The Issue The issues to be resolved in this proceeding concern whether the intent to award a contract by the Department of Children and Family Services (DCF) or (Department) for programming and programming analysis support services for the Florida Online Recipient Integrated Data Access System (the Florida System) to Intervenor, Deloitte Consulting LLP (Deloitte), is in accordance with the governing statutes, rules, and policies applicable to the Department's procurement, and to the specifications in the Request for Proposals (RFP). It must also be determined whether the decision by DCF to disqualify the Petitioner, Unisys Corporation (Unisys), for allegedly being unresponsive to the specifications and terms of the RFP in a material way, is clearly erroneous, contrary to competition, arbitrary, or capricious.
Findings Of Fact The Florida System is a computerized public assistance and child support enforcement system. It contains approximately six million lines of programming code and is very complex. It supports the state entitlement system which, among other functions, determines eligibility for benefits under the Medicaid program, temporary assistance for needy families, and food stamp programs. The child support enforcement component of the System records collections of child support payments by the circuit courts. The System is vital to the client population and the public of Florida and it is vital that it be properly maintained. Essential services could be disrupted if such is not the case, causing serious problems for the client populations for state and federal programs that are related and for the tax-paying public, regarding these multi-billion dollar programs. The RFP to be issued would result in a contract for a period of 36 months. It included a 45-day start-up period, a support phase of the contact extending 36 months and a final 45- day period for transition to a new vendor, upon the approach of the conclusion of the contract. The RFP required each vendor to submit a technical proposal and a separate cost proposal. The technical proposal represented 650 points out of a possible 1000 points. The cost proposal represented 350 points out of 1000 points. The proposed project staff requirements of the three technical criteria received the greatest weight of 350 points. The other technical criteria: corporate experience (150 points) and technical approach (150 points) also compared the availability of qualified staff, which was an important part of the contract. Unisys was the incumbent contractor. It submitted a proposal and response to the first RFP (RFP09), as did the other two vendors, Deloitte and Spherion. The Department disqualified Deloitte and Spherion's initial proposals. It did not disqualify the initial Unisys proposal, but decided to reject all proposals for that RFP and to issue a new RFP. The Department did not wish to award a contract to Unisys since it would be an exceptional or sole source purchase under these circumstances. It appeared that re-issuing the RFP at that time could result in more competitive bidding by attracting more than one responsive vendor. In that earlier procurement, Spherion's proposal had been disqualified because it did not include the proposal bond manditorily required by the RFP. Deloitte's proposal was disqualified because Deloitte attached exceptions or conditions to its supplemental proposal sheet submitted as part of its proposal. It thus failed a fatal criterion in the RFP which required agreement to all terms and conditions. The DCF procurement officer, David Shepard, announced the decision to reject all bids, to the vendors, via telephone. He advised a representative of Deloitte that its proposal was rejected for including conditions attached to its supplemental proposal sheet. He told a Spherion representative that its proposal had been rejected for failure to include the proposal bond. He told a Unisys representative that its proposal had not been disqualified, but that Deloitte and Spherion had been disqualified for failure to meet fatal criteria. Mr. Shepard also advised Unisys that the Deloitte proposal had been "conditioned". Beyond that he was reluctant to provide competing vendors more detailed information about the other vendors' proposals because a new RFP was contemplated. In preparing the new RFP the Department intentionally highlighted the requirement in the document advising vendors that "any qualification, counter-offer, deviation from or condition to the terms, condition or requirements of the RFP may render the proposal non-responsive." This language was moved to a more prominent place in this second RFP and put in "bold-faced type" with space surrounding it. This change was made because of Deloitte's disqualification for conditioning its proposals by including "exceptions" when it responded to the first RFP. The Agency wanted to emphasize and highlight this prohibition on qualifications, counter-offers, deviations or conditions to the requirements of the RFP so proposing vendors would clearly know that this was a serious requirement. When the new proposals were submitted in response to the second RFP (the subject RFP), the Department made a determination that all three proposals had passed the certain "fatal criteria" identified in the RFP. Thus the technical proposals were all reviewed and scored by the five member evaluation team. The separate cost proposals from each vendor were opened at a later date. DCF determined at that time that Unisys included with its cost proposal a list of fifteen enumerated "assumptions" which the Agency ultimately determined to be "qualifications, counter-offers, deviations from or conditions to, the terms, conditions or requirements of the RFP." Because of these "assumptions" the Unisys proposal was found to be non- responsive and was not scored. The Agency determined the other two vendors, Deloitte and Spherion, to be responsive to the RFP. Deloitte was determined to have the highest score. Therefore, DCF proposed to award the contract to Deloitte, on July 27, 2005. Unisys timely filed a Notice of Intent to Protest and a Petition protesting the proposed award, requesting a formal administrative proceeding and hearing. Deloitte intervened in that proceeding. The Department filed a Motion for Summary Recommended Order with the Administrative Law Judge contending that the Unisys proposal was non-responsive as a matter of law, and, therefore, that no standing existed for Unisys to challenge the award to Deloitte or to challenge other aspects of the procurement process. That Motion was denied without prejudice on September 23, 2005, because the elicitation of evidence as to material, relevant facts was deemed necessary. Deloitte filed a similar Motion on September 19, 2005, ruling on which is subsumed in this Recommended Order. Responsiveness "Fatal criteria" were delineated in both this RFP and the previous one. The purpose of including "fatal criteria" in an RFP is to determine responsiveness to the criteria the Department has published. Fatal criteria are sometimes referred to as "initial screening criteria" or "responsiveness criteria." A vendor which does not meet all identified fatal criteria is disqualified upon opening its proposal for the RFP. It is not scored. If its proposal passes the initial fatal criteria screening it is sent to the evaluators to be scored. All mandatory requirements in an RFP are not necessarily fatal criteria. The only RFP requirements that result in automatic disqualification are those formally identified as fatal criteria. Both of the RFPs which are involved in the issues in this proceeding include "non-fatal criteria," which are criteria that are reviewed and scored by evaluators. Vendors that do not satisfy the non-fatal criteria may be scored poorly in the competitive evaluation, but are not disqualified unless they fail to meet one or more of the identified fatal criteria. Certain changes were made when the second RFP was issued as compared to the first RFP. Some of the fatal criteria in the first RFP were changed or deleted in the second, including a requirement which had been a fatal criterion in the first RFP that a vendor provide resumes for all its proposed staff, including references and other information. The requirement that providing such was mandatory was retained in the second RFP, but it was made a non-fatal criterion. The DCF kept the requirement that a vendor had to provide sufficient personnel to successfully perform the project, but made it a non-fatal criterion in the second RFP. Mr. Shepard explained the change in the context of looking in the first RFP proposal for every name of 117 proposed staff members and checking to see if a corresponding resume had been supplied became extremely burdensome and it was ". . . very difficult to have a repeatable process on it, so we eliminated it." The vendors were noticed of the change in the fatal criteria through the publication of the second RFP. All vendors had an opportunity to challenge the specifications and none challenged the specification as to the changes in the fatal criteria between the two RFPs. All vendors had an opportunity to ask questions in the question-and-answer period related to the second procurement, concerning the changes to the fatal criteria. No one asked about the changes. Unisys has contended that the Spherion proposal should be disqualified as non-responsive to the second RFP because it did not include the proper number of resumes. Inclusion of the proper number of resumes was no longer a fatal criterion for the second RFP, however. Spherion was scored poorly by the evaluators for failing to fully comply with the non-fatal criterion regarding sufficient support personnel. Although Unisys contends that a procurement manual (CFOP75-10) purports to require the rejection of any proposal which is incomplete or has significant inconsistencies or inaccuracies, the manual was not in effect at the time of the procurement at issue. The procurement officer, Mr. Shepard, was unaware of its existence and none of the vendors were then aware of it, including Unisys. Mr. Shepard, for the Agency, felt that he had to inform the vendors on what basis they would be evaluated and could not use anything against the proposals in a negative way when he had not disclosed a particular evaluation criterion. Unisys also contends that Spherion is non-responsive as to the second RFP because in its signed proposal sheet (SPS) wherein it agrees to all terms and conditions to the RFP it included a statement saying it "has a contract in place with the State of Florida to date. We will abide by the terms and conditions already agreed upon." The procurement officer Mr. Shepard professed not to know what the statement meant, but he did not view it as a condition, saying that it is non- specific and contains no specific terms or conditions. He believes that it did not affect the price of the Spherion proposal and therefore is not a material irregularity in any event. Unisys also raises the alleged non-responsiveness of Deloitte because in its technical proposal it uses the statement that "in the cases where other background checks are required, the Deloitte consulting will be responsible for obtaining such background checks based on costs negotiated with the Department." Mr. Shepard professed to not understand what the phrase meant regarding "negotiating costs," but noted that, in compliance with the RFP, Deloitte had agreed to be responsible for background checks. He thus considered the phrase a minor irregularity that did not affect the price of the Deloitte proposal and thus was not a disqualifying indicia of non- responsiveness. In the first RFP Spherion was disqualified for violating fatal criterion number ten relating to inclusion of a proposal guarantee or performance bond. Deloitte was disqualified in that procurement for violating fatal criterion number twelve relating to a completed and signed "supplemental proposal sheet." The Agency felt that the proposal of Deloitte contained conditions, even though the SPS was properly signed by a representative of Deloitte. The supplemental proposal sheet requires a vendor to agree to comply with all terms and conditions of the RFP. The vendor must not only sign a statement to that effect, but also place the initials of an authorized person beside the statements showing that the vendor understands and agrees with each individual provision of the RFP. Although Deloitte's representative signed the SPS and provided the necessary initials, it also attached "exceptions" to that sheet which resulted in the proposal being rejected in the first RFP process. In the second procurement Unisys was found non- responsive for violating fatal criteria relating to the supplemental proposal sheet (fatal criterion number nine in the second RFP). Mr. Shepard felt that it was a conditioned proposal. His handwritten note beside fatal criterion number nine stated, "opened cost proposal. Cost proposal included potential conditions . . . final decision was a conditioned proposal." Although Unisys had submitted a signed and initialed SPS (attachment K), the assumptions included with its proposal were determined by the Agency to actually modify the signed SPS. Ultimately, after conferring with its counsel, the Agency Assistant Secretary and Secretary determined that Unisys in its proposal was conditioned in a way as to violate the requirements of the RFP, determined it was non-responsive, and thus disqualified. The Unisys Assumptions The vendors in the procurement at issue were precluded from submitting with their proposal any contract terms, conditions or exceptions that did not conform with the terms and conditions provided in the specifications in the RFP. They are warned in bold type that "that any [p]roposal containing terms and conditions conflicting with this requirement shall be rejected . . .". In a separate RFP provision they are cautioned that "[a]ny qualification, counter-offer, deviation from or condition to the terms, conditions or requirements of the RFP may render the proposal non-responsive." See Joint Exhibit 1, Sections 7.2D and 2.9, in evidence. Unisys, like all vendors, was required to and did submit a signed supplemental proposal sheet, but Unisys' corporate representative testified that he nevertheless included the assumptions with the cost proposals because he was not sure that the Department had the same understandings of certain terms and conditions in the RFP as Unisys did. As he stated, " . . . that was why we asked to clarify." If any vendor, including Unisys did not understand the import of the various terms and conditions in the RFP specifications, or a particular term, the RFP provided an opportunity for vendors to seek clarifications through various means, including written questions, prior to bid submission and opening. Moreover, if a contract term or specification was deemed improper, unclear or otherwise inappropriate the vendors had an opportunity, prior to submitting proposals, to challenge the specifications of the RFP themselves. During the ten days between the issuance of the second RFP and the deadline for submission of proposals Unisys did not challenge the specifications nor submit any questions to the Agency concerning the subject matter of the assumptions which it placed in its proposal. The RFP does not allow for negotiations between a winning vendor and the Department. Once the contract is awarded by announcement by the Agency, pursuant to the RFP, and until the contract is signed, the only discussion between the vendor and the Agency may be about technical errors. Any negotiations about the terms and conditions of the RFP with the winning vendor would be unfair to other vendors who submitted proposals based solely on the terms and conditions published in the RFP, and who had no such opportunity for "after-proposal negotiations" with the procuring Agency. The Department considered the Unisys assumptions, especially their placement in the cost proposal as opposed to the technical proposal, part of an effort to gain negotiating opportunity at the end of the evaluating process, an opportunity not provided to the other vendors. The Department believed that the assumptions were not included in the body of the technical proposal in order to make sure that the technical proposals would be evaluated and scored. Then, once Unisys had a score on the technical proposal, it had a cost proposal modified by the assumptions, which the Agency believed was an effort by Unisys to obtain some leeway to negotiate after award and before the final contracting process. In fact, the preamble language Unisys used to propose its list of assumptions states as follows: "The following are assumptions that Unisys has made for this proposal. We would like the opportunity to discuss these assumptions at contract negotiations." (emphasis supplied). The RFP does not allow for negotiations after the posting of a contract award. Even if the Department were to ignore the clear request to enter contract negotiations regarding the assumptions, the Agency still took the position that the assumptions proposed were beyond the specifications of the RFP, in fact altered the proposal and, if accepted, would have altered the terms of the RFP and the contract contemplated in it and by it. In fact, the persuasive evidence, including the testimony of Mr. Fagan and Mr. Shepard, establishes that the proposal by Unisys was based on those fifteen assumption items being considered and implemented in the ultimate contract, should Unisys be awarded the contract. Some of the fifteen assumptions, as shown by the persuasive, credible evidence clearly deviate from the express terms and conditions of the RFP, which the RFP prohibits. Assumption seven provides: We assume that applicable RFP terms regarding recovery against the performance bond are clarified to the extent that the Department will not seek liquidated or any other damages against the performance bond unless the contract is terminated for default and the vendor and the Department have been unable to settle any resulting claim. This assumption, if accepted in the contracting process, would limit those circumstances where the Department would be able to make a claim against the performance bond of Unisys. Pursuant to the plain language of this assumption the Department would be precluded from seeking damages from the performance bond, unless there was actual default by Unisys which resulted in contract termination. The RFP, however, places no such restriction on when the Department may make a claim against the performance bond of a vendor. The RFP in fact, expressly authorizes DCF to file for remuneration against the performance bond based upon any failure to perform by the vendor, regardless of whether the contract is terminated. The RFP specifically provides that if the vendor is given an opportunity to cure a material breach, which would keep the contract in effect, that DCF may still obtain compensation for the results of that breach by preceding against the vendor's performance bond. See Joint Exhibit 1, Section 3.21, in evidence. In fact there are a number of circumstances provided for in the RFP where DCF may make a claim against a performance bond despite the continuation status of the contract. For instance, Section 3.5.C.2.a authorizes the recovery of damages from the performance guarantee where an individual fixed price contract, rather than the entire contract, is terminated due to the vendor's failure to meet the project's completion date. So too, Section 3.9.E provides "any and all occurrences of any dishonesty or deception on the part of the vendor's employees, with regard to Department confidential information, shall cause the Department to suffer damages and the Department shall be entitled to . . . recovering from the vendor, the actual damages the Department sustains up to the insured limits of the vendor's performance guarantee." In his testimony at hearing Unisys corporate representative acknowledged that if the Department accepted assumption seven proposed by Unisys, that the contact would not allow DCF to seek damages against the performance bond unless the contract was actually terminated. This is clearly contrary to the language in the RFP. Assumption twelve provides: We assume that the last sentence of paragraph two under 3.18 ['vendor agrees that any and all work performed exceeding the mutually agreed to time