Second sentence rejected; this is clearly a proper option under the terms of the ITB. Rejected. See ruling on proposed finding of fact 21e. Rejected as irrelevant. COPIES FURNISHED: Edgar Lee Elzie, Jr., Esquire MacFarlane, Ferguson, Allison & Kelly 804 First Florida Bank Building Tallahassee, Florida 32301 Charles R. Holman, Jr., Esquire Unisys Corporation 4151 Ashford, Dunwoody Road, N.E. Atlanta, Georgia 30319 Elaine New, Esquire Assistant General Counsel, HRS 1323 Winewood Boulevard Building I, Room 407 Tallahassee, Florida 32399-0700 Gary P. Sams, Esquire Cheryl G. Stuart, Esquire Hopping Boyd Green & Sams Post Office Box 6526 Tallahassee, Florida 32314 Robert J. Beggs, Esquire NCR Corporation 1700 South Patterson Blvd. Dayton, Ohio 45479 Sam Power, Clerk Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 Gregory L. Coler, Secretary Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700 John Miller, Acting General Counsel Department of Health and Rehabilitative Services 1323 Winewood Boulevard Tallahassee, Florida 32399-0700

Florida Laws (5) 120.53120.54120.57287.012287.057
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BAYWOOD NURSERIES CO., INC. vs DEPARTMENT OF HEALTH, 15-001694RP (2015)
Division of Administrative Hearings, Florida Filed:Tallahassee, Florida Mar. 24, 2015 Number: 15-001694RP Latest Update: Jan. 11, 2016

The Issue This is a rule challenge brought pursuant to section 120.56, Florida Statutes,1/ to the Proposed Rules of the Department of Health (“Department” or “DOH”) 64-4.001, 64-4.002, 64-4.004, and 64-4.005 (the “Proposed Rules”). The main issue in this case is whether the Proposed Rules are an invalid exercise of delegated legislative authority in that the Proposed Rules enlarge, modify, or contravene the specific provisions of law implemented, section 381.986, Florida Statutes; are vague; and/or are arbitrary and capricious. Petitioner also argues that the Proposed Rules impose regulatory costs that could be addressed by the adoption of a less costly alternative. Finally, Petitioner asserts that the Department materially failed to follow the applicable rulemaking procedures and requirements in its promulgation of the Proposed Rules.