estimates in the ISSR maybe deemed by the Department to be gratuitous and not subject to charge by the vendor'] applies only to fixed price projects. Fixed price projects are defined in the RFP as "one unique activity where the vendor shall establish a fixed price for providing the deliverables . . . ." Unlike fixed price projects, the RFP provides that work tasks assigned to a vendor pursuant to a Information Systems Services Rquest (ISSR) will be performed and paid for on an hourly rate basis. In this regard the ISSR must identify the "vendor's and the Department's agreed-upon estimated work hours and anticipated completion date." Although the DCF must pay for any hours worked up to the total work hours estimated in the ISSR, the RFP provides that DCF is not obligated to pay for any hours worked beyond that estimate. In fact, Joint Exhibit 1, Section 3.18, in evidence, provides in relevant part: The vendor agrees that any and all work performed exceeding the mutually agreed to time estimates in the ISSR's maybe deemed by the Department to be gratuitous and not subject to charge by the vendor. Pursuant to this quoted sentence from the RFP the agreed-upon estimated work hours in the ISSR operates as a limit to the number of hours that a vendor can bill DCF for a particular job or task. However, the plain language of the Unisys assumption materially alters this RFP provision by changing the word "ISSRs" to "fixed price projects," which would make the sentence read, if it were adopted, as follows: The vendor agrees that any and all work preformed exceeding the mutually agreed to time estimate in the fixed price projects deemed by the Department to be gratuitous and not subject to charge by the vendor. (emphasis supplied.) Thus this assumption proposed by Unisys clearly amounts to the substitution of one defined term for another which would change the liability of the proposer, Unisys, with respect to that specific provision. Unisys's own corporate representative acknowledged in his testimony that the change identified by this assumption would mean that Unisys would be paid more under the operation of the contract. If this word substitution were adopted in the contracting process, the estimated work hours that must be agreed to and included in each ISSR would become meaningless, as the ISSR would no longer serve the function of limiting the number of hours that could be billed for hourly rate work. Assumption five provides: Pursuant to the Department's changes to Section 3.12, time is of the essence applies only to failure to meet completion dates for startup and transition tasks and not the contract as a whole. Most of the performance under the contract will be provided during the support task days of the contract. This will represent 36 of the 39 months of the basic contract period. A completion date is provided in the RFP for each support task assigned to the vendor, either through an ISSR or fixed price project. The RFP at Section 3.12 (Joint Exhibit 1 in evidence) emphasizes the importance of completing on a timely basis, where it states: The vendor agrees . . . to proceed diligently to complete the start-up and support tasks in accordance with the requirements set forth in this RFP . . . time is of the essence in this RFP . . . This ”time is of the essence" phrase is qualified in the case of the start-up phase and transition task during which the vendor would have to work with another company that may prevent the timely performance of a particular task. Because of this possibility the RFP provides that a vendor's failure to meet a completion or a start-up or transition task will not be a default if it is due to the failure of another company to timely perform its obligation. The RFP also gives DCF numerous remedies, including termination of the contract, in the event performance is untimely by the vendor. This assumption posed by Unisys attempts to limit the "time is of the essence" requirement to the start-up and transition task and thus limit Unisys's potential liability for failing to meet deadlines during the support phase, the majority time period of the contract term. Numerous parts of the RFP emphasize the importance of timely completion of various tasks. See Joint Exhibit 1 Section 4.5, Section 3.5C.2 and Section 3.7.D and Section 3.15.A, in evidence. Unisys's corporate representative witness testified that assumption five was included because Unisys was confused about a change in the "time is of the essence" language made during the question-and-answer period after the first RFP was issued. (Not at issue in this case.) However, Unisys did not use the question and answer period during this second RFP process to seek clarification of the earlier change or of the meaning of the "time is of the essence" requirement, if indeed it was confused. Various sections of the RFP cited above which emphasize the importance of timely performance show that timely performance is important and a material part of the RFP. The Unisys proposal, at assumption five, will have the effect of changing the requirement of the RFP regarding time being of the essence for completion of support tasks, seeking rather to limit the time is of the essence requirement to only start-up and transition tasks. This would significantly limit Unisys's potential liability for failing to meet the deadlines during the support phase. Assumptions nine and eleven in Unisys's proposal provide respectively as follows: We assume that the RFP attachment C, Section 21 (limitation of liability) is clarified so that in the event the Department does not issue any purchase orders under the contract, to substitute 'amounts paid' under the contract for 'purchase order'. We assume that to comply with attachment C, Section 21, the Department will provide a PO to Unisys or if not, the language will be changed to refer to the contract. The RFP itself contains no provision limiting a vendor's potential liability to DCF in the event of contract breach. Although Section 21 of the PUR Form (RFP attachment C) is entitled "limitation of liability," this provision is inapplicable to this contract because Section 21 only purports to limit liability where a claim is made under a purchase order. It is undisputed that no purchase orders will be issued pursuant to this RFP. PUR Forms attached to the RFP at issue in this case are standard forms that are required by state purchasing rules to be attached to all competitive procurements. They are subordinate to the RFP, and certain provisions of the PUR Forms are not applicable to all procurements. An order of precedence in PUR Form 1001 (attachment D to Joint Exhibit 1 in evidence) makes it clear that the RFP supersedes the PUR Forms. Section 21 of attachment C is not applicable to the RFP at issue in this case. If the language in assumptions nine and eleven were adopted in the contract, DCF would be required to either to issue purchase orders, which ordinarily would not be done in this RFP, or to change the language of Section 21 by substituting the phrase "amounts paid under the contract" for "purchase order." Thus if Unisys assumptions nine and eleven were adopted it would have the effect of limiting Unisys's liability by applying the limitation of liability related to purchase orders to the entire RFP. Such was not the intent behind nor in accordance with the terms of the RFP. Unisys assumptions one and thirteen are also related. They provide: We assume that the parties will reach mutually acceptable clarifications to the RFP and final terms and conditions for the contract. We assume that any direct conflicts if any, between the Department contract documents will be resolved during negotiations. The agreement between the parties will consist of multiple documents, including the contract document, the RFP, and the winning bidder's proposal. To the extent that any of these documents is in conflict, assumption thirteen would compel the Department to resolve the conflict through negotiations with Unisys. This is contrary to Section 2.13 of the RFP which does not make such conflicts subject to negotiation, but rather states that "[a]ny ambiguity or inconsistency among those documents shall be resolved by applying the 'order of precedence'" specified in the RFP. These two assumptions basically incorporate a negotiation phase into the RFP that was not provided for by the RFP. Unisys asserts an order of precedence for resolving ambiguity or inconsistency among the documents and contract terms in its assumption eight, which provides: We assume that the contract terms will be clarified with an order of precedence assigned to each component (contract terms, proposal, PUR Forms, or RFP). This assumption attempts to rewrite Section 2.13 of the RFP which establishes instead the following order of precedence: The contract document; The RFP and its appendices (e.g. the PUR Forms and attachments C and D); and The vendors proposal. Assumption eight, which prioritizes the documents differently (i.e. contract terms, proposal, PUR Forms, and RFP), would materially change the order of precedence by making the Unisys proposal, including the deviations from the RFP it contains, more important in order of precedence than the RFP itself. Assumption eight also assigns the generic PUR Form, which contains the general conditions that are incorporated into all state procurements, a higher priority than the special conditions in the RFP that the Department developed for this particular contract. This conflicts with the PUR Form itself, which states that the general conditions in the PUR Form are subordinate to the special conditions and technical specifications in the RFP. See Joint Exhibit 1, attachment D, paragraph 4 in evidence.1/ Unisys assumption six provides: We assume that the Department is responsible for daily backup of all the production data basis and will perform backups to protect the integrity of the data. Under the RFP, the vendor is responsible for repairing damaged data. Assumption six, however, would shift partial responsibility for this task to the Department or create a potential reason or excuse for any failure by Unisys to repair damaged data by imposing on the Department a duty to protect the data by daily back-ups. Assumption number six thus seems to provide that Unisys would guarantee repair of damage data only if DCF assumes responsibility for the daily back-ups and, if it did not, no liability or obligation for damaged or lost data or its repair would be assumed by Unisys. This assumption is thus at odds with the RFP to the extent that it adds such a contract term that was not contemplated by the RFP Unisys assumption ten provides: We assume that the documentation library and all information provided by the Department is correct, current and complete. The RFP, however, explicitly states that "the Department does not warrant that the information is indeed complete or correct. The Department disclaims any responsibility for the accuracy or completeness of the material information, documentation and data in the documentation library." Past Agency Practices Witnesses for Unisys stated, in essence, that it is their company's policy to include assumptions in responses to RFPs. They introduced evidence concerning two prior procurements by RFP in 1997 and in 1998 to which Unisys responded with assumptions in its RFP proposals. They contend that it is Agency policy to allow for such assumptions in responses to RFPs using these two past procurements as examples. One of those procurements, the 1998 Florida System RFP resulted in a contract between Unisys and the Department. The other procurement, the 1997 "SACWIS" procurement never resulted in a contract because the Agency did not receive enough money from federal funding and legislative funding to meet the price of the awardee, which was Unisys. In the 1998 Florida System procurement RFP three assumptions were placed in the cost proposal submitted by Unisys. The first of them provided that the proposer, Unisys, wanted to negotiate the "indemnity provisions including a reasonable limitation on liability provision." The Department standard contract which was attachment "A" to that RFP, however, specifically provided for the negotiations that Unisys requested in this assumption. The contract stated that "where any contract which may result from this request for proposal contemplates software licensing, software maintenance services, or software developmental services, the language in Section 1.F., indemnification in the standard contract may be subject to change through negotiation." Thus this assumption did not change the terms and conditions of the RFP involved in that procurement because it simply requested something that was already explicitly allowed by the RFP, that is, negotiation. The second assumption in that procurement states that the wording of paragraph 3.20.B(3) in the RFP is "unclear" and that Unisys "assumes that the Department does not intend for the proposer to indemnify the proposer's subcontractors." The reference paragraph in that RFP had contained a mistaken sentence which stated that the successful proposers "shall indemnify its affiliated companies and sub-contractors . . ." That assumption did nothing more than identify a mistake, it did not change the terms and condition of the RFP. The final assumption as to that 1998 procurement RFP stated that Unisys "assumes that language along the lines of the clarification provided for question two on page four of addendum one will become a permanent part of the contact." This assumption did not change the terms and conditions of the RFP, either, because addenda to the RFP are normally incorporated into a contract. The assumptions made by Unisys in response to the 1998 RFP are not the same as the assumptions in the procurement at issue because none of them changed the terms and conditions of the RFP. Notably, the 1998 assumptions acknowledged this fact by inclusion of the following statements: By stating the assumption below Unisys is not taken any exceptions or making any deviations to or from the terms or conditions of the RFP or the standard contract. Our acceptance of the terms and conditions are specifically included at tab 8 . . . We have however made certain assumptions to allow pricing of the proposal where a clear determination of the potential impact for a certain statement could not be ascertained. No similar statement was included with the assumptions made by Unisys in its current procurement RFP proposal. Regarding the 1997 SACWIS procurement, Unisys also submitted a list of assumptions with its proposal. These, however, as shown by Mr. Shepard, did not rise to the same level as the assumptions in the instant RFP situation. Neither Mr. Shepard, nor other witnesses were able to identify if any of the assumptions in that 1997 procurement ever changed the terms and conditions of the RFP because a complete text of the 1997 RFP was not available. No contract resulted from that procurement because the Agency did not receive sufficient funding to implement a contract. Subsequent negotiations to reduce the costs associated with the procurement were halted by the Agency's general counsel because those negotiations "got into areas that were not permitted by the RFP." Moreover, Mr. Shepard for the Agency, in his testimony in this case, acknowledged that if any of the assumptions submitted by Unisys in the 1997 procurement changed the terms and conditions of the RFP, then the Agency would have been in error if it did not reject them as non-responsive. Unisys contends that the Spherion proposal was non- responsive because Spherion only supplied 37 of the required 117 resumes identifying the personnel it would use to operate the contract. The failure of Spherion to include all resumes and identify all sub-contractors gave it a competitive advantage according to Unisys because Unisys had to obtain agreements from all sub-contractors on price in order to formulate a cost proposal for its response to the RFP. By obtaining most of its staff after an award was made, Spherion would be in a more favorable competitive position, in making its proposal, allowing it to, in effect, "bid shop" for sub-contractors at decreased prices after it had secured the bid award. Unisys thus maintains that the failure to submit all the required resumes was a material deviation from the specifications of the RFP. Unisys also cites that part of Spherion's proposal where it announced that it "has a contract in place with the State of Florida to date. We will abide by the terms and conditions already agreed upon." Mr. Shepard for the Agency stated that he simply disregarded this condition expressed in attachment "K" by Spherion because he did not know what it meant. It would appear that it could be interpreted to mean that Spherion was proposing to abide by terms and conditions already agreed upon in some other unidentified contract with the Agency or with the "State of Florida" (Agency unspecified), which could mean interpreting terms and conditions which came from outside the specifications of this subject RFP. If that were the case it would possibly portend a material deviation from the specifications of this RFP. Unisys contends that if Spherion were deemed to be unresponsive, because of these two reasons, that would leave only Deloitte as a responsive proposing vendor, if Unisys's position that it was responsive and should be awarded the contract were rejected by the Agency. It maintains that, in order for this to then be a competitive procurement, a new RFP would have to be issued to allow the Department to have at least two qualified, responsive vendors to consider. Moreover, Unisys contends that, in addition to Spherion, that Deloitte should be treated the same as the Unisys proposal was treated by the Agency in terms of intolerance for alleged deviations from the RFP. It contends that the RFP at Section 3.7G required background checks to be conducted on all contract personnel, at the expense of the contractor. Deloitte indicated that it would conduct such background checks, but "based on costs negotiated with the Department." In response to this contention, at hearing, Mr. Shepard, for the Agency, dismissed this assertion in the proposal by Deloitte as a "minor irregularity" because it wasn't clear to him, stating: It could easily be interpreted to say that the scope of the background checks needs to be negotiated with the Department so they can figure out what it is going to cost them to do that. I mean, there are just a couple of ways you could interpret this language. In given that, I could not come to the conclusion that this was a material deviation from the requirements. The proposal by Deloitte clearly says costs "negotiated" (emphasis supplied) not "scope." Unisys thus contends that it is disparate and in effect arbitrary for the Agency to be willing to overlook the inconsistency thus expressed in Deloitte's proposal by interpreting it as being as unclear or at most a minor deviation when it would allow Deloitte, through that proposal, to present an issue that must be negotiated with the Agency before background checks for any staff to be assigned to the job could be performed. This is contrasted with the Agency interpretation of the Unisys proposal regarding "discussion" of assumptions and regarding conducting "negotiations" as being unallowable conditions and material deviations from specifications. Parenthetically, it is noted that, if this aspect of the Deloitte proposal and the above-discussed aspects of the Spherion proposal concerning the "other state contract" and the fact that its proposal was deemed responsive even though it was not held to the requirement of supplying all 117 resumes of proposed subcontractors (which might allow it "bid shop" subcontractors after an award) were deemed to allow Spherion or Deloitte a competitive advantage or to affect the cost of their proposals, then the argument that these apparent irregularities are material irregularities or departures from the specification of the RFP, might have some merit. However, because of the findings and conclusions below concerning the responsiveness of the Unisys's proposal, and the effect such has on Unisys's standing in this proceeding, these issues regarding Deloitte's and Spherion's proposals cannot, at law, be definitively addressed so as to decide in this proceeding that all proposals should be rejected and the procurement effort be repeated.
Recommendation Having considered the foregoing Findings of Fact, Conclusions of Law, the evidence of record, the candor and demeanor of the witnesses, and the pleadings and arguments of the parties, it is, therefore, RECOMMENDED that a final order be entered by the Department of Children and Families awarding the Florida System contract at issue to Deloitte Consulting LLP. DONE AND ENTERED this 2nd day of February, 2006, in Tallahassee, Leon County, Florida. S P. MICHAEL RUFF Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with Clerk of the Division of Administrative Hearings this 2nd day of February, 2006.
The Issue Whether the Respondent committed the violations alleged in the Administrative Complaint, and, if so, the penalty that should be imposed.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing and on the entire record of this proceeding, the following findings of fact are made: The Department of Business and Professional Regulation is the state agency responsible for investigating and prosecuting complaints involving violations of the requirements of Chapter 489, Part I, Florida Statutes. Sections 489.131(7)(e) and 455.225, Florida Statutes. Pursuant to Section 489.129(1), the Construction Industry Licensing Board ("Board") is the entity responsible for imposing discipline for any of the violations set out in that section. At all times material to this case, Mr. Vega was a certified general contractor operating under a license issued by the Construction Industry Licensing Board, numbered CG C046448. Mr. Vega has been a licensed general contractor in Florida since 1989, and since 1994, he has been the licensed qualifying agent for Group Construction South Florida, Inc. The residence of David M. Hudson, located at 19801 Southwest 84th Avenue, Miami, Dade County, Florida, was severely damaged in August, 1992, by Hurricane Andrew. In a letter dated October 13, 1992, Mr. Hudson, who holds a doctorate in biology and is the laboratory manager for the University of Miami Chemistry Department, proposed to Mr. Vega that he prepare plans for reconstructing the Hudson residence. On December 23, 1992, Mr. Hudson and Mr. Vega executed a contract for construction work to be performed on the Hudson residence. The parties contemplated that Mr. Vega would complete the work in accordance with the drawings and original blueprints prepared by Jose A. Sanchez, a structural engineer, at Mr. Vega's direction and based on preliminary plans approved by Mr. Hudson. Specifically, Mr. Hudson understood that the major elements of construction included in the December 23 contract were elevation of the house from one story to two stories, construction of a new living area on the second floor, and construction of a basement on the first floor to serve as a "bare bones storage area." The contract price specified in the December 23 contract was $146,338.33, with ten percent due upon acceptance of the proposal, ten percent due at completion of each of eight items of construction specified in the contract, and ten percent due upon completion of the project. The eight items of construction specified in the contract were "demolition work, rising work, tie beams, roof, doors & windows, plaster & tile, pool & fence, finish work and paint." On February 1, 1993, Metropolitan Dade County Building and Zoning Information Department issued Permit Number 93119957 to Mr. Vega for the Hudson project. The building permit was based on the original plans for the project submitted by Mr. Vega on January 19, 1993, together with some items that were added to the plans at the county's request. Mr. Vega began work on the project on February 1, 1993, the day the permit was issued. Mr. Vega hired Ruben Armas to act as foreman for the project, and his duties included hiring and supervising day laborers and procuring materials needed for construction. At the time, Mr. Armas was not licensed, registered, or certified by either Dade County or the State of Florida. Mr. Vega had an arrangement with Mr. Armas whereby he paid Mr. Armas periodic advances on a lump sum payment that Mr. Armas was to receive when the Hudson project was complete. Mr. Vega did not deduct FICA or withholding tax from the payments made to Mr. Armas under this arrangement. Mr. Vega dealt directly with Mr. and/or Mrs. Hudson regarding the project, although they would occasionally leave messages for him with Mr. Armas. Mr. Vega directly supervised Mr. Armas and gave him instructions on the work that was to be performed and the way it was to be done. Mr. Vega was routinely at the job site at least two or three times a day to inspect the work that had been done. Mr. Vega was present at the site during the entire time that cement was poured for footings or other structural elements. Mr. Vega arranged for various subcontractors to work on the project, including electricians, plumbers, air conditioning workers, roofers, carpenters, and drywall hangers. On April 14, 1993, a Department investigator conducted an inspection of the Hudson project during a "hurricane task force sweep." When she and the other members of the task force arrived on the job site, she observed Mr. Armas and two other men "inside working," but she did not observe them working or see the type of work they were doing. Mr. Armas walked out to meet the inspector and gave her a card that contained his name and phone numbers and the words "General construction & roof repair." Mr. Armas told the Department investigator that, when she arrived, he was "working on the footing for the elevation of the house." On April 21, 1993, Mr. Vega signed a Cease and Desist Agreement in which he acknowledged that the Department was investigating allegations that he had "engaged in the practice of aiding and abetting unlicensed contractor Ruben Armas." By signing the agreement, Mr. Vega agreed to cease "engaging in this activity," but he did not admit that the Department's allegations were true. The Department investigator was at the Hudson job site on April 14, 1993, for thirty minutes to an hour, during which time Mr. Vega did not appear at the site. This was the only time she was at the job site while work was being done. As the work progressed on the project, everything appeared to be going well, and Mr. Vega felt that he enjoyed a very good working relationship with Mr. and Mrs. Hudson. Mr. Hudson paid Mr. Vega a total of $116,400.00, or eighty percent, of the original contract price of $146,338.33, in ten percent increments as provided in the contract. By check dated December 23, 1992, Mr. Hudson paid the down payment of $14,633.38. By check dated February 5, 1993, Mr. Hudson paid $14,600.00 upon completion of the demolition work. By check dated March 5, 1993, Mr. Hudson paid $14,633.00 upon completion of raising the structure to two stories. By check dated March 24, 1993, Mr. Hudson paid $14,633.00 upon completion of the tie beams. By check dated April 19, 1997, Mr. Hudson paid $14,633.00 upon completion of the roof. By check dated May 13, 1993, Mr. Hudson paid $14,633.00 which should have been paid upon completion of the doors and windows but which he paid even though the installation of the doors and windows was not complete. By check dated June 23,1993, Mr. Hudson paid $12,000.00 of the $14,633.00 draw because, in his opinion, the project was not being completed on schedule. Finally, by check dated July 2, 1993, Mr. Hudson paid $17,000.00 to bring the payments up to the amount consistent with the contract schedule for completion of the pool and fence. In a letter to Mr. Vega dated June 7, 1993, Mr. Hudson stated that he wanted to make "a major change" in the plans. Specifically, Mr. Hudson wanted to eliminate the swimming pool, which he estimated would save $20,000.00 of the $146,633.00 contract price, and use the money saved "to completely finish the downstairs to be a nice guest area," to "install the better quality carpet we want, complete wooden fence, air conditioning in 1st floor, plumbing ~ electric in 1st floor, [and] indoor wooden shutters for all windows." Mr. Hudson went on to state that he wanted certain enumerated appliances, which would cost $4,108.00, and new furniture, which he estimated would cost $6,000.00, for a total of $10,108.00. According to Mr. Hudson's proposal, Mr. Vega should be able to "finish off the 1st floor the way we want it, install the nice carpet and tile, and do all the other jobs previously listed (fence, plumbing, etc., for 1st floor) for about $10,000.00." The basement area which Mr. Hudson wanted to finish as a "nice" living area consisted of approximately 2,000 square feet and had originally been designed as a storage area, with concrete floor and walls. Mr. Vega and Mr. Hudson discussed the proposal and the costs of the changes, but they did not reach an agreement on the cost of the additional work. 3/ Mr. Hudson asked Mr. Vega to leave the job site and cease work on the project on or about July 3, 1993, and Mr. Vega did not perform any work on the Hudson residence after this time. Mr. Hudson terminated Mr. Vega from the project solely because of the dispute with Mr. Vega over the cost of the changes he had requested in his June 7 letter. Mr. Hudson did not complain to Mr. Vega about the quality of the work that had been completed, and, although he thought that the project was getting behind schedule, Mr. Hudson issued a check dated July 2, 1993, which brought the total payments to eighty percent of the original contract price. When Mr. Vega stopped work on the project, the structure contained deviations from the original plans. 4/ Some of the deviations were items shown in the original blueprints which had not been incorporated into the structure; some were items that were not shown in the original blueprints but were incorporated into the structure at the request of, or with the approval of, Mr. and/or Mrs. Hudson; some were deviations in the size of openings to accommodate doors and in the location and size of windows; most were minor deviations in the placement of electrical switches and receptacles or other similar deviations. The construction was, however, generally consistent with the original plans. 5/ There were three items that were significant deviations from the original plans. The most serious deviation concerned the changes made in the dimensions of the structural slab that formed the floor of the second floor balcony off the family room, kitchen, and dining room and the roof of the first floor terrace. The original plans included a second floor balcony with a width of six feet. The Hudsons asked Mr. Vega to increase the width of the balcony, and Mr. Vega called Mr. Sanchez, the structural engineer who had prepared the original plans, and asked if the width of the slab could be increased. Mr. Sanchez approved an extension from the original six feet to eight feet, eight inches, and he advised Mr. Vega of the additional reinforcement that would be needed to accommodate the increased width. On the basis of Mr. Sanchez's approval, Mr. Vega incorporated the additional reinforcement specified by Mr. Sanchez and poured the slab to the requested width of eight feet, eight inches. Even though Mr. Vega consulted a structural engineer, he did not submit revised blueprints to the building department and obtain approval for the structural change before doing the alteration. He was aware that the building code required approval before such a change could be incorporated into a structure and that his actions violated the code. 6/ The second significant deviation from the original plans was Mr. Vega's failure to construct the fireplace shown in the original plans. According to the plans, a fireplace was to be constructed in the living room, on the second floor. Although the roof was completed and the drywall installed, no accommodation had been made for the fireplace in either the wall or the roof. Mr. Vega intended to construct the fireplace and would have done so had he not been told to cease work on the project. The third significant deviation from the original plans concerns the windows installed in the structure. No window permits or product approvals were contained in the permit file for the Hudson project. In addition, some of the windows were not the size specified in the original plans, some were too deep, and some were placed lower than the thirty inch sill height specified in the original plans. Many of the items identified as "deviations" were actually items not shown on the original plans but incorporated into the structure at the request of, or with the approval of, Mr. and/or Mrs. Hudson. Neither the requests for the additional items nor the costs of the items were reduced to writing by Mr. Hudson or Mr. Vega. At the time Mr. Hudson directed him to cease work on the project, Mr. Vega had contracts with subcontractors to provide the labor and materials specified in the original contract. He was prepared to complete the project in accordance with the original plans and for the original contract amount, with adjustments for the extras that had already been incorporated into the project at the request of, or with the approval of, Mr. and/or Mrs. Hudson. He was also prepared to correct all deficiencies and code violations in the structure. After he was terminated from the project, Mr. Vega continued to negotiate with Mr. Hudson's attorney to arrive at an agreement for completion of the project that would be satisfactory to Mr. Hudson. In a proposal submitted to Mr. Hudson's attorney in the fall of 1993, Mr. Vega offered to complete the project in seven weeks in accordance with the original plans, as modified to incorporate the changes and upgrades Mr. Hudson had requested in the June 7 letter and the changes and upgrades that had already been incorporated into the project at the request of, or with the approval of, Mr. and/or Mrs. Hudson. The total price for completion proposed by Mr. Vega was $56,750.00, which included the cost of the upgrades and extras and the $29,572.00 balance owing under the original contract. Mr. Hudson did not accept this proposal. Instead, he eventually hired a contractor named Robert Krieff, who did some work on the project. In February, 1994, Mr. Hudson took over the building permit himself and hired various subcontractors to work on the project. According to Mr. Hudson, in addition to the $116,400.00 he paid Mr. Vega, he has paid approximately $50,000.00 for work done after he terminated Mr. Vega, and he anticipates spending another $35,000.00 before a Certificate of Occupancy is issued. Mr. Hudson paid off a lien on his property for work done pursuant to his contract with Mr. Vega. A Claim of Lien in the amount of $4,712.00 was filed by Luis A. Roman on October 5, 1993, for drywall hung and finished at the Hudson residence under an arrangement with Mr. Vega. Summary of the evidence. The evidence presented by the Department is sufficient to establish that Mr. Vega willfully violated the building code with respect to the alteration of the width of the second floor balcony. Mr. Vega admitted that he knew he was violating the building code when he extended the width of the second floor balcony beyond the width specified in the original blueprints before submitting revised engineering plans to the county and receiving approval to make the alteration. This violation is one of procedure only, however, and there was no competent evidence presented to establish that Mr. Vega failed to include adequate reinforcement to compensate for the additional width prior to pouring the slab or that there were structural problems with the slab. 7/ The evidence presented by the Department is sufficient to establish that Mr. Vega violated the building code because the work completed by Mr. Vega on the Hudson project contained deviations from the original approved plans. 8/ On the other hand, the evidence presented by the Department is sufficient to establish that this violation is a minor one. The Department's experts testified that the construction done on the Hudson residence by Mr. Vega was generally consistent with the approved plans and that it was commonplace for contractors in Dade County to deviate from the approved plans and later submit revised plans for approval. The evidence presented by the Department is sufficient to establish that Mr. Vega did not file product approvals or obtain window permits prior to windows being installed in the Hudson project. The evidence presented by the Department is not sufficient, however, to establish that these omissions on Mr. Vega's part constituted a violation of section 204.2 of the South Florida Building Code, as alleged in the Administrative Complaint. Although there was some testimony that the building code requires that product approvals be filed and window permits obtained before windows are installed, the applicable code and section were not identified by the Department's witnesses or otherwise made a part of the record. Thus, there is no evidence of the precise obligations imposed on Mr. Vega by the code that was applicable at the time of the Hudson project. As a result, it is not possible to determine whether Mr. Vega fulfilled his obligations under the code. The evidence presented by the Department is not sufficient to establish that Mr. Vega assisted Mr. Armas in engaging in the unregistered or uncertified practice of contracting. There is no evidence in the record that Mr. Armas performed any work on the Hudson project that could be performed only by a licensed contractor. 9/ Notwithstanding the opinions stated by the Department's experts, the evidence presented by the Department is not sufficient to establish that Mr. Vega is guilty of incompetence or misconduct in the practice of contracting as a result of the work done on the Hudson project. The evidence presented by the Department is sufficient to establish that Mr. Hudson suffered financial loss in the amount of $4,712.00, which is the amount Mr. Hudson paid to clear the lien placed on his property by Luis A. Roman. Although this loss is attributable to Mr. Vega's failure to pay Mr. Roman for hanging and finishing drywall in the Hudson residence, the evidence presented by the Department is not sufficient to establish that Mr. Hudson suffered financial loss as a result of the violation with which Mr. Vega was charged and of which he was proven guilty.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Construction Industry Licensing Board issue a Final Order dismissing Counts I and III of its Administrative Complaint, finding that Gonzalo Vega is guilty of violating section 489.129(1)(d), Florida Statutes (1993), and imposing an administrative fine in the amount of $1,000.00. DONE AND ENTERED this 3rd day of July, 1997, in Tallahassee, Leon County, Florida. PATRICIA HART MALONO Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (904) 488-9675 SUNCOM 278-9675 Fax Filing (904) 921-6847 Filed with the Clerk of the Division of Administrative Hearings this 3rd day of July, 1997.