Findings Of Fact The Parties The Department is an agency of the State of Florida charged with administering and enforcing laws relating to the general health of the people of the state. § 381.0011(2), Fla. Stat. As part of this duty, the Department is charged with implementing the Compassionate Medical Cannabis Act of 2014 (Act). See § 381.986, Fla. Stat. Baywood is a nursery located in Apopka, Florida, that grows and sells tropical and subtropical, non-cannabis foliage. Baywood has operated as a registered nursery in Florida for more than 30 consecutive years. Baywood is operated by Mr. Hogshead, a nurseryman as defined in section 581.011, Florida Statutes. Baywood intends to submit an application for approval as a medical cannabis dispensing organization under the Act and rules promulgated thereunder. Baywood filed its rule challenge petition (Petition) on March 24, 2015. At the time it filed the Petition, Baywood held a Certificate of Nursery Registration from the Florida Department of Agriculture and Consumer Services (DACS) pursuant to section 581.131, issued for the cultivation of 10,001 to 25,000 plants. However, on April 10, 2015, DACS issued Baywood a Certificate of Nursery Registration to cultivate more than 400,000 plants. Background In 2014, the Florida Legislature passed Senate Bill 1030, titled the “Compassionate Medical Cannabis Act of 2014.” See chapter 2014-157, Laws of Florida (pertinent portions codified as section 381.986, Florida Statutes). The Act provides for the regulation and use of low-THC cannabis to provide relief for certain patients with debilitating diseases, when ordered by a Florida physician. The Act authorizes licensed physicians to order low-THC cannabis, or “Derivative Product,” for qualified patients under specified conditions, primarily those suffering from cancer or other conditions that produce severe and persistent seizures and muscle spasms. The Department has the majority of the responsibility for implementing the Act. The Act requires the Department to establish an Office of Compassionate Use and a compassionate use registry and to authorize the establishment of five dispensing organizations to cultivate, process, and dispense Derivative Product to qualified Florida patients. See §§ 381.986(1)(a) - (5), Fla. Stat. The Act and the proposed rules are unique in that the cultivation, processing, and dispensing of cannabis have never been legal in Florida and, except to the extent five dispensing organizations are licensed to do so with Derivative Product, will remain illegal. § 381.986, Fla. Stat. The proposed rules establish a regulatory framework implementing the Act by, among other things, creating dispensing organization application, approval, and authorization procedures. Proposed rule 64-4.001 provides definitions for certain words and phrases pertinent to the Act’s implementation, including “Applicant,” “Approval,” “Certified Financials,” “Derivative Product,” “Dispensing Organization,” and “Financial Statements.” Proposed rule 64-4.002 delineates the requirements for the dispensing organization application process, including the application fee, how an applicant may demonstrate that it best meets the statutory criteria to become a dispensing organization, the application itself and application scoring form (or scorecard), and a sample performance bond form. Proposed rule 64-4.004 sets forth the circumstances under which dispensing organization approval will be revoked. Proposed rule 64-4.005 details dispensing organization authorization and facility inspection procedures. The Rule Development Process The Proposed Rules are the Department’s second attempt to adopt rules implementing the Act. The first set of proposed rules (the Prior Rules) was challenged and invalidated in Costa Farms, LLC v. Department of Health, DOAH Case No. 14-4296RP (Fla. DOAH Nov. 14, 2014) (the Prior Final Order). The Department began developing the Proposed Rules through a public rule development workshop held on December 30, 2014. The workshop was attended by approximately 110 people, many of whom offered comments to be considered by the Department in drafting the rules. Due to the complexity of the rules to be developed, and the strong opposition anticipated, the Department decided to use a negotiated rulemaking process to develop the Proposed Rules. The Department also considered and concluded that a balanced negotiated rulemaking committee would help the Department develop mutually acceptable Proposed Rules, because committee members with competing interests could “hash things out.” On January 5, 2015, the Department announced that it would select a negotiated rulemaking committee composed of persons representing the following groups: a nursery that meets the criteria in section 381.986(5)(b)1.; a qualified patient or patient representative; a testing laboratory; a member of the Florida Bar experienced in administrative law; an individual with demonstrated experience in sound agricultural practices and necessary regulation; a physician authorized to order low-THC cannabis products for qualified patients; an individual with demonstrated experience establishing or navigating regulatory structures for cannabis in other jurisdictions; and Department representatives. Through the notice, the Department also invited persons who believed their interests were not adequately represented by the above groups to apply to participate. The Department received approximately 10 requests from nurseries to participate in the committee — none of which came from Baywood. The Department selected committee members that it believed were well informed in their fields and well equipped to bring perspectives for all of the stakeholder groups. The committee included: (1) a qualified grower (one of whom was a certified public accountant) from each of the five dispensing regions; (2) a patient’s parent who worked to get the Act passed to help her daughter; (3) a testing laboratory representative with experience with the testing the committee would be discussing; (4) a physician authorized to order low-THC cannabis products for qualified patients and who had experience in horticulture and cannabis education; (5) two Florida attorneys certified by the Florida Bar as experts in federal and state administrative law who had vast experience with rule challenges; and (6) two persons who had significant experience growing regulated cannabis legally in jurisdictions where that activity is permissible and had significant knowledge of cannabis-growing conditions. The nurseries represented on the committee varied in size, ranging from the largest nursery in Florida to at least one nursery smaller than Baywood. The composition of the committee was balanced: its members held and represented different interests and were not all “of the same mind.” The negotiated rulemaking sessions were held on February 4 and 5, 2015, and lasted for approximately 26 total hours. Committee members were provided with a binder containing the public comments received to date, the statute, and the Prior Final Order. The sessions were mediated by a professional mediator, who ensured that the group addressed each viewpoint or concern expressed by any committee member. The committee went rule by rule, provision by provision, and discussed each paragraph of each rule. Input that ultimately was incorporated into the proposed rules was given by each member — ranging from the growers from all five dispensing regions, to members with experience growing the pertinent cannabis strains, to the administrative law attorneys. The proposed rules published on February 6, 2015, and challenged in this proceeding, are the product of the negotiated rulemaking sessions, as guided by the public rule development workshop, the public comments, the Department’s research, the Act, and the Prior Final Order. No stakeholder group represented by any committee member, the Department included, got everything it wanted in the proposed rules — which underscores that the committee was balanced, that the negotiated rulemaking process worked properly, and that the developed rules reflect the interests of all represented groups. Baywood’s Objections to the Proposed Rules Baywood challenges proposed rules 64-4.001, 64-4.002, 64-4.004, and 64-4.005. Specifically, Baywood takes issue with certain definitions being omitted (rule 64-4.001); the requirement that applicants submit a $60,063 nonrefundable application fee and certified financials with their applications (rule 64-4.002); the requirement of a $5 million performance bond (rule 64-4.002); the application evaluation and scoring process (rule 64-4.002); dispensing organization license denial and revocation procedures (rule 64-4.004); and dispensing organization facility inspection procedures (rule 64-4.005). Definitions Baywood contends that the proposed rules are defective in that although the terms “operator,” “contractual agent,” and “inspection” are used in the proposed rules, none of those terms is defined therein. However, at hearing, Baywood presented no evidence as to why these particular terms should have been defined. The definitions listed in the Proposed Rules were developed in the negotiated rulemaking process, and the five grower representatives believed that the definitions were adequate for their representative groups to understand and know how to comply with the rules. At no time during the rulemaking process did any interested party express concern as to the meaning of the terms Baywood maintains require definition. Further, the Department’s position, which the undersigned agrees is reasonable, is that not every word used in a rule requires a corresponding definition, particularly words that are commonly understood as plain English such as the terms Baywood contends should be defined. The Application Fee The Legislature expressly required the Department to impose an application fee that is sufficient to cover the costs of administering the Act. § 381.986(5)(b), Fla. Stat. Proposed rule 64-4.002(1) requires applicants to submit a $60,063 initial application fee. Baywood contends that the $60,063 fee should be refundable, is excessive, and is based on an estimated number of applicants that is inaccurate. The committee determined the application fee by dividing the total cost to the Department of administering the Act by the anticipated number of applicants for a dispensing organization (D.O.) approval. The committee estimated that 15 nurseries would apply for D.O. approval. Baywood asserts that the fee should be based on 99 applicants rather than the Department’s estimated 15, based upon a document generated by the Department of Agriculture and Consumer Services (DACS). However, the document Baywood relies upon includes the caveat that the “information is based on [DACS]’s best available records and was prepared in response to media inquiries and public records requests. The inclusion of a nursery on this list is NOT a determination of eligibility for licensure as a medical marijuana dispensary pursuant to section 381.986, Florida Statutes.”3/ There is no evidence in this record that all, or even a significant portion, of the nurseries appearing on the DACS list are expected to apply to become D.O.’s. There was no evidence introduced by Baywood substantiating its allegation that a significant number of those listed nurseries have a desire or the wherewithal to apply for approval as a D.O. The application fee was derived from the Revised SERC. The Department calculated the application fee by determining the estimated costs of implementing section 381.986 and dividing that number by the estimated number of D.O. applicants. In the Revised SERC, the Department stated that the expected regulatory cost imposed by the Proposed Rules was $900,945. The Revised SERC also set forth the estimated number of applicants, which was derived by consensus of the negotiated rulemaking committee. The Department asked for input from the