The Issue As set forth by the parties in the Prehearing Stipulation and in their proposed recommended orders, the issue in this case is whether the bid submitted by Pass International, Inc., on the Booker T. Washington Middle School Project No. A-0557 is responsive with respect to compliance with the Minority/Women Business Enterprise Assistance Levels subcontracting requirement contained in the Invitation to Bid.
Findings Of Fact Based on the oral and documentary evidence presented at the final hearing, on the contents of the Pre-Hearing Stipulation, and on the entire record of this proceeding, the following findings of fact are made: At all times material to this proceeding, the School Board was a duly-constituted School Board charged with the duty to operate, control, and supervise all free public schools within the School District of Miami-Dade County, Florida, pursuant to Article IX of the Florida Constitution and to Section 230.03, Florida Statutes. Acestarz, Inc., was organized as a Florida for-profit corporation on September 2, 1997. Joseph Akoni, an African American male, owns 100 percent of the stock of Acestarz and acts as its president. In an agreement executed April 19, 1998, Joseph Robert Mijares, a Hispanic, agreed to act as Acestarz' qualifying agent and to apply for Acestarz's certification of authority as a general contractor. At the time, Mr. Mijares was an employee of Pass, and he acted as project manager on a number of Pass construction projects, both large and small. Mr. Mijares notified Pass of his agreement with Acestarz a few days after it was executed. Mr. Mijares held a state general contractor's certification. As qualifying agent, Mr. Mijares submitted the application for certification for Acestarz to the Florida Department of Business and Professional Regulation, Construction Industry Licensing Board, on April 23, 1998. A Temporary Authorization License was issued to Mr. Mijares on August 5, 1998, which authorized Acestarz to practice contracting through Mr. Mijares as its qualifying agent pending the processing and receipt of the permanent certification. By its terms, the temporary license was to expire on October 5, 1998. On or about June 1, 1998, Acestarz submitted a Certification Application to the School Board requesting certification as an African American M/WBE. In a letter dated June 1, 1998, Patricia Freeman, Director of the Division of Business Development and Assistance, notified Mr. Akoni that the application had been received. In the letter, Ms. Freeman stated: In the interim [while the application is pending], you may bid as a prime, or subcontractor, on future Dade County Public Schools contracting opportunities, set aside for, or requiring M/WBE participation. Should you be deemed the apparent low bidder or a subcontractor thereto, your application will be processed before contract award. Prime contractors who utilize subcontractors that are pending, but subsequently are deemed ineligible for certification, will be allowed to make a substitution, within the same racial or gender category as the firm being substituted. The School Board's BTW project is a competitive design- build project involving the conversion of Booker T. Washington Middle School into a high school. In order to submit a bid on the BTW project, prospective bidders were required to submit pre-qualification proposals for evaluation in August 1997. Pass and Danville-Findorff, among others, submitted pre-qualification proposals. After the School Board administrative staff evaluated the proposals, three firms, including Pass and Danville-Findorff, were pre-qualified to bid on the BTW project. On or about June 9, 1998, the School Board issued an Invitation to Bid on the BTW project. The bid specifications instructed the bidders to submit a lump-sum bid for all design and construction services required to complete the BTW project. The bid specifications further provided that the bids were to be submitted on or before July 28, 1998, and that, thereafter, the bids would be opened, read, and tabulated. According to the bid specifications, the "[a]ward of the contract will be made to the lowest responsible bidder for the actual amount bid." The time for submitting bids was extended to August 4, 1998. Included as part of the Invitation to Bid on the BTW project is a Special Provision for Compliance with M/WBE Subcontracting Assistance Levels Participation ("Special Provision"). The purpose of the Special Provision is to "ensure that Minority/Women Business Enterprises are afforded maximum opportunity to participate in School Board work." Section II.A., Special Provision. An M/WBE is defined in Section I.A.12. of the Special Provision as follows: Any legal entity which is organized to engage in commercial transactions and which is at least fifty-one (51) percent owned and controlled by minority persons. Minority person means a person who is a citizen or lawful permanent resident of the United States and who is: An African American, a person having origins in any of the Black racial groups of Africa; An Hispanic, a person of Spanish or Portuguese culture, including, but not limited to persons with origins in Mexico, South America [sic] Central America, or the Caribbean Islands, regardless of race; A Woman. Pursuant to the Special Provision, M/WBE assistance levels for one or more minorities are to be specified for all School Board projects. The assistance level for African American M/WBEs was established at eight percent of the total price bid on the BTW project. Section III.A. of the Special Provision provides in pertinent part: SUBMITTALS As a condition of responsiveness, all bid submittals shall contain the documents and information required below. . . . Sealed bids must contain a completed FORM FM 4828, BREAKDOWN OF PROJECT COST AND SUBCONTRACTORS/ CONSULTANT LIST, stipulating the name, and price for each Subcontractor, including the M/WBE category for those listed to meet the M/WBE subcontracting Assistance Level requirements. Letters of Intent (Attachment C-FM 4829) for listed M/WBEs used to meet the M/WBE subcontracting Assistance Levels must be presented by the apparent low bidder, to the Department of Contract Management, . . . within two (2) days (by no later than 2:00 p.m.) after the date, and time and location specified in the LEGAL ADVERTISEMENT AND THE INSTRUCTIONS COVERING OPENING OF BIDS. Letters of Intent prices must not be less than the amount listed on Form FM 4828, Breakdown of Project Cost and M/WBE Subcontractor/Consultant List. Letters of Intent for M/WBEs not listed on FM-4828, will not be considered in determining Compliance, unless the listed M/WBE becomes Unavailable. M/WBE Certification Applications (FM-3920) must accompany the Letters of Intent for all M/WBEs utilized to meet the Assistance Levels who are not certified nor pending certification as M/WBE's [sic] Dade County Public Schools at the time of bid submission. All bids, will be publicly opened, read, and tabulated in the School Board Auditorium, or other designated area, Dade County School Board Administration Building, by an authorized representative of the School Board. The submittal of the apparent low bidder being considered for award will be presented to the Division of Business Development and Assistance for an M/WBE subcontracting Compliance Review, in accordance with Section IV. of the SPECIAL PROVISION FOR COMPLIANCE WITH M/WBE SUBCONTRACTING ASSISTANCE LEVELS PARTICIPATION. If the apparent low Bidder is found to be nonresponsive or in Noncompliance, the Department of Contract Management shall notify the second low bidder . . . . Failure to submit the completed Form FM 4828 submittals at the bid opening may result in the bid being found nonresponsive. Both Pass and Danville-Findorff submitted sealed bids for the BTW project on August 4, 1998. The bid packages were opened on August 5, 1998. Pass had submitted the lowest lump-sum bid at $13,900,000, and Danville-Findorff had submitted the second lowest bid at $13,979,000. Pass submitted a Form FM 4828 with its bid in which it identified Acestarz and Manny & Lou as the M/WBEs that Pass intended to use to meet the eight-percent African American subcontracting assistance level. The listings on the Form FM 4828 submitted by Pass indicated that Acestarz would perform work in categories 9.01 through 9.06 for a price of $500,000 and that Manny & Lou would perform work in category 15.04 for a price of $700,000. Without Acestarz' $500,000 proposal, Pass's bid would not meet the eight-percent African American M/WBE assistance level. Section III.B.4. of the Special Provision provides as follows: The listing of a M/WBE Subcontractor [on Form FM 4828] by the Bidder shall constitute a representation by the Bidder that the listed Subcontractor is available and qualified, and a commitment by the Bidder that if it is awarded the contract, it will enter into a subcontract with the Subcontractor for the type of work, at a minimum of the price set forth in its submission. "Qualified" is defined in Section I.A.21. of the Special Provision as follows: A subcontractor is potentially Qualified to do specific work if at a minimum it meets all of the following criteria: It has or is able to obtain any and all bonds, insurance and licenses required to do such work and was duly informed by the Bidder that a bond, insurance or license was required and said Subcontractor included the cost associated with same in the bid quotation; It has the necessary experience, financial ability, organization, technical qualifications, skill and facilities to do such work; It is able to reasonably comply with the performance schedule needed for such work; It does not have an unsatisfactory record of integrity, judgment or performance; It is able to meet the applicable equal employment opportunity requirement if stipulated, and It is not otherwise ineligible to perform such work under applicable law and regulations. It is the general contractor's responsibility to determine whether a subcontractor is qualified to do the work or portion thereof. Nothing delineated herein shall be interpreted to waive the requirement that the subcontractor be legally licensed and certified at the time it is scheduled to perform such work. Prior to listing Acestarz on Form FM 4828, Henry Louden, who prepared Pass's bid package on the BTW project, did not ask Mr. Akoni about Acestarz' licensure status, the number of employees on its payroll, its financial capacity, or the type of equipment it had. Prior to submitting Pass's bid package, Mr. Louden mentioned to Mr. Akoni that he needed to look at bonding requirements because, when doing public work, subcontractors sometimes were required to provide bonds. Mr. Louden did not, however, inform Mr. Akoni of any licenses Acestarz might need to do the work proposed or of the insurance that Pass required its subcontractors to carry. The extent of Mr. Louden's knowledge about Acestarz prior to submitting Pass's bid package was described in the following two exchanges: Q. [By Mr. Flaxman] What did you know as it related to his [Joseph Akoni's] construction, his portion of construction, things of that nature prior to your [sic] submitting his name to the School Board? A. [By Mr. Louden] His experience? Q. Everything. Whatever you knew about him. A. About his whole firm, then? Q. Yes. A. Joe Akoni came to our office, inquired about bidding work with us, identified areas that he was familiar with, in construction areas that he is familiar with, and subsequent to that, I guess, he got together with Mr. Mijares in my office, and after that discussion, Mr. Mijares -- * * * THE WITNESS: Okay. Mr. Mijares got involved with Ace Starz [sic]. Ace Starz looked at a couple jobs in our office. Ace Starz submitted some bids to us on other jobs. Ace Starz was interested in submitting prices for the Booker T. Washington job. We provided plans to him. We reviewed the plans together, identifying the scope that we needed them to furnish to us, . . . . Q. . . . . Is there anything else you knew about Ace Starz, Inc. as it related to the construction of the project [prior to submitting Pass's bid package]? A. No.2 And, again, Q. (By Mr. Swimmer) Did you meet or did someone else on behalf of Pass meet with Mr. Akoni prior to Mr. Akoni giving a price on behalf of Ace Starz [sic] to go over the scope of work? A. [By Mr. Louden] Yes. Q. And did you discuss with him scope of work at that time? A. Yes. Q. And did you come away from that meeting with a sense of qualifications and ability of Ace Starz and Mr. Akoni [Objection by Mr. Flaxman.] MR. SWIMMER: Then, let me ask you -- I'll rephrase the question. BY MR. SWIMMER: Q. Did you reach a belief as a result of your interaction with Mr. Akoni regarding his capacity, his ability with regard to construction of the items for which he was pricing? A. Yes. Q. And what was that conclusion? A. His pricing and understanding of what we were requesting, from what I felt was necessary, in order to achieve -- to submit a price to me when we went through the plans, after he submitted the pricing, we reviewed it and it was consistent with what I was looking for, with other sub prices that we received. Q. Did you go through the plans with him, with Mr. -- A. Yes. Q: Did Mr. Akoni mark up the plans to describe the work which would be the scope of his price? A. I'm sure he did. I don't recall what he marked, whether he marked it. I identified specifically which areas he needed to price 3 On August 4, 1998, the date that bid packages on the BTW project were submitted to the School Board, Acestarz was not licensed by the state Construction Industry Licensing Board pursuant to Chapter 489, Florida Statutes, or by Miami-Dade County pursuant to Chapter 10 of the Code of Metropolitan Dade County, Florida. Once Pass was notified by the School Board that it had submitted the low bid, Pass timely submitted Letters of Intent from each of the three subcontractors it intended to use to meet the M/WBE assistance levels for the BTW project, as required by Section III.A.2. of the Special Provision. An application for certification for Acestarz was not submitted with Pass's bid package because Acestarz's certification application had been filed with the Division of Business Development and Assistance on June 1, 1998, and was still pending. Pass was determined to be the lowest responsive bidder and its bid package was forwarded to the Division of Business Development and Assistance for a compliance review to be conducted pursuant to the Special Provision.4 In Section I.A.4. of the Special Provision, "compliance" is defined as "[t]he condition existing when a successful bidder has met and implemented the requirements of this Provision." In Section I.A.6. of the Special Provision, "compliance review" is defined as "[a] review to determine whether the successful Bidder is in Compliance with these Provisions." "Successful Bidder" is defined in Section I.A.24. as "[t]he Bidder to which the contract is awarded." Even though the above-quoted sections of the Special Provision specify that a compliance review is done for the "successful" bidder after the contract for the project is awarded, the M/WBE compliance review is actually done before the contract is awarded in accordance with the procedures set out in Section IV. of the Special Provision. Section IV.A. provides in pertinent part: DETERMINATION OF COMPLIANCE Subsequent to bid opening and prior to award, the M/WBE Compliance Administrator will conduct a review of the bid submittals in order to determine Compliance with the Provision as follows: 1. Fulfillment of Established Assistance Levels If the total price for work to be performed by M/WBE Subcontractors as indicated in either the Breakdown of Project Cost and Subcontractors/Consultant List or Letters of Intent is sufficient to fulfill the established Assistance Levels, in each race/ethnic/gender category, the Compliance Administrator will issue a written Notice of Compliance to the Bidder. Pursuant to these provisions, the compliance review involves consideration of the cost breakdown for each M/WBE subcontractor listed by the lowest responsive bidder on the Form FM 4828; whether each subcontractor listed is a certified M/WBE, has an application for certification pending, or has filed a certification application with its Letter of Intent; and whether the price of the work to be done by each M/WBE subcontractor meets or exceeds the assistance levels specified in the bid documents. Ms. Freeman, in her capacity as Compliance Administrator, was responsible for conducting the compliance review of Pass's bid package. On August 14, 1998, before the compliance review had been completed but after Pass had been identified as the lowest responsive bidder, Danville-Findorff sent a notice of bid protest to Julio Alvarez in the School Board's contract administration section protesting the award of the contract for the BTW project to Pass. The August 14 notice of protest includes virtually the same factual allegations as those set out in the Petition which initiated these proceedings. Danville-Findorff supplemented the allegations contained in its August 14 notice of protest in letters dated August 19, 1998, and September 1, 1998, which included additional information regarding Joseph Mijares, the qualifying agent for Acestarz. On August 18, 1998, Pass sent to the School Board via facsimile an M/WBE Subcontractor/Consultant Letter of Intent executed by G. Family Ent., Inc., a certified M/WBE, in which that company agreed to perform the same scope of work that Acestarz had agreed to perform in its Letter of Intent submitted to the School Board on August 6, 1998.5 G. Family Ent., Inc., agreed to do the work for $500,000, the same price specified by Acestarz. Although the School Board never issued a formal response to Danville-Findorff's August 14 notice of protest, the issues raised were resolved when Ms. Freeman issued a Notice of Noncompliance dated August 26, 1998, in which she stated that, based on her analysis of Acestarz' status, Pass's bid did not meet the eight-percent assistance levels for African American M/WBEs established for the BTW project. Ms. Freeman's conclusion was based on a finding that Acestarz' $500,000 proposal could not be credited toward the African American assistance levels required for the BTW project because "ACESTARZ was neither qualified as a construction company on bid day, nor can it be certified as an M/WBE." Ms. Freeman refused to authorize Pass to substitute another M/WBE subcontractor for Acestarz because "it can only be assumed that Pass was fully aware of ACESTARZ' status." When it received the Notice of Noncompliance, Pass timely requested a meeting with Ms. Freeman, as permitted in Section IV.B.2. of the Special Provision. The meeting was held on August 28, and, on September 4, 1998, Ms. Freeman issued a Final Notice of Noncompliance in which she reiterated her conclusion that Pass's bid was not in compliance with the African American M/WBE assistance levels required for the BTW project. In the final notice, Ms. Freeman stated: ACESTARZ was not qualified to perform construction services of any nature at the time of bid. Not only did it not hold a State license but it was denied a County license without first obtaining the requisite local or state licenses. Therefore, it was not eligible or qualified to bid as a prime or a subcontractor. * * * In conclusion, Pass not only listed an unqualified firm, but one that was not legally organized to conduct business as a construction company. Therefore, Pass cannot be credited for including ACESTARZ to meet the M/WBE requirements, on this project. * * * To your request for immediate authorization to allow Pass to substitute [another M/WBE subcontractor for] ACESTARZ,"[6] please be advised that Pass . . . made" the same request on August 12, 1998, Please be advised that, other than certified M/WBEs, prime contractors are only credited for listing subcontractors, that meet all legal requirements, but fail to be certified for reasons determined by the Division, in accordance with M/WBE Certification requirements. ACESTARZ was not legally qualified to engage in the construction business at the time of bid opening, and withdrew its M/WBE Certification Application."[7] Therefore, a substitution for the firm cannot be allowed. Section IV.C.5. of the Special Provision provides that the Final Notice of Noncompliance "shall be final and conclusive. The Compliance Administrator shall recommend that the Compliance Review procedure be initiated with respect to the next lowest responsive Bidder, or all remaining bids may be rejected and the project readvertised." A compliance review was not initiated for Danville-Findorff because, on September 4, 1998, Pass delivered its Formal Written Protest to the School Board. Pass stated in the protest that "the stated basis for declaring Pass International, Inc. to be not in compliance with the M/WBE subcontracting requirements set forth in the notice of August 26, 1998, is clearly in error." Specifically, Pass challenged Ms. Freeman's conclusion that Acestarz was not qualified to do the work specified in the Form FM 4828 because it was not licensed at the time Pass submitted its bid. The issues raised in Pass's protest were resolved when Ms. Freeman sent Pass a letter dated September 29, 1998, entitled "RESCISSION OF NOTICES OF NONCOMPLIANCE" for the BTW project.8 Ms. Freeman rescinded the Final Notice of Noncompliance because, at the recommendation of the School Board's legal counsel, she reconsidered the definition of the term "qualified" contained in Section I.A.21. of the Special Provision and determined that, under this definition, Acestarz "is considered a qualified subcontractor for purposes of M/WBE Compliance." Specifically, Ms. Freeman concluded that, pursuant to Section I.A.21. of the Special Provision, it was not the responsibility of the Division of Business Development and Assistance to determine whether Acestarz was qualified to do the work included in Pass's bid submittal. Rather, according to Ms. Freeman, it was Pass's responsibility. In addition, Ms. Freeman concluded that, pursuant to Section I.A.21. of the Special Provision, an M/WBE does not need to be licensed or certified at the time the bid is submitted. Rather, it need be licensed to do the work and certified as an M/WBE Subcontractor in the appropriate category at the time it performs the work under the contract. During her re-evaluation of the notices of noncompliance, Ms. Freeman also decided that it was improper to conclude during the compliance review that Acestarz was not certifiable as an African American M/WBE. A compliance review to determine whether M/WBE assistance levels are met by a bidder is done pursuant to the criteria set out in the Special Provision; the decision to grant or deny an application for M/WBE certification is based on an evaluation of the application pursuant to the standards established in School Board Rule 6Gx13- 3G-1.05. As a result, Ms. Freeman advised Pass in the September 29 letter that, as "the next step in the process," the Division of Business Development and Assistance would complete its review of Acestarz' certification application.9 Some of the criteria for certification specified in School Board Rule 6Gx13-3G-1.05 are the same as or similar to the minimum criteria for an M/WBE subcontractor to be qualified pursuant to Section I.A.21. of the Special Provision. In a letter dated October 23, 1998, entitled "DENIAL OF MINORITY/WOMEN BUSINESS ENTERPRISE (M/WBE) CERTIFICATION," Ms. Freeman advised Joseph Akoni that the documents he submitted failed to show that he "has the capability, knowledge, training, education, and experience needed, to independently guide the future and destiny of Acestarz' construction activities." (Emphasis in original.) Ms. Freeman also observed that, as a matter of statutory law, Acestarz' Hispanic qualifying agent, Robert Joseph Mijares, "has the responsibility to supervise, direct, manage and control the contracting and construction activities of Acestarz." Ms. Freeman concluded: "In summary, Acestarz's construction activities appear, at best, to be managed and controlled jointly by an African American and a non-African American. Therefore, the firm failed to establish eligibility for certification as African American-owned and controlled business, as prescribed by School Board rules." A copy of this denial notice was sent to Pass. Acestarz appealed the decision to deny its application for certification as an African American M/WBE. Ms. Freeman's decision was affirmed by the Certification Appeals Committee, and, in a letter dated November 20, 1998, Ms. Freeman sent to Acestarz' attorney the "FINAL MINORITY/WOMEN BUSINESS ENTERPRISE (M/WBE) CERTIFICATION DENIAL NOTICE." Section III.D. of the Special Provision specifies that, if an M/WBE listed on Form FM 4828 is "determined not to be certifiable, [the M/WBE] must be substituted with another certified or certifiable M/WBE before award." Accordingly, on December 11, 1998, Pass proposed to use TCOE Corporation, a certified African American M/WBE, as a substitute for Acestarz, to do the same scope of work for $550,000. The request to substitute TCOE had not been granted or denied at the time of the final hearing. Summary With respect to the first and second factual issues raised in Danville-Findorff's formal bid protest, the evidence presented is sufficient to establish that Acestarz was neither licensed nor certified as an African American M/WBE at the time Pass submitted its bid on the BTW project. This is irrelevant, however, to a determination of whether Pass's bid is in compliance with the bid specifications because, pursuant to Section I.A.21. of the Special Provision, an M/WBE subcontractor need be licensed and certified only "at the time it is scheduled to perform" work under the contract. With respect to the third issue raised in its formal bid protest, Danville-Findorff presented evidence during the hearing regarding the licensing requirements for construction contractors found in Chapter 489, Florida Statutes, and in Chapter 10, Code of Metropolitan Dade County. Its apparent aim in presenting this evidence was to establish that, because Acestarz was not licensed by the state or the county, Acestarz could not submit a proposal to Pass for inclusion in its bid on the BTW project under the definition of "contracting" in the statute and in the code provision. In essence, Danville-Findorff is attempting to challenge the provision in Section I.A.21. of the Special Provision which requires that an M/WBE subcontractor be licensed at the time it is scheduled to perform work on the project. Danville-Findorff may not do so in this proceeding: The notice of protest challenging the specifications contained in an invitation to bid must be filed within seventy-two hours "after the receipt of . . . intended project plans and specifications in an invitation to bid or request for proposals, and the formal written protest shall be filed within 10 days after the date the notice of protest is filed." Section 120.57(3)(b), Florida Statutes (1997). Danville-Findorff protested only the School Board's intention to award the contract to Pass, and the protest was filed after the bids were opened. With respect to the fourth issue raised in Danville- Findorff's formal bid protest, the evidence is uncontroverted that Joseph Mijares, an employee of Pass until October 1998, acted as the qualifying agent for Acestarz, as that term is defined in Section 489.105(4), Florida Statutes. Danville- Findorff's purpose in presenting this evidence is apparently to establish that Mr. Mijares exerts complete control over Acestarz by operation of this statute. According to Danville-Findorff, this level of control by a Hispanic violates School Board Rule 6Gx13-3G-1.05.I. which requires that an African American M/WBE be fifty-one percent "owned and controlled, in form and in substance" by African Americans. The issue of control is, however, not relevant to a determination of whether a bidder is in compliance with the terms of the Special Provision. Rather, the issue of control is relevant only to a determination of whether an application for certification as an African American M/WBE should be granted or denied pursuant to School Board Rule 6Gx13-3G-1.05. With respect to the sixth issue raised in its formal bid protest, Danville-Findorff presented no credible evidence to establish that it was placed at a competitive disadvantage with regard to its bid on the BTW project because an employee of Pass acted as qualifying agent for Acestarz for purposes of Acestarz' application for licensure as a general contractor. With respect to the seventh issue raised in Danville- Findorff's formal bid protest, the evidence is uncontroverted that Acestarz did not submit an application for certification as an African American M/WBE with its Letter of Intent. This was unnecessary pursuant to Section III.A.3. of the Special Provision because Acestarz' application for certification was submitted on or about June 1, 1998, and was pending at the time Pass's bid was submitted. With respect to the fifth and eighth issues raised in its formal bid protest, Danville-Findorff presented sufficient evidence to establish with the requisite degree of certainty that, at the time the bid package was submitted, Pass did not satisfy the eight-percent assistance level for African American M/WBE participation on the BTW project: Pass did not satisfy the responsibility imposed on it in Section I.A.21. of the Special Provision to determine whether Acestarz was "qualified" or "potentially qualified” to do the work it had proposed to do on the BTW project. Mr. Louden, the Pass employee who prepared the Pass's bid package for the BTW project, did not possess adequate information regarding Acestarz or its president, Mr. Akoni, to determine whether Acestarz satisfied the criteria set out in Section I.A.21., which are the minimum criteria that must be met by a subcontractor to be "potentially Qualified to do specific work." In addition, Mr. Louden failed to make any meaningful inquiry into the qualifications of Acestarz. Because Pass lacked adequate information regarding Acestarz' qualifications and failed to make meaningful inquiry to ascertain Acestarz' qualifications at the time Pass submitted its bid package, Pass could not, in good faith, represent to the School Board that Acestarz was "qualified" or “potentially qualified” at the time the bid was submitted, which it did pursuant to Section III.B.A. of the Special Provisions when it listed Acestarz on the Form FM 4828.9 Because Pass did not conform to the requirements of Section I.A.21. and Section III.B.4. of the Special Provision when it listed Acestarz as a "qualified" or “potentially qualified” African American M/WBE subcontractor, it was not entitled to use Acestarz to meet the African American M/WBE assistance levels for the BTW project at the time it submitted its bid. Furthermore, under these circumstances, Pass cannot substitute another subcontractor for Acestarz because that option is available pursuant to Section III.D. of the Special Provision only upon the denial of the application for certification of an M/WBE which was not certified at time the bid was submitted. Because Pass's bid does not meet the assistance levels established for African American M/WBEs set out in the Special Provision for Compliance with M/WBE Subcontracting Assistance Levels Participation, Pass's bid was not in compliance with the Special Provision at the time it was submitted. Therefore, Pass's bid is not responsive to the bid specifications for the BTW project. The award the contract for the BTW project to Pass would be contrary to the bid specifications and would be arbitrary in light of the facts found herein.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that the Miami-Dade County School Board reject the bid of Pass International, Inc., as non-responsive to the bid specifications and that a compliance review be initiated with respect to the next lowest responsive and responsible bidder. DONE AND ENTERED this 14th day of April, 1999, in Tallahassee, Leon County, Florida. PATRICIA HART MALONO Administrative Law Judge Division of Administrative Hearings The DeSoto Building 1230 Apalachee Parkway Tallahassee, Florida 32399-3060 (850) 488-9675 SUNCOM 278-9675 Fax Filing (850) 921-6847 www.doah.state.fl.us Filed with the Clerk of the Division of Administrative Hearings this 14th day of April, 1999.
The Issue The threshold issue in this case is whether the decisions giving rise to the dispute, which concern the allocation and disbursement of funds appropriated to Respondent by the legislature and thus involve the preparation or modification of the agency's budget, are subject to quasi-judicial adjudication under the Administrative Procedure Act. If the Division of Administrative Hearings were possessed of subject matter jurisdiction, then the issues would be whether Respondent is estopped from implementing its intended decisions to "de- obligate" itself from preliminary commitments to provide low- interest loans to several projects approved for funding under the Community Workforce Housing Innovation Pilot Program; and whether such intended decisions would constitute breaches of contract or otherwise be erroneous, arbitrary, capricious, or abuses of the agency's discretion.