grower members from the five dispensing regions, who were familiar with the nurseries in their region — which they compete with on a daily basis. The committee discussed the grower members’ knowledge of the nurseries that exist in their region (including competitors), the likely requirements for approval as a D.O., the risks associated with underestimating the number of applicants, and section 381.986(5)(b)1.’s requirements, and determined a reasoned and credible estimate of how many qualified nurseries would apply to become D.O.’s. If the Department overestimates the number of applicants — say, by assuming that a significant portion of those nurseries appearing on the DACS list will apply — the application fees could be insufficient to cover the Department’s costs of administering the Act, in violation of the Legislature’s imperative. § 381.986(5)(b), Fla. Stat. For example, if the Department used a 30-applicant estimate, the fee would be approximately $30,500 ($900,945 divided by 30); if only 15 nurseries applied, as estimated by the Department, the Department would recover only $457,500 — less than one-half of the expected costs of administering the Act and therefore less than one-half the sum the Act mandates the Department recover from the application fees. On the other hand, if the Department underestimates the number of applicants and captures more than its costs of administering the Act, the Department would still be in compliance with the statutory mandate.4/ Certified Financials A D.O. applicant must be able to demonstrate the financial ability to maintain operations for the duration of the 2-year approval cycle, including the provision of certified financials to the Department, under the express terms of the Act. An approved applicant must post a $5 million performance bond. § 381.986(5)(b)(5), Fla. Stat. Proposed rule 64-4.001(6) defines “Certified Financials” as “[f]inancial statements that have been audited in accordance with Generally Accepted Auditing Standards (GAAS) by a Certified Public Accountant, licensed pursuant to Chapter 473, F.S.” Proposed rule 64-4.002(2)(f)(1) requires that an applicant for a D.O. approval provide to the Department, as part of its completed application form, proof of “[t]he financial ability to maintain operations for the duration of the 2-year approval cycle, including the provision of Certified Financials to the department,” including “Certified Financials issued within the immediately preceding 12 months.” Baywood contends that rule 64-4.002(2)(f)’s requirement that an applicant submit as part of its application certified financials issued within the immediately preceding 12 months is contrary to the Act, contrary to industry standard, and financially burdensome to applicants. Baywood contends that the Act instead requires certified financials to be submitted by a nursery only after the nursery is selected to be a dispensing organization. The Department, on the other hand, interprets the Act as requiring certified financials to be submitted with the application, as part of the submittal package offered to demonstrate the applicant’s financial ability to maintain operations for the duration of the 2-year D.O. approval cycle. The Department consulted with Deborah Curry, President-CEO of the Florida Institute of Certified Public Accountants, and was guided by the Prior Final Order when developing the certified financials portions of the rules. The Department’s interpretation of the Act as requiring certified financials to be submitted with the application is consistent with the testimony of expert Jeff Barbacci, a Florida-licensed certified public accountant who routinely works with certified financials, also known as “audited financial statements.” In layman’s terms, “financial statements” are an accounting summary of the activity a business uses to create revenue (income statement); the expenses the business incurs (cash flow statement); a balance sheet, which is the cumulative results of that activity since the business’s inception; and notes that help better explain the activities. “Certified financials” are financial statements that include a certified public accountant’s opinion whether the financial statements are fairly presented in all material respects in accordance with generally accepted accounting principles. Proposed rule 64- 4.001 defines both the terms “financial statements” and “certified financials.” The “financial statements” definition mirrors the definition used by the Florida Department of Business and Professional Regulation, Board of Accountancy, an industry standard definition. The “certified financials” definition is also an industry standard definition routinely used and understood in the field of public accounting. According to the credible testimony of Mr. Barbacci, certified financials can be a forward-looking tool for assessing financial strength, as contingent liabilities are considered. And there is a presumption with certified financials that the business under scrutiny has the ability to continue as a viable entity for at least 12 months after issuance of the auditor’s report. Notably, according to Mr. Barbacci, the type of business being evaluated is immaterial for the purposes of a certified financial analysis. Significantly, because an industry standard is applied, one set of certified financials is comparable to another set. That industry standard is the “generally accepted auditing standards” prescribed by the American Institute of Certified Public Accountants, and delineates what evidence an auditor must examine in developing an opinion. Proposed rule 64-4.002(2)(f)’s requirement of certified financials for the preceding 12 months comports with the Act and allows the Department to evaluate applicants on a one-to-one, standardized basis. From certified financials, the Department can determine whether an applicant is a financially unstable business, or is financially strong based on the applicant’s available cash, liquidities relative to liabilities, positive or negative capital, and debt. Mr. Barbacci’s credible, expert opinion was that the Act’s requirement that an applicant demonstrate the “financial ability to maintain operations for the duration of the 2-year approval cycle” means the Legislature is requiring applicants to provide a package of information that indicates the ability to maintain operations, and part of that package is certified financials that provide a historical view. He further opined that the 13 other items required by rule 64-4.002(2)(f) (such as the applicant’s projected two-year budget) work in concert with certified financials to help the Department evaluate the applicant’s financial position and thus ability to perform under the Act. For example, the certified financials help the Department determine whether the applicant has the ability to make its projected budget possible. Baywood contends that in order to attain certified financials, there must be a starting inventory and an ending inventory, and where it is not a common industry standard to maintain such inventories from the outset of business, it is nearly impossible for an applicant to go back in time for 12 months to speculate regarding the same. Baywood’s contention that it is not industry standard practice to maintain starting and ending inventories was credibly refuted by the testimony of committee member Pedro Freyre, whose role as vice president of foliage at Costa Farms, LLC, involves overseeing inventory tracking. Mr. Freyre holds an MBA Degree from Dartmouth College. He testified that Costa Farms tracks all its plants as a matter of course and has done so for many years. In fact, at any given moment, Costa Farms can determine how many plants it has in a given location at any given facility, notwithstanding the constant fluctuations of inventory. Baywood also asserts that the cost to acquire certified financials as required by the proposed rule is approximately $125,000.00 per year, an overly burdensome requirement for applicants. Mr. Freyre also refuted this contention, testifying that the cost of obtaining certified financials ranges from $10,000 for a small nursery such as Baywood, to upwards of $80,000 for Costa Farms, which is the largest nursery in Florida. Costa Farms, Mr. Freyre testified, has for decades had certified financials prepared annually as part of its regular business operations, and Mr. Freyre is aware of several “small” nurseries that do the same. The issue of whether the certified financials should be required at the time of application was considered at length by the negotiated rulemaking committee. The committee determined that the certified financials would enable an historical analysis of the applicant’s financial operations, and would serve as a necessary “gating constraint,” as an applicant’s ability to start and continue operation as a D.O. is predicated and contingent on the company’s financial ability to perform under the Act. Terms and Conditions of the Performance Bond The Act mandates that D.O. applicants, upon their approval, secure a $5 million performance bond. § 381.986(5)(b)5, Fla. Stat. However, the Act omits any definition of the specific terms and conditions that must accompany the bond. Proposed rule 64-4.002(5) provides, (e) Upon notification that it has been approved as a region’s Dispensing Organization, the Applicant shall have 10 business days to post a $5 million performance bond. The bond shall: Be payable to the department in the event the Dispensing Organization’s approval is revoked; Be written by a surety company licensed by the Florida Office of Insurance Regulation; Be written so that the nursery name on the bond corresponds exactly with the Applicant name; If a bond is canceled and the Dispensing Organization fails to file a new bond with the department in the required amount on or before the effective date of cancellation, the Dispensing Organization’s approval shall be revoked. Proposed rule 64-4.002(5)(g) further provides, “The surety company can use any form it prefers for the performance bond as long as it complies with this rule” and includes a sample form “[f]or convenience.” According to the Department’s representative, Patricia Nelson, it is not mandatory for applicants to use the form, and a different bond would not be rejected as long as the bond bonded performance and complied with the statute and rule. Baywood contends that rule 64-4.002(5)(e)’s performance bond provision is overly burdensome and inequitable given the alleged difficulty companies will have in obtaining a bond where all marijuana activity is a federal crime. Baywood also contends the bond provision should include exceptions for circumstances beyond a dispensing organization’s control, such as hurricanes and other “acts of God,” and that the bond should be invoked only upon revocation of a dispensing organization’s registration. Baywood further questions how invocation of the bond would be applied — for example, how the amount of damages would be determined and what constitutes a valid recoverable cost? The Department reasonably interprets the Act as requiring a performance bond that guarantees performance and does not carve out exceptions that undermine the purpose of the bond. The Department does not believe it has the authority to create such exceptions, including exceptions accounting for enforcement of federal laws relating to cannabis. Similarly, the Department does not believe it has the authority to include in the rules a process for a dispensing organization to appeal if it believes the bond was improperly invoked. Further, the Department is cognizant of the fact that the dispensing organization would have a right to administratively challenge bond invocation as agency action. In developing its position on the bond requirements of the statute and in drafting the rule’s bond provision, the Department considered the bond-related conclusions in the Prior Final Order. Under the Prior Rules, the