Findings Of Fact Petitioners Pasco CWHIP Partners, LLC ("Pasco Partners"); Legacy Pointe, Inc. ("Legacy"); Villa Capri, Inc. ("Villa Capri"); Prime Homebuilders ("Prime"); and MDG Capital Corporation ("MDG") (collectively, "Petitioners"), are Florida corporations authorized to do business in Florida. Each is a developer whose business activities include building affordable housing. The Florida Housing Finance Corporation ("FHFC") is a public corporation organized under Chapter 420, Florida Statutes, to implement and administer various affordable housing programs, including the Community Workforce Housing Innovation Pilot Program ("CWHIP"). The Florida Legislature created CWHIP in 2006 to subsidize the cost of housing for lower income workers performing "essential services." Under CWHIP, FHFC is authorized to lend up to $5 million to a developer for the construction or rehabilitation of housing in an eligible area for essential services personnel. Because construction costs for workforce housing developments typically exceed $5 million, developers usually must obtain additional funding from sources other than CWHIP to cover their remaining development costs. In 2007, the legislature appropriated $62.4 million for CWHIP and authorized FHFC to allocate these funds on a competitive basis to "public-private" partnerships seeking to build affordable housing for essential services personnel.1 On December 31, 2007, FHFC began soliciting applications for participation in CWHIP. Petitioners submitted their respective applications to FHFC on or around January 29, 2008. FHFC reviewed the applications and graded each of them on a point scale under which a maximum of 200 points per application were available; preliminary scores and comments were released on March 4, 2008. FHFC thereafter provided applicants the opportunity to cure any deficiencies in their applications and thereby improve their scores. Petitioners submitted revised applications on or around April 18, 2008. FHFC evaluated the revised applications and determined each applicant's final score. The applications were then ranked, from highest to lowest score. The top-ranked applicant was first in line to be offered the chance to take out a CWHIP loan, followed by the others in descending order to the extent of available funds. Applicants who ranked below the cut-off for potential funding were placed on a wait list. If, as sometimes happens, an applicant in line for funding were to withdraw from CWHIP or fail for some other reason to complete the process leading to the disbursement of loan proceeds, the highest-ranked applicant on the wait list would "move up" to the "funded list." FHFC issued the final scores and ranking of applicants in early May 2006. Petitioners each had a project that made the cut for potential CWHIP funding.2 Some developers challenged the scoring of applications, and the ensuing administrative proceedings slowed the award process. This administrative litigation ended on or around November 6, 2008, after the parties agreed upon a settlement of the dispute. On or about November 12, 2008, FHFC issued preliminary commitment letters offering low-interest CWHIP loans to Pasco Partners, Legacy, Villa Capri, Prime (for its Village at Portofino Meadows project), and MDG. Each preliminary commitment was contingent upon: Borrower and Development meeting all requirements of Rule Chapter 67-58, FAC, and all other applicable state and FHFC requirements; and A positive credit underwriting recommendation; and Final approval of the credit underwriting report by the Florida Housing Board of Directors. These commitment letters constituted the necessary approval for each of the Petitioners to move forward in credit underwriting, which is the process whereby underwriters whom FHFC retains under contract verify the accuracy of the information contained in an applicant's application and examine such materials as market studies, engineering reports, business records, and pro forma financial statements to determine the project's likelihood of success. Once a credit underwriter completes his analysis of an applicant's project, the underwriter submits a draft report and recommendation to FHFC, which, in turn, forwards a copy of the draft report and recommendation to the applicant. Both the applicant and FHFC then have an opportunity to submit comments regarding the draft report and recommendation to the credit underwriter. After that, the credit underwriter revises the draft if he is so inclined and issues a final report and recommendation to FHFC. Upon receipt of the credit underwriter's final report and recommendation, FHFC forwards the document to its Board of Directors for approval. Of the approximately 1,200 projects that have undergone credit underwriting for the purpose of receiving funding through FHFC, all but a few have received a favorable recommendation from the underwriter and ultimately been approved for funding. Occasionally a developer will withdraw its application if problems arise during underwriting, but even this is, historically speaking, a relatively uncommon outcome. Thus, upon receiving their respective preliminary commitment letters, Petitioners could reasonably anticipate, based on FHFC's past performance, that their projects, in the end, would receive CWHIP financing, notwithstanding the contingencies that remained to be satisfied. There is no persuasive evidence, however, that FHFC promised Petitioners, as they allege, either that the credit underwriting process would never be interrupted, or that CWHIP financing would necessarily be available for those developers whose projects successfully completed underwriting. While Petitioners, respectively, expended money and time as credit underwriting proceeded, the reasonable inference, which the undersigned draws, is that they incurred such costs, not in reliance upon any false promises or material misrepresentations allegedly made by FHFC, but rather because a favorable credit underwriting recommendation was a necessary (though not sufficient) condition of being awarded a firm loan commitment. On January 15, 2009, the Florida Legislature, meeting in Special Session, enacted legislation designed to close a revenue shortfall in the budget for the 2008-2009 fiscal year. Among the cuts that the legislature made to balance the budget was the following: The unexpended balance of funds appropriated by the Legislature to the Florida Housing Finance Corporation in the amount of $190,000,000 shall be returned to the State treasury for deposit into the General Revenue Fund before June 1, 2009. In order to implement this section, and to the maximum extent feasible, the Florida Housing Finance Corporation shall first reduce unexpended funds allocated by the corporation that increase new housing construction. 2009 Fla. Laws ch. 2009-1 § 47. Because the legislature chose not to make targeted cuts affecting specific programs, it fell to FHFC would to decide which individual projects would lose funding, and which would not. The legislative mandate created a constant-sum situation concerning FHFC's budget, meaning that, regardless of how FHFC decided to reallocate the funds which remained at its disposal, all of the cuts to individual programs needed to total $190 million in the aggregate. Thus, deeper cuts to Program A would leave more money for other programs, while sparing Program B would require greater losses for other programs. In light of this situation, FHFC could not make a decision regarding one program, such as CWHIP, without considering the effect of that decision on all the other programs in FHFC's portfolio: a cut (or not) here affected what could be done there. The legislative de-appropriation of funds then in FHFC's hands required, in short, that FHFC modify its entire budget to account for the loss. To enable FHFC to return $190 million to the state treasury, the legislature directed that FHFC adopt emergency rules pursuant to the following grant of authority: In order to ensure that the funds transferred by [special appropriations legislation] are available, the Florida Housing Finance Corporation shall adopt emergency rules pursuant to s. 120.54, Florida Statutes. The Legislature finds that emergency rules adopted pursuant to this section meet the health, safety, and welfare requirements of s. 120.54(4), Florida Statutes. The Legislature finds that such emergency rulemaking power is necessitated by the immediate danger to the preservation of the rights and welfare of the people and is immediately necessary in order to implement the action of the Legislature to address the revenue shortfall of the 2008-2009 fiscal year. Therefore, in adopting such emergency rules, the corporation need not publish the facts, reasons, and findings required by s. 120.54(4)(a)3., Florida Statutes. Emergency rules adopted under this section are exempt from s. 120.54(4)(c), Florida Statutes, and shall remain in effect for 180 days. 2009 Fla. Laws ch. 2009-2 § 12. The governor signed the special appropriations bills into law on January 27, 2009. At that time, FHFC began the process of promulgating emergency rules. FHFC also informed its underwriters that FHFC's board would not consider any credit underwriting reports at its March 2009 board meeting. Although FHFC did not instruct the underwriters to stop evaluating Petitioners' projects, the looming reductions in allocations, coupled with the board's decision to suspend the review of credit reports, effectively (and not surprisingly) brought credit underwriting to a standstill. Petitioners contend that FHFC deliberately intervened in the credit underwriting process for the purpose of preventing Petitioners from satisfying the conditions of their preliminary commitment letters, so that their projects, lacking firm loan commitments, would be low-hanging fruit when the time came for picking the deals that would not receive funding due to FHFC's obligation to return $190 million to the state treasury. The evidence, however, does not support a finding to this effect. The decision of FHFC's board to postpone the review of new credit underwriting reports while emergency rules for drastically reducing allocations were being drafted was not intended, the undersigned infers, to prejudice Petitioners, but to preserve the status quo ante pending the modification of FHFC's budget in accordance with the legislative mandate. Indeed, given that FHFC faced the imminent prospect of involuntarily relinquishing approximately 40 percent of the funds then available for allocation to the various programs under FHFC's jurisdiction, it would have been imprudent to proceed at full speed with credit underwriting for projects in the pipeline, as if nothing had changed. At its March 13, 2009, meeting, FHFC's board adopted Emergency Rules 67ER09-1 through 67ER09-5, Florida Administrative Code (the "Emergency Rules"), whose stated purpose was "to establish procedures by which [FHFC would] de- obligate the unexpended balance of funds [previously] appropriated by the Legislature " As used in the Emergency Rules, the term "unexpended" referred, among other things, to funds previously awarded that, "as of January 27, 2009, [had] not been previously withdrawn or de-obligated . . . and [for which] the Applicant [did] not have a Valid Firm Commitment and loan closing [had] not yet occurred." See Fla. Admin. Code R. 67ER09-2(29). The term "Valid Firm Commitment" was defined in the Emergency Rules to mean: a commitment issued by the [FHFC] to an Applicant following the Board's approval of the credit underwriting report for the Applicant's proposed Development which has been accepted by the Applicant and subsequent to such acceptance there have been no material, adverse changes in the financing, condition, structure or ownership of the Applicant or the proposed Development, or in any information provided to the [FHFC] or its Credit Underwriter with respect to the Applicant or the proposed Development. See Fla. Admin. Code R. 67ER09-2(33). There is no dispute concerning that fact that, as of January 27, 2009, none of the Petitioners had received a valid firm commitment or closed a loan transaction. There is, accordingly, no dispute regarding the fact that the funds which FHFC had committed preliminarily to lend Petitioners in connection with their respective developments constituted "unexpended" funds under the pertinent (and undisputed) provisions of the Emergency Rules, which were quoted above. In the Emergency Rules, FHFC set forth its decisions regarding the reallocation of funds at its disposal. Pertinent to this case are the following provisions: To facilitate the transfer and return of the appropriated funding, as required by [the special appropriations bills], the [FHFC] shall: * * * Return $190,000,000 to the Treasury of the State of Florida, as required by [law]. . . . The [FHFC] shall de-obligate Unexpended Funding from the following Corporation programs, in the following order, until such dollar amount is reached: All Developments awarded CWHIP Program funding, except for [a few projects not at issue here.] * * * See Fla. Admin. Code R. 67ER09-3. On April 24, 2009, FHFC gave written notice to each of the Petitioners that FHFC was "de-obligating" itself from the preliminary commitments that had been made concerning their respective CWHIP developments. On or about June 1, 2009, FHFC returned the de- appropriated funds, a sum of $190 million, to the state treasury. As a result of the required modification of FHFC's budget, 47 deals lost funding, including 16 CWHIP developments to which $83.6 million had been preliminarily committed for new housing construction.
Recommendation Based on the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that FHFC enter a Final Order dismissing these consolidated cases for lack of jurisdiction. DONE AND ENTERED this 18th day of February, 2010, in Tallahassee, Leon County, Florida. JOHN G. VAN LANINGHAM 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 18th day of February, 2010.
The Issue Whether Petitioner's bid on State Job No. 86075-3459 was non-responsive and Respondent's award of the bid to the next lowest responsible bidder was arbitrary, illegal or dishonest.
Findings Of Fact Petitioner timely submitted its bid on State Job No. 86075-3459 and this bid was the lowest received by DOT on this project. The DBE requirement on this bid was 11%. This means each bidder had to show on its submittal that at least 11% of the project cost would go to a minority business subcontractor. With its bid submittal, on the Disadvantaged Business Enterprise (DBE) Utilization Summary (Form 275-020-003 Minority Prog. 11/87), Petitioner listed as DBE subcontractors Reliable Trucking, Inc. with $100,000 as the dollar amount for DBE goal and $280,000 for Community Asphalt Corporation. (Exhibit 1.) These two figures exceeded the 11% minimum DBE requirement. Community Asphalt Corporation had been a certified DBE subcontractor in early 1990 but in May 1990 its certification expired and was not renewed. Accordingly, at the time of the bid opening, Community Asphalt was not listed on the list of certified DBE subcontractors DOT provided to bidders with the bid forms to complete for this project. Petitioner had initially shown only Reliable Trucking, Inc. on Exhibit 1 with $400,000 as the dollar amount for the DBE goal. Reliable Trucking is a certified DBE. Petitioner received a late quote from Community Asphalt and just before submitting its bid added Community Asphalt to its DBE Utilization Summary, interlining the $400,000 amount for Reliable Trucking and changed this amount to $100,000. Although Petitioner still intended to use Reliable Trucking for work on this project in excess of $400,000 its policy, which was here followed, is to show on its DBE Utilization Summary submitted with its bid only a small percentage over the required minimum. Therefore, when Community Asphalt was added as a DBE subcontractor, the dollar amount to Reliable Trucking was reduced. Petitioner's employee who added Community Asphalt to the DBE Utilization Summary checked to see that Community Asphalt was a certified DBE but, unfortunately, looked at the list of certified DBE subcontractors furnished by DOT for an earlier bid--not the current list. The current list which had been supplied to Petitioner did not list Community Asphalt as a certified DBE. When the bids received were first checked by the DOT employee who reviews bids to see that DBE requirements are met, she approved the bid but set it aside for further check. Later, after realizing Community Asphalt was not on the approved list of DBE's she disapproved the bid and it proceeded to the Good Faith Efforts Committee for review. Petitioner submitted no documentation of any good faith efforts to comply with the DBE requirements. This is understandable as Petitioner thought when the bid was submitted that Community Asphalt was a certified DBE and its bid complied with the DBE requirements. In reviewing and accepting bids for DOT projects, Respondent relies entirely on the documentation submitted with the bid and does not allow bidders to supplement the bid after opening.
Recommendation It is recommended that the protest of Bergeron Land Development, Inc. to the rejection of its bid submitted on State Job No. 86075-3459 be dismissed with prejudice. DONE and ENTERED this 23rd day of October, 1990, in Tallahassee, Leon County, Florida. KEN N. AYERS 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 23rd day of October, 1990. APPENDIX Respondent's proposed findings are generally accepted, except for: Rejected. The DBE forms submitted by Petitioner, as corrected by Petitioner before submittal, showed Reliable Trucking, Inc., a certified DBE, to receive only $100,000 in subcontracts, far less than the 11% DBE participation required. Rejected. Whether Reliable Trucking had a firm contract with Petitioner to provide in excess of $400,000 subcontracting work on this project is immaterial if the DBE utilization form submitted with the bid fails to show the DBE utilization goal is attained or documentation of good faith efforts are not included. Rejected that the mistake by Petitioner was a non-material mistake. Bids have to be accepted as received. Rejected. Rejected. Rejected. Accepted as an accurate quote of Rule 14-78.003,Florida Administrative Code. The legal conclusion that the ruledoes not require evidence of good faith efforts be included withthe bid submitted is rejected. The conclusion of law that Respondent violated its own rule is rejected. COPIES FURNISHED: John H. Beck, Esquire 1026 East Park Avenue Tallahassee, Florida 32301 Paul J. Martin, Esquire Department of Transportation 605 Suwannee Street Tallahassee, Florida 32399-0450 John Radey, Esquire Post Office Drawer 11307 Tallahassee, Florida 32302 Ben G. Watts, Secretary Department of Transportation Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32399-0458 Thornton J. Williams, Esquire General Counsel Department of Transportation 605 Suwannee Street, Room 562 Tallahassee, Florida 32399-0458
The Issue The issues are whether Respondent violated Sections 489.129(1)(i), (l), (m) and (o); 489.119(2); 489.1195(1)(a); and 489.1425(1), Florida Statutes, for the reasons stated in the Administrative Complaint and, if so, what penalty should be imposed.
Findings Of Fact Based on the oral and documentary evidence adduced at the final hearing, and the entire record of this proceeding, the following findings of fact are made: Petitioner is the state agency responsible for regulating the practice of contracting in the State of Florida. At all times material hereto, Respondent was licensed as a certified general contractor in the state, pursuant to license number CG C008922. Respondent's license is currently inactive. Respondent has been a contractor for nearly 30 years, and has never been subject to disciplinary action against his license until this proceeding. Respondent was licensed as the licensed qualifying agent for ECE from January 1998 through February 2001, for a fee of $400.00 per month. As the qualifying agent, Respondent was responsible for all of ECE's contracting activities, in accordance with Section 489.1195(1)(a), Florida Statutes, which states: "All primary qualifying agents for a business organization are jointly and equally responsible for supervision of all operations of the business organization; for all field work at all sites; and for financial matters, both for the organization in general and for each specific job." Respondent did not obtain a certificate of authority for ECE. On November 16, 1998, ECE entered into a contract in the amount of $15,577.00 with Carl and Darlene Weinzierl to install aluminum siding at their residence in Terra Ceia, Florida. The contract specified that ECE would use Reynolds brand siding in the construction. ECE actually used an inferior grade of aluminum siding. The contract did not contain a notice explaining to the Weinzierls their rights under the Construction Industry Recovery Fund. Such notice is required by Section 489.1425, Florida Statutes. ECE represented to the Weinzierls that they would receive a mortgage to pay for the aluminum siding and to consolidate their other debts at an interest rate of 6.5 percent. The actual interest rate on the mortgage was 18 percent. On December 14, 1998, ECE commenced work on the Weinzierls' house. ECE never completed the work. On January 22, 1999, ECE filed a lien against the Weinzierls' property in the amount of $15,577.00. Respondent had no knowledge of the project on the Weinzierls' house, of the mortgage arrangement made by ECE, or of the lien filed by ECE against the Weinzierls' property. On November 5, 1998, ECE entered into a contract in the amount of $3,624.00 with Barbara Lewis to install soffit and fascia at her residence in Bradenton, Florida. The contract did not contain a notice explaining to Ms. Lewis her rights under the Construction Industry Recovery Fund, as required by Section 489.1425, Florida Statutes. ECE represented to Ms. Lewis that she would receive financing to pay for the soffit and fascia at an interest rate of 11 percent. The actual interest rate of the financing was 18 percent. ECE performed the work on Ms. Lewis' house in one day. Respondent had no knowledge of the project at Ms. Lewis' house or of the financing arrangement made by ECE. On August 16, 1998, ECE entered into a contract in the amount of $13,250.00 with John Maxwell to install aluminum siding at his residence in Bradenton, Florida. The contract did not contain a notice explaining to Mr. Maxwell his rights under the Construction Industry Recovery Fund, as required by Section 489.1425, Florida Statutes. ECE commenced work at Mr. Maxwell's house on August 18, 1998, and completed the project on August 27, 1998. On August 31, 1998, ECE recorded at the Manatee County Circuit Court a mortgage on Mr. Maxwell's property in the amount of $13,427.55 for the installation of aluminum siding. Mr. Maxwell had signed no documents to place a mortgage on his property, and received a satisfaction of mortgage on May 19, 1999. Respondent had no knowledge of the project to be completed at Mr. Maxwell's house or of the mortgage recorded by ECE. On October 10, 1998, ECE entered into a contract in the amount of $3,663.00 with Richard Lanois and Beverly Carroll to install soffit and fascia on their residence in Bradenton, Florida. The contract did not contain a notice explaining to Mr. Lanois and Ms. Carroll their rights under the Construction Industry Recovery Fund, as required by Section 489.1425, Florida Statutes. ECE commenced work at the house on October 13, 1998, and completed the project on October 15, 1998. ECE recorded a financing statement to obtain a lien on the property of Mr. Lanois and Ms. Carroll with the Manatee County Circuit Court on October 22, 1998. Neither Mr. Lanois nor Ms. Carroll had signed the financing statement that ECE filed at the court. Respondent had no knowledge of the project at the residence of Mr. Lanois and Ms. Carroll, or of the financing statement filed by ECE to obtain a lien on their property. On December 2, 1998, ECE entered into a contract in the amount of $5,739.00 with Paul and Linda Porter to install Reynolds brand thermal double pane windows at their residence in Bradenton, Florida. The contract did not contain a notice explaining to the Porters their rights under the Construction Industry Recovery Fund, as required by Section 489.1425, Florida Statutes. ECE commenced work at the Porters' house on December 5, 1998, and completed the project on December 17, 1998. ECE installed BetterBilt brand windows rather than Reynolds windows, without the Porters' approval. On December 17, 1998, ECE recorded at the Manatee County Circuit Court a mortgage on the Porters residence in the amount of $5,775.80. The Porters had signed no documents to allow this mortgage to be placed on their property. Respondent had no knowledge of the project at the Porters' residence or of the mortgage recorded by ECE on the Porters' residence. On November 2, 1998, ECE entered into a contract in the amount of $6,426.00 with William C. Roach to install Reynolds thermal double pane windows on his residence in Bradenton, Florida. The contract did not contain a notice explaining to Mr. Roach his rights under the Construction Industry Recovery Fund, as required by Section 489.1425, Florida Statutes. ECE commenced work at the Roach residence on November 2, 1998, and completed the project on November 3, 1998. ECE installed BetterBilt brand windows instead of Reynolds windows, without Mr. Roach's permission. ECE represented that Mr. Roach would receive financing to consolidate the cost of the windows, his mortgage, and his credit card debt. In fact, Mr. Roach received financing only for the cost of the windows. Respondent had no knowledge of the project at Mr. Roach's residence or of the financing arrangement that ECE entered into with Mr. Roach. On November 28, 1998, ECE entered into a contract in the amount of $3,635.90 with Carol Lipp to install Reynolds brand soffit and fascia on her residence in Bradenton, Florida. The contract did not contain a notice explaining to Ms. Lipp her rights under the Construction Industry Recovery Fund, as required by Section 489.1425, Florida Statutes. ECE commenced work at Ms. Lipp's residence on November 30, 1998, and completed the project on December 7, 1998. ECE recorded a financing statement with the Manatee County Circuit Court in order to obtain a lien against Ms. Lipp's property. Ms. Lipp had not signed the financing statement. Respondent had no knowledge of the project at Ms. Lipp's residence or of the financing statement filed by ECE on Ms. Lipp's residence. On January 22, 1999, ECE entered into a contract in the amount of $13,504.00 with Shirley G. Bradley to install 11 Reynolds thermal double pane windows and to enclose the lanai and front entry of her residence in Englewood, Florida. The contract did not contain a notice explaining to Ms. Bradley her rights under the Construction Industry Recovery Fund, as required by Section 489.1425, Florida Statutes. ECE commenced work at Ms. Bradley's residence on January 25, 1999, and completed the project on February 9, 1999. ECE installed BetterBilt brand windows instead of Reynolds windows, without Ms. Bradley's permission. ECE represented to Ms. Bradley that she would receive financing for the project at an interest rate of 16 percent. In fact, ECE obtained a loan for Ms. Bradley at an interest rate of 21 percent. Respondent had no knowledge of the project to be completed at Ms. Bradley's residence or of the financing arrangement between ECE and Ms. Bradley. On October 13, 1998, ECE entered into a contract in the amount of $6,511.10 with George Haight to install Reynolds thermal double pane windows on his residence in Bradenton, Florida. The contract did not contain a notice explaining to Mr. Haight his rights under the Construction Industry Recovery Fund, as required by Section 489.1425, Florida Statutes. ECE installed BetterBilt brand windows instead of Reynolds windows, without Mr. Haight's permission. Respondent had no knowledge of the project to be completed at Mr. Haight's residence. On December 7, 1998, ECE entered into a contract in the amount of $15,216.00 with Shirley Behen to install Reynolds thermal double pane windows on her residence in Bradenton, Florida. The contract did not contain a notice explaining to Ms. Behen her rights under the Construction Industry Recovery Fund, as required by Section 489.1425, Florida Statutes. ECE represented to Ms. Behen that she would receive financing for the windows that would also consolidate her roof payments and credit card debt. ECE provided none of the promised financing. ECE installed BetterBilt brand windows instead of Reynolds windows, without Ms. Behen's permission. On December 15, 1998, ECE recorded a mortgage on Ms. Behen's residence with the Manatee County Circuit Court in the amount of $10,713.95. Ms. Behen had not signed any document to secure a second mortgage on her property. Respondent had no knowledge of the project to be completed at Ms. Behen's residence or of the mortgage filed on her property by ECE. On November 17, 1998, ECE entered into a contract in the amount of $7,845.00 with Debby and Wally Keefe to install Reynolds thermal double pane windows on their residence in Bradenton, Florida. The contract did not contain a notice explaining to the Keefes their rights under the Construction Industry Recovery Fund, as required by Section 489.1425, Florida Statutes. ECE represented to the Keefes that they would receive a mortgage to pay for the windows and consolidate their credit card debt at a rate of 6.5 percent. In fact, ECE provided a mortgage with an actual interest rate of 18 percent. Respondent had no knowledge of the project to be completed at the Keefes' residence or of the mortgage arrangement between the Keefes and ECE. On September 29, 1998, ECE entered into a contract in the amount of $8,531.00 with Joe and Laura Poulin to install vinyl siding on their three duplexes in Bradenton, Florida. The contract did not contain a notice explaining to the Poulins their rights under the Construction Industry Recovery Fund, as required by Section 489.1425, Florida Statutes. ECE recorded a financing statement with the Manatee County Circuit Court, obtaining a lien against the Poulins' property. The Poulins did not sign the financing statement. Respondent had no knowledge of the project to be completed at the Poulins' residence or of the financing statement filed by ECE. In August 1998, ECE entered into a contract in the amount of $8,307.00 with Darwin and Joyce Wilson to install 17 Reynolds thermal double pane windows on their residence in Sarasota, Florida. The contract did not contain a notice explaining to the Wilsons their rights under the Construction Industry Recovery Fund, as required by Section 489.1425, Florida Statutes. ECE commenced the project on September 5, 1998, and completed the project on September 7, 1998. ECE installed BetterBilt brand windows instead of Reynolds windows, without the Wilsons' permission. Respondent had no knowledge of the project to be completed at the Wilsons' residence. Also in August 1998, ECE entered into another contract with the Wilsons, in the amount of $14,000.00, to install Reynolds vinyl siding on their residence. The contract did not contain a notice explaining to the Wilsons their rights under the Construction Industry Recovery Fund, as required by Section 489.1425, Florida Statutes. ECE began installing the vinyl siding on October 15, 1998, and completed the project on November 15, 1998. ECE represented to the Wilsons that they would receive a new first mortgage that would include the price of the windows, the siding, their house payment, and their credit card debt. In fact, ECE provided no such mortgage. Respondent had no knowledge of the second project to be completed at the Wilsons' residence. On October 7, 1998, ECE entered into a contract in the amount of $5,171.00 with Derek Campagna to install vinyl siding and fascia on his residence in Bradenton, Florida. The contract did not contain a notice explaining to Mr. Campagna his rights under the Construction Industry Recovery Fund, as required by Section 489.1425, Florida Statutes. ECE commenced work on October 8, 1998, and completed the project on October 10, 1998. On or about January 5, 1999, ECE filed a lien against Mr. Campagna's property in the amount of $5,171.40. Respondent had no knowledge of the project to be completed on Mr. Campagna's residence or of the lien filed by ECE. The misrepresentation of the actual interest rate to be charged for financing the above projects was the commission of fraud or deceit in contracting by ECE and its representatives. The installation of BetterBilt windows in those houses the owners of which had contracted for Reynolds windows constituted the commission of fraud or deceit in contracting by ECE and its representatives. Respondent was unaware of ECE's fraudulent activities in the Bradenton/Sarasota area at the time they were occurring. Respondent believed that ECE did business exclusively in Indian River, St. Lucie, and Martin counties on the east coast of Florida. Respondent submitted the proper forms for the relevant permits and actively supervised ECE's construction work on the east coast of Florida. There was no evidence that ECE used Respondent's license to obtain permits for the projects it undertook in the Bradenton/Sarasota area. The evidence established that ECE pulled no permits at all for those projects. From all the evidence presented at the hearing, the inference may fairly be drawn that ECE purposely kept Respondent in the dark concerning its activities in the Bradenton/Sarasota area. Respondent first learned of ECE's activities in Bradenton/Sarasota through a telephone conversation with a friend, Peter Green. Mr. Green was a mortgage broker, and told Respondent that he was trying to secure financing for some of the ECE clients named above. Mr. Green told Respondent that some of these clients were very upset with ECE, and asked Respondent if he was aware of the problems. Respondent told Mr. Green that he was unaware ECE was doing any work on the west coast of Florida. Mr. Green gave Respondent the phone number of Darlene Weinzierl, one of the disgruntled ECE customers. Following her own bad experience with ECE, Ms. Weinzierl had undertaken an investigation of the company. She searched courthouse records for liens filed by ECE and contacted all the individuals whose names she found. Ms. Weinzierl heard "horror stories." A woman who could barely speak English told her that ECE had slapped siding over rotting woodwork, sent her a bill for $20,000, then filed a lien on her house. Another woman told Ms. Weinzierl that when she attempted to cancel her contract, the ECE salesman showed up at her door accompanied by a man ostentatiously wearing a gun in a shoulder holster. Other customers told Ms. Weinzierl that ECE had forged mortgages on their property. Ms. Weinzierl's hearsay testimony is unsupported by other competent substantial evidence and therefore cannot be relied on for the truth of the statements contained therein. However, it is undisputed that Ms. Weinzierl later conveyed this information to Respondent. Respondent telephoned Ms. Weinzierl on January 23, 1999. Ms. Weinzierl conveyed to Respondent everything she had learned about ECE. The next day, Respondent spoke with James Pizzo, Jr., one of the principals of ECE. Mr. Pizzo told Respondent that he had a very aggressive salesman who "had made a lot of promises to people," but that he was in the process of responding to the complaints and correcting the situation. Respondent asked Mr. Pizzo why ECE was doing business on the west coast of Florida. Mr. Pizzo replied that ECE's telemarketing effort had saturated the east coast, and he believed there was a fresh market on the west coast. Because he had worked with Mr. Pizzo for over a year and had a good working relationship with ECE, Respondent took at face value Mr. Pizzo's promise to correct the problems. Respondent took no action on his own, and continued to act as the qualifying agent for ECE. Respondent did not visit any of the west coast job sites or make any independent effort to contact ECE's victims. FDLE commenced a RICO investigation of ECE in the spring of 1999. Special Agent Charles Leonard, the FDLE investigator, first interviewed Respondent on May 10, 1999. Respondent was never a target of the investigation, and cooperated fully. Respondent did not sever his relationship with ECE until February 2001. By this time, 14 complaints had been filed against ECE by customers in the Bradenton/Sarasota area, and ECE had taken no action to address the situation beyond ceasing to do business in the area. In mitigation of his failure to take any action for two years after he became aware of ECE's fraudulent practices, Respondent pointed to the precarious state of his health. In January 2000, Respondent's car was stopped on I-95 when it was rear-ended by a truck traveling at 50 to 60 miles per hour. Respondent received a concussion and suffered excruciating headaches. His neurologist ordered an MRI and found a brain tumor. The tumor could not be removed entirely. Respondent is also a diabetic. Respondent continues to have headaches so severe that he requires trigger point injections of pain medication and epidural injections in his neck and upper spine every few months. He regularly takes Tylenol III with codeine. He requires an MRI every six months to monitor his brain tumor. Prior to his brain surgery, Respondent managed his diabetes through oral medication; however, since the surgery he has needed three injections of insulin daily. At the same time he severed his relationship with ECE, Respondent notified Petitioner that he was transferring his license to inactive status. Respondent no longer actively practices contracting. However, his current position as a construction project manager for the Broward County School Board requires that he hold at least an inactive general contractor's license. Respondent credibly testified that if he were to lose his current job, and the health insurance that goes with it, he could not pay his medical bills.