performance bond was conditioned solely on the expense of destroying low-THC cannabis inventory if the dispensing organization failed to perform or failed to destroy its inventory when required. Costa, DOAH Case No. 14-4296RP, ¶ 64. The Prior Final Order concluded that the Prior Rules ignored the potential significant delays in appointing a new dispensing organization and having it become operational should a dispensing organization default, and a conclusion that the Prior Rules “dilute[d] the purpose and effect of the required performance bond to the point that ‘performance’ [was] not being bonded.” Id. ¶¶ 65, 110. The Department also consulted with a bond brokerage firm when drafting the Proposed Rules. The brokerage firm, including its attorneys, provided input that helped the Department draft a sample bond form that complies with the Act and the rule and would be palatable to sureties. The bond provision was discussed during the negotiated rulemaking sessions, and none of the growers on the committee — regardless of their nursery’s size — voiced any objection to the bond rule or the bond form. Biennial Renewal Requirements The Act mandates that the Department “shall develop an application form and impose an initial application and biennial renewal fee that is sufficient to cover the costs of administering this section.” In its Proposed Final Order, Baywood argues that applicants are entitled to know the financial burden to be imposed by the renewal fee, and that the failure to include renewal costs and fees in rule 64-4.003(4) is in contravention of the Act. At hearing, the undersigned took official recognition of the Department’s published withdrawal of proposed rule 64- 4.003 which addressed the biennial renewal requirements for D.O.’s. Accordingly, Baywood’s challenge to proposed rule 64- 4.003 is moot. To the extent Baywood faults the remaining proposed rules for failing to include mention of the renewal fee, the undersigned notes that the Department will have at least two years to determine the appropriate amount of the renewal fee. In doing so, the Department will be required to take into consideration the cost of administering the Act during that period, as well as the amount of revenue received from the initial application fees. Baywood’s challenge to the proposed rules based upon the absence of the biennial renewal fee amount is rejected, since approved D.O.’s will have the option to renew their D.O. approval or not, once the amount of the renewal fee is determined and announced by the Department. Application Evaluation and Scoring Proposed rule 64-4.002(2) lists the seven statutory criteria that an applicant must demonstrate to become a dispensing organization: the technical and technological ability to cultivate and produce low-THC cannabis; the ability to secure the premises, resources, and personnel necessary to operate as a dispensing organization; the ability to maintain accountability of all raw materials, finished products, and any byproducts to prevent diversion or unlawful access to or possession of these substances; an infrastructure reasonably located to dispense low-THC cannabis to registered patients statewide or regionally as determined by the department; the financial ability to maintain operations for the duration of the two- year approval cycle; that all owners and managers have been fingerprinted and have successfully passed a level 2 background screening pursuant to section 435.04, Florida Statutes; and the employment of a medical director who is a physician licensed under chapter 458 or chapter 459, Florida Statutes, to supervise the dispensing organization’s activities. See § 381.986(5)(b), Fla. Stat. These criteria are carried over into the dispensing organization application incorporated into the rule in the form of five categories and subcategories developed during the negotiated rulemaking sessions. The rule also lists for most statutory criteria numerous “items,” also developed in part by the negotiated rulemaking committee, which will help the Department assess each applicant’s ability to meet the statutory criteria. The application reiterates these items under the five categories and the subcategories. For example, the rule, under the statutory criterion “technical and technological ability to cultivate and produce low-THC cannabis,” lists “experience cultivating cannabis,” “experience cultivating in Florida plants not native to Florida,” and “experience cultivating plants for human consumption such as food or medicine products” as some of the items. The application repeats these three items under the “cultivation” category (worth 30 percent of the applicant’s score), and the “technical ability” subcategory (worth 25 percent of the cultivation score). As expressly provided in the application, the application is organized differently than the rule because the application is based on the scoring system the Department will use to evaluate applications. But the application nevertheless covers and cites to all seven criteria from the statute and every item in the rule. Every applicant is required to address each of the items, as provided in rule 64-4.002(2), even if just to state that, for example, it has no experience or knowledge in a given area. As stated in the application, however, having knowledge or experience relating to these items “is not mandatory but is designed to elicit information” that will help the Department select the most qualified dispensing organizations from the pool of applications. Baywood contends that the rule and application conflict as to whether addressing each item is mandatory. Baywood also contends that rule 64-4.002(2) and the application fail to set forth the required level of experience or knowledge relating to each item. Finally, Baywood contends that the incorporated application scorecard fails to disclose what percentage of an applicant’s score corresponds with each item. Baywood’s contention as to each point is rejected. First, the rule and application do not conflict, as the former unambiguously requires applicants to address each item and the latter unambiguously repeats this requirement, stating that the applicant is required to provide the Department with all items listed, and informs applicants that it is not mandatory to have knowledge of and experience with each item. Second, there is no required minimum level of experience or knowledge for any item. As provided in the application, a description of the items is mandatory, but an applicant need not possess each item in its experience or operation. Thus, each applicant is competing with other applicants, not with any mandatory minimum criteria set by the Department. In fact, to make any of the items mandatory would exceed the Department’s authority under the Act, as only the basic elements, such as “cultivation,” are listed in the Act. See also Costa, DOAH Case No. 14-4296RP, ¶ 81 (concluding that imposing mandatory qualifications not specified in Act impermissibly modifies or enlarges Act). Third, there is no percentage score assigned to every single item in the application (only the categories and subcategories are assigned percentages); the items are not weighted, but are simply things each applicant must address to demonstrate its knowledge of and experience in an area. This will allow the Department to evaluate the applicant against other applicants in predictable areas and will inform the applicant as to what the Department is looking for. The decision not to assign weights or percentages to items (as opposed to categories and subcategories) was made by the negotiated rulemaking committee, whose grower members believed the Department’s expectations as to how applications would be evaluated were made clear in the rule and application. In developing this evaluation system, the Department was guided by the Prior Final Order, which concluded that the Act required the Department to undertake a comparative, qualitative review of each applicant. Costa, DOAH Case No. 14-4296RP ¶¶ 84-87. Inspection and License Revocation The Act expressly requires an “approved dispensing organization [to] maintain compliance with the criteria demonstrated for selection and approval . . . at all times.” § 381.986(6), Fla. Stat. Proposed rule 64-4.004 provides that the Department “shall” revoke a D.O.’s approval if the D.O. “[c]ultivates low- THC cannabis before obtaining Department authorization” or “[k]nowingly dispenses Derivative Product to an individual other than a qualified patient or a qualified patient’s legal representative without noticing the department and taking appropriate corrective action.” That rule also provides that the Department “may” revoke approval if any of four other events occurs and is not corrected within the applicable cure period specified in the rule — for example, if a dispensing organization fails “to comply with the requirements in [the Act or the rules]” or fails “to implement the policies and procedures or comply with the statements provided to the department with the original or renewal application” and does not correct the failure within 30 calendar days after notification. Proposed rule 64-4.005 provides in part that submission of an application constitutes permission for entry by the Department at any reasonable time during the approval or renewal process into any D.O. facility to inspect any portion of the facility, review the records required by the Act or the rules, and identify samples of any low-THC cannabis for laboratory analysis. That rule also provides that if, during an inspection, the Department identifies a violation of the Act or the rules, the D.O. must notify the Department in writing within 20 calendar days after receipt of written notice of the violation what corrective action was taken and when. Baywood contends rule 64-4.004 fails to include any standards or protocol for violation correction or license revocation, allows the Department to revoke a license “based on a whim,” and fails to include a revocation appeal mechanism. Baywood contends rule 64-4.005 fails to include any parameters or criteria for inspections, leaving D.O.’s to wonder what will be inspected, what testing protocols will be used, and against what standards their facilities will be measured; fails to specify what records a D.O. must keep; and fails to provide an appeal process. The Department, interpreting a statute the Department is charged with implementing, believes section 381.986(6) obligates the Department to monitor each dispensing organization’s compliance with the Act and that proposed rules 64-4.004 and -.005 implement that statutory provision. The Department is confident that these rules, which were developed by a negotiated rulemaking committee that included five grower members, clearly delineate what a D.O. is expected to do and what the repercussions of failing to comply are. Indeed, the negotiated rulemaking committee discussed the rules’ inspection and revocation provisions in great detail, and the grower members’ concerns, in particular, were a factor in drafting those provisions. For example, if the Department identified samples of product for laboratory analysis, those samples would be required to meet the Act’s requirements for low-THC cannabis, which is defined in part as containing “0.8 percent or less of tetrahydrocannabinol and more than 10 percent of cannabidiol weight for weight.” § 381.986(1)(b), Fla. Stat. And if a D.O. failed to comply with this standard and did not correct the failure within the cure period delineated in the rule, the Department could initiate the revocation process. By the same token, a license may be revoked upon a D.O.’s failure to implement the policies and procedures or comply with the statements provided to the Department in the D.O.’s application. Clearly, a D.O. would look to its own approved application to determine what policies, procedures, and statements it needs to comply with to avoid revocation on such grounds.

Florida Laws (13) 120.52120.54120.541120.56120.569120.57120.68215.31381.0011381.986435.04581.011581.131
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ROSIEK CONSTRUCTION CO., INC. vs DEPARTMENT OF TRANSPORTATION, 04-002059BID (2004)
Division of Administrative Hearings, Florida Filed:Tampa, Florida Jun. 09, 2004 Number: 04-002059BID Latest Update: Sep. 14, 2005

The Issue On May 12, 2004, did Respondent, Department of Transportation (DOT), act illegally, arbitrarily, dishonestly, or fraudulently when it cancelled the posting and noticed its intent to reject the bid of Rosiek Construction Co., Inc. (Rosiek), in relation to financial project Nos. 256903-1-52-01 and 256903-1-56-01, Pinellas Bayway Bridge Replacement, SR 682 (the Project)? § 120.57(3)(f), Fla. Stat. (2004).

Findings Of Fact The subject of this protest is financial project Nos. 256903-1-52-01 and 256903-1-56-01, Pinellas Bayway Bridge Replacement. Respondent and 12 other pre-qualified bidders received copies of the bid solicitation notice, plans and specifications for the Project at issue. Rosiek submitted a responsive bid for the Pinellas Bayway Bridge Replacement on April 28, 2004. There were no other bidders. Rosiek is pre-qualified to bid and receive the contract for the Project and therefore is a responsible bidder. On May 12, 2004, DOT posted its notice of intent to reject all bids. Rosiek timely filed this bid protest on May 14, 2004, with DOT, along with the statutorily required bid protest bond. DOT's 2004 Standard Specifications for Road and Bridge Construction is applicable to this project. FACTS BASED UPON ROSIEK'S ADMISSIONS DOT had advertised its bid solicitation notice for Financial Project Nos. 256903-1-52-01 and 256903-1-56-01, Pinellas Bayway Bridge Replacement on or about March 4, 2004. Rosiek received the copy of the Bid Solicitation Notice for the Project. Rosiek did not file a specifications challenge with respect to the referenced Project. DOT advertised the amount of $37,087,000.00 as its budgeted amount for the Project. Rosiek submitted a total bid of $50,470,378.12 for the Project (total bid A+B). ADDITIONAL FACTS Juanita Moore is a manager of the DOT Contracts Administration Office. She served as a member of the Technical Review Committee and the Awards Committee in relation to the Project. When the Technical Review Committee is confronted with a bid, such as the Rosiek bid, which is from a single bidder, something is missing from the bid or for certain differentials in price between the bid received and the official cost estimate, the Technical Review Committee considers these to be "problem jobs." In connection with terminology, Ms. Moore explained that the budget figure, referred to in the Bid Solicitation Notice for the Project as a Proposal Budget Estimate, is derived from an earlier estimate in the process and in turn an official cost estimate was established for the Project. The official cost estimate is also referred to simply as the estimate. The official cost estimate has not been disclosed as has been explained in the Preliminary Statement to the Recommended Order. The official cost estimate here is broken down into component items within the Project pertaining to cost for Mobilization, Concrete Class IV, Concrete Class V, etc. After the Technical Review Committee considered the Rosiek bid, the bid was passed on to the Awards Committee where it was decided to reject the bid. According to Ms. Moore the bid was rejected as too high when compared to the official cost estimate. The reference to a bid being too high relates to a bid which is more than 10 percent in excess of the official cost estimate. The budget figure and the official cost estimate are not necessarily the same in a given instance. The fact that it was the only bid was also a factor considered in the rejection. As Ms. Moore explained, at the time the Rosiek bid was rejected, it was principally because it was too high in relation to the official cost estimate. Given the posture in this case, the rejection as the only bid will form the basis for resolving this dispute, absent DOT's willingness to divulge the amount of the official cost estimate or how it was established. DOT does not have an established policy for rejecting bids based upon the fact that only a single bidder responded to the solicitation. In her experience, Ms. Moore does not remember DOT rejecting a bid solely on the ground that there was only one bidder. The minutes of the Awards Committee meeting held on May 12, 2004, detail the response by that committee to the Rosiek bid. In the copy of that document provided for this proceeding, DOT's official cost estimate is redacted. The percentage differential between the official cost estimate and the Rosiek bid is likewise redacted. The item number 0101-1 for Mobilization reflects Rosiek's bid of $4,900,000.00 compared to the official cost estimate which is redacted. Similarly, Item No. 0400-4-4, Concrete Class IV refers to the contractor bid price of $800.00 per cubic yard compared with the official cost estimate which is redacted. There are other comparisons between several additional categories or items in which the contractors bid price is reflected but the official cost estimate in comparison is redacted. The minutes go on to describe how the review being made by the Awards Committee led to the conclusion that the official cost estimate could be adjusted, placing the bid received by Rosiek a certain percentage above the estimate on a 10 percent criteria job but the differential between the adjusted official cost estimate and the Rosiek bid is not revealed as a percentage because of redaction. The DOT district where the project would be located is District 7, the Tampa office. The minutes of the Awards Committee meeting indicate that the district and the Technical Review Committee recommended to the Awards Committee that it reject the Rosiek bid and re-advertise. That was the decision made by the Awards Committee on May 12, 2004, to re-let in June. Nothing in the minutes prepared by the Awards Committee refers to the significance of Rosiek as the only bidder and any concern which the Awards Committee had about that fact. On May 12, 2004, when DOT provided a Cancellation of Posting and a Notice of Intent to Reject to Rosiek, it did not state the rationale for that decision. It merely indicated to Rosiek that it was DOT's intent to reject all bids on the project and advised Rosiek of its opportunity to contest that decision. On May 5, 2004, Kenneth A. Hartmann, P.E., the District 7 Secretary, prepared the District Response to Post- Bid Evaluation of Bids in Excess of Approved Award Criteria. The document is presented in question-and-answer form. In response to the question numbered 4 within the document, related to the prospect of critical safety deficiencies in the existing system being corrected by the construction of a new bridge, Mr. Hartmann responded with the answer "No." In relation to question numbered 2, excluding normal inflation, the question was asked whether re-advertising the project would likely result in a higher bid. Mr. Hartman answered "No." In response to question numbered 16, related to his recommendation as the district secretary, for action that should be taken by the Awards Committee he stated "This project should be rejected and re-advertised for a June 2004 1st [sic]. Considering that the project is medium to large and was competing against two other large bridge projects on the same day it is understandable that the contractor's bid was higher than our estimate." In response to question numbered 15 concerning the work load level of the contracting industry in the locality where the project would be constructed, Mr. Hartmann referred to "a high level of work load." At hearing Donald Skelton, P.E., the District 7 Secretary testified in support of the rejection of the Rosiek bid. In the past he had served as Director of Transportation Development with DOT, a position that made him responsible for preparation of the design plans and contract packages that are bid. He had involvement with this Project pertaining to the preparation of design plans and getting the Project to contract letting. He reviewed the Rosiek bid. In discussions related to the Rosiek bid during the post-bid evaluation period, there was a concern over a lack of competition and the differential between, what Mr. Skelton refers to, as the budget amount and the bid amount by Rosiek. Mr. Skelton was mindful of potential safety issues that might warrant the prospect of trying to find additional money to fund the Project, if it was necessary to replace the existing bridge for safety reasons. If the bridge were structurally deficient or in bad shape, that would need to be addressed, versus the additional time necessary to potentially rebid the project. No safety issues of that sort were found by Mr. Skelton. Mr. Skelton explained that the fact that there was single bidder made it difficult, if not impossible, to make a comparison between that bid and what the true market value of the bridge construction would be. Mr. Skelton expressed the hope by the DOT, that there would be more than one bidder in the future to truly get an impression of the degree of competition and whether the competition would result in a realistic price for the public. He recognized that there is no guarantee that DOT is going to get a lower bid if the project is re-bid. Mr. Skelton indicated that when you have multiple bids you can compare what the economic system would support in relation to the affordability of the project. That comparison is of similarity in prices among the competitors trying to win the job, with the belief that bidders put their best effort forward to prevail in the competition. A single bid does not give any indication of market factors, in his view. Michael Rosiek is the vice-president for Rosiek. In his testimony, he expressed a concern that if the project was re-let for bid, Rosiek's competitive position would not be good, in that the other contractors would have read the Rosiek bid that was made in the first letting, informing the competitors of the Rosiek price to its detriment. Further, Mr. Rosiek expressed a concern that in a re-letting the company would be bidding "against ourselves." Louis Wenick, P.E., has a business consulting service. The nature of the business is consulting work relating to the construction industry. A considerable part of the business involves DOT projects. In his work Mr. Wenick is involved with scheduling, cost analysis, and entitlement analysis in DOT projects. He is familiar with DOT's specifications, policies, and procedures. Mr. Wenick is a registered engineer in Florida and a certified general contractor in Florida. Mr. Wenick obtained information from DOT concerning its history in receiving sole bids for a project and the instances in which the sole bidder was awarded the contract. Mr. Wenick looked at procedures followed by DOT in awarding contracts. Mr. Wenick looked at the DOT experience in re- letting bids to determine if a company was a low bidder in the first letting when bids were rejected, and what percentage of the time that low bidder would succeed in being awarded the contract upon a re-letting. Mr. Wenick prepared certain charts intended to depict the DOT response in the areas examined by the witness. Rosiek's Exhibit numbered 3 is referred to as Problem Jobs for the April 28, 2004, letting, with two posting dates of May 20, 2004, and June 7, 2004, respectively. The chart depicts the proposal I.D. number (bid), the project number and the type of problem identified in reviewing bid responses and a brief statement of the Technical Committee's comments and the Awards Committee's disposition in those projects depicted. Nothing more is described in the chart. In no case set forth in the chart was the type of problem described in any detail or, limited to an experience with a single bidder, as opposed to perceived problems in relation to the bid that was too high, as well as having a single bidder or to the problem of having a bid that was too high alone. Seven projects were awarded. Two were not. The rejections were based upon the bids being too high. One of the projects initially awarded was later rejected due to the unavailability of local funding to support the project. Mr. Wenick prepared a chart, Rosiek's Exhibit numbered 4. This reflects the DOT award results for sole or single bidders from the period July 1999 through April 2005. The columns in the chart show the numeric count of sole bids, at certain letting dates, with the contracts numbers, the name of the low bidder, and the disposition of the bids. The numeric count of sole bids is a running tally over the period. This reflects 52 sole bids of which eight were rejected, making the percentage accepted 84.62 percent. Again the nature of the projects is not shown in the chart, and this chart does not indicate the basis for rejection. Rosiek's Exhibit numbered 5 is another chart prepared by Mr. Wenick. It reflects instances in which projects were re-let for bid in the period July 1999 to April 2005. The letting dates are reflected. The project numbers, the low bidders names, if known, and the amount quoted is set out. The re-let date if the project was re-let is reflected. The low quote on re-bid and the low bidder's name on re-bid are reflected, as is the percentage difference between the low quote in the first letting and the low quote in the re- letting. Where data is established in all columns in the chart, 18 of the projects are shown to have been re-bid out of 24 projects that were bid initially. Within that group, five bidders who bid in the initial letting were awarded the contract in the re-letting, while 13 low bidders in the first letting were disappointed in the re-letting. This equates to 27.78 percent success rate by the low bidder in the initial letting when re-bidding in the re-letting. Having considered the exhibits prepared by Mr. Wenick, the information is insufficient to discern the reason for DOT's past policies and practices and to compare them to the present case for consistencies in the application of those policies and practices when rejecting bids. Additionally, the reason for the choices in any single project described in the charts cannot be appropriately understood from the charts and compared to the experience here. On the topic of the success rate for contractors who provided the low bid in the original letting and the low bid in the re-letting, it is so general an analysis, that it cannot be relied upon to determine the real significance for contractors who provided the low bid in the original letting, only to be disappointed in the re-letting when the contractor did not receive the contract.