Recommendation Based upon the foregoing Findings of Fact and Conclusions of Law, it is RECOMMENDED that Petitioner enter a final order finding Respondent guilty of violating Section 489.129(1)(l) and (m), Florida Statutes, suspending Respondent's license for three years from the date that Respondent re-activates his license, imposing an administrative fine in the amount of $3,000.00, and requiring Respondent to pay costs of Petitioner’s investigation. DONE AND ENTERED this 12th day of March, 2002, in Tallahassee, Leon County, Florida. LAWRENCE P. STEVENSON 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 12th day of March, 2002. COPIES FURNISHED: Michael Martinez, Esquire Department of Business and Professional Regulation 1940 North Monroe Street, Suite 60 Tallahassee, Florida 32399-1007 E. Cole Fitzgerald, III, Esquire Fitzgerald, Hawkins, Mayans & Cook Post Office Box 3795 West Palm Beach, Florida 33401 Hardy L. Roberts, III, General Counsel Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-2202 Suzanne Lee, Executive Director Construction Industry Licensing Board Department of Business and Professional Regulation Northwood Centre 1940 North Monroe Street Tallahassee, Florida 32399-0792
Findings Of Fact Based on the stipulations of the parties, on the exhibits received in evidence, on the testimony of the witnesses at the hearing, and on the deposition testimony received in evidence, I make the following findings of fact: On October 30, 1985, the Florida Department of Transportation ("FDOT") received and opened sealed bids on State Project Number 72270-3431, in Duval County, Florida. Five bids were submitted for this project. The lowest bid, in the amount of $6,235,948.35, was submitted by Hubbard Construction Company ("Hubbard"). The amounts of the other bids were as follows: the second low bidder, $6,490,796.91; the third low bidder, $6,519,447.90; the fourth low bidder, $7,470,941.74; and the fifth low bidder, $7,477,038.49. All bids submitted were more than seven per cent over FDOT's estimate of the project price. The two lowest bids also appeared to be unbalanced and, as set forth in more detail below, the Hubbard bid was in fact unbalanced in several particulars. It is FDOT policy to give special review to bids that are more than seven per cent above the estimated price of the project. All bidders were made aware of this policy by the following language on the first page of the Notice To Contractors: Bidders are hereby notified that all bids on any of the following projects are likely to be rejected if the lowest responsive bid received exceeds the engineer's estimate by more than seven per cent (7 percent). In the event any of the bids are rejected for this reason, the project may be deferred for readvertising for bids until such time that a more competitive situation exists. Upon review of the bids submitted on the subject project, FDOT decided to reject all bids. By notices dated December 6, 1985, all bidders were advised that all bids were rejected. The stated reasons for the rejection of all bids were as follows: All bids were too high; the apparent first and second low bidder's bids were unbalanced and the apparent first low bidder failed to meet the WBE Requirements. Hubbard submitted its formal written protest to the FDOT regarding the proposed rejection of its bid on the subject project on January 3, 1986. This protest was made pursuant to Section 120.53, Florida Statutes (1985), the instructions to bidders and bid information provided by the Department, and rules of the Department, including Rules 14-25.04 and 14-25.05, Florida Administrative Code. Unbalancing occurs when a contractor puts a higher price on a particular item of work in the project in anticipation of using more of that item than the FDOT has estimated will be required. Unbalancing can also occur when a lower than estimated price is placed upon a particular item. When a bid appears to be unbalanced, the bid is submitted to the Technical Awards and Contract Awards committees for review. In this case, the FDOT's preliminary estimate personnel discovered six items that were unbalanced within Hubbard's bid. The first item of concern was an asphalt base item for which the FDOT's estimate was $4.00 per square yard and the Hubbard bid was $19.29 per square yard. The second item was clearing and grubbing for which FD0T's estimate was $50,000 and Hubbard's bid was $200,000. The third item was removal of existing structures for which FDOT's estimate was $190,762 and Hubbard's bid was $38,000. The fourth item was installing new conductors for which FDOT's estimate was $251,000 and Hubbard's bid was $141,000. The fifth item was removal of existing pavement for which FDOT's estimate was $78,000 and Hubbard's bid was $153,000. Finally, the sixth item was surface asphalt items for which FDOT's estimate was $98,000 and Hubbard's bid was $169,000. The FDOT has a policy that any bid that is seven per cent or more over the estimate will go before the Awards Committee for review. Further, the FDOT has a policy that whenever the bids are more than seven per cent higher than the estimate, the FDOT's Bureau of Estimates will then review their estimate and the apparent low bidder's bid to determine whether the original estimate was correct. The FDOT maintains a Women's Business Enterprises ("WBE") program. The FDOT's program requires that successful bidders provide for participation of women owned and controlled business in FDOT contracts. The program is implemented by the setting of so-called "goals" for certain projects. The goal is stated as a percentage of the total dollar bid for each project. Thus, the WBE goal for a project requires that the bidder utilize FDOT certified WBE's in constructing the project to the extent that the FDOT's goal is a percentage of the total bid. The FDOT has implemented rules to effectuate its WBE program. Rule 14- 78, Florida Administrative Code (amended effective May 23, 1984). In submitting a bid, the rules offer the bidder the option of meeting the WBE goals or submitting proof of a good faith effort to meet the goal and if a good faith effort is sufficient, the FDOT may waive the goal. The FDOT's bid package and specifications, as furnished to contractors, in no place referred to the Department's rule providing that only 20 percent of the amount of subcontracts with WBE suppliers shall count toward the goals on Federal aid projects. The specifications clearly state that WBE suppliers may be counted toward the goals. The specifications as furnished by the Department also imply that the 20 percent rule applies only to non-federal aid jobs. The project in question in this case is a Federal aid project. There is a conflict between the rule and the language of the specifications which creates an ambiguity in the specifications, as well as a trap for the unwary bidder who overlooks the requirements of the rule. The FDOT is in the process of amending the specifications to make them conform to the rule. The Special Provisions contained within the bid specifications established certain minority participation goals for this project--ten per cent for Disadvantaged Business Enterprises (DBE) and three per cent for Women Business Enterprises (WBE). FDOT personnel analyzed the bid documents submitted by Hubbard according to the criteria set forth at Rule 14-78, Florida Administrative Code, and determined that Hubbard exceeded the DBE goal but failed to meet the WBE goal. Hubbard's WBE participation was two per cent. All other bidders on the project met both of the DBE and WBE goals. When Hubbard submitted its bid on this project, Hubbard thought that it had complied with the three per cent WBE goal by subcontracting 3.5 per cent of the contract price to WBE certified firms. However, 2 per cent of the contract price was to be subcontracted to a WBE for supplies to be furnished by a WBE who was not a manufacturer. Accordingly, when the 20 per cent rule discussed above was applied to that 2 per cent, the total amount of WBE participation which could be counted toward Hubbard's compliance with the rule was approximately 2 per cent, which was less than the 3 per cent goal. Once it was determined that Hubbard had failed to meet the WBE goal, FDOT personnel analyzed Hubbard's good faith efforts package pursuant to Rule 14-78, Florida Administrative Code. Hubbard's good faith efforts package failed to demonstrate that Hubbard had taken sufficient action in seeking WBE's to excuse its failure to meet the WBE goal for this project. Similarly, Hubbard's evidence at the hearing in this case was insufficient to demonstrate that Hubbard had taken sufficient action in seeking WBE's to excuse its failure to meet the WBE goal for this project. Most telling in this regard is that all four of the other bidders on this project were successful in meeting or exceeding the DBE and WBE goals.
Recommendation For all of the foregoing reasons, it is recommended that the Florida Department of Transportation issue a Final Order rejecting all bids on Federal Aid Project No. ACIR-10-5 (76) 358 (Job No. 72270-3431). DONE AND ORDERED this 24th day of March 1986, at Tallahassee, Florida. MICHAEL M. PARRISH 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 24th day of March 1986. APPENDIX TO RECOMMENDED ORDER IN DOAH CASE NO. 86-0O24BID The following are my specific rulings on each of the proposed findings of fact submitted by each of the parties. Rulings on findings proposed by the Petitioner, Hubbard Construction Company The substance of the findings of fact proposed by the Petitioner in the following paragraphs of its proposed findings have been accepted and incorporated into the findings of fact in this Recommended Order: 1, 2, 3, 4, 5, and 8. The substance of the first sentence of paragraph 6 is accepted. The remainder of paragraph 6 is rejected as an unintelligible incomplete statement. Paragraph 7 is rejected as not supported by competent substantial evidence. (The Standard Specifications for Road and Bridge Construction were not offered in evidence.) Paragraph 9 is rejected for a number of reasons, including not being supported by competent substantial evidence, being to a large part irrelevant, being predicated in part on an erroneous notion of which party bears the burden of proof, and constituting in part legal argument rather than proposed findings of fact. The first and third sentences of paragraph 10 are accepted in substance. The second and fourth sentences of paragraph 10 are rejected as irrelevant. The last sentence of paragraph 10 is rejected as irrelevant and as not supported by competent substantial evidence. Paragraph 11 is rejected as irrelevant and as including speculations which are not warranted by the evidence. Paragraph 12 is rejected as irrelevant and as including speculations which are not warranted by the evidence. Paragraph 13 is rejected as not supported by competent substantial evidence and as being contrary to the greater weight of the evidence. Rulings on findings proposed by the Respondent, Department of Transportation The substance of the findings of fact proposed by the Respondent in the following paragraphs of its proposed findings have been accepted and incorporated into the findings of fact in this Recommended Order: 1, 2, 3, 4, 5, 6, 7, and 8. Paragraph 9 is rejected as irrelevant. COPIES FURNISHED: John E. Beck, Esquire 1026 East Park Avenue Tallahassee, Florida 32301 Larry D. Scott, Esquire Haydon Burns Building 605 Suwannee Street Tallahassee, Florida 32301-8064 Thomas Drawdy, Secretary Department of Transportation Mail Station 57 605 Suwannee Street Tallahassee, Florida 32301-8064
Findings Of Fact In August 1985, the Department issued a Request for Proposal (RFP), State Project Number RFP-DOT-85-06, for a demonstration bonding assistance program. The program was authorized in 1985 by Congress, using Federal Highway Administration funds, to assist economically and socially disadvantaged business enterprises (DBEs) to meet the bonding requirements mandated on public works projects, and thereby increase their participation in the bid process. Consistent with existent agency policy, and Section 287.057(16), Florida Statutes, the RFP provided: A selection committee of at least three members will be established to review and evaluate each proposer's response to this Request for Pro- posal and subsequently decide the preference order of the proposers. In response to the RFP, the Department received six proposals. The evidence established that it is Department policy to submit the proposals to a "technical review committee," comprised of three members for evaluation of the technical responsiveness of the proposals, and to an employee of the Department's Bureau of Contractual Services to evaluate the cost responsiveness of the proposals. In this case, the proposals were submitted to a "technical review committee" consisting of two members and to an employee of the Department's Bureau of Contractual Services. The "technical review committee" separately evaluated and scored the technical responsiveness of each proposal, and reported their scores to an Operations and Management Consultant, with the Department's Bureau of Minority Programs. 1/ The Consultant did not evaluate the proposals. He merely averaged the scores of the two members of the "technical review committee," added the cost responsiveness of the proposals received from the Department's Bureau of Contractual Services, and prepared a summary evaluation package for the "Selection Committee." The evaluation package ranked the proposals by score. The "Selection Committee" consisted of the Department's Secretary (Thomas E. Drawdy), Deputy Assistant Secretary (Mel Hilliard), and Director of the Division of Administration (Bruce Gordon). Mr. Gordon, based on the scores set forth in the evaluation package, recommended, and the Committee concurred, that Boone's proposal be accepted. Mr. Gordon did not review any of the proposals submitted in response to the RFP. Kenneth L. Sweet, one of the evaluators on the "technical review committee," is an engineer for the Department's Bureau of Construction. While steeped with a broad range of technical and engineering experience, Mr. Sweet lacked knowledge of the requisites to successfully secure a bonding commitment.