Recommendation Upon consideration, it is RECOMMENDED: That a final order be entered dismissing the Rosiek Amended Formal Written Protest challenging the DOT decision to reject its bid. DONE AND ENTERED this 17th day of August, 2005, in Tallahassee, Leon County, Florida. S ___________________________________ CHARLES C. ADAMS Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 17th day of August, 2005.

Florida Laws (6) 120.569120.57120.68337.11337.168339.135
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TYCO CONSTRUCTORS, INC. vs. BOARD OF REGENTS, 82-003303 (1982)
Division of Administrative Hearings, Florida Number: 82-003303 Latest Update: Jul. 22, 1983

The Issue The ultimate issues to be resolved in this proceeding are whether the Respondent should award a contract in accordance with an invitation to bid to the Petitioner, to some other bidder, or reject all bids and reissue an invitation. Petitioner contends that it was the low bidder in response to the invitation; that its bid was responsive; and to the extent that it was not responsive, any defects were of a minor sort which should be waived. Petitioner contends that the Respondent has previously waived irregularities such as existed in the Petitioner's bid and should therefore waive them in this case. The Respondent contends that the Petitioner's bid was not responsive, that the irregularities in Petitioner's bid are not minor, that any mistakes the Respondent has made in past acquisitions should not be repeated, and that the contract should be awarded to another company.

Findings Of Fact The Respondent issued an invitation to bid for a project known as the "Animal Science/Dairy Science Building" at the University of Florida. The project was given No. BR-108 by the Respondent. Petitioner was the lowest bidder in response to the invitation. The next lowest bidder, Charles R. Perry Construction Company, submitted a bid approximately $37,000 higher than Petitioner's bid. Perry has not filed any formal protest nor intervened in this proceeding. Petitioner is a responsible contractor and has in the past entered into construction contracts with the Respondent. Petitioner's bid was rejected by the Respondent. The Petitioner protested the rejection of its bid in a timely manner. Paragraph "B-15" of the bid specifications provides in pertinent part, as follows: In order that the Owner may be assured that only qualified and competent sub- contractors will be employed on the project, each Bidder shall submit with his Proposal a list of the subcontractors who would perform the work for each Divi- sion of the Specifications as indicated by the "List of Subcontractors" form contained in these Specifications... only one subcontractor shall be listed for each phase of the work. * * * No change shall be made in the list of subcontractors, before or after the award of a contract, unless agreed to in writing by the Owner. Section "B" of the invitation for bid provided space for the bidder to list the name and address of subcontractors for the roofing, masonry, plumbing, mechanical, electrical, meat processing equipment, and controls and instrumentation phases of the project. In Section "B" of its bid, Petitioner listed two subcontractors for the plumbing, mechanical, and controls and instrumentation phases of the project. Listing two subcontractors does not comport with the bid specification requiring that only one subcontractor be listed for each phase. Petitioner listed two subcontractors because one of the subcontractors submitted a proposal to Petitioner only fifteen minutes prior to the time when the bid had to be submitted, and Petitioner was unsure of whether the last-minute proposal included all of the work that the Petitioner anticipated would be required. In addition, Petitioner felt that one of the subcontractors may not have been acceptable to the Respondent. The requirement that bidders list only one subcontractor for each phase of a project helps to discourage "bid shopping." Bid shopping is a practice whereby a contractor who receives a bid from a subcontractor approaches another subcontractor with that bid and encourages the other subcontractor to reduce its price. If the other subcontractor responds, this reduced price can be taken back to the original subcontractor. The original subcontractor is then confronted with the choices of either lowering its bid or losing the project. Bid shopping that occurs after a bid has been accepted by the owner does not benefit the owner. It benefits only the bidder, who is able to reduce its costs and therefore increase its profit. Requiring that one subcontractor be listed for each phase cannot serve to completely eliminate bid shopping. A contractor could still bid shop by listing itself as the subcontractor, then after winning the contract shop between several subcontractors. A contractor could also bid shop by changing subcontractors after the bid award. In either case, however, the contractor would need to secure the approval of the owner. The practice is thus discouraged. If a bidder lists two subcontractors for a phase of the project, that bidder would have an advantage over those who listed only one subcontractor. Listing two subcontractors enables the bidder to make a choice as to the best subcontract bid at a time later than the choice is made by bidders who list only one subcontractor. In addition, listing two subcontractors makes it easier for the bidder to engage in bid shopping, which would be more difficult for bidders who listed only one subcontractor. Paragraph "B-24" of the bid specifications for this project provides in pertinent part: The Contract will be awarded . . . to the lowest qualified bidder pro- vided his bid is reasonable and it is in the best interest of the Owner to accept it. * * * The Owner reserves the right to waive any informality in bids received when such waiver is in the interest of the Owner. The listing of two subcontractors for phases of the project is not a mere informality in the bid. It is directly contrary to Paragraph "B-15" of the bid specifications. It would not be in the interest of the owner to accept a bid in which two subcontractors are listed for phases of the project. The integrity of the acquisition process would be damaged by allowing such a deviation because a bidder who listed two subcontractors would have gained an advantage over bidders who complied with the bid specifications. It is not in the best interest of the Respondent to waive the defect in the Petitioner's bid. On at least two prior occasions, the Respondent awarded contracts to bidders who listed more than one subcontractor per phase of the work. One of these projects was for a gymnasium at Florida Atlantic University (Project No. BR-603). Another was for a window replacement project at Florida State University (Project No. BR-342). In at least three other projects, the Respondent awarded contracts where the bidder failed to list the name of any subcontractor for one or more phases of the work. These were for the cancer center at the University of South Florida (Project No. BR-569), the student housing facility at the University of South Florida (Project No. BR-576), and an expansion project at Florida A & M University (Project No. BR-343). The bid specifications for all of these projects were not offered into evidence; however, the Respondent had utilized the same specifications as required in this project at all pertinent times. Failing to list any subcontractor for a phase of a project constitutes approximately the same defect in a bid response as listing two subcontractors. It provides even greater opportunities for bid shopping and an advantage to the bidder over those who list subcontractors as required by the specifications. In several other projects, it appears that the Respondent has awarded contracts to bidders whose bids contained defects of the same magnitude, but a different sort than the listing of two subcontractors. It does not appear that the Respondent has awarded contracts where bidders have listed more than one subcontractor, no subcontractor, or otherwise violated bid specifications because of any policy or because of any expressed waiver of the defect. Rather, it appears that the Respondent has not adequately policed bids to determine responsiveness to the bid specifications. This is especially true with respect to the listing of subcontractors. It appears that no one on the Respondent's staff took the responsibility to consider whether one subcontractor was listed for each phase of a project as required in the specifications. The only policy that the Respondent established was a policy of being too lax in examining bids. The Petitioner did not list two subcontractors for various phases of this project because of any reliance on past conduct of the Respondent. Petitioner's agent overlooked the bid requirements in Preparing its bid response. In prior bids submitted by the Petitioner in response to bid invitations issued by Respondent, Petitioner listed only one subcontractor, as required. Generally, unless it is otherwise required, Petitioner prefers to list two subcontractors because of the flexibility it provides to the owner and to Petitioner. Petitioner was not aware that Respondent had previously awarded contracts to bidders who listed more than one subcontractor for a phase of the work when it submitted its bid in this instance.

Florida Laws (1) 120.53
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BLALOCK FOLIAGE, INC. vs. EXOTIC PLANT SALES, INC., AND FIDELITY AND DEPOSIT, 80-000814 (1980)
Division of Administrative Hearings, Florida Number: 80-000814 Latest Update: Sep. 23, 1980

Findings Of Fact Respondent-Principal, a licensed dealer in agricultural products, routinely ordered plants from Petitioner by telephone for pick up at Petitioner's warehouse in Apopka. Petitioner issued invoice statements on each order individually, which Respondent-Principal customarily paid by check, with a notation on each instrument showing the invoice number(s) to which payment applied. The transaction at issue commenced with a telephone order for tropical foliage placed on June 28, 1979. Petitioner began preparing this order on June 29 by removing plants from its greenhouse, but did not complete assembly of the foliage until sometime after June 29. Respondent-Principal picked up the shipment on July 2, 1979, as agreed. Concurrently, Petitioner billed Respondent-Principal for $2,647.34 on a two-page document identified as invoice 21561 (page 1) and 21562 (page 2). Petitioner continued to receive and fill Respondent-Principal's plant orders through August 20, 1979, after which sales transactions ceased. However, Respondent-Principal continued to make payments against various outstanding invoices. Respondent-Principal issued a check for $2,000.00 dated November 26, 1979, with no notation other than "pd on acct." Petitioner's president received this check on November 28, and instructed the bookkeeper to apply it to the largest invoice balance. Although the $2,647.34 due on invoice 21561/21562 was the oldest debt outstanding, the $3,489.31 due on invoice 21588 was the largest invoice balance, and the bookkeeper applied the payment to the latter debt accordingly. By letter dated January 11, 1980, Respondent-Principal advised Petitioner that it had ceased operations and would make a final payment on all of its debts to Petitioner in April or May, 1980. However, no payments were received after the November 26, 1979, check for $2,000.00.

Recommendation Upon consideration of the foregoing, it is RECOMMENDED: That the Department of Agriculture and Consumer Services enter its final order finding that Petitioner, Blalock Foliage, Inc., is due $2,647.34 from the sale of tropical foliage to Respondent, Exotic Plant Sales, Inc., as stated in Petitioner's Invoice 21561/21562; and, further, discharging Respondent, Fidelity & Deposit Company of Maryland, from liability under Chapter 604, Florida Statute, on this sale. DONE AND ENTERED this 22nd day of August, 1980, in Tallahassee, Florida. R. T. CARPENTER Hearing Officer Division of Administrative Hearings 101 Collins Building Tallahassee, Florida 32301 (904) 488-9675 Filed with the Clerk of the Division of Administrative Hearings this 22nd day of August, 1980. COPIES FURNISHED: Blalock Foliage, Inc. Mr. Timothy J. Blalock Post Office Drawer F West Kelly Park Drive Apopka, Florida 32703 Exotic Plant Sales, Inc. 1902 Charles Houston, Texas 77093 Fidelity & Deposit Company of Maryland 777 South Post Oak Building Suite 700 Houston, Texas 77903 Robert A. Chastain, Esquire General Counsel Department of Agriculture and Consumer Services Mayo Building Tallahassee, Florida 32301

Florida Laws (7) 604.15604.19604.20604.30671.201672.106672.401
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INTERCONTINENTAL PROPERTIES, INC. vs DEPARTMENT OF LABOR AND EMPLOYMENT SECURITY, 96-001311BID (1996)
Division of Administrative Hearings, Florida Filed:Miami, Florida Mar. 12, 1996 Number: 96-001311BID Latest Update: May 23, 1996

The Issue Whether Respondent acted fraudulently, arbitrarily, illegally, or dishonestly in determining the geographical boundaries for the competitive procurement of Lease No. 540:1071.

Findings Of Fact Approximately nine years ago, Respondent, Department of Labor and Employment Security (Department), entered into a lease with Petitioner, Intercontinental Properties, Inc. (Intercontinental), for a Jobs and Benefits Office at 701 S.W. 27th Avenue, Miami, Florida (Office No. 6574). The lease expires May 31, 1996. Office No. 6574 serves a large area: Flagler on the north side; south to Sunset, 72nd Avenue; east to Biscayne Bay; and west to the Everglades. The current office is located in the northeast corner of the service area. The Department currently maintains another Jobs and Benefits Office in the State-owned Rhode Building, which is approximately 3.1 miles from the subject office. Applicants for the Department's services may apply at either location. In May, 1995, the Department began the process of issuing a Request for Proposals (RFP) for leased space for the Jobs and Benefits Office at issue. Dennis Fernandez, the office manager of the Jobs and Benefits Office, sent a memorandum to Nathaniel Bruce with the Department's leasing office in Tallahassee, requesting that the proposed boundaries for the RFP be Flager Street to the north; Bird Road (S.W. 40th Street) to the south; Red Road (S.W. 57th Avenue) to the east; and S.W. 107th Avenue to the west. Part of his job responsibilities was to determine the boundaries. Mr. Fernandez recommended that the office be moved from the present location for the following reasons: Close proximity to another full-service office. We are currently 3.1 miles from the Miami Downtown Jobs [and] Benefits Center. Being located in Little Havana, this office is primarily serving non-English speaking applicants. We need to increase our applicant base and move further South and West in order to better serve the community we represent in accordance with our administrative area. Current location has this office split in two different floors, which has proven to be very difficult to staff, manage, and operate on a day-to-day basis. Also, with the advent of "migration," it has been difficult to adhere to a true "No Wrong Door" policy, to the detriment of our customers. An office on one level only would eliminate a lot of the problems we have faced during the last eight years. Mr. Fernandez based his recommendation to move the office further south and west on his eight years of experience as the office manager. The office's marketing report showed that the marketing team was going more to the west and south than the east in order to reach employers. A lot of the employers are located on Bird Road and on Coral Way west of the Palmetto. Based on his experience, review of applications, and discussions with his employees, he felt that more applicants were located west of the present location than east. At the time that Mr. Fernandez wrote his May 15 memorandum, there had been no statistical data run to support his recommendations. In September, 1995, the Department issued a RFP for leased space for Office No. 6574 with the following geographical boundaries: Beginning at a point where SW 107th Avenue intersects with SW 40th Street; Proceed East on SW 40th Street to the corner of SW 57th Avenue; Proceed North on SW 57th Avenue to the corner of West Flagler Street; Proceed West on West Flagler Street to the corner of SW 107th Avenue; Proceed South on SW 107th Avenue to the corner of SW 40th Street, the point of Beginning. Intercontinental filed a Notice of Intent to Protest and a Formal Written Protest, contesting the boundaries of the September, 1995 RFP. The Department received one bid in response to the RFP, which the bidder later withdrew. Kim Jacobs, the Leasing Manager for the Department, began her employment in September, 1995. When she became aware of the Formal Written Protest, she requested further justification for the boundaries contained in the RFP. On October 5, 1995, Kenneth Holmes, the Director of the Division of Unemployment Compensation, forwarded a memorandum to Lynn Mobley, who was Ms. Jacob's supervisor, setting forth the number of unemployment compensation claimants served from January 1, 1994, through October 1, 1995, for the zip codes located in the service area for Office No. 6574. Based on the information in Mr. Holmes' memorandum, there were 7,661 claims east of 57th Avenue and 11,170 claims west of 57th Avenue. There were 12,867 claims west of the current location as opposed to 5,964 claims eastward. Sometime between the time the protest was filed and November 17, 1995, Mr. Fernandez discussed the location of the boundaries with his boss, Dr. Willie Robinson, who indicated that perhaps they should include the present location of the office within the boundaries. Dr. Robinson did not share his rationale for such a suggestion with Mr. Fernandez, and no statistical data was gathered to support moving the boundary to include S.W. 27th Avenue. Mr. Fernandez was still of the opinion that the boundary should be moved as stated in the September, 1995 RFP. On November 17, 1995, Mr. Fernandez transmitted two facsimiles to Mr. Bruce setting forth the changes suggested by Dr. Robinson. On November 21, 1995, Mr. Bruce sent a computer message to Dr. Robinson's assistant, requesting written justification and demographics for the proposed change to the boundaries set forth in Mr. Fernandez's facsimiles of November 17, 1995; however, no additional justification or demographic information was supplied to Mr. Bruce. The Department decided to extend the boundaries further to the west and to the south in an effort to obtain more responses. Mr.Fernandez had ridden in the extended area to see if there were possible locations there. In December, 1995, the Department issued another RFP, with the following boundaries: Beginning at a point where SW 117th Avenue intersects with SW 56th Street; Proceed East on SW 56th Street to the corner of SW 57th Avenue; Proceed North on SW 57th Avenue to the corner of West Flagler Street; Proceed West on West Flagler Street to the corner of SW 117th Avenue to the corner of SW 56th Street, the Point of Beginning. The current location of Office No. 6574, is not within the geographical boundaries set forth in the December, 1995, RFP. On December 22, 1995, Intercontinental filed a Notice of Intent to Protest the boundaries in the December RFP, but did not file a formal protest or bid protest bond thereafter. The Department received one bid, which was nonresponsive. On February 22, 1996, the Department issued another RFP with the same boundaries contained in the December, 1995 RFP. On February 28, 1996, the Department received Intercontinental's Notice of Intent to Protest. On March 5, 1996, Intercontinental filed its Formal Written Protest and Bid Protest Bond with the Department.

Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that a Final Order be entered dismissing Intercontinental Properties, Inc.'s formal notice of protest. DONE AND ENTERED this 19th day of April, 1996, in Tallahassee, Leon County, Florida. SUSAN B. KIRKLAND 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 April, 1996. APPENDIX TO RECOMMENDED ORDER, CASE NO. 96-1311BID To comply with the requirements of Section 120.59(2), Florida Statutes (1995), the following rulings are made on the parties' proposed findings of fact: Petitioner's Proposed Findings of Fact. Paragraphs 1-6: Accepted. Paragraph 7: The first and last sentences are rejected as unnecessary. The remainder is accepted in substance. Paragraphs 8-9: Accepted in substance. Paragraph 10: The first two sentences are accepted in substance. The last sentence is rejected as subordinate to the facts found. Paragraph 11: The first two sentences are accepted. The third sentence is rejected as subordinate to the facts found. Paragraph 12: The last sentence is rejected as subordinate to the facts found. The remainder is accepted in substance. Paragraph 13: Accepted in substance. Paragraph 14: Rejected as subordinate to the facts found. Mr. Fernandez was considering the client base when he made his recommendation in May. Paragraph 15: Accepted in substance to the extent that Mr. Fernandez was sending his boss' recommendation not Mr. Fernandez's recommendation. Paragraph 16: Rejected as unnecessary. Paragraphs 17-19: Accepted in substance. Paragraph 19: Accepted in substance. Paragraphs 20-21: Rejected as subordinate to the facts found. Paragraph 22: Rejected as constituting argument. Paragraph 23: The first and last sentences are rejected as unnecessary. The remainder is accepted in substance. Paragraph 24: The first two sentences are rejeced as subordinate to the facts found. The remainder is accepted in substance. Paragraph 25: The third and fifth sentences are rejected as subordinate to the facts found. The remainder is accepted in substance. Paragraph 26: The first sentence is accepted in substance. The remainder is rejected as subordinate to the facts found. Paragraph 27: Accepted in substance. Paragraph 28: The first sentence is accepted in substance. The remainder is rejected as subordinate to the facts found. Paragraph 29: Accepted in substance. Paragraph 30: Rejected as subordinate to the facts found. Paragraph 31: Accepted. Paragraph 32: Rejected as subordinate to the facts found. Paragraph 33: The first three sentences are rejected as subordinate to the facts found. The fourth sentence is accepted in substance. The remainder is rejected as subordinate to the facts found. Paragraph 34: Rejected as constituting argument. Paragraph 35: Rejected as subordinate to the facts found. Paragraph 36: The first, fourth, and sixth sentences are rejected as unnecessary. The remainder is accepted in substance. Paragraph 37: The first two sentences are accepted in substance. The remainder is rejected as subordinate to the facts found. Paragraph 38: The first sentence is accepted in substance to the extent that there was no statistical data but rejected to the extent that it implies there was no basis for the changing of the boundary. The second and third sentences are rejected as subordinate to the facts found. The fourth sentence is accepted to the extent that no further demographics were done, but Ms. Jacobs did know that Mr. Fernandez had ridden in the southern and western areas to determine if there were possible space available. The remainder is accepted in substance. Respondent's Proposed Findings of Fact. Paragraphs 1-8: Accepted in substance. Paragraphs 9-11: Accepted. COPIES FURNISHED: Robert A. Sweetapple, Esquire Sweetapple, Broeker and Varkas 465 East Palmetto Park Road Boca Raton, Florida 33432 Edward A. Dion, General Counsel Department of Labor and Employment Security The Hartman Building, Suite 307 2012 Capital Circle, Southeast Tallahassee, Florida 32399-2189 Douglas L. Jamerson, Secretary Department of Labor and Employment Security 303 Hartman Building 2012 Capital Circle Southeast Tallahassee, Florida 32399-2152

Florida Laws (2) 120.53120.57